Doug DeMuro
Appearances
Acquired
Porsche (with Doug DeMuro)
13,000 versus 350,000. Yes. It's so funny because the enthusiast world, there's often a, are you a Porsche person or a Ferrari person? Like they're not really.
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Porsche (with Doug DeMuro)
Yeah. Well, yeah, I mean, I... But they're cool. I mean, I would get one. I'd recommend them to a lot of people. But that's a good point. Like, I haven't went and got a Porsche SUV. Truthfully, the reason is ridiculous. I don't want to drive, like, things of that name brand, like, on a daily... Like, my wife would never be seen in, like, a Porsche. Do you know what I mean?
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Porsche (with Doug DeMuro)
It's ridiculous. I know, it's an interesting point. I never really considered that. I just, I like to be casual for my normal cars. Also, I think that like having the Porsche SUV is kind of like a, it's almost more in your face than this. Like if you bought a, you're a connoisseur, if you have a sports car. If you buy the SUV, it's like, that could be. I love them, by the way. They're awesome cars.
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Porsche (with Doug DeMuro)
Right, that's exactly how I look at it. Like, okay, that's fine, but I'm going to stay kind of low-key in my normal life. What do you think I drive?
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Porsche (with Doug DeMuro)
Oh, yeah, okay. Yeah, those are good cars. The Porsche Macan of the mainstream content.
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Porsche (with Doug DeMuro)
If you ask my colleagues, they would say that, but I think it just isn't normal. But I like them. They're good. I recommend those to people, too.
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Porsche (with Doug DeMuro)
People just pay and pay and pay. And by the way, the $330 average price thing, I'm just still astonished by it. That's an unbelievable amount of money when you really think about it for 13,000 cars a year.
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Porsche (with Doug DeMuro)
I mean, Ferrari's still charging like two grand to put Apple CarPlay as an option in their cars. I am dead serious. Like, heated seats are like 800 bucks extra in Ferraris. You get the idea. Yeah. Yeah. A Ferrari options list will go crazy.
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Porsche (with Doug DeMuro)
Yeah. It's hard businesses. It's a lot of stuff. It's a lot of stuff. It's a different business and it's a lot. Yeah. Distribution's harder.
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Porsche (with Doug DeMuro)
Plus scalability is harder. And you alluded to the dealerships and the distribution. Distribution's hard. You're shipping stuff on giant boats all the way across the world and all that.
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Porsche (with Doug DeMuro)
And the funny thing is also they always, they danced around even in this period and then in the decades after that. And then, of course, now there was always kind of flirting with each other.
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Porsche (with Doug DeMuro)
Yeah, the big one. I suspect that the German engineering thing also plays a role. Now, not against BMW and Mercedes-Benz, but certainly against the Japanese. I'm sure their margins are much, much higher than the Acuras and the Lexuses of the world. And they, even though when you really look at it on paper, it doesn't make sense.
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Porsche (with Doug DeMuro)
There is some level of like, this is a, the German engineering thing, like you alluded to earlier, has this incredible reputation that helps them. Okay, this car is just simply built better. It's European, it's German, you know?
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Porsche (with Doug DeMuro)
Supposedly, reliability is still excellent. Supposedly, based on the J.D. Power studies and all that. Now, the question of whether it's actually important for people making the decisions to buy the cars, I'm not so sure. How many of those SUV customers are leasing and don't really care if the thing stays reliable? I don't know. But there is some component of just like quality that you just feel.
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Porsche (with Doug DeMuro)
I mean, it's certainly true. So you get a BMW or Mercedes-Benz and it's just not as nice. It's not the same. You have this feel. It's certainly more special.
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Porsche (with Doug DeMuro)
yeah as many decades as you think and it'll have to be for something else though it can't be for racing like it's something else related to the cars right it would have to be for something else performance is a commodity now the koreans have been around for 25 years and there's no like emotional attachment to any of those cars even the older ones i don't know brand is it
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Porsche (with Doug DeMuro)
Well, the most famous one, of course, is the 993 Turbo, the Arena Red 993 Turbo. Fortunately, they would put up one picture of the car, and then there was always a tagline. That was like the thing for decades. The famous one was, kills bugs fast. That's what everybody remembers.
