What determines the price of a new car?
Discussion
It is a question I have been asking myself for a long time now (apologies now if it is a bit waffly).
There is so much discussion about NEW cars and and their values that I wanted to open a discussion on what people think makes a new expensive car worth what it is. Or what makes a new car 'good value'?
The general consensus on the new Turbo S is that it is not 'worth' £ 140,000. Compared to what? In subjective terms it is much better value than the current Gallardo or V12 vantage as it is new and has cutting edge technology. But it is not 'worth' £140,000 because the interior is no different to a car at less than half its value and it doesn't 'look' like a car worth £ 140,000. The Mclaren and 458 give you all the above but are nearer £ 200,000 new so are these good value evn though they are less practical?
Compared to a (e.g.) new Golf GTI the Turbo S is terrible value. Even compared to an Audi RS6 where for 2/3 of the price you get a much more versatile car with 'similar' performance it is bad value. I have no idea what build costs are for different cars but I would think the build cost for an RS6 and Turbo S are similar, So why is the Porsche so expensive? And why is the GT3 seen to be better value - it is still £120,000 for a similar specced car.
How about an Aventador? Is this worth double a Turbo S? Surely it costs a similar amount to build - but would we say it is too expensive? I mean much of the interior is taken from an R8. Are you getting better value for money relative to a Porsche or worse value for money? Or is it just so expensive to make it exclusive. Or is it just because not many are sold?
And would you say a Turbo S is better value than a Sport Classic? Both are the same price. Surely the Turbo S is better value? Or is it?
So to summarise, for a > £100,000 car, where do people list the following in order of importance:
1) Performance?
2) How it looks on the road?
3) Interior quality and originality?
4) Resale value?
5) A car that gives you pleasure even when you are not driving it (like an object of art)
6) How it sounds?
7) Useability?
8) Exclusivity?
No rational person would spend more than £30,000 on a new car - but many of us do.
There is so much discussion about NEW cars and and their values that I wanted to open a discussion on what people think makes a new expensive car worth what it is. Or what makes a new car 'good value'?
The general consensus on the new Turbo S is that it is not 'worth' £ 140,000. Compared to what? In subjective terms it is much better value than the current Gallardo or V12 vantage as it is new and has cutting edge technology. But it is not 'worth' £140,000 because the interior is no different to a car at less than half its value and it doesn't 'look' like a car worth £ 140,000. The Mclaren and 458 give you all the above but are nearer £ 200,000 new so are these good value evn though they are less practical?
Compared to a (e.g.) new Golf GTI the Turbo S is terrible value. Even compared to an Audi RS6 where for 2/3 of the price you get a much more versatile car with 'similar' performance it is bad value. I have no idea what build costs are for different cars but I would think the build cost for an RS6 and Turbo S are similar, So why is the Porsche so expensive? And why is the GT3 seen to be better value - it is still £120,000 for a similar specced car.
How about an Aventador? Is this worth double a Turbo S? Surely it costs a similar amount to build - but would we say it is too expensive? I mean much of the interior is taken from an R8. Are you getting better value for money relative to a Porsche or worse value for money? Or is it just so expensive to make it exclusive. Or is it just because not many are sold?
And would you say a Turbo S is better value than a Sport Classic? Both are the same price. Surely the Turbo S is better value? Or is it?
So to summarise, for a > £100,000 car, where do people list the following in order of importance:
1) Performance?
2) How it looks on the road?
3) Interior quality and originality?
4) Resale value?
5) A car that gives you pleasure even when you are not driving it (like an object of art)
6) How it sounds?
7) Useability?
8) Exclusivity?
No rational person would spend more than £30,000 on a new car - but many of us do.
The price of a car is never easy to work out. Some cars have massive R&D costs, which in turn makes almost no profit - sometimes a loss!
But the brand image is driven by these halo models, and even if there are losses at the top - they make gains at the bottom.
Its also why its cheaper to build say a 500+bhp saloon based on an existing car i.e RS/AMG/Alpina than to build it from the ground up like Ferrari etal.
Porsche are in the middle - hence the price is the middle ground.
You get a lot of car for your money in any 911 turbo - or any 911 for that matter.
But the 911 has that "something special" that even the new ones still carry over. That is worth a lot!
McLaren found this out the hard way with their first shot at the 12C and had to make some fairly quick changes to the set up and the exhaust.
IYSWIM.
But the brand image is driven by these halo models, and even if there are losses at the top - they make gains at the bottom.
Its also why its cheaper to build say a 500+bhp saloon based on an existing car i.e RS/AMG/Alpina than to build it from the ground up like Ferrari etal.
Porsche are in the middle - hence the price is the middle ground.
You get a lot of car for your money in any 911 turbo - or any 911 for that matter.
But the 911 has that "something special" that even the new ones still carry over. That is worth a lot!
McLaren found this out the hard way with their first shot at the 12C and had to make some fairly quick changes to the set up and the exhaust.
IYSWIM.
Porsche fail for me on expensive cars due to Interior quality and originality.
you can buy a base level Boxtser add leather and it's the same as a 140k top on the line Porsche.
One reason I did not buy a R8 was my TTRS was nicer inside due to newer design. yes the TTRS is never going to be a R8
But when I went to buy a R8 you may as well be in a A4 (gated box aside).
Now go and sit in a Ferrari, it all feels and looks new and sexy, an F430 does not have a cheap Ferrari to copy, so it is what it is.
so if you own a Boxster then go for a test drive in a 991 you don't feel you are getting value as you would not know what car you are in.
Does that make the Boxster great value or a 911 poor value ?
you can buy a base level Boxtser add leather and it's the same as a 140k top on the line Porsche.
One reason I did not buy a R8 was my TTRS was nicer inside due to newer design. yes the TTRS is never going to be a R8
But when I went to buy a R8 you may as well be in a A4 (gated box aside).
Now go and sit in a Ferrari, it all feels and looks new and sexy, an F430 does not have a cheap Ferrari to copy, so it is what it is.
so if you own a Boxster then go for a test drive in a 991 you don't feel you are getting value as you would not know what car you are in.
Does that make the Boxster great value or a 911 poor value ?
When I used to work in manufacturing the base models were effectively made and then sold at cost as this is what the market could stand. R&D costs, assembly, and advertising costs are way beyond what most people imagine. It was the higher end models that made the money, and the whole enterprise profitable as a result. This is why so many have ventured into clothing and accessories as the margin is so great.
When I used to work in manufacturing the base models were effectively made and then sold at cost as this is what the market could stand. R&D costs, assembly, and advertising costs are way beyond what most people imagine. It was the higher end models that made the money, and the whole enterprise profitable as a result. This is why so many have ventured into clothing and accessories as the margin is so great.
mollytherocker said:
The market determines the price of a car unless you can create a market.
The car is designed, costed and built around that.
I think this is most accurate tbh.The car is designed, costed and built around that.
When it comes to that sort of price point I simply don't believe that it accurately reflects R&D & manufacturing costs.
A car being £140k is as much about positioning it as an exclusive aspirational product as it is paying back R&D costs. At that level the numbers are very carefully thought about - ultimately Porsche will have done research to determine what market exists for a £140k car, and whether they would stand to gain more sales & brand value positioning it there than, say, £100k.
Also a 911 is no Veyron, and whilst it seems suspiciously widely reported that VW lose money on each Veyron (the pessimist in me would argue that this is part of the PR as well) Porsche have plenty of experience with 911s, and the R&D & manufacturing costs of the 911 Turbo S are spread across several models that share the same platform.
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