Porsche Removed from DAX: Market Analysis

Key Points from the Discussion

• Porsche has historically been a marginal business, often on the brink of viability, with past successes like the Boxster providing crucial breathing room. The current challenge is that their 'bread and butter' models are not attracting enough customers, leading to double-digit discounts in Europe.
• A luxury premium product should be aspirational and hard to acquire, not mass-produced. The shift towards making Porsche cars easier to drive with numerous aids, coupled with increased production, has diluted their exclusivity and appeal for some long-time enthusiasts.
• The automotive industry's future necessitates electric vehicles for viability, even for luxury brands like Ferrari. Porsche's delays in bringing new electric models to market, such as the Macan, pose a significant concern for future success.
• Modern electric vehicles offer advanced torque vectoring and control that surpass even the most advanced internal combustion engine cars, suggesting that driving pleasure is not necessarily diminished but rather evolving.
• The watch industry, despite its luxury status, is tiny compared to the car industry in terms of annual sales and R&D investments, making different market mechanisms applicable to each sector.
• The chip shortage led car manufacturers to believe they could sustain higher prices, but this proved unsustainable. Porsche's return on sales dropping from 18% to near break-even is a major factor in its stock price decline.