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Porsche (with Doug DeMuro)
My favorite. That ad was great. I had one for my 996 Turbo that I owned 9, 11 years ago, and I had it framed, and it said, calling it transportation is like calling sex reproduction.
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Porsche (with Doug DeMuro)
Yeah. That's going to become less true, I suspect, with all the tech that's in cars. But yeah, I agree. Up until this point, it certainly hasn't been a thing.
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Porsche (with Doug DeMuro)
Yeah, that's right. That's an interesting point. Are there any other companies that do things like that?
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Porsche (with Doug DeMuro)
Everybody dreams. I mean, it's your whole life. You dream. I grew up dreaming of owning a Porsche, which is, again, kind of funny as we talk about the SUVs and the volume they do. If you're a little girl or boy, you don't dream of owning a Cayenne. Like, kids are getting dropped off in those at school is kind of my point. But you do dream of a Porsche, even though it's the same thing.
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Porsche (with Doug DeMuro)
And everybody wanted to work there. We get unsolicited resumes all the time, blah, blah, blah. And like pay wasn't great. And, but like you had that name, you know, I worked for Porsche. That's so cool. And just being a part of it. And then, yeah, having the car was a huge deal.
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Porsche (with Doug DeMuro)
Right, because so much of their revenue is based on those SUVs that probably will not be as resilient as... Right.
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Porsche (with Doug DeMuro)
Yeah. But supposedly, the British didn't want it. The British saw the plans for Volkswagen, for the Beetle, and said, no one's going to ever want to buy that car. It's crazy to think about now. And it gives you an idea of how the British would operate their car industry. There's constant missed opportunities. But they literally looked at the models that they had built, and they said, nah.
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Porsche (with Doug DeMuro)
Yeah, yeah. There's also this other thing of like, you alluded to the colors, the money they're charging for colors. Like they've done this, they've perfected this with so many options and people are just paying it and paying it and paying it. And it seems like there's no end to like what Porsche can kind of fleece their customers for.
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Porsche (with Doug DeMuro)
And it just seems like that's only going to continue to be more and more of a thing going forward. There's become this entire subculture around like specking your Porsche in this like perfect way. And that is obviously big margin stuff for them.
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Porsche (with Doug DeMuro)
So I'm seven. You're seven. I think we're a pretty unified seven. Seven. Yeah.
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Porsche (with Doug DeMuro)
Right, I'm sitting here thinking... Seven might be a bit high. Margins are pretty impressive considering that's the car business. That's what I'm sitting here thinking. The car business requires so much, just so much cost.
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Porsche (with Doug DeMuro)
I just don't think so. From when I worked there till now, it is amazing to me how much more people have become obsessed with Porsches. Every cars and coffee event has become sort of a de facto Porsche event. The used ones, the vintage ones have just shot up in value to an unbelievable level. Porsche is more loved now, I think, than at any other point in its history.
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Porsche (with Doug DeMuro)
Now, will it diminish as a result of that? Probably, right? You can only be at a certain level for so long, at a high level for so long. But it's been incredible to me to watch Porsche's rise, even just over the last 10 years, and how much people love it and obsess over it compared to how it used to be. It isn't Ferrari.
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Porsche (with Doug DeMuro)
It doesn't have that brand equity that Ferrari does, but it's got more than you'd think. And it's especially got more than you'd think for a company that mostly makes SUVs.
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Porsche (with Doug DeMuro)
Somehow they were able to both produce an SUV that gets them 350,000 units annually. Yes. But also mention the same breath as Ferrari in terms of like enthusiasts.
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Porsche (with Doug DeMuro)
And yet people still dream. It's crazy. I agree. I completely agree. And again, the love only seems to be growing even as their model line expands to what we would consider to be less desirable cars. It's amazing. Like you said, it's amazing they pulled it off.
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Porsche (with Doug DeMuro)
Gucci is always going to be valuable. The regular individual still has this thought of Gucci as, like, holy practices.
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Porsche (with Doug DeMuro)
And I think Porsche is the same thing. Once the brand gets to a certain level, is it even possible to kill? I don't think so.
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Porsche (with Doug DeMuro)
If you see him interviewed anywhere or talk anywhere like extemporaneously, he is pretty legit. Yeah.
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Porsche (with Doug DeMuro)
Yeah, so different. He's the exact opposite. He's the biggest difference of all of them, for sure.
