No one is on top forever. Even the Yankees lose. In fact, the Yankees lose quite often these days (and if there is any justice in this universe, the Dodgers will join them soon). Being a baseball fan is a great way to learn about humility. Another way is to be a car company executive.
When we first started publishing The Morning Dump, Porsche was still in a fairly enviable position. These days? There’s a little less to envy. The company has a plan, though, to get back to the good old days. The same could probably be said of CarMax, which has struggled to keep up with Carvana in the transition to online used car sales.
Uber has long wanted to transition to robotaxis, and is making deals wherever it can. In Las Vegas, this means making a deal with Zoox. That seems like a safer bet than the ones most people are used to making in Vegas. Credit availability has improved dramatically, as lenders seem to be willing to wager a little more on subprime buyers. Is that a safe bet?
How Many Derivatives Could There Be Above Porsche’s Current Lineup?
Porsche was really on top of the world a few years ago. It made a lot of cars in a few key segments. With the exception of the Taycan, most of those cars seemed to be of the high-margin variety. Or, at least, the high-margin SUVs the company was selling in places like China were enough to cover up any sins from the sports cars.
And then the world changed. I need a shorthand to quickly summarize the trio of impacts that have struck German car companies since the pandemic: Tariffs, BEV adoption slowing, and the loss of China. Der Horror? Maybe that’s too extreme.
Either way, Porsche has been dealing with that, and its Fiscal Year 2025 report starts with the bad news, which is that sales were down, revenue was down, and, thanks to BEV-related costs, profits were basically nil. Is it getting better this year? Barely. The brand needs a bigger vision, and the new CEO, Michael Leiters, has one:
“Since I took office, our management team has systematically analysed the situation and begun a series of initial targeted measures. These include the consistent application of our Value over Volume principle, especially in the difficult market environment of China; and the quality-oriented ramp-up of production of the all-electric Cayenne. We will streamline our management structure, reduce hierarchies and cut back on bureaucracy. We have also already begun to focus more strongly on our core business.” At the company’s annual press conference in Stuttgart, Michael Leiters emphasised: “We are using the current challenges as an opportunity to act even more decisively. We will comprehensively reposition Porsche, make the company leaner, faster and the products even more desirable.”
Leiters clearly expressed his own expectations of the company: “The name Dr. Ing. h.c. F. Porsche stands for the technical excellence of a sports car manufacturer. We stand for uncompromisingly good sports cars that you want to drive yourself, that are fun, that convey performance and passion. And all this regardless of the type of powertrain.” Seventy days after taking office in January, Leiters outlined the first concrete cornerstones of his Strategy 2035: “We are considering the expansion of our product portfolio in order to grow in higher-margin segments. In doing so, we are looking at models and derivatives both above our current two-door sports cars and above the Cayenne.” With a view to the capital market, he added: “With Strategy 2035, we want to lay the foundations for sustainably strong cash flow, strong results and margins that are appropriate for Porsche.”
That bolded bit is what I’m interested in right now. In the image at the top of this post, there’s probably the Porsche three-row SUV everyone expects. Think of it as a GLS/X7- fighter. It doesn’t sound like the brand wants to go below what it’s currently doing, so don’t expect a Miata-fighting sports car, sub-Taycan sedan, or a tiny hatchback city car.
What’s a higher-margin segment? Sure, there’s your large seven-seater SUV. What could go above the 911? Well, as Leiters said, there seems to be no end to the number of ways you can make a 911 more exciting and more expensive (Dakar, GT3 RS, R, et cetera). Porsche is great at making cars expensive. Not since the 918 has Porsche offered a true hypercar, and I’m not sure the Mission X is going to be it. Every Porsche CEO wants to make their own 959/Carrera GT, and Porsche as a brand can probably find someone to buy it.
Huge volumes don’t seem to be on the minds of Porsche execs right now. Instead, Porsche seems to be moving more in the direction of a Ferrari.
Activist Investors Eye CarMax Expansion
I feel like I talk about Carvana all the time, whereas OG national used car retailer, CarMax, barely gets any airtime. The fact that we’re not talking about CarMax all the time goes to show that the brand’s pivot into digital sales hasn’t gone well. That’s why the company has a new CEO (Keith Barr) and, it seems, some new investors. Specifically, activist firm Satboard Value LP has purchased roughly $350 million in company shares.
