Dial 911 For Profit

Jack Baruth
by Jack Baruth

What’s the Volkswagen Group’s most profitable brand? Is it Bentley? Lamborghini?

Obviously it’s Porsche. I mean, how much could it possibly cost to make a water-cooled six-cylinder engine and a cheapo plastic interior? How much does an Outback 3.6R cost? Everything over that’s profit, for sure. But how much profit is there in every Porsche?

The odd thing about automakers being public corporations is that they are compelled to pretend that they are milling their products out of unobtanium in their public advertising while simultaneously bragging to their shareholders how they were able to make the crankshafts out of recycled lambskin condoms. No surprise that VW’s making hay of Porsche’s profitability in their annual report, and no surprise that the investor press has picked up on it. Bloomberg, therefore, read the report and came up with the amazing number of $23,000 profit per Porsche.

Bentley’s close to Porsche, with a per-car profit of about $21,000, but a cursory reading of this month’s Robb Report shows that Bentleys cost quite a bit more than Porsches. The cheapest Bentley costs more than all but the most expensive Porsches. So that profit margin is doubly amazing. Bloomberg further notes that

Indeed, Volkswagen’s high-end models carried the company last year, as demand waned for its more affordable cars and it poured research dollars into retooling its big sellers. The company R&D expenses climbed 23 percent last year, sucking up almost 6 percent of revenue. A euro that steadily gained on the dollar and a shaky Continental economy didn’t help results either. The company’s total sales for 2013 ticked up only 2.2 percent, to €197 billion ($275 billion at this morning’s exchange rate), while income slid 58 percent, to €9.1 billion.

There are two ways to look at this news. The Wannabe Warren Buffets who infest every car blog and continually tell people to drive a used ’89 Excel so they can put all their money into flipping houses or Bitcoins will deliver passionate, faux-jaded dissertations on how corporations have the almighty duty to earn as much money as possible and how the product is completely immaterial. The other crowd, we’ll call them Automobile Enthusiasts, will wonder if perhaps Porsche could sell the base 911 for $59,995, the way they did in 1995. True, back then the dollar was worth more, but the 1995 Porsche 911 was also milled from unobtanium.

In reality, the per-vehicle profit number includes the Cayman and the upcoming Macan, both of which probably cost about as much to build as a Santa Fe does, so I wouldn’t look for lower prices on Boxsters any time soon. But if you’re an investor, you must be very impressed with Volkswagen now…

Jack Baruth
Jack Baruth

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  • 3Deuce27 3Deuce27 on Mar 18, 2014

    The 'good old days' cars don't look so good because of how good today's cars are. We have been spoiled by how good they are, and, what a bargain most of them are. My 96' 328is with all options was just over $41,000. A new 4-series 435i with similar options, is about $50,000+ and it has much more standard content and performance with its turbo engine. With greater content and 16 years of inflation, not as bad as one might think, except for those trapped in deflating wage, jobs.

  • 3Deuce27 3Deuce27 on Mar 19, 2014

    Reg; " the difference in handling advantages of BMW are now diminishing relative to other vehicles — even good pickup trucks!" Comparing any vehicle performance to another on surface streets or any off track situation is pointless, due to several factors, some already expressed. First of, is the willingness to press the issue by the contestants, maybe they have passengers or other considerations. The second, is the individual driver skills involved. The third, is the unknown or unfamiliarity with the road and the potential for immediate situations not easily dealt with at speed, your not on a familiar track. The fourth, some times you have to protect your driving record and pocket book. All of the above considerations, are left in the paddock when on the track. Put a good driver in the Raptor on a track and post some times, and then put him in the BMW and compare times. There will be a difference, probably significant. A good 9/10ths performance capable driver, is going to be a threat in a non-competitive situation driving almost anything. I used to... lie, still like to catch somebody in a performance car on a twisty road while driving in a vehicle of less capability and push them and see if they want to play. Don't get that opportunity these days, as everything I drive, but my big truck and motorhome, is quite capable in the corners. When I used to do fun runs into the mountains for hiking or rock hounding, in my American motors Hornet 'Sportabout' with the 'X' and Rallye package, or my Chevy LUV 4x4 pickup or 4x4 Suburban, I would often have the opportunity to engage in a little spirited competition with the occasional BMW or Mustang, etc. Most of the time, I could climb their bumper in the curves, but I never once thought the Sportabout, LUV, or Suburban had the real means to actually be competitive in a competition on the track with the really capable cars that were engaged. It is just that most people can't utilize the capabilities of their vehicle or are not willing to push the limits on the street. If I saw someone who was pushing beyond their capabilities, crossing the center line, I backed off. Now days when in the twisties in my girlie Miata, and some kid climbs my bumper in his noisy FWD banger car, I just down shift a gear or three and let them watch me fade from their sight. Most don't engage again, as one embarrassment is usually enough to cool their jets.

  • Kcflyer but will it be direct injection only? If so, fool me once.......
  • THX1136 The current administration hoping the unwashed masses are not paying attention. A purely political move similar to the 'request' by Democrats that the Biden administration do something about the border issues prior to the election. Still won't vote for him OR the other guy this Nov.
  • Kwik_Shift_Pro4X .
  • Jkross22 https://www.energy.gov/ceser/strategic-petroleum-reservehere it is: "The Strategic Petroleum Reserve (SPR), the world's largest supply of emergency crude oil was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program."
  • Kwik_Shift_Pro4X Released or sold off to _________?