Porsche posts first period results this week.

Here's all you need to know about the economics of Porsche: In the first four months of their current fiscal (August to November 07), Porsche sold 30,700 units worldwide (up 18.4% VYA). That is a tiny, tiny car company. And well over half of those units are Cayennes. But those 30,700 vehicles generated $3.5 billion in revenue (up 14.7% VYA), not much for a car company in gross dollars, but not chump change and certainly impressive on a unit basis. Great margins, but little opportunity to amortize engineering development or parts specs, and little leverage against suppliers. I think that tells you almost all you need to know about why Porsche is the way it is. Unique, involving, and relatively exclusive fast cars; dodgy component quality sometimes, and weak, disinterested market support. Love it or leave it, I figure.

QUOTE=BruceP;4829738]Here's all you need to know about the economics of Porsche: In the first four months of their current fiscal (August to November 07), Porsche sold 30,700 units worldwide (up 18.4% VYA). That is a tiny, tiny car company. And well over half of those units are Cayennes. But those 30,700 vehicles generated $3.5 billion in revenue (up 14.7% VYA), not much for a car company in gross dollars, but not chump change and certainly impressive on a unit basis. Great margins, but little opportunity to amortize engineering development or parts specs, and little leverage against suppliers. I think that tells you almost all you need to know about why Porsche is the way it is. Unique, involving, and relatively exclusive fast cars; dodgy component quality sometimes, and weak, disinterested market support. Love it or leave it, I figure.[/QUOTE] BruceP, Certainly great results of a "small" car manufacturer. However, just think what the results would be if the US dollar was not in the tank VS the euro. If this situation doesn't change soon, it would seem inevitable that US prices would have to increase siginificantly for them to just maintain their finacial performance, let alone improve. I don't have too much sympathy for them at this point as their margins are so high, however something has to give IMHO............ Demosan

IMHO Porsche is going to start feeling a pinch sooner or later based on resale values. They can only keep momentum for so long when their products lose 50% of their value in three years. Eventually owners won't be repeat new owners, refusing to keep taking that hit.

Anyone know how many of those were sold in the US?

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10,750 units in North America.

Don't forget folks. Porsche is the most profitable automotive company in the world. C.

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Was kind of my point. They actually aren't the most profitable by a long shot. They have the highest margins. It's not the same thing. You're a designer, right? Let's say you've got a few employees, and your business produces 35% operating margins (reasonable). But your revenue might only be a few hundred grand a year (also reasonable). Now, let's say Interpublic, who own design and branding companies, are running at 1.7% enterprise-wide (they did, in 2006). You are more profitable than they only in margin terms. Interpublic's revenue was $6.2 billion last year. The press is fond of calling Porsche the "most profitable," but it's misleading. You can't take margin to the bank.

What about the other "stakes" Porsche has in other companies? (I do not claim to be a financial guru - far from it)...example - they are getting ready to take over VW AG. I believe they presently own 30% of the shares...(I may be mistaken). C.

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Yep. That's where those profits are going, and I think they are now the controlling shareholder of VW. It's a good business strategy, because PAG isn't viable on its own. There's no place for independent car makers anymore. Their options would have been to sell (like Lambo or Ferrari or Bentley or Aston), to try to expand the product line on their own (which is what BMW did successfully) or buy. What they're doing is a good and common approach to reinvesting profits from a high margin business with low asset value. So, for example, back to your business: A successful design company with some strategy credentials can turn 35% all day long, but it will never be worth anything as an asset (ask me how I know). So a lot of guys I know in businesses like that reinvest their profits not in the business itself, but by converting the profits into other, more solid assets like real estate. I know a consulting company that actually bought a winery this way, for example. They're being smart. They couldn't keep going like this. Can you imagine tooling up a new engine that you're only going use in one car that sells less than 30,000 units a year? When even a Bentley has VW horsepower under the hood? When even Aston's V12 is made using the block from the V6 that powered the Escape and Taurus? Porsche is a magnificent anachronism. We'll live to see the day when there is no 911, other than in name. The hand wringing over air vs. water cooling will look silly in hindsight. Until then, I'm thrilled to be driving one. I just love it. Warts and all.

did they say porsche make more $$ by trading options?

Don't forget that Porsche AG was "eaten" by the new Porsche Automobil Holding SE a conversion of the Company into a European stock corporation. And the figures in short time will be different, very different...

That would be my concern. Just like many comapnies, as you take your assets and grow by expansion, you may become liable to takeovers OR market variations that you could live with when the profit sheets is one way you can't live with as your liabilities get larger in size. I'm not an accountant so I hope I'm saying what I mean to say. As an example, I was involved in a company that owned Duckhead. In the 90's, that brand grew at an astronomical rate, but never made money, in fact lost money year after year...uncontrolled growth as I saw it. At the same time, the Levi's and VF's were raking in money, competing in the same markets.