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Porsche (with Doug DeMuro)
Interesting. Okay, mine is a YouTuber named Whistlin Diesel. Have you guys heard of him? No. I'm not surprised. Neither will anybody who is listening to this. He creates, it's like he's a kind of a car YouTuber, but mostly he just does crazy stuff. He lives in Tennessee and has a big property.
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Porsche (with Doug DeMuro)
And like, did you see the thing that went viral like on Twitter and elsewhere of the Tesla that was on like 20 foot tall wagon wheels? Yeah. He's done that. He bought a Ferrari and put it in one of those bubbles that boomers put inside their garages. And then he just started throwing stuff at it, like a ladder and an axe and a sledgehammer to see if it would break the bubble and damage the car.
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Porsche (with Doug DeMuro)
He dropped a Mercedes G-Wagon through a house. Wow. He got a Chevy pickup with tires so big that he was able to drive it out into a bay in Florida. Oh my God. He's the Mr. Beast of the car. He's the Mr. Beast of the car world.
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Porsche (with Doug DeMuro)
It's like that. And he's like this. He's like from Indiana and he lives in Tennessee. So he's like just kind of like backwoods dude. But his channel's gotten so big that it's allowed him to do just dumb stuff. And he has become my utter guilty pleasure because you put on his video and you're going to see like deep destruction of something that a lot of people hold dear.
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Porsche (with Doug DeMuro)
As a YouTuber, I also feel like this is like the greatest thing ever because he takes what the haters say and just like turns it up even more. And I have to be like, nice. I'm so sorry, sir.
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Porsche (with Doug DeMuro)
I'm just going to blow it up. He flew a helicopter inside of his garage. That's a good episode. I highly recommend it.
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Porsche (with Doug DeMuro)
This is all just, like, trash TV, but it is so good to watch, so highly recommend it.
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Porsche (with Doug DeMuro)
Yeah, right, right. I do wonder sometimes about, like, the danger of YouTube and, like, okay, it takes now flying a helicopter inside your garage to get views. Like, I started, I had a Ferrari. That was enough.
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Porsche (with Doug DeMuro)
I make a YouTube videos My channel is my name, which has become very complicated now that I have a business on a channel. Also, maybe regret doing that, but I'm just Doug DeMuro. And then I also run an automotive, like a car auction website for enthusiast cars called Cars and Bids. And we're selling something like 30 cars a day or auctioning 30 cars a day on Cars and Bids right now. Yeah.
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Porsche (with Doug DeMuro)
So all just all like enthusiast cars, you know, Porsches and BMWs and things of that variety. Yeah.
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Porsche (with Doug DeMuro)
Doug. Yeah. Thanks so much. Thank you. Thanks for having me. It was a lot of fun. It really was. Prepping for this was so interesting, learning all this history that I didn't know, even having worked there. It was great.
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Porsche (with Doug DeMuro)
Yeah, totally. Now, one of the things that I find interesting about the Beetle is that Europe was so war-torn after World War II. All these places were in similar situations to Germany in that the people needed to get back to work, they needed to be able to drive and go places, and each European country had their own Beetle. UK had the Mini, Italy had the Fiat 500, France had the Citroën 2CV,
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Porsche (with Doug DeMuro)
They all kind of looked similar. Wait, these are all based on the Beetle? No, no, no. But they all came from the post-war era where they needed something small and cheap to, like, remobilize the citizenry, basically. And so kind of each country developed, had their own, you know, car that did that for each country.
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Porsche (with Doug DeMuro)
But in Germany, of course, the Beetle became a global hit, whereas in those countries it was more... you know, in their era.
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Porsche (with Doug DeMuro)
But the 2CV was a huge, huge car. And the French, just like the Germans, needed to get back to work, needed to start building stuff again, and also needed a cheap car to, like, cruise around in.
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Porsche (with Doug DeMuro)
Yeah, I mean, it's an interesting concept because sports cars in general weren't a thing that much. They were, and there's going to be people around and say, no, there were a lot of sports cars before. But it was really a thing of real enthusiasts, wealthy people, that sort of thing, would buy cars to go motor racing in the era of brass era and that kind of stuff.
