Porsche IPO - good for the consumer?

[VChenz]

I'm sure you have all read that Porsche is going public.

With having to now line the pockets of shareholders do you think Porsche will be forced to now increase production so everyone who wants a Porsche will get one? If I had stock in a company, I would want that company doing everything it could to bring in more revenue and there is only so much mark up you keep asking for on limited production.

I don't know enough about what happens behind the scenes at Porsche but I always felt they were leaving 100s of millions of dollars on the table by not selling everyone a GT3 who were willing to pay MSRP. I hear stories of people waiting a full model generation before getting an allocation or having to take one off the heavily inflated secondary market. Don't get me started on 2 year old 911 S going for 200K! IMO, all of their pricing has had to move upwards to stem off some of the demand, but by having fewer cars in the market they reduce service revenue, used car inventory to resell, etc.

What are your thoughts?

[Alfisti]

I think it's good for the folks who own one now because the market will get diluted with cheaper models (as you outlined, to maximise profit) and at the same time the classic 911 line will see price rises.

[chassis]

Look to the bigger picture. VW is raising capital via the Porsche IPO so that the EV transition can be financed. Big R&D and fixed asset investments are needed from carmakers to get to the EV future state.

Especially so for a German company, where the home country culture is not conducive to mass layoffs, as are socially acceptable at some level in the U.S. Large numbers of employees and significant machinery and buildings would be made redundant in the EV transition. Because VW doesn’t have the same flexibility as say, Ford, VW will not simply cut the employees or close the old ICE operations. They will retool the facilities and retrain the workers. This costs huge dollars (Euros).

I don’t see Porsche going the MB route and attempting to put a car in every driveway with cheap crummy models (A-Class, CLA, GLA, GLB).

My view is the Porsche IPO affects no one except the VAG balance sheet.

[dgoldenz]

Porsche is extremely good at brand building and managing supply and demand. I don't think anything significant will change.

[M3WC]

If an IPO means they will meet demand for GT models, then bring it on. I don't care about resale value. People would like to be able to get a GT model without an adm and/or waiting on a list 50 customers long.

[dgoldenz]

Originally Posted by M3WC

If an IPO means they will meet demand for GT models, then bring it on. I don't care about resale value. People would like to be able to get a GT model without an adm and/or waiting on a list 50 customers long.

Seems unlikely. Porsche limits production on purpose. They know exactly what they’re doing.

[440i6MT]

I don't know, but I'm buying.

I can say that I finally own my own Porsche.

[Mike00]

Originally Posted by dgoldenz

Seems unlikely. Porsche limits production on purpose. They know exactly what they’re doing.

The thing is Shareholders will press for profits. The long term devaluing of the brand won’t matter for short term. Think of all the companies that make short term profit decisions even though in 7 years it will hurt.

It’s hard to see how porsche does not get itself into that position.

[chassis]

The Porsche and Piëch families will retain control. The Board is more or less hand chosen by the families. Shareholders' voices will never be heard, in practice. I haven't looked into VAG ownership but given the control positions of the families, even institutional investors would not be able to force change.

[Mike00]

Originally Posted by chassis

The Porsche and Piëch families will retain control. The Board is more or less hand chosen by the families. Shareholders' voices will never be heard, in practice. I haven't looked into VAG ownership but given the control positions of the families, even institutional investors would not be able to force change.

Depends on what % of control they hold in public company. Otherwise it won’t play out that way.

[RM7]

Originally Posted by chassis

The Porsche and Piëch families will retain control. The Board is more or less hand chosen by the families. Shareholders' voices will never be heard, in practice. I haven't looked into VAG ownership but given the control positions of the families, even institutional investors would not be able to force change.

Naïve.

[chassis]

Originally Posted by RM7

Naïve.

And?

[Theruleslawyer]

Shareholders will force engineering decision based on 'value'. It will impact their reputation long term.

[dgoldenz]

Originally Posted by Mike00

The thing is Shareholders will press for profits. The long term devaluing of the brand won’t matter for short term. Think of all the companies that make short term profit decisions even though in 7 years it will hurt.

