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.
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- 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.↩
- 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↩
- See Apple, Uber, etc. for more of this phenomenon.↩
- My CV, in case you’re curious as to the derivation of my authority on the matter in question.↩
- 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 ↩
- All the signs, stickers, and warning labels in the car were in Japanese ! I’m a sucker for this kind of thing.↩
- 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.↩
- Not that the two German firms are alone in this, they’re just two of the more tragic cases, imo.↩
- 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!↩