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Porsche (with Doug DeMuro)
The concept of creating like something more affordable, littler, that was still fun was like, it was kind of an interesting idea that, you know, this was a real, it was a touchstone of a concept that has really been taken obviously by them and refined and others as well. Yeah.
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Porsche (with Doug DeMuro)
It looks like a boat. The thought at the time really was, you want to go faster? More. More power, which of course creates more weight, which of course creates the need for more power. And they did that, but it was unwieldy. Yeah. I mean, even like to this day, the Carrera GT sitting behind us, that's not a large car. Right. And that was a Porsche thing.
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Porsche (with Doug DeMuro)
Basically, you know, when an engine takes in air and that's kind of air helps air mixes with the fuel and it creates a combustion that more or less, that's how a combustion engine works. Supercharger push, like pushes in even more air to create more power basically.
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Porsche (with Doug DeMuro)
So the term supercharged would be referring to like takes the same engine, but adds this thing to kind of force more power through to like.
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Porsche (with Doug DeMuro)
The concept of turbo is actually fairly similar to supercharging, except that it spins something that adds even more air, basically. And thus, turbochargers result in power kind of being produced. As the car makes more power, it makes more power, if that makes any sense. It kind of like spins itself up in a faster way. And there's kind of pros or cons to either of them.
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Porsche (with Doug DeMuro)
Well, I mean, production numbers is probably the biggest component of that one, right? They made literally a zillion Beetles. And the 356 is special because it really kind of was one of the real touchstone moments of the sports car coming out of the war, how we define the sports car today. It was a special thing, and it was a special time and a special moment. And
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Porsche (with Doug DeMuro)
A lot of them also weren't treated all that well. Ultimately, the 356, it was not affordable, but they made a decent number of them. They got to be relatively cheap. It was the old used Porsche for a while in the 60s and 70s. And so not that many of them were saved. And now it's kind of revered as when we look back as this major moment in Porsche history.
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Porsche (with Doug DeMuro)
Initially, it was slow. It took them a while. The first couple years, they only made a couple hundred of them or something like that. It was initially pretty slow. But then things started to kind of kick around. People in Germany started to get some money. And things started to take off.
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Porsche (with Doug DeMuro)
It may be worth pointing out also in the context of the sports car, like the 356, coming out of World War II was kind of the beginning of the sports car really taking off. Like I mentioned before, the earlier ones were these big giant things that were only operated by enthusiasts who knew how to work them. But like post-World War II, there was a lot of optimism.
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Porsche (with Doug DeMuro)
There was more, in Britain it was happening too. MG was coming out with their sports cars, Austin Healey, Jaguar. These cars all kind of were born from this post-war period of like, hey, these cars have been refined to the point where we can use them and drive them and enjoy them. And that really became a thing. And in Germany, it was the 356.
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Porsche (with Doug DeMuro)
And probably not even at the time, not even clear just how amazing it would be. Right.
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Porsche (with Doug DeMuro)
I mean, what an opportunity to be given a distribution network just as the car is starting to become like a big thing.
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Porsche (with Doug DeMuro)
It's an interesting question. I suspect the answer is yes. more or less in some brands, I bet they were selling direct to consumer and some I bet they weren't. Some of the smaller ones maybe. I suspect the reason this worked out is because Volkswagen didn't, I mean, these companies didn't want to be the ones who were distributing all these cars across and doing all this.
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Porsche (with Doug DeMuro)
Do you think there was some guarantee that the tax rates would lower someday?
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Porsche (with Doug DeMuro)
Yeah, real 550 Spiders. They only made 90 of them in the end. And so, like, it was a car that, in theory, you could go and buy. But while the 356 was, like, the sports car that you could gentleman race, the 550 Spider was for people who, like, were really, like, let's go racing and, like, do it. But like you said, you could. A person could walk into it.
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Porsche (with Doug DeMuro)
Not a dealership necessarily, but, like, just order one. Yeah. But it is an absolute legend.
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Porsche (with Doug DeMuro)
You basically buy them. Right, yeah. And that was kind of a special thing, but that was the point of those classes. It was that there were cars for people who could kind of go buy a car off the street and modify it.
