Why is depreciation so great on 996 Porsche?

I have read many rennlist posts concerning folks who have lost $20,000 depreciation on 996's six months to well under one year old. I am not trying to create a firestorm or unsettle anyone, mind you. It is just very remarkable to see others taking such substantial loss on a alledgedly 'rare' premium sportscar as a Porsche. Others have said its due to the higher production Porsche is pumping out now. To compare however, the country is awash in Corvettes and yet most Vette owners routinely experience less than 5K loss per year for clean cars. Does anyone have a constructive answer to this high Porsche depreciation question?

I'll start because I'm stuck inside today. This sounds like a trite answer to a logical question, but here's my guess: The well worn Supply/Demand ratio. I don't know the what the change in production numbers were for the 996 vs the 993, but Porsche was using newer supposedly more efficient production methods. Did that result in higher production or just lower unit cost with flat production. Perhaps there were a substantial number of lease cars coming on the market...and perhaps there were a lot of people unhappy with MY 99 and 00 that traded early for MY 01,02. Now perhaps fewer people are buying new or used Pcars because of the general economy...and perhaps people are holding off until they can begin ordering MY 04's No matter what factors you plug in it remains supply/demand. Corvette offers a lower base price and that fact in itself means that the car is financially available to a larger market. Plus it's an American Icon and probably not looked upon as an "exotic"...the category that Porsche allegedly falls into. Then there is the old "value" theory. If people don't feel they are getting good value for their money, they won't buy Pcars. Well, that's my shot at it! (typed during F1 qualifying so some it might not make sense) <img src="graemlins/sleep.gif" border="0" alt="[sleep]" />

i concur with don watson. it is supply/demand. 1. porsche was until recently a limited production exotic and so commanded a premium. over the last 5-6 years it has moved mass market, mainly with the boxter, and in doing so lost some (much?) of its exotic appeal/demand and the associated premium... 2. the product focus has shifted from purists to affluent folks that want an upscale car (the lexus/ bmw/ mercedes crowd). they are probably better comparions for resale than corvettes IMHO. 3. a major switch from 993 to 996 with associated glitches in early production cars made some folks leary... 4. the precipitous decline in household wealth in the US has probably impacted resale values of all cars in the $60-150k range. though i have no data to back my assertion, i would argue that cars below and above this range are less impacted..

If you like the car and it gives you that rewarding experience-isn't that all is important? Having to worry about resale values makes for a unpleasant experience one you won't drive it as much and won't drive it as hard. I would do the same kinda driving if it were a more expensive car. So what if I put way many more miles on the car and watch resale go down- I'm having fun during it's life of the car and that's priceless. Regards. Mike

Here's another factor : base MSRP for '99-00 coupes was in the $64-65 range. The resale buyer basically depreciates THAT number, offering almost nothing extra for what we know are ridiculous option prices , such as $700 footwell lights, $800 leather shift/brake levers , $5000 - 9000 leather packages , etc.

The Full Leather option on my MY01 was $3,215, the full wood package was almost $8k. Don's answer makes perfect sense, basic economics. Thinking about resale is about as exciting as looking at my portfolio I'm w/Mike driving your car and enjoying it is the best way to justify it's value.

[quote]Originally posted by MKW: <strong>Here's another factor : base MSRP for '99-00 coupes was in the $64-65 range. The resale buyer basically depreciates THAT number, offering almost nothing extra for what we know are ridiculous option prices , such as $700 footwell lights, $800 leather shift/brake levers , $5000 - 9000 leather packages , etc.</strong><hr></blockquote> Well first off, straight out the gate you can forget the taxes you paid - that's $10,000 right there. Plus, immediate availability of new ones writes off a further $5000 - $10,000. Plus, people who are buying cars in this price range (new) can afford to get their cars configured exactly as they want and so they'd rather spend $20,000 more to buy a new on as they want it than $20,000 less to compromise. This extra amount paid for configuring as MKW very astutely points out means nothing in the resale market and is lost money straight out the gate.

You may not be able to get more money for a well-optioned car on re-sale, but I bet you could at least sell it faster...and sometimes this is important.

Here's my shot at the answer. Most owners or would-be owners of P-cars can afford NEW cars, prefer new cars, and therefore buy new cars. As stated above, it is the old supply and demand. There just isn't a demand for used P-cars. A bit simplistic, I agree. Ooops, the boss is calling. Gotta go to church. See y'all later.

That $45-60 K range is an odd dollar range in US. Too much for a used car/nearly off warranty for someone really stretching $-wise for it so they prefer new/full warranty like an M3 or Boxster S or such. Above that price point , might as well spend a bit more and get a brand new car, especially since dealers are knocking thousands off MSRP now compared to pre-dot bomb days when dealers never had any new 996s on lot and used ones were selling at or above MSRP - ahh the good ol' bad days of NASDAQ 5000.

