News

Porsche's IPO has nothing (and everything) to do with car enthusiasts

by David Zenlea
19 September 2022 3 min read
Image
Photo by The Toms

Reading about Porsche’s recently announced intention to go public, first hinted at earlier this year, my mind turned to glue. That’s not some metaphorical allusion to my inability to understand it all, although I’ll admit the minutiae of how Porsche’s corporate governance would work is a bit complex (things get even more confusing when one remembers that while Porsche the automaker is owned by Volkswagen Group, a Porsche-controlled holding company—Porsche SEactually owns a significant share of Volkswagen Group).

Rather, I’m talking about actual glue, specifically the stuff I’ve used to MacGyver my 1993 Miata’s rear window into place for the better part of a decade. I noticed recently that the fix is failing (again), leading me to contemplate whether to go whole hog and replace the top to avoid getting drenched in a downpour (again). In the past, the personal-finance math hasn’t worked: I paid about $3000 for the car, and a decent aftermarket top goes for around $600, assuming I’m willing to become proficient with a rivet gun and sealant and perform the work myself. Twenty percent of the car’s value for a non-essential (to me) repair never made sense.

Until now. My Miata has quietly outperformed my 401k in recent years and, per the Hagerty Price Guide, is worth somewhere close to $5k in its present condition (fair or “#4” in valuation parlance). A watertight top would, in my estimation, elevate the car to condition #3 (Good)—worth more than $9k per the latest guide. Suddenly a new top seems not just justifiable but downright prudent.

These calculations are not all that different from what’s driving Porsche’s sale. As VW, like every automaker, contemplates the cost of transitioning to electric propulsion, someone in Wolfsburg seems to have noticed that the sports car producer it bailed out in 2009 might now be worth some $75 billion (for context, Ford’s current market cap is less than $60 billion, while Telsa sits close to a cool trillion). Given this state of valuation, why not consider a public offering to leverage Porsche’s upward trend?

You might be the sort who reads this and thinks the “money talk” is ruining car enthusiasm. If a new top for the Miata will allow me to drive the car more, I should just buy a top. If you love a 911, it shouldn’t matter how much the car—let alone the the company that built it—is worth. I sympathize with such sentiments but would gently suggest they miss the broader picture.

My 10-footer Miata has done better than my 401k of late. (David Zenlea)

On an individual level, money is relevant to most enthusiasts precisely because our cars are for fun. I’ve met collectors at all income levels and phases of life; very few are able to spend blindly on an extra-curricular activity, even one they love. So, the fact that we can anticipate getting some of our fun money back is what sustains the activity and, ultimately, preserves the cars.

On a larger scale, it’s high time enthusiasts embrace the fact that the cars and the brands we love are going up in value because—at the risk of getting all Stuart Smalley here—we have value. No, our 911s aren’t likely to appreciate because of Porsche’s IPO. That didn’t happen with vintage Ferraris after its IPO and it’s not happening here. Rather, it’s the opposite: Ferrari’s IPO in 2015 was viable because of the people who had already driven appreciation for 250 GTOs, Daytonas, and the like, just as Porsche’s IPO is viable because of the strong following who have already driven appreciation for 911s old and new. (Indeed, the average value for Porsches in Hagerty’s book of business has gone up 150 percent in the past decade.)

We’ve seen smaller, yet more direct efforts from automakers to monetize their enthusiast followings and, more specifically, their pasts, from factory-backed restoration programs and “continuation” cars to outright sales of older vehicles, most notably Mercedes’ record setter earlier this year. Beyond actual monetary returns, these efforts are worthwhile to automakers as a way to remind consumers and investors alike of their brands’ appeal. Of course, there are passionate enthusiasts working at automakers who genuinely want to preserve history through these actions, but multinational corporations tend not to act out of altruism alone.

During my time covering the new car industry for so-called buff books (first Automobile, then Road & Track), I frequently encountered auto executives who regarded enthusiasts as juvenile distractions from the modern business of building cars. Here’s the thing, though: The modern business of building cars is a grim one, requiring large investments and typically returning slim margins. That makes the added value that comes with a vibrant brand all the more important. Our passion and enthusiasm—and ultimately our spending and our old cars—is a big part of what powers that.

Put it another way: In the automotive business, we enthusiasts are no mere sideshow. We’re the glue.

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Comments

  • Ben says:

    Reading this sloppy and meandering article hurts my poor brain. Maybe it’s me. Maybe I’m not clever. But I don’t think so.

  • Zephyr says:

    Adding to the corporate confusion: is the Porsche design firm (the one that designs pens and such) now completely separate from the Porsche automotive firm?

  • John DiChiaro says:

    I don’t care if the company is privately owned, publicly traded or bankrupt. I’m keeping my ’87 911 until I die and maybe a few years after that!

  • Gail M Smith says:

    I agree with the guy who said the article was meandering. It was so hard to follow, I am not sure of the point.

  • Rick Clark says:

    Never got past his ill treated Mazda Miata.. This guy isn’t a ‘car enthusiast’ – he just drives ‘beaters’..

  • Dr. Who says:

    Yes, we are the glue because we know things the average person doesn’t. And that is why people we know ask us their questions. We are the influencers, and that makes us very valuable indeed! This was evidenced last weekend when the local Lexus dealer had a Cars & Coffee event, they know.