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Porsche (with Doug DeMuro)
Plus, an important distinction between Porsche and Ferrari in this era is that Porsche was largely focused on road cars, and then the road cars went racing. Except for the 550, which was kind of purpose-built for racing. And there were racing versions of the 356, but the goal was mostly road cars. Whereas Enzo, very famously, he just wanted to race. And he hated his road car customers deeply. Yeah.
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Porsche (with Doug DeMuro)
It wasn't his thing. He just wanted to race. He only sold road cars to kind of finance racing. And a lot of the road cars that he ended up selling were either based on race cars or just former race cars. I'm done with this crap. Whereas Porsche was selling, I mean, 356s were like being sold in pretty good volume.
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Porsche (with Doug DeMuro)
Like, one car. And it remains true. It's kind of like Porsche's thing to this day. Like, how relatively usable the car is in just about any setting. Like, you can drive it to work. You can actually take it on a racetrack. That, like, has remained sort of an ether. Whether or not it's constantly a North Star for them, it is what they do more than anybody else.
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Porsche (with Doug DeMuro)
And there have been, and we'll get to, and the 550 Spider is one of them, there have been some portions that kind of go one way or another in the philosophy. But generally speaking, it's sort of a middle of the road, going back to Ferry's quote about this exact thing, can do all these things.
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Porsche (with Doug DeMuro)
Le Mans is like, there are various car races that are considered sort of the big car race, right? Like the Indy 500 is the car race of that racing series. Le Mans has always kind of been a place to prove technology. It's a 24-hour race, so you switch drivers. And it's always been a place where some of like
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Porsche (with Doug DeMuro)
It proves like the endurance and the capabilities of a car and of a manufacturer over that time period. It's really serious. It's always raining and it's always a disaster and it's in the middle of the night and it's difficult. And so like being able to win or win your class, Le Mans is like the Monaco Grand Prix, the Super Bowl, if you will, of like vehicles racing in that sort of race series.
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Porsche (with Doug DeMuro)
relative to the other races it's closer to like what you want for a all-around car that would also be a drivable car because like fuel efficiency matters it's also a road race so it's not on a racetrack it's literally on they close down roads in the french countryside and and race on the road and so there's like some component of like instead of purpose building a car for a circuit like cows were using this road you know two days before yeah right totally
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Porsche (with Doug DeMuro)
It's amazing to think that 588 cars was 40% of Porsche production. Right? I agree with you, by the way, about your point that they didn't really have America in the business plan. One thing to provide some context is important to keep in mind.
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Porsche (with Doug DeMuro)
The number of sports car startups happening in Europe at this time was significant, most of which listeners, viewers will have never really heard of because they all died. These came up. They showed up. They raced a little. They sold some cars. They failed. And there were tons of these. There was no concept that Porsche would be more successful than any of them.
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Porsche (with Doug DeMuro)
Obviously, the family hoped it would, and it became that way. But so many families hoped theirs would, too, and they all failed. And somehow Porsche, you know, grew and grew and grew.
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Porsche (with Doug DeMuro)
We could be speculative because we know we got the money coming in. And Beetle continues to be more and more and more popular. It only continues to embolden them to reinvest. Right.
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Porsche (with Doug DeMuro)
Right. Right, right, right. And what was starting to happen was the 356 was one of the leaders of the charge of the sports car in that era. And what was clearly starting to happen was other sports cars are showing up that were refining some of the principles. Yes.
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Porsche (with Doug DeMuro)
And all these are starting to show up. Yeah, Austin, everything is like, okay, there's a lot of pressure.
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Porsche (with Doug DeMuro)
So X, zero, X. And in fact, all Peugeot cars even to this day are named 205, 206, 207, 208. That's the 308, 408, 508. And so they trademarked them all just knowing that eventually that would happen.
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Porsche (with Doug DeMuro)
Now, the story that I hear, have heard about this, is that they said, well, we got these badges that say 9-0-1. Why don't we do 9-1-1 because we have the 9 and the 1 already? Yeah. Hence the 911. Hence the 911. Some of this may be more apocryphal than others. One of the things that I don't understand is why they wanted to call the car the 901 in the first place.
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Porsche (with Doug DeMuro)
And I was never really able to get great information about that. The 356 was purportedly named because it was the 356 engineering project they did. But did they really do 500 engineering projects between 356 and 901s?
