Porsche to Cut Prices as U.S. Sales Plummet
Porsche, in a dramatic effort to halt an ongoing free-fall plunge in the American sales of its expensive sports cars, said Wednesday that it plans to cut the prices on some of its models by more than $3,000.
The move to slash prices on its 944 series--the least expensive segment of its lineup--comes in the midst of a disastrous slump at the West German sports car maker.
The rapid appreciation of the German mark against the U.S. dollar has forced Porsche to drastically raise prices over the past several years--to the point that even its wealthy customers have found it increasingly difficult to afford the company’s cars. At the same time, more and more performance models from Japan, Europe and the United States have entered the market, reducing Porsche’s distinctiveness.
As a result, Porsche sales have hit rock bottom. The company sold a mere 15,737 cars in the United States in 1988, just half as many as in 1986.
Sales ‘Horrible’
Its sales so far in 1989 are even worse. They plunged 59% in the first three months of the year--down to just 1,808 units--prompting industry analysts to wonder whether the German company can survive in the American market.
“Their sales have been horrible,” said Thomas O’Grady, an automotive analyst with Integrated Automotive Resources, a Wayne, Pa., research firm. “Porsche’s sales have gotten so bad that its become a question of whether they can sustain themselves.”
The sales crisis has prompted about 20 dealers to drop their Porsche franchises within the past year, according to Porsche spokeswoman Martha McKinley. The auto maker has also been forced to slash production in its West German factories.
Porsche’s slump is part of a broader decline that is hitting all of the European luxury auto makers, who are losing customers to the domestics and the Japanese because of hyper-sticker shock.
For many luxury buyers, it is becoming increasingly difficult to justify paying more than $50,000--sometimes double what comparable American or Japanese models sell for--just for the status of the Porsche or Mercedes nameplate. Mercedes sales, in fact, have dropped 11% so far this year.
Still, Porsche has been hit the hardest. Unlike BMW and Mercedes, it doesn’t offer any sedans to appeal to a broader range of luxury buyers; instead, it sells only pure performance coupes to well-to-do driving enthusiasts.
Wednesday’s price cuts seemed designed to give the 944 series a chance to compete. The price of the base model 944, for instance, has been cut 8.6%, from $36,360 down to $33,245. The 944 S2 model’s price is being slashed 7.5%, from $45,245 to $41,900, while the turbo-charged 944’s price is dropping 5.7%, from $47,600 to $44,900.
