David Rosenthal: evaluation

Transcript context

…It wasn't crazy fast or anything else. Yup. The old 356 had four cylinders. Now, the 911 have six cylinders. Like you said, it's not a world class powerful fast car, but it elevates the 356 into a much more… You can really achieve a lot more with this than you could with the 356s. This becomes super important from a business side for Porsche because they priced the 911 about 50% higher than they had the 356. What they do at first, they realized this is going to create a major price gap or lineup here. We're going to lose a lot of customers by elevating, so they do a stop gap. At the same time that they introduced the 911, they also introduced the 912. The 912 is a 911 with the old 356 four-cylinder engine. They essentially downgrade the 911 to be the entry-level model only as a stopgap. They don't want to do this permanently. They sell about three quarters of the units or the 912s, the cheaper four-cylinder ones, and one quarter of their sales are the more expensive 911s. The profit margins, though, on the 911s are so much higher. Ferry starts thinking—and this is part of the plan all along, I think—let's create a whole new model. The old 356, we're going to bifurcate our performance, real enthusiast customers who are willing to spend, and we're going to make great margins on those models. That's going to be the 911. Let's create a new car that can be the entry-level Porsche. We'll eventually introduce the Boxster 20-plus years later. It takes Porsche a while to really get to the perfect end state of this strategy here. For this new car, Ferry says, hey, we're not really equipped yet to be running multiple lines as just us, Porsche the company, we need a partner for this new car. Let's turn to our good old friends at Volkswagen and jointly engineer and produce this new car with them. In 1967, Porsche kicks off a joint project with Volkswagen to produce a new mid-engined roadster, eventually smaller, more compact car, and mid-engined. not rear-engined, called the 914. The idea is that they're going to make both a four-cylinder and a six-cylinder version of this. The four-cylinder version is going to be a Volkswagen, the six-cylinder version is going to be a Porsche. Ferry puts his nephew, Fernand Piech, in charge of this joint project with Volkswagen. A very fateful decision, as we shall see. What ultimately happens with the 914, there's a change in CEO of Volkswagen, and the new CEO definitely sees the value in deepening the relationship with Porsche and specifically their relationship with young Ferdinand. He wants to continue the project, but he's like, I actually don't think that a sports car makes sense in the VW lineup. Why don't we just have all of these be Porsches? The plan was originally to have some of the 914s be branded VW and some of them be branded Porsche?…

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