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Porsche (with Doug DeMuro)
It gets complicated because what ends up happening, just like happens to every car, is they start to get redesigned. As the years go on, they need newer models. They still call it the 911. The only way to distinguish the newer version from the older version is to call it by the project number, which is 964, 993, etc., etc.
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Porsche (with Doug DeMuro)
And so if you're really into it, you've got to know not just that it's a 911, but which version it is.
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Porsche (with Doug DeMuro)
It's a little complicated. Maybe that's part of the success. There's sort of a language you have to speak in order to get Porsche to an extent. And there's something to that.
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Porsche (with Doug DeMuro)
Well, he had an honorary doctorate. He was already doing stuff, though. He was engineering and creating. Yes. Hence the honorary doctorate.
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Porsche (with Doug DeMuro)
And partly because they've essentially kept the shape the same since this. Since 1962. So pretty immediately, this car is a big hit.
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Porsche (with Doug DeMuro)
It's important to keep in mind, at the time, you didn't know, right? It was just like this thing, this sports car they had come up with. And again, there were a lot of sports cars, and it was whatever. But of course, what has ended up happening is that this car has become symbolic of the sports car.
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Porsche (with Doug DeMuro)
And I think a lot of people would, if you were told to mention a sports car, they would say the 911. It just has become like the car. And it was, like you say here, it was clear, very... early on that it had something special in this great combination of, you know, reliability, comfort, practicality, just like the 356 had been, but just better.
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Porsche (with Doug DeMuro)
It's not an eight and it's rear mounted. Right. So the 356 had a boxer four. To explain what a boxer engine is, you know, a lot of cars, most cars, well, these days most cars have inline engines where the cylinders are in a line. A lot of other cars in the past have had V engines where the cylinders literally make a V for balance.
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Porsche (with Doug DeMuro)
The boxer engine, the cylinders are literally like across from each other. It's flat. They call it a flat engine or a boxer because the cylinder heads look like they're boxing each other as they go back and forth. And the benefit of the boxer engine was that it's got this great balance to it because it's like literally flat in the car. Yes, it was unusual.
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Porsche (with Doug DeMuro)
I don't think it was necessarily unusual to do a six-cylinder engine, although as time has gone on, it has started to become more unusual, like that the police cars still have six cylinders, even as V8s and V10s became, V12s became more popular. But it was the thing. It was what they did.
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Porsche (with Doug DeMuro)
And it was part of that ethos of keep it relatively light, relatively simple, and like strip things down to the core essentials of the car.
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Porsche (with Doug DeMuro)
Volkswagen had made a little sports car called the Karmann Ghia. Yes. Previous to this, like in the 60s. And so the thought was they wanted to replace the Karmann Ghia. Porsche wanted an entry-level car. Let's jointly develop it. Porsche gets the more powerful one, the 914 6, the six-cylinder. And Volkswagen get the four-cylinder. But the decision was made, like you said.
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Porsche (with Doug DeMuro)
Yeah, Porsches previous to this had all been rear engines, the 911, the 356. And so this was a mid-engine, which was starting to really take hold in the car world as the right...
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Porsche (with Doug DeMuro)
design because the engine in the middle is really the perfect balance you kind of can put the engine right in the center of the car and it gives you like perfect weight distribution when I always talk about sports cars in my mind like God intended sports cars to be mid-engined that's how it's more difficult the engineering is more difficult than front engine but that's how it should and rear engine is just insane but Porsche made it work they've always been great at that but mid-engine is how it should be
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Porsche (with Doug DeMuro)
Now, there are technical mid-engine cars where the engine's in the front, but behind the front axle. But most people, when referring to a mid-engine car, are talking about a car that has the engine between the passenger compartment and the rear axle.
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Porsche (with Doug DeMuro)
Yeah, I feel that way. But it's controversial because the 911 is the Porsche. Don't hate us in the comments.
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Porsche (with Doug DeMuro)
Every car is the best when it comes out, and then it's superseded by the next best.
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Porsche (with Doug DeMuro)
Right. Very. And I don't even take advantage of it as much as some of my colleagues.
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Porsche (with Doug DeMuro)
application of performance cars right like uh yeah a whole different set of calculus like it doesn't matter there's no engine anymore although you still even in electric cars for a performance electric car you still want the weight to be as close to the middle of the car as possible for a similar reason honestly but the engine component and all that other stuff boxer yeah yeah it doesn't it's gone it's gone
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Porsche (with Doug DeMuro)
But the other Ferdinand, the son of Louise and Anton, was hired by the German company also.