Here is my .02 worth, I'll take a stab at it: Lower the future Porsche production by 30-40%. Get out of the mass market and family/SUV market. Of course, the price will need to be increase to make up for the reduction in production . But exclusivity is increased, similar to the F-cars <img src="graemlins/r.gif" border="0" alt="[king]" /> Increase the performance on the C2 to +/-400hp <img src="graemlins/burnout.gif" border="0" alt="[burnout]" /> TT to +/-500hp <img src="graemlins/burnout.gif" border="0" alt="[burnout]" /> This should satify the 0-60 watcher crowd. <img src="graemlins/jumper.gif" border="0" alt="[jumper]" /> Of course, keeping the same Porsche shape and rear engine design. This should satify the "purist" <img src="graemlins/roflmao.gif" border="0" alt="[hiha]" /> And finally, Porsche need to get back into the big time racing circuits, the F-cars just won 1st and 2nd in the Grand Prix. Now here is the critical question: How many of us would stand in line for this "new Porsche"? C2 coupe 400hp Base price $100,000 C2 cab 400hp Base price $120,000 TT coupe 500hp Base price $185,000 TT cab 500hp Base price $205,000 <img src="graemlins/drink.gif" border="0" alt="[cherrsagai]" /> Replies to this post, should answer Skytop's question. Bocky '02 Carrera c2 coupe BTW, I would be the first in line for the "New Porsche C2 coupe" <img src="graemlins/bigok.gif" border="0" alt="[thumbsup]" />

Porsche and their dealers have gone down the road of no return. PCNA basically told their dealers that those who don't spend millions to build stand alone dealerships ( like Carlsen's new stand alone and Rectors's getting rid of Cadillac /remodel and Stevens Creeks upgrades and for instance ) would lose allocations of high demand models means dealers need truck volume and Boxster volume to pay for their investment. We'll see in a few years what happens. In the meantime, I've seen how higher volume via lower line cars ( for dealer profits )has made it tougher to get good service and satisfaction at local MBZ, BMW and Lexus dealers compared to 5-10 years ago.

I think that there are multiple reasons, several or all of which have already been stated: 1. The economy is terrible and the stock market has sucked a lot of wealth from households. My feeling is that real estate is next. 2. There are a lot of great cars out there. Porsche is no longer alone, for instance the Corvette Z06, the Merc AMG cars, BMW M-cars, etc. I know that all are not real sports cars but nonetheless it is the same buyers looking at them. 3. Porsche has lost some of its "aura" by staying out of racing. Racing improves the breed and by extension sales and resale values. Just look at Ferrari. 4. Leasing has changed the mindset of car buyers. Why pay a high resale amount for a used car when you can lease a new car? Thus, the buyer demands a much lower resale to entice them to buy used. 5. People don't trust used cars as much because repair costs have soared. Everybody knows that fixing Porsches is expensive. I hope this helps./ jmmitias

[quote]Originally posted by jmmitias: <strong>I think that there are multiple reasons, several or all of which have already been stated: 1. The economy is terrible and the stock market has sucked a lot of wealth from households. My feeling is that real estate is next. 2. There are a lot of great cars out there. Porsche is no longer alone, for instance the Corvette Z06, the Merc AMG cars, BMW M-cars, etc. I know that all are not real sports cars but nonetheless it is the same buyers looking at them. 3. Porsche has lost some of its "aura" by staying out of racing. Racing improves the breed and by extension sales and resale values. Just look at Ferrari. 4. Leasing has changed the mindset of car buyers. Why pay a high resale amount for a used car when you can lease a new car? Thus, the buyer demands a much lower resale to entice them to buy used. 5. People don't trust used cars as much because repair costs have soared. Everybody knows that fixing Porsches is expensive. I hope this helps./ jmmitias</strong><hr></blockquote> 1. Agree on the stock market but not on the real estate. With interest rates this low, and likely to go lower, you're going to see much of the cash that is still out there be converted into bricks and mortar. With the economy in the shape it is you're beginning to see the supply side (housing starts) decline which will further increase the upward momentum of house prices. 2. The 405hp Z06 not a real sports car? The 333hp M3 and 394hp M5 not sports cars? Are you shi**ng me? AMG cars putting out between 350hp and 500hp not sports cars? If they're not sports cars I don't know what is. 3. Agreed to some extent but the reason Ferraris hold there value so well has as much to do with not diluting the brand (a la Cayenne, boxster) and limited production as well as maintaining the racing heritage. Ferraris are exotic, Porsches are not. Basically, in my opinion, Porsche's strategy in recent times seems to be to go after each segment by looking at the leader, adding $10,000 to the price of that vehicle and building a car up to that price hoping that the Porsche badge will encourage people to buy. They started this strategy with the boxster (for the life of me I can't see why anybody would buy one over a S2000) and they're continuing it with the Cayenne. There's nothing wrong with this at all if you want to be another BMW, Mercedes-Benz, Audi, or any manufacturer with a wide range of cars aimed at the higher end of the scale but the other side of the coin is that you better get over the notion that Porsche is an exotic brand and can be compared with the likes of Ferrari. 4. True. But this affects every car. 5. Not true. The warranty periods are such that people buying 1-2 year old cars are still covered under warranty for another couple. If you're selling your car at the end of a warranty period the question about quicj depreciation no longer applies as after 4 years the depreciation slows down sgnificantly. Bottom line folks, in my opinion, is that we need to to get used to fast depreciation on these cars but they're just like any other mass produced expensive automobile.

