Report: Porsche Raising Prices Across the Board
Porsche will reportedly be raising prices between 4 and 8 percent on the European and U.S. markets during the second half of 2023 to cope with higher operating costs noted in its first-quarter earnings announcement. Even so, higher-end brands appear to be doing fairly well at present, and Porsche itself noted that operating profits rose to €1.84 billion ($2.03 billion USD) while revenue increased to €10.1 billion in Q1 — which is about 25 percent higher than they were last year.
Unless you’ve been in a coma for the last few years, you’ve undoubtedly noticed that automotive pricing has gone off the rails. While the dollar has certainly gotten weaker, we’ve also seen dealerships going crazy with markups and manufacturers exploiting limited production volumes in the hopes of expanding their profit margins.
Tesla has been tweaking its pricing nearly every month to make the most of the changing regulatory landscape for electric vehicles, ensuring that it can take full advantage of government subsidies, and has even slashed MSRPs on a few models. But the general trend across the industry has been to reduce overhead (layoffs, streamlined production, de-contenting, etc.) while raising vehicle pricing and trying to leverage connectivity into higher profits.
Excuses for the industry’s behavior have included the pandemic, overtaxed supply chains, and semiconductor shortages that just don’t seem to end. Inflation also has become a problem. However, it really just feels like businesses are trying to suck the marrow out of consumers' bones.
According to BNN Bloomberg, Porsche CEO Lutz Meschke said that prices could increase by as much as 8 percent on certain models. The company likewise said it anticipates base pricing for its electric vehicles to be between 10 and 15 percent higher than the corresponding internal combustion engine models.
From Bloomberg:
“The expectation when it comes to the BEV transition is that we can achieve a very high price premium,” Meschke said.
Porsche, which reiterated its 2023 guidance that margins would stay in a range of 17 [percent] to 19 [percent], said its return on carmaking was 18.2 [percent] in the first quarter.
Automakers are still getting a boost from pent-up demand after supply-chain issues capped output, though uncertainty about global demand persists. Stellantis NV’s first-quarter sales climbed more than expected thanks to strong vehicle prices and higher shipments of models like the Jeep Compass.
“The key thesis on Porsche is that they can push pricing in this environment,” Bernstein analyst Daniel Roeska told the outlet. “If that’s not happening, that’s the worry.”
Shares of the German automaker fell as much as 3.6 through the first part of 2023. Analysts have claimed that investors are watching for aggressive price increases. Porsche has likewise been talking about going more upmarket to compete with the likes of Ferrari.
[Image: Peter Mati]
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Consumer advocate tracking industry trends and regulations. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied, he pivoted to writing about cars. Since then, he has become an ardent supporter of the right-to-repair movement, been interviewed about the automotive sector by national broadcasts, participated in a few amateur rallying events, and driven more rental cars than anyone ever should. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and learned to drive by twelve. A contrarian, Matt claims to prefer understeer and motorcycles.
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"However, it really just feels like businesses are trying to suck the marrow out of consumers' bones."
OK, Bernie. As if businesses just discovered they can raise prices. These prices wouldn't hold if people weren't paying them.
In actual fact, it's the government that's sucking the marrow out of your bones by printing an endless supply of fiat currency, and transferring it to the unproductive.
Sehr geehrter Herr Meschke,
I am poor and unsuccessful (source: my parents). I live in an undesirable area of the country (source: TTAC comments) surrounded by not very intelligent people (source: CNN).
Drove 250 miles this past weekend and ran across a few of your Porsche minivans -- I mean SUV's. This surprised me and should alarm you.
You should raise the price more -- a lot more. Because when your vehicles cross paths with me, you are not Premium.
Mit freundlichen Grüßen, T.G.