5k quid more to make a Turbo than a boxster
Discussion
So I have heard this from more than 1 OPC sales guy and wonder if it is just an urban rumour or is there truth to it.
the 911 is a halo model and justifies the pricing through prestige and product/market positioning but is the statement above true?
That is 1 hell of a markup... I know both cars share the same platform and cost efficiencies are possible but is the cost to build so similar?
The same question can be asked of the base panamera versus the turbo panamera. I wonder what is the difference in build costs.
the 911 is a halo model and justifies the pricing through prestige and product/market positioning but is the statement above true?
That is 1 hell of a markup... I know both cars share the same platform and cost efficiencies are possible but is the cost to build so similar?
The same question can be asked of the base panamera versus the turbo panamera. I wonder what is the difference in build costs.
SDoran said:
I believe it is true, I've heard the same figure from an auto analyst that covered Porsche.
Spot the city boys time.From memory the analyst report was posted in the FT and should still be there.
I think it was from 2008 and covered the VW/Porsche takeover and had analysis on a couple of models including the VW built Caynne.
I wouldn't take these figures literally.
IIRC, there was a casual comment in Autocar(?) a few years ago that suggested the 997 Turbo cost c.£6k to build. But I've never seen these figures substantiated, or the comparitive build costs of other cars.
Anyone who has done basic economics will know that the MCP (Marginal Cost of Production) is usually very small.
IIRC, there was a casual comment in Autocar(?) a few years ago that suggested the 997 Turbo cost c.£6k to build. But I've never seen these figures substantiated, or the comparitive build costs of other cars.
Anyone who has done basic economics will know that the MCP (Marginal Cost of Production) is usually very small.
Geneve said:
I wouldn't take these figures literally.
IIRC, there was a casual comment in Autocar(?) a few years ago that suggested the 997 Turbo cost c.£6k to build. But I've never seen these figures substantiated, or the comparitive build costs of other cars.
Anyone who has done basic economics will know that the MCP (Marginal Cost of Production) is usually very small.
This means that indeed, by buying the bigger engined models, we are in fact contributing to porsche's profit margins. I don't have a problem with that because the sum of parts could still be greater to the consumer which means despite spending more my marginal utility is still higher. I would probably just go with the smallest engined/sporty model that I can live with in order to maximise my marginal utility.IIRC, there was a casual comment in Autocar(?) a few years ago that suggested the 997 Turbo cost c.£6k to build. But I've never seen these figures substantiated, or the comparitive build costs of other cars.
Anyone who has done basic economics will know that the MCP (Marginal Cost of Production) is usually very small.
No chance.
Obviously it's not the difference between the retail prices of the two either, but it's never £5k.
The extra component parts on the turbo will see its way through £5k in the blink of an eye (turbos, intercoolers, driveshafts, diffs, etc etc), then there's the higher spec parts e.g. brakes etc.
Then you have spec/feature content....
Obviously it's not the difference between the retail prices of the two either, but it's never £5k.
The extra component parts on the turbo will see its way through £5k in the blink of an eye (turbos, intercoolers, driveshafts, diffs, etc etc), then there's the higher spec parts e.g. brakes etc.
Then you have spec/feature content....
It is my understanding that the manufacturing cost of the 996 Turbo was circa £28k.
Obviously this does not include research & development, marketing, distribution, sales etc etc.
A 5k difference between a 996T and a 986/987 is entirely believable.
MTR
PS - I know of at least one example (Mk1 Focus) of where the cheapest engine in the range (1.4) was actually the most costly to manufacturer.
Obviously this does not include research & development, marketing, distribution, sales etc etc.
A 5k difference between a 996T and a 986/987 is entirely believable.
MTR
PS - I know of at least one example (Mk1 Focus) of where the cheapest engine in the range (1.4) was actually the most costly to manufacturer.
Edited by mollytherocker on Sunday 5th February 21:15
anonymous said:
[redacted]
As the motoring journalist for the esteemed North West Legal News, I was given a tour of the TVR factory in 2000 and spent a joyous afternoon touring the Fylde coast in a yellow Cerbera with a TVR test driver. I subsequently spent some time with their press officer who claimed that ( at that time) a Boxster cost Porsche £12k to build and that TVR had rather more modest margins.Assuming a base cost of a boxster (exc vat and dealer costs) - £25,562
asumming profit margin of 10% per unit (c19% across all P models) - £25,562
a per unit Boxster cost of - £23,000 ish
expected delta between bringing a Boxster to market and a 997 Turbo (quoted as $10k USD) - £6,451
Cost to bring a 997 turbo to market = £29,451 per unit.
Profit per 997 turbo unit sold = £44,800 = 150% ish.
For once I get to add to a post where I feel comfortable I can add something with some substance behind it 
Used to work as a cost analyst for a major vehicle manufacturer..
I am not going to pretend that I know whether it is really £5k between a Boxster and 911 Turbo but here are some observations based on experience that may allow you to draw your own conclusions.