I hear what everyone's saying regarding the depreciation. . .it is discouraging. There is no doubt that Porsche is changing with the times and becoming like most other high-end companies. However, for me Ferrari is not the alternative. Certainly not a new one. Not within my budget right now. I have been a rabid BMW fan for some time. I currently own a 2001 X5 and a 1999 M3. Of course, the M3 will be replaced by the 2003 C4S on order. . .I cannot wait. I have had a variety of M cars over the years. Did I consider the E46 M3? Absolutely. But as compared to Porsche, I am totally unhappy with BMW's direction. Talk about diluting a brand! I won't even go into Chris Bangle and his lousy designs. BMW is on a mission to become all things to all people. They have an X3 mini-ute and a 1 series coming out in the near future. That kills me! The point is that for me, Porsche is still about as much as I could hope for in terms of a performance car company. I mean, at least with the Cayenne they're stressing performance, performance, performance. For diehards, Porsche may die what we consider a death (worsening service, reliability, resale, etc), but it will be a slow one as compared to the competition. These days, that's good enough for me.

imo the market for $50k plus used cars is down across the board--look at resales for sl mercedes which traditionally have had very good depreciation. this is even worse for s class mercs and 7 series bimmers. imo, porsche is not at fault. blame that bastard osama and his friend saddam! <img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" /> they both suck! <img src="graemlins/cussing.gif" border="0" alt="[grrrrrrr]" />

You're blaming the wrong people - Blame Bill Clinton if you're looking for somebody to blame. Not sure how you can criticize BMW for diluting their brand . Their brand is all about providing a broad range of cars that fit in the high end of each particular niche. Building a 1 series makes absolute sense to compete with Mercedes A class, and Audi A2 to name but a few. These are cars well received in Europe and if those of us here in America could, just for a second, get off the typical American 'bigger is better' bandwagon we'd all be better off.

i agree that clinton sucks too! he allowed saddam and osama to thrive while he was screwing around <img src="graemlins/soapbox.gif" border="0" alt="[soapbox]" /> i don't agree that brand dilution has anything to do with our worsening depreciation problems which is affecting all expensive brands. i think that resale of expensive used cars is always affected in every recession before new car sales are affected. frankly if i only had $50 k to spend on a car i would have gotten a boxter instead of a 911. i find comfort in owning a new car--i don't think that i'm alone in this.

I couldn't be more frustrated over resale value and the value of the cars in general. My current 996 will be my last f_cking Porsche. I have had more troubles with this vehicle and they never were able to find what was wrong it seems until it was a month out of warranty and now EVERYTHING is much clearer to them. This also comes on the heels of owning a Boxster thats transmission blew up after its first 1200 miles... ( It took two weeks to fix and I had to drive an Infiniti for a loaner...)I don't even have enough time to go into all that I have had wrong with my Pcars... So being more than optimistic I figured I just needed to trade for a new model. I went to Carlsen (Palo Alto) and they have an 02 Seal Grey Carrera optioned pretty close to what I want that stickers at $76K. They said there are no rebates and they would only come down $2k on the price.. (IT GETS BETTER) They would only offer $40k for my 99 with 38K miles that is LOADED.. My paint isn't perfect but they said that would only add a grand or so if it was. I asked about all of my options and was told that it doesn't really add to the price...! It sure adds to theirs! So I will be buying something that retains it's value, has a better warranty, is faster, has the coolest transmission, and STILL cost less to boot. Hello BMW M3!javascript : Ferry should be rolling over in his grave!

[quote]Originally posted by zobi: <strong>I couldn't be more frustrated over resale value and the value of the cars in general. My current 996 will be my last f_cking Porsche. I have had more troubles with this vehicle and they never were able to find what was wrong it seems until it was a month out of warranty and now EVERYTHING is much clearer to them. This also comes on the heels of owning a Boxster thats transmission blew up after its first 1200 miles... ( It took two weeks to fix and I had to drive an Infiniti for a loaner...)I don't even have enough time to go into all that I have had wrong with my Pcars... So being more than optimistic I figured I just needed to trade for a new model. I went to Carlsen (Palo Alto) and they have an 02 Seal Grey Carrera optioned pretty close to what I want that stickers at $76K. They said there are no rebates and they would only come down $2k on the price.. (IT GETS BETTER) They would only offer $40k for my 99 with 38K miles that is LOADED.. My paint isn't perfect but they said that would only add a grand or so if it was. I asked about all of my options and was told that it doesn't really add to the price...! It sure adds to theirs! So I will be buying something that retains it's value, has a better warranty, is faster, has the coolest transmission, and STILL cost less to boot. Hello BMW M3!javascript : Ferry should be rolling over in his grave!</strong><hr></blockquote>