Tariff anxiety . . .

[dgkhn]

Having no idea if this is right, what If the cars are sold for $100k and that is 40% profit, and they leave all of that profit margin to the dealers to deal with, it seems to me the tariff is 25% of $60k. much more manageable.

First, I would say, not manageable. Second, they could leave more of the profit in PCNA, which I believe is the importer technically, but then what? In any case, this would be nibbling at the edges. The point is, if your business is constructed around x profit margin, and you suddenly lose 2/3 of that, it's not sustainable.

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[dgkhn]

Whatever the presumed benefit might be, there are many problems with these tariffs, including their magnitude, their arbitrary nature, and their suddenness. They create an incredible amount of uncertainty, and they lend themselves to corrupt manipulation (playing favorites). They make doing business in the US undesirable (which Trump might think is a feature, not a bug, but that is a humongous gamble).

 

[bennksy]

Assume dealer margin is 10%, PAG margin is 20%.

MSRP: $100k
Dealer invoice: $90k
PAG to PCNA COGS: $72k -> tariff base.

Scenario 1: If PAG & dealer pass tariffs to consumer,
COGS w/ tariff: $72k * 1.25 = $90k
Dealer invoice: $90k*1.2=$108k
MSRP: $108*1.1 = $119k

Scenario 2: If they absorb some of it, so dealers don’t get burned with immovable inventory
Dealer invoice: $90k*1.1 =$99k (PAG margin cut by half)
MSRP: $99k*1.05 = $104k (dealer margin cut by half)

The margin % and structure are just my guesses, but in principle Porsche and dealers are likely figuring out how much tariff should they absorb for this shipment so dealers don’t get burned - scenario 2.

 

[dgkhn]

Assume dealer margin is 10%, PAG margin is 20%.

MSRP: $100k
Dealer invoice: $90k
PAG to PCNA COGS: $72k -> tariff base.

Scenario 1: If PAG & dealer pass tariffs to consumer,
COGS w/ tariff: $72k * 1.25 = $90k
Dealer invoice: $90k*1.2=$108k
MSRP: $108*1.1 = $119k

Scenario 2: If they absorb some of it, so dealers don’t get burned with immovable inventory
Dealer invoice: $90k*1.1 =$99k (PAG margin cut by half)
MSRP: $99k*1.05 = $104k (dealer margin cut by half)

The margin % and structure are just my guesses, but in principle Porsche and dealers are likely figuring out how much tariff should they absorb for this shipment so dealers don’t get burned - scenario 2.

I'm sure there are some very smart folks working on this at PAG and PCNA, but to some extent we are in uncharted territory.

You folks who have cars on order, tell me: how much of a price increase will you tolerate and still take the car? 5%? 10%? And those of you who are considering or planning on ordering, how much of a price increase will change your mind? And then again, what will you get instead, if everything is going up? Will you put off buying a car, buy a cheaper car, buy a used car? What if you expect the tariffs to go away in 3 or 6 months? What will the competition do?

So many moving pieces!

 

[dgkhn]

I'm sure there are some very smart folks working on this at PAG and PCNA, but to some extent we are in uncharted territory.

You folks who have cars on order, tell me: how much of a price increase will you tolerate and still take the car? 5%? 10%? And those of you who are considering or planning on ordering, how much of a price increase will change your mind? And then again, what will you get instead, if everything is going up? Will you put off buying a car, buy a cheaper car, buy a used car? What if you expect the tariffs to go away in 3 or 6 months? What will the competition do?

So many moving pieces!

Just thinking about this: in some ways it might be like when Covid hit. What could happen is everyone gets frozen in place. If you KNEW the tariffs would stay in place, then you could act accordingly. Having no idea, the safest thing is to do nothing...buy nothing. What happens when everyone starts to think that way? And then if the tariffs are removed quickly, who will ever believe anything this administration threatens next? This might be a real deep rabbit hole.

 

[bennksy]

I'm sure there are some very smart folks working on this at PAG and PCNA, but to some extent we are in uncharted territory.