It’s hard to see how porsche does not get itself into that position.

Porsche maintains its brand loyalty/image and demand based on limiting supply. If everyone can buy a GT3 at MSRP easily then used values would tank and damage the brand. They know what they’re doing and they’re extremely proficient at it. Shareholders would be killing the golden goose by trying to change their approach.

[Cos270]

Originally Posted by dgoldenz

Porsche maintains its brand loyalty/image and demand based on limiting supply. If everyone can buy a GT3 at MSRP easily then used values would tank and damage the brand. They know what they’re doing and they’re extremely proficient at it. Shareholders would be killing the golden goose by trying to change their approach.

I think you may be giving more credit to the intelligence of share holders than is due.

[Mike00]

Originally Posted by dgoldenz

Porsche maintains its brand loyalty/image and demand based on limiting supply. If everyone can buy a GT3 at MSRP easily then used values would tank and damage the brand. They know what they’re doing and they’re extremely proficient at it. Shareholders would be killing the golden goose by trying to change their approach.

Long term vs short term gains. It takes awhile break a brand. And the reality is they will care about the profits short term.

Additionally, judging by say the the current generation Vette, I actually think Porsche is leaving some money on the table in some aspects - i.e. GT4 or GT4 RS even - I think it would be interesting to see how many bought them if they were a bit more available. I have a feeling it’s a lot more revenue than people realize.

Hell people said the same about BMW but their revenue is up quite a bit. MB also. It’s actually a proven model whether people here like it or not.

[zx10guy]

I've observed this very thing happen with high end audio. Many once great marques have been dropped into the toilet due to shareholder pressures or are totally gone. Not saying Porsche will disappear but the probability there will be changes which won't be for the better is pretty high.

I've also worked in a large company which was public, then went private, and now is public again. I can say decisions made when under the public umbrella were definitely steered by shareholder pressures. Also, managers that make strategic and significant decisions were either added or thrown out due to shareholder, quarterly report pressures.

[M3WC]

Originally Posted by zx10guy

I've observed this very thing happen with high end audio. Many once great marques have been dropped into the toilet due to shareholder pressures or are totally gone.

A lot of those brand names where sold to highest bidder and are now used to label sh*t products.

[heavyD^2]

Originally Posted by Theruleslawyer

Shareholders will force engineering decision based on 'value'. It will impact their reputation long term.

This is the part that would worry me as there will likely be pressure to increase sales. That said it may be a good stock to buy and hold as it seems Porsche is in a better place now than it's ever been when you look at how good their products are and their overall sales growth as consumers love their SUV's. I don't care if they add a mid-size SUV to meet increasing sales demands as long as they aren't pressured into offering entry level vehicles.

[Theruleslawyer]

Originally Posted by heavyD^2

This is the part that would worry me as there will likely be pressure to increase sales. That said it may be a good stock to buy and hold as it seems Porsche is in a better place now than it's ever been when you look at how good their products are and their overall sales growth as consumers love their SUV's. I don't care if they add a mid-size SUV to meet increasing sales demands as long as they aren't pressured into offering entry level vehicles.

Im thinking more that they will make a part plastic that previously would be aluminum because the plastic one will last the warranty. There are a lot of places where you can do it right or do it to maximize profit. Im sure the stock will be okay, but there will be more parts to replace if you really want to track it and i bet long term reliability and resale on new ones will take a hit for it.

[Germanauto]

One can only hope this will have minimal impact. But shareholders will always push for growth and if the stock isn't performing, the execs will be ousted. That naturally leads to companies making non-engineering driven decisions. In contrast, Porsche has always been an engineering-focused company.

I don't feel good about this. Would hate to see Porsche become diluted like BMW has.

[Donatello.]

Originally Posted by chassis

The Porsche and Piëch families will retain control. The Board is more or less hand chosen by the families. Shareholders' voices will never be heard, in practice. I haven't looked into VAG ownership but given the control positions of the families, even institutional investors would not be able to force change.

Shareholders will be heard