- Yes, bigger/pricier cars have much better margins than smaller/cheaper cars since the main extra component is metal ie same number of components just larger/smaller. You can set market price based on performance/brand but a 3.8l boxer will cost the same to make as a 3.2l boxer. As noted above, adding stuff like turbos adds cost but the price/cost ratio works very well in the favour of the manufacturer.
- The £5k thing is probably based on direct costs, as is my bullet above. There are of course development and tooling costs which need to be recouped. But this is why you see so much platform sharing these days to minimise those one-offs. Spinning a Cayman off a Boxster would incur investment but there is no doubt in mind that the total parts/manufacturing costs of a Cayman would be less than a Boxster since you have a sheet of metal in place of a complex roof mechanism but everything else is basically the same (besides how often have you seen a hardtop version of a car be priced above the softop version in any other model line up?!)
- While people focus on the extra cost of turbos etc. tooling costs for things like dashboards are often what really impact margins. So when you read the marketing stuff about the next Boxster saying 'hey look you get a dashboard reminiscent of the one in the more expensive Panamera. Isn't that great?!' now you know why..
- Options are what get manufacturers really excited. That Platinum Silver you just specced may well have cost only an extra £10 in the build process. You were going to get paint anyway, now you're getting some flecs of metal in it. No wonder most manufacturers brought out a metallic white when solid white suddenly became all the rage...
Used to work as a cost analyst for a major vehicle manufacturer..I am not going to pretend that I know whether it is really £5k between a Boxster and 911 Turbo but here are some observations based on experience that may allow you to draw your own conclusions.
- Yes, bigger/pricier cars have much better margins than smaller/cheaper cars since the main extra component is metal ie same number of components just larger/smaller. You can set market price based on performance/brand but a 3.8l boxer will cost the same to make as a 3.2l boxer. As noted above, adding stuff like turbos adds cost but the price/cost ratio works very well in the favour of the manufacturer.
- The £5k thing is probably based on direct costs, as is my bullet above. There are of course development and tooling costs which need to be recouped. But this is why you see so much platform sharing these days to minimise those one-offs. Spinning a Cayman off a Boxster would incur investment but there is no doubt in mind that the total parts/manufacturing costs of a Cayman would be less than a Boxster since you have a sheet of metal in place of a complex roof mechanism but everything else is basically the same (besides how often have you seen a hardtop version of a car be priced above the softop version in any other model line up?!)
- While people focus on the extra cost of turbos etc. tooling costs for things like dashboards are often what really impact margins. So when you read the marketing stuff about the next Boxster saying 'hey look you get a dashboard reminiscent of the one in the more expensive Panamera. Isn't that great?!' now you know why..
- Options are what get manufacturers really excited. That Platinum Silver you just specced may well have cost only an extra £10 in the build process. You were going to get paint anyway, now you're getting some flecs of metal in it. No wonder most manufacturers brought out a metallic white when solid white suddenly became all the rage...
Something else on this though.
While the extra margin on a 911Turbo may seem hard to justify, remember volume plays a role here ie the much lower volume of a 911Turbo over a Boxster means you have far fewer units over which to recover your investment. The net margin after this is factored in will balance things up a lot..
While the extra margin on a 911Turbo may seem hard to justify, remember volume plays a role here ie the much lower volume of a 911Turbo over a Boxster means you have far fewer units over which to recover your investment. The net margin after this is factored in will balance things up a lot..
anonymous said:
[redacted]
Yes it is, if you are interested in this sort of thing there is a leaked CFSB (as it used to be known) analyst report on google from 2003 which breaks it all down into percentages.From their last results, 19% profit margin per unit is the figure quoted and I think the average gross income per unit was around $71k USD - the highest in the industry by far.
good analysis Carl..
I can back you up on that 19% avg number. Most car manufacturers are in single digits... some even low single digits.
so that is entirely plausible. As explained by gl20, volume plays a very big part. you can't have exclusivity and low prices. Hence the cost of the new boxster. It is so attractively priced to shift high volumes. For the auto enthusiast who isn't concerned about exclusivity, this is a major coup... the great chassis, dash layout, same engineering for so little more.
why o why would you be buying a 911 cabrio other than to flaunt that exclusivity (nothing wrong with that at all. In some places, safety issues are a concern but in the UK generally, it is safe enough to show off your wealth)
I can back you up on that 19% avg number. Most car manufacturers are in single digits... some even low single digits.
so that is entirely plausible. As explained by gl20, volume plays a very big part. you can't have exclusivity and low prices. Hence the cost of the new boxster. It is so attractively priced to shift high volumes. For the auto enthusiast who isn't concerned about exclusivity, this is a major coup... the great chassis, dash layout, same engineering for so little more.
why o why would you be buying a 911 cabrio other than to flaunt that exclusivity (nothing wrong with that at all. In some places, safety issues are a concern but in the UK generally, it is safe enough to show off your wealth)
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