  • Oldfordman says:

    We all remember the DOT Com bursting bubble. Now we just might be in an AUCTIONEER’S bubble! POP!

  • Jon Aronson says:

    Porsche’s IPO will fail if it is really to aid in the development of battery powered cars, which few want and even fewer can afford. Capitalism, which is the foundation of Western Culture, creates demand based upon the public desiring certain purchasable objects. It is not the government(s) dictating a new technology that is not desired by the public. The public, which has become accustomed to cars lasting many years, has come to understand that batteries simply will not last more than 10 years and the cost of replacement kills whatever value the cars will have. That will both destroy the used battery car markets and increase demand for older gasoline powered cars.

    These facts do not even touch upon the failure of electric creation and transmission and recharge capacity and the Western US, where the majority of the 1.0% of current battery vehicles exist.

    It took 20 years for people to switch from horses to cars, but then it was through the demand of the public. It will destroy Porsche, if the company diverts its production to battery powered cars!

    • Manorborn says:

      Jon, you overlooked the fact that during the battery’s ten years of life, science will be coming up with batteries that are substantially smaller, last much longer and are much less expensive. It’s really inevitable. For example, the Tesla battery in my house is twice as thin and lasts far longer than the Tesla house batteries of six years ago. I have a 57 kilowatt solar field here on my country propery and two gas engined Porsches which I intend to keep. Yet I admit at some point the switch to a new electric one – at least for my Macan – will become too compelling. Never for my 997 911S!

      • Jon Aronson says:

        Manorborn, with due respect, these batteries have been on the market for over ten years already and with the exception of percentage changes in metals, such as nickel, and some lessening of Lithium bridging, the batteries are no less expensive, nor are they particularly more efficient.

        The batteries are just as heavy and in my example of purchasing hybrids (2-400H Lexus) 40,000 mile tires gave out at 10-11,000 miles, energy recovery heated up the brake disks, which caused warping, so much that 8 had to be replaced in the few years I drove the second one and 6 in the one before that. When we would complain about the brake pedal rhythmically pushing our feet and another rotor change and brake disk, the manager would tell us that hybrids were not designed for anything but cities and straight roads. Since we changed back to pure gasoline cars, we have not had to replace any brake parts, nor energy recovery system, and we get 40,000 miles out of 40,000 mile tires.

        Battery cars will never go down in price and are ecological disasters. At present there is no recycling of lithium AND China and South America, where most of the lithium is mined are destroying vast wetlands in order to provide the huge amounts of water necessary for the collection of the metal.

        The change is mandatory in some places, because government and its agents, who profit from “the new technology,” have replaced market demand.

        Battery cars may, and I limit it severely, to large metropolitan areas in very temperate areas(for you know that mileage decreases by 1/2 in cold areas(which increase costs), where no one travels more than a few miles at a time, but the nation’s economy is not run by city people, it is run by productive commuters, who travel from safe counties to city.

        I too have a 911, an 84 that I have owned since ordered and delivered. I get 21 city and 27mpg highway and if someone offered me a Taycan Turbo S, as a trade, I would laugh at the offer and turn my back and walk away. Follow the Green money and it will lead you to China and to those who benefit, not from consumer demand, but from the government, any government.

        • Manorborn says:

          I was specifically referring to house batteries. I know nothing about electric cars or their batteries. though I think in general it seems reasonable to contemplate advancements in battery science over a 10 year timespan.
          But you’re probably right… I can’t stomach thinking about having a battery powered car either despite the fact that because of my solar field, I could drive for free.
          “I get 21 city and 27mpg highway and if someone offered me a Taycan Turbo S, as a trade, I would laugh at the offer and turn my back and walk away.” Now there I agree 100%. I often think about the 356B Super90 I had many decades ago in college, and come away thinking I would trade my 997 to have that car back in a heartbeat. Reading the Lotus Seven article certainly didn’t lessen the yearning either. Need the Macan though…the gravel roads here in the Hills are brutal on everyday drivers.

  • CJinSD says:

    “The heritage industry has to demonstrate to society that sustainability also means to maintain a classic car. Because you don’t have to do any mining for the car or production. The car is already here.”
    Marcus Breitschwerdt, head of Mercedes-Benz Heritage division

    In other news, the new C63 AMG has a four-cylinder engine paired with a hybrid system. Everything is operated at a level that will preclude long-term durability. Nobody who can’t afford the car when it is new will be able to afford keeping it on the road once the warranty ends.

  • Ray Ashenhurst says:

    A few years back, a resolution was passed by some German Government Branch that prohibits the sale of ICEs after a certain year. This resolution went to the European Union and was approved. The change to EVs is now mandatory. I don’t remember the year by which it must be done. Ford and GM have a big market in Europe and that is why they are also making the switch. Of course some manufactures will change over sooner than others, those in the lead will be the winners, technically and financially. Its the European law that is driving this.

  • A. J. Klein says:

    This is the way of anything automotive these days. We’ve also seen direct efforts from collector car insurers to monetize their enthusiast followings.

  • Gary Bechtold says:

    I still wonder if this will in the future hurt Porsche’s direction when making the share holders is more important than the customer.

    Oh and you should buy the top.

  • Maestro1 says:

    The IPO has nothing to do with anything. The family will still have a nice piece of the Company and
    the funding allows for hopefully significant cars in the near term.

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