The activist investor has nominated its own CEO, Jeff Smith, to the CarMax board, along with Bill Cobb, the chairman and CEO of Frontdoor Inc., according to a statement Wednesday confirming an earlier Bloomberg News report.
Starboard supports Barr, who starts this month, and is optimistic the former InterContinental Hotels Group CEO can be a catalyst for change at CarMax, Smith wrote in a letter to Barr.
“The company’s recent performance has fallen well short of underlying potential,” Smith wrote. “We believe these problems are fixable. As such, we are excited about the announcement of your appointment as CEO.”
No pressure! Since Carvana has a vending machine, maybe CarMax can get a claw machine.
Uber Goes Zoox
I am obligated to remind everyone that our own Jason Torchinsky once called BS on Zoox as a company, only to have them turn around and name their robotaxis after his euphemism for the vehicles. Full credit to Zoox, they actually deployed robotaxis, and are currently in Las Vegas and San Francisco.
One of the challenges of being a new rideshare-type startup is that everyone has Uber and Lyft on their phone and not, say, the Zoox app. That’s why the news from Zoox that it’s partnering with Uber is such a big deal:
We’re excited to announce that Zoox is partnering with Uber to bring our robotaxi experience to Uber’s growing autonomy platform in select cities. As part of a multi-year agreement, a dedicated fleet of Zoox robotaxis will be available through the Uber app, beginning later this year in Las Vegas and next year in Los Angeles. We will continue to offer our service through the Zoox app, in addition to rides being available through Uber in those cities.
Because the Zoox folks have a good sense of humor, it’s the robotaxi firm I’m most excited to see do well.
Credit Availability Is Up (Thanks To More Subprime Loans)
I’ve been talking about this a lot lately, so apologies, but things aren’t going to go poorly unless they go really poorly. Carmakers are still making cars, and cars are still getting more expensive, meaning that something has to give. There are plenty of hyperwealthy people. Not all of those hyperwealthy people are going to buy six Honda CR-Vs. They’re going to buy one car that costs as much as six Honda CR-Vs.
This means that carmakers have to find a way to make it possible for more consumers to buy cars, and that’s where financing comes in. The term “subprime” has a negative connotation, even though there are plenty of reasons why consumers might find themselves with less-than-perfect credit ratings. I know a business owner who moved to this country and had trouble getting a car because he simply had no credit, even though he had plenty of money and very little debt.
According to Cox Automotive, credit availability has improved a lot, thanks in large part to subprime buyers. This could be fine, so long as everything stays fine:
Credit access continued to broaden in February, with improvement across all channels and lender types offering financing opportunities in both new and used markets. However, the underlying picture carries increasing caution. Record negative equity, a sharply rising subprime share, widening yield spreads, and loan terms at their highest level on record all point to elevated borrowing costs and greater long-term financial risk. Consumers should carefully consider the full terms of any financing offer, particularly total loan length and overall cost.
It’s worth keeping an eye on, at least.
What I’m Listening To While Writing TMD
You’re easily led, but you’re much too scared to follow
Tell’em Elvis Costello! It’s “You belong to me.”
The Big Question
What are the next two vehicles Porsche should build?
Top photo: Porsche
A new 912 and a new 914, clearly
Conspicuously absent from Porche’s CEO vision for revival are color-changing LEDs. They should get in on that.
Boo, parsh. Boo. If anything, they could do with some more cheaper Porsches. Bring the entry price of the Box/man back down to a true entry-level car. Bring back a stripped-down manual base 911. That’s how you a) get younger people hooked on the brand and b) survive when the bottom leg of the K in the K-shaped economy finally gets around to all of those pesky guillotines.
Seriously, though, there are only so many rich people and if their move is to expand into endless high-end specials, oof. That’s not good at the upper end, either. The last thing they need is a round of McLarenitis: the annoying phenomenon where when everything is a special edition, nothing feels special anymore and buyers lose interest. (I knew parsh hiring execs away from McLaren was a mistake!!!)
Anyway, if this interrupts my supply of classic parts, I’m gonna be mad. They’re probably the best brand when it comes to support for their older vehicles.
The only thing is that the more Porsche strips off of a car, the higher the price goes. They just can’t help themselves. They’d call it a “911 Purity Edition” or something and it would cost half a million dollars.
There’s probably a possibility for Porsche to encroach a bit into the Porsche restomod space, it’s clear people are willing to pay big money for classic Porsches that are restomodded. Imagine if Porsche themselves offered a restomods of a classic 911 with the underpinnings of a modern GT3. I’m willing to bet there would be some suckers, er, I mean customers willing to pay in the 7 figures range for such a car. A car to spec above the 911 but not quite as exclusive as a Carrera GT or a 918 makes some sense. Alternatively they could push into making a Porsche sedan/wagon that would compete in the space the M3/M2 or CT4/5 Blackwings do. This could create volume without needing to dilute the Porsche brand too much.
This is such an obvious play for them that I’m surprised they’ve deferred to Audi here for so long. It’s not as if the larger VAG has shied away from letting the two compete directly in other segments. Audi could be positioned as the luxury-tuned alternative, with Porsche the harder-edged driver’s car.
“This means that carmakers have to find a way to make it possible for more consumers to buy cars, and that’s where financing comes in. ”
Yeah, we can’t let affordable cars and/or financial literacy get in the way of unfettered capitalism. Let’s just recycle the same ol playbook and rely on the collective amnesia of the American consumer to wonder how it can all come crashing down.
Again.
I get there are situations, as mentioned, where “sub prime” loans are needed. Where there is a lack of credit but not risk. The reality is that it will quickly become no credit and all the risk to get vehicles because in the end there isn’t any choice to the consumer. Of course, so many make terrible choices anyway it will become self inflicted anyway.
(I stole this concept from a meme; it’s not an original thought)
Autonomous vehicles perform best on closed courses, with good weather and limited hazards. It seems that the ultimate place for AV should be NASCAR, F1, etc.
And yeah, the ZOOX taxis are all over Vegas. I really oughta try one sometime soon.
“I know a business owner who moved to this country and had trouble getting a car because he simply had no credit, even though he had plenty of money and very little debt.”
Does he not understand how cash works? Or that used cars exist?
Eff-it Porsche should just build a 1 ton pick up, why not.
It only makes sense for Porsche to move upwards.
If there’s one thing rich people have, such as those who can afford new Porsche 911GTs, it’s money.
So, instead of VW selling them a hideous Bentayga that makes you look like you’ve got no taste: they can get a stretched Cayenne that makes them feel hip & sporty.
Get more bang for your buck, and no one notices another 10-20% buried into it from a new tax/tariff/whatever-are-we-calling-broken-trade-agreements-today?
I wanna see Porsche make their own rendition of the Citroen Ami.
Then they should make a Porsche truck.
The Porsche version of the Citroen Ami already exists. It’s called the Volkswagen Beetle. 🙂
The beetle is nearly twice the size of an Ami. That’s like saying “Ford already makes a Jimny, the Bronco!”
I’m mildly surprised that Porsche hasn’t done a truck.
They could go headfirst into making a Dakar-cruiser/Prerunner absurdity for obscene money, and sell them all. It doesn’t actually need to be any more practical than a 911’s vestigial rear seats.
A Porsche truck would definitely be a new, high-margin product.
I mean, the Cayenne drivetrain is just begging to be crammed into a unibody truck chassis.
“make a Porsche truck”
And GM should cash in on that with a new Corvair.
Matt didn’t ask for products that would sell. Just what I think they should make.
You don’t think GM should make a new Porsche beating line of Corvairs?
I don’t know what Porsche can do to fix things. But a handy name to describe their problems is something like TarrBattChin, which covers all three of the issues affecting them…:)
I guess CarMax never recovered from selling that warranty on Doug’s Range Rover.
The one thing customers and enthusiasts really love is when manufacturers take their most iconic model and turn it into a sub-brand. Bring on the 911 Cross, a spacious yet sporty compact crossover, and the 911XT, the only pickup that has the soul of a Porsche.
911 Cross, if it were a more accessible safari-type build, could be appealing. Do the same to the Panamera while you’re at it!
That BMW M3 pickup one-off/design study from like 2009 still generates clicks. I think you’re on to something with the 911XT idea
I personally think the Safari thing is beyond played-out at this point, but Porsche should absolutely be doing more with the Panamera. They finally made it good and not ugly and it feels like they’re content to just let it whither on the vine.
