00:00Porsche shares P911 at GY remain under pressure as the carmaker moves to cut the number of models
00:07it produces. Porsche's new CEO says the portfolio has become too complex. We're joined by Bloomberg's
00:14Detroit bureau chief, David Welch. And David, I guess they have the Panamera, the Taycan,
00:20the Cayman, the Boxster, the 911, the Macan, and the Cayenne. So that's seven by my count.
00:28What are we looking at in the future? I'm not sure if it's necessarily models. They have a lot of
00:35trim levels for each one of those models, which is a lot of manufacturing complexity. I mean, if you
00:40wanted to trim one, do you need, you know, all the sports cars that they have given the size of
00:46the
00:46sports car market? I mean, they would have to keep the 911 because it's the name, it's iconic.
00:51But do they trim some of those other, you know, smaller sports cars that are expensive toys for
00:57people? Maybe. But I think there's probably a lot of complexity, just trim levels, different options
01:04and things. And maybe they start to cut that, but they just don't have enough volume, especially
01:09given their global issues, right? It's very difficult and expensive now to export to the U.S.
01:15The China business is tough. The Chinese don't really want foreign automakers having a big presence
01:20there. If you do, if you're going to play in China, and General Motors has realized this,
01:25you have to export from China to other countries. The Chinese market just has too much capacity. But
01:30if you're willing to export and keep people employed there, the government will kind of let
01:33you keep going that way. So Porsche has struggled there, too. And what you're seeing are a bunch of
01:38methods to cut costs and kind of maintain their earnings while they figure out how to try and
01:43grow this thing again.
01:44How much pressure do you think, David, they're getting from Volkswagen? Because isn't Porsche
01:49traditionally like the crown jewel of the group?
01:53It is. Look, the luxury business makes a lot of money. And Porsche is, you know, one of the,
01:58it's creme de la creme of the luxury business here, because they do sell expensive cars. And
02:04they're actually in pretty decent numbers. This isn't like Bentley or something where you're
02:07talking a few thousand vehicles a year around the globe. They've got pretty good volume. And
02:12when Volkswagen plays in the mass market, it's very tough in Europe to make money in that market
02:17because literally everybody, the Chinese, the Koreans, Japanese, Ford, are all competing there
02:22with basically small cars and small crossovers. So the pricing and the margins aren't very good.
02:28China's a tough market now. There are price wars there. And Volkswagen's never really cracked
02:32the code in the U.S. So they've got to make their money someplace. And Porsche has always been a
02:37big
02:37engine for them. So, yeah, there's going to be a lot of pressure there to get the
02:42that company and that brand back to printing money the way it used to.