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Porsche (with Doug DeMuro)
And it certainly has become more that way since Porsche was, as we'll get to, because Mercedes-Benz is there, and it really does feel like, yeah, a manufacturing cradle, especially for cars.
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Porsche (with Doug DeMuro)
It's crazy. It's especially a crazy decision because, like you said, they were killing it. They were the best. It had been a family business until this point, and it had been a very successful one because of the efforts of the family. And especially, you've got Ferdinand Pietsch. Now, looking back on this, we know what happens to Ferdinand Pietsch, which we'll get to.
Acquired
Porsche (with Doug DeMuro)
But you've got him on this up-and-coming track where he's so legit. Oh.
Acquired
Porsche (with Doug DeMuro)
Everybody you meet in Stuttgart, just like when you go to Detroit, works for Porsche or Mercedes-Benz or a supplier or something like that.
Acquired
Porsche (with Doug DeMuro)
Yeah, that's an interesting question. The brands that we know, I think it was just Volkswagen and Audi.
Acquired
Porsche (with Doug DeMuro)
Audi had been a separate company. And it's also important contextually here to make one really important point about PS and Audi. At that time, Audi was a joke. Audi was not what it is now. Now you view Audi as a legitimate competitor to Mercedes and BMW. Back then, it was more like how Saab would have been treated. It was an absolute second or third tier brand that no one could possibly...
Acquired
Porsche (with Doug DeMuro)
Was the Audi 5000 the thing that kind of saved them and brought them back? On the contrary, actually. That car was the one that had the famous scandal in the United States where the 60 Minutes found that it unintended acceleration where it would accelerate, which turned out to kind of be unfounded. But their reputation was like severely, severely damaged by that. But that was this era.
Acquired
Porsche (with Doug DeMuro)
That was this era. Audi needed to turn around. Volkswagen's got Audi. They're like, we don't know what the hell to do with this thing. We got BMW and Mercedes. They're killing it.
Acquired
Porsche (with Doug DeMuro)
He develops this reputation of being this just iron-fisted, like, I can only, when you say I can only imagine how upset he was when they made the decision to end the family involvement. He has this rep of being like incredibly angry and everything must be to his standard. And so I can only imagine how angry he was.
Acquired
Porsche (with Doug DeMuro)
He had a lot of kids. He was that typical, you know, how you think of like a German industrialist. Around this time, Volkswagen started really growing.
Acquired
Porsche (with Doug DeMuro)
gaining a lot of brands so in the late 90s they bought lamborghini um they owned two europe only brands one for like spain and one for like eastern europe and they repurchased the bugatti the rights to the bugatti name which had gone to an italian company um and they brought it back to france where it was like initially existing yeah restarted i mean
Acquired
Porsche (with Doug DeMuro)
And by the way, that's like uncontested. In the car world, Ferdinand Pietsch is looked at as like exactly what you're saying. The guy. Everybody knows his impact. Everybody knows how effective he was.
Acquired
Porsche (with Doug DeMuro)
The family says it more like, because I met one of them at one point, they say it more like, not like Porsche, but more like Porsche. But it's hard, I think it's a German thing, and I think it's difficult to, so we all say Porsche, Porsche.
Acquired
Porsche (with Doug DeMuro)
It suffered from that stigma for sure. The saving grace was it was actually a pretty good car to drive. And so over the years, and even at the time, it was kind of accepted as, hey, we all get that it came from a Volkswagen, but sort of the beloved 914. And it drives pretty well. Yeah. So, like, people were like, yeah, we'll take this as the entry Porsche of the time. But it wasn't a 911.
Acquired
Porsche (with Doug DeMuro)
It was a totally different thing. Yeah, the 914 was a small, lightweight, compact roadster, removable top. The 924 was definitely a different kind of situation.
Acquired
Porsche (with Doug DeMuro)
And regulations started to really show up like in this time period. In the car world, the 60s are kind of viewed as like the last bastion of just like anything goes and some very special cars came out of that era. In the 70s, everything started to get... The oil crisis was a big factor because that started to screw with emissions.