Porsche should start/keep designing a 918 successor, and do more with the Panamera as the Arch Duke suggested.
A coupe/convertible based on the Panamera, basically a Porsche version of the Continental GT, and the new internal combustion engine powered Macan needs to come ASAP
I don’t think this is going to work for Porsche. Every single manufacturer has been trying to find new and exciting ways to cater to the people that are destroying the world and it’s resulted in an endless sea of boutique products for them. Porsche is also a standard choice of the “old money” type of crowd that tends to prefer to be a little less conspicuous.
That’s long gone. There is no consumption that is too conspicuous in end stage capitalism/the social media era. There really aren’t inconspicuous luxury buys anymore outside of Audi, and they’ve gone so inconspicuous their vehicles are a sea of nothing design wise. Anyway Porsche is overplaying their hand here.
They see themselves as god’s gift to automative engineering (how very German of them!) but what nouveau rich tech bro is going to choose a $500,000 Porsche over a McLaren? Or a Ferrari? Or a Lamborghini? And when it comes to the Uber Cayenne who out of that gross crowd is going to choose it over a Cullinan? Or a Bentayga? Hell goddamn Aston Martin and Ferrari have SUVs now.
Porsche has a lot of brand cache but I genuinely don’t think they have enough to succeed in that realm outside of boutique hypercars, which are not money makers. Porsche has the snooty rich reputation now, but it hasn’t always been that way. Don’t get me wrong-they were never cars for the common folk, but they were cars that the common folk could aspire to.
Not all that long ago it wasn’t that unusual for an upper middle class person to have a Boxster or used 911 in the garage…and before then Porsche obviously had success with cars that had humble bones like the 914, 924, 944, etc. They weren’t ground up Porsches, but they became Porsches and folks learned to love even the oddballs.
All of that is gone. Rich assholes have ruined it for everyone else, as is tradition. You really can’t aspire to own one at this point unless you have a seven figure plus net worth or want to lease a shitty base Macan. Is that a problem for Porsche? Maybe, maybe not. But line not go up and it’s a problem.
I don’t think stretching their already straining brand equity to the edges of the universe is going to work as well as they do. But I’m a doofus on a blog who’s salty that his Porsche dream is fading, so what do I know?
And …. Porsche should make a hot hatch. $40k. AWD. 2 door. A sports trim and a practical trim.
Preach. I do think there’s appetite for a parsh hypercar (the Carrera GT and 918 were hits for good reason), but it’s not going to save the company by any stretch. Their brand IS a halo without the need for a halo car, and I think it’d be better suited if they went for more volume at the lower end of their portfolio. Sonderwunsch can’t be that much of a money-maker, but moving Macans off the lot likely is. The Cayenne is what saved their butts last time, for Pete’s sake.
The Cayenne was another semi-attainable volume seller that wasn’t a “pure” Porsche, as it was developed on the shared VAG platform that also underpinned the Tuareg. Everyone scoffed at the time, and 20 years later it’s widely regarded as an icon/excellent Parsh. The original ones are widely sought after for off road and overlanding builds.
The other thing that contributed to saving the flailing, halo product obsessed Porsche was…that’s right! The Boxster. “Cheap”, “not a real Parsh”, “hairdressers car”, etc. Now it’s an icon that they shove the GT3 engine in and everyone loves it.
We don’t need more boutique sports cars, Porsche already makes approximately 900 different 718 and 911 variants. We need something within reach of regular people…even if it’s a far reach.
I think Porsche should build a luxury electric minivan. Nobody’s done that yet, right?
And since it is two vehicles also a luxury electric truck.
Pretty sure that would just end up being a lightly restyled VW Buzz with some alcantra, leather, piano back, slathered with illuminated Porsche badges inside and out and a mid six figure ask.
Being a baseball fan is a great way to learn about humility.
Lion’s fans say hold my Stroh’s. Looks around. “Where’d it go?”
A Miata priced Porsche. They should focus on volume to keep all their faltering VW plants busy.
Time for a new 924?
I’m for it.
A modern day 912. Just toss a the Tsi engine in a stripped down 911. No options for anything but the interior. You get Manual or paddles, and you get your choice of cloth. Cut out the tech, RWD only, and slap basic brakes on it. Parts bin it up and see how much you could save.