You folks who have cars on order, tell me: how much of a price increase will you tolerate and still take the car? 5%? 10%? And those of you who are considering or planning on ordering, how much of a price increase will change your mind? And then again, what will you get instead, if everything is going up? Will you put off buying a car, buy a cheaper car, buy a used car? What if you expect the tariffs to go away in 3 or 6 months? What will the competition do?

So many moving pieces!

I will not take the car if it's above the MSRP i received. Considering the uncertain economics outlook and high chance of a recession, i was hoping to get 3%-5% off of MSRP before tariffs hit.

 

[dgkhn]

I will not take the car if it's above the MSRP i received. Considering the uncertain economics outlook and high chance of a recession, i was hoping to get 3%-5% off of MSRP before tariffs hit.

One thing carmakers could do, especially Porsche, is play with the leases. Porsche could, for example, lower the money factor and raise the residual, to make the leases seem acceptable. That would kick the can down the road a bit, for those who would consider leasing. On the EV's, there's still the EV credit on leases, which is say 5-8% of the car's MSRP, so maybe that gives some room for as long as that lasts. That's free money (sort of an anti-tariff).

 

[SupremeHustle]

They haven't killed the EV credit yet? I'm actually shocked.

 

[fubar.droid]

I'm sure there are some very smart folks working on this at PAG and PCNA, but to some extent we are in uncharted territory.

You folks who have cars on order, tell me: how much of a price increase will you tolerate and still take the car? 5%? 10%? And those of you who are considering or planning on ordering, how much of a price increase will change your mind? And then again, what will you get instead, if everything is going up? Will you put off buying a car, buy a cheaper car, buy a used car? What if you expect the tariffs to go away in 3 or 6 months? What will the competition do?

So many moving pieces!

I'm not planning to pay a dollar more than my purchase order. Okay maybe a dollar more but definitely not two dollars more. I plan to stop purchasing anything that is not a necessity while Trump plays this game and just save my money. At the rate it's going, everything will be half off (in the stock market) in a year.

 

[dgkhn]

I'm not planning to pay a dollar more than my purchase order. Okay maybe a dollar more but definitely not two dollars more. I plan to stop purchasing anything that is not a necessity while Trump plays this game and just save my money. At the rate it's going, everything will be half off (in the stock market) in a year.

I didn't think of that… Save all your money to invest in the crashed stock market! Unfortunately, though perhaps Porsche drivers have options like that, most people don't.

 

[Wivenhoe]

I think the point about the leasing could ease the pain for Porsche. On the basis the tariffs are going to make used car prices higher, then as suggested, they could increase the end residual and kick the can down the road.

Here in the UK, the opposite has happened. As the EV market has crashed the finance houses are suffering as cars at the end of the lease \ PCP’s are realising far less than the residuals assumed, so cars are being returned and they are facing losing £ ‘000’s on every car. One company that provides cars for ‘disabled’ drivers had to write off £ 500m+ and VAG are rumoured to be facing losses far greater. As Porsche are the largest shareholder in VAG they will be taking a bit hit too.

 

[Postesla]

I'm sure there are some very smart folks working on this at PAG and PCNA, but to some extent we are in uncharted territory.

You folks who have cars on order, tell me: how much of a price increase will you tolerate and still take the car? 5%? 10%? And those of you who are considering or planning on ordering, how much of a price increase will change your mind? And then again, what will you get instead, if everything is going up? Will you put off buying a car, buy a cheaper car, buy a used car? What if you expect the tariffs to go away in 3 or 6 months? What will the competition do?

So many moving pieces!

My order shifted to step 4 yesterday (mfg start). I will pay my agreed price when I ordered…or someone else will enjoy my configuration. I will not concede any support to the idiocy of this policy or the joker who declared it.

 

[ze_shark]

Just in case it proves useful to some, the reality of the Porsche P&L.
2024 gross margin 25.8%
2024 operating margin 14.1%

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