Acquired
Porsche (with Doug DeMuro)
And then you had all these regulations about bumpers and safety and seatbelts that, you know, were very important and beneficial. But at the time, it was like, oh, they're killing our fun.
Acquired
Porsche (with Doug DeMuro)
And they're faster than they were back then. So it's kind of the best of all worlds. And in most cases, they're more efficient also.
Acquired
Porsche (with Doug DeMuro)
Now, I want to defend the 928 a little bit here, because this is an important moment in Porsche's history. When we look back on it now, it seems insane that the 911 would go away. Like, how could that be? But it's important to keep in mind that, like, the 356 went away, and that was the Porsche. Like, how now you say, like, oh, I have a Jeep, and you're referring to the Wrangler.
Acquired
Porsche (with Doug DeMuro)
Like, the Porsche was the 356. And so that went away, and for the 911, it only made sense at some point the 911 would also go away. The crazy thing about the 928 in the Porsche world is that it was a front-engine V8 car, which Porsche had never pursued before and was more kind of an American thing. But in the context of the time, it's not that insane that they went after this.
Acquired
Porsche (with Doug DeMuro)
Which was important because in Germany in that time, car ownership was not anywhere near as big as it was in the United States. Apparently only 2% of Germans owned a car versus 30% of Americans by the 1930s. And so mobilizing Germans was not something that had happened in mass at that point.
Acquired
Porsche (with Doug DeMuro)
All sports cars were starting to get bigger and more powerful, and because of the oil crisis and because of tightening emissions laws – It was getting very difficult to make any sort of power from anything other than a big engine. And even big engine cars at that time didn't really make a lot of power. Cadillac had like eight liter V8s that made like 150 horsepower.
Acquired
Porsche (with Doug DeMuro)
It was embarrassing stuff because they had to put so many emissions controls on that by the time you actually got the power out, it was a disaster. So it didn't seem that insane. And the Jaguar E-Type had just been replaced. That was the big competitor. It was another sports car. That had been replaced by the XJS, which was now a V8, comfortable, automatic transmission car.
Acquired
Porsche (with Doug DeMuro)
Mercedes-Benz did the same thing with the SL class. It went from like a little fun sports car like the 911 to a big V8, kind of relaxed, leather, luxury cruiser, that sort of thing. And so it made sense that Porsche would maybe want to head in that direction also and start thinking about moving past the 9-11 just as they had moved past the 356, you know, 20 years before.
Acquired
Porsche (with Doug DeMuro)
One of the great stories in the auto industry. The 928, though I just provided an impassioned defense for it, It never felt like the right car to Porsche. It never felt like the right car to especially the employees who had kind of fallen in love with this 911. It had been in production now at this point for probably 20 years, 25 years maybe. And the 911 was Porsche to a lot of these people.
Acquired
Porsche (with Doug DeMuro)
And the fact that it was going to get replaced by the 928 was this sad thing. And it had kind of really hurt morale in Stuttgart at the factory all the way up to some of the people at the top. And so the great story is that the 9-11, everybody knows the impending cancellation is coming. It's still going, but it's coming, this beloved car.
Acquired
Porsche (with Doug DeMuro)
And so Schuetz, Peter Schuetz, the American CEO, is sitting in the office of Helmuth Bott, who's the chief of engineering for Porsche. And there's a line on the wall that shows where all the products stop and start in the timeline.
Acquired
Porsche (with Doug DeMuro)
Yeah, like on a whiteboard or something. Yeah, like tacked to the wall. Right. And so they're sitting there talking about it. They know that morale is low. They know that the company wants to keep the 911 even though it should be replaced because it's old. That's the thinking of the people.
Acquired
Porsche (with Doug DeMuro)
An edict has been given, and the car's out. I mean, the 928 is on sale. Like, it has shown up to replace the 911 in the spirit of these other cars of the time. V8 front engine, it made sense. It was what they were going to do. But the morale was low, and they knew this. And so, Schutz stands up. He's got a marker in his hand. He stands up.
Acquired
Porsche (with Doug DeMuro)
He walks up to the timeline on the wall, and he draws a line on the timeline all the way onto the wall and extends the 9-11's timeline indefinitely, including onto the literal wall. Now, this story, of course, this is like the stuff of legend in Porsche. Like, Peter Schutