Porscheflation and the death of automotive purity.

Founded by Ferdinand Porsche in 1931, the Porsche company, known formally as Dr. Ing. h.c. F. Porsche AG,i is easily one of the most profitable luxury carmaker in the world, boasting margins in excess of 15% in an industry accustomed to the low single-digits. But that doesn’t mean that Porsche is doing particularly well at the moment. Allow me to explain.

Despite offering a line-up that includes no less than seven different models – 918, Macan, Cayenne, Panamera, Boxster, Cayman, and that lil’ ol’ 911 – each with a bevy of sub-model variantsii and a cornucopia of still more customisable options, Porsche is no longer that little German firm making sporty little cars for focused motoring enthusiasts. Those days are over, dead at the altar of Growth.

Now Growth can be a beautiful thing – be it when a boy grows into a man, a girl into a woman, a sapling into a tree, or a start-up into a viable business – but the rate of growth is vital to how the end-product of said growth feels, which in turns affects market prices. When something grows too slowly, if it’s in a competitive environment and is insufficiently insulated from its larger peers, it withers and dies, leaving just a footnote on the pages of history. When something grows too quickly, however, it’s an aesthetic travesty and a potential detriment to the value of the underlying idea.iii Scarcity is an essential ingredient in perceived value, as any Bitcoiner worth his salt will readily remind you, and its loss undermines the object’s or service’s long-term survival prospects.

Porsche, like a Y Combinator pump-and-dump, has unfortunately fallen into this latter category of late – it’s grown too quickly. It’s hard to believe that just 13 years ago, the company produced only made two distinct models of cars : the 911 and the Boxster. Only 20 years ago, the firm produced but a single model – the 911 – and even that at a paltry rate of ~12k per year.

Today, with sales on track for >200k units in 2015, a 16x increase in volume in the past two decades and more than half of which are now SUVs, Porsche’s product range is more twisted than a pop starlet who’s ten drinks deep, starved for attention, and hasn’t eaten more than a tic tac for three days ; and every bit as desperate. Much like Lindsay Lohan the day she turned 18, Porsche has lost the essence of its uniqueness and the innocence of its sexiness. The manual transmission that defined the driver-Porsche interface is now gasping desperately for air, every model has the “efficient” and dead-feeling blight that is electric steering, and the once svelte sheetmetal has packed on the pounds like Melissa McCarthy at the buffet table. The results are abrasive abominations that only an executive with PWC could love.

The cause of this undisciplined Growth is, to my eye,iv a concatenation of the braindamage known as “the customer is always right,” general electronification and plastification, and a pivot from European/American customers to Chinese customers, all of which is exactly what you’d expect from gving a bunch of MBAs the rule of the roost. So the results are clear, sure sales volumes are up and all that, but what’s still more telling is that prices for older air-cooled 911s – which ceased production in 1998 with the 993 generation, right around the time when the company expanded its product range beyond a single vehicle and arguably went soft – have absolutely skyrocketed in the last 5 years. I’m talking blast-off to space virgin island here. Like “send me a postcard from the moon” territory. Prices for air-cooled Porsches are unbefuckinglievably high right now and show no signs of letting up.v

I came reasonably close to buying a black Japanese import 964 Carrera 4 Coupevi in 2010 but didn’t close the deal because 1) The car needed $5k of maintenance right off the bat,vii and 2) It was an automatic. The seller had listed the car for $30,000 but had offered to accommodate the upcoming maintenance bill. Add in a little negotiation (what am I, a gentile?) and we were looking at ~$23-25k sale price in 2010, had I been able to see myself with the city-oriented transmission. Today, that car, which was in excellent shape and had 100`000km on the clock, would fetch no less than $55k in 2015 !! (And quite possibly as much as $65k.) That’s 2.2x – 2.8x increase in 5 years !!! (or comfortably 20% p.a.).

While such an appreciation in asset price isn’t unheard of in stocks, fine art, and even occasionally in housing, it’s fairly unusual in the automotive space, particularly for offerings for which so many units have been produced ; a total of 62`172 Porsche 964s rolled off the assembly line in its 5 years of production. Quite clearly, an air-cooled 911 isn’t a McLaren F1, of which only 106 were manufactured, and for which prices are commensurately stratospheric.The state of the used Porsche 911 market indicates that there is something deeply, deeply wrong at the house Ferdinand built.

That being said, Porsche isn’t alone in this inflation of volume and consequent loss of quality, Mercedes is following the exact same plan as Porsche.viii So I wouldn’t be surprised if Saddam, the ultimate status symbol, followed a similar trajectory to the air-cooled 911s.ix

My advice to you : get one while you can, because they just don’t make ’em like they used to.

___ ___ ___

  1. Ferdinand designed the Volkswagen Beetle for Hitler, cribbing the styling and layout from, perhaps not surprisingly, a Jew – Josef Ganz (despite retardopedia listing Hungarian Béla Barényi as the inspiration for the car) – but it was Ferdinand’s son, Ferry, who launched Porsche as a sports car maker with the 356 in 1948.

    Update : Automotive historian par excellence LJK Setright, in his mega-recommended title “Drive On! : A social history of the motor car,” lists Czech-born designer for Tatra, Hans Ledwinka, as Ferdinand’s muse. So I suppose there’s no shortage of debate on the topic.

  2. The 911 range is the most perversely diverse today as ever. There are presently 25 different variants on Porsche Canada’s website. The 964 (1989 – 1993) car had a coupe, a convertible, and a targa, each with RWD or AWD options, a couple Turbo variants, a Cup, and an RS edition for a total of 12 choices. Choice inflation!!1
  3. See Apple, Uber, etc. for more of this phenomenon.
  4. My CV, in case you’re curious as to the derivation of my authority on the matter in question.
  5. I had some inkling as to this existence of this phenomenon from a conversation with a fellow air-cooled enthusiast last summer : after hemming and hawing a bit, he’d just bought a silver 6-speed 993 Coupe, a fine automobile, but the price had increased $5k in the 6 months during which he deliberated the purchase ! This seemed a peculiarly rapid appreciation, but hey, it’s not like they’re making any more of them.

    At the time, I didn’t dig deeper into the market conditions for those swan songs of air-cooled glory, primarily because I was more focused on digital assets than physical ones, so this recent bit of digging really and truly caught me by surprise ! I’m fucking flabbergasted over here !!1

  6. All the signs, stickers, and warning labels in the car were in Japanese ! I’m a sucker for this kind of thing.
  7. Of course, the $5k maintenance bill only came to light as a result of a pre-purchase inspection, not as a result of the seller providing me this information up front. Even if it’s $100 – 200, always pony up for a PPI on a used car, particularly German ones that are >10 years old! Oh, and get used to $5k maintenance bills every few months.
  8. Not that the two German firms are alone in this, they’re just two of the more tragic cases, imo.
  9. Why did I buy a 5+ metre long sedan instead of that sexy little Porsche I’ve long lusted after ? Well, don’t tell anyone, but I’m going to be a papa next month!

25 thoughts on “Porscheflation and the death of automotive purity.

  1. […] the piping hot prices of air-cooled Porsches are anything to go by, it appears that consumers who are looking for less connected cars are […]

  2. cazalla says:

    Congratulations. No doubt you’ll make a great father :)

  3. […] MP noted, this goldbuggery mental malfunction is a FASCINATING phenomenon. While older Porsches are running away with the moon, art’s on the loose, Bitcoin’s doing things that […]

  4. […] has never been more skewed towards the latter than it is today. A degree from Harvard has become, like Porsche, another symbol of Asianvi financial dominance. Sure, all of these degrees and cars and leather […]

  5. Pete D. says:

    If you want to see what’s happening to the prices of truly rare automobiles, like the McLaren F1 mentioned hereabove, check out this 1998 LM Spec Macca that just sold for $13.7 mn at Sotheby’s. Granted, there were only 5 LMs produced, but the same car still wouldn’t have fetched much more than $5 mn as recently as 2008.

    Then, of course, there are the Ferraris.

  6. […] mobile apps, like MacOSX, like goddam Porsches, like the entire fucking “civilised” stack. It’s all in shambles beneath a […]

  7. […] cars from the finest tanks on the road into yet more brittle plastic toys. Yes, like Porsche. […]

  8. […] in consumer electronics and “apps,” which at this point even includes, sadly, cars. […]

  9. […] sold 189k vehicles in 2014 and 225k in 2015. But before you yell “Porscheflation!“, that’s simply the volume necessary for to produce $100k cars and survive, whether you […]

  10. Pete D. says:

    Updated. Nothing major, just a few coherence improvements.

  11. […] for these non-renewable resources therefore don’t seem set to climb in the way that, say, Porsches have recently. But maybe we’re just 20-30 years away from that too. […]

  12. […] on the door posts.iii The hyperbolic and white-power-powerediv appreciation of vehicles in the air-cooled Porsche space these last few years is already cracking under the weight of frankly absurd expectations. With old […]

  13. […] is why, for example, Porsche has moved in the “impure” direction they have. Go China or go home. […]

  14. […] nor trustworthy than their shameful CPI figures. And everything from the high art market to the air-cooled Porsche market to the cauliflower market gives us a pretty good indication that BLS as a whole is about as useful […]

  15. […] wares confirms that used prices for the Studio Designs are holding up so well because, like the rest of the high-end manufacturers, Scotty no dumb, he put cork up Chinaman bum! […]

  16. […] previously discussed the air-cooled bubble and how to invest in cars on these pages, not to mention the reason new cars are so slabby these […]

  17. […] The original spirit remained true for the briefest of instances but not much longer. As the air-cooled bubble was crescendoing in the 993 market and poised to spill over into the 964s and earlier, BaT was in […]

  18. cazalla says:

    2 years on, prices are higher, least here in Australia. Any idea of a buyers guide and what to look out for someone not mechanically minded? Hard to find any with under 100k km on the odo down under.

    Also, opinion on jaguar f-type r?

  19. cazalla says:

    Oops, I was referring to the 964.

    • Pete D. says:

      Hey Caz,

      Prices for the 964 have certainly spiked here in Canada as well, though the “impact bumper” models have seen even wilder appreciation of late. At least on the ask side. I don’t see a lot of bids going through. The same refurbed ’80 cabriolets are still on sale at the dealer since the spring.

      As far as a 964 buyer’s guide goes, you’re buying the seller as much as the car itself. If the guy seems meticulous and freely shows out every imperfection to you, no matter how seemingly minor, he’s the kind of scrupulous guy you want to buy from. If the car drives well enough, you like the owner, and there’s no obvious physical flaws on the prospective 964 (or other air-cooled) that you can’t live with, pay $300 for a proper PPI (pre-purchase inspection) and see if any $10k repair bills are lurking, and if so, how many! There could quite easily be 2-3.

      As to the F-Type R, it’s sadly wedged between the big-daddy SVR and the “ideal” for purists : the manual-fitted S. Any version of the F-type with a manual and a hardtop is bound to be a collector’s item some day. It’s drop-dead gorgeous and it sounds like Thor dropped his hammer on his own toe. An AWD R would certainly be sinister on the snowy slopes of Canada, but probably no better than a GT-R here and even less necessary in Oz. What are your thoughts on it ?

    • cazalla says:

      The F-Type R is a nice car insomuch someone like me, who doesn’t know much about cars, and only goes by looks can think a car is nice. There really isn’t much else new on the market that I like, even a new Porsche doesn’t seem to be the head turner the older ones were, maybe that was just part and parcel of seeing them as a kid though.

      Obviously, there is no rush, and I’m happy to wait a bit to see if something older but suitable pops up, not like it could be used as a family car regardless of price tag anyway.

      Thanks again Pete.

  20. […] Of course, prices for the best 560SELs are going parabolic at the moment, but if any fuckin’ air-cooled 911 coupe with a stick is worth six-figure sums these days, you’d better believe that minty […]

  21. […] original Roadsters will surely be the air-cooled Porsches of the 2040s. […]

  22. […] but notice the market impacts of this rapidly degrading purchasing power in the realms of fine art, fine automobiles, and others, but let’s take a year-end review of the dollar-denominated state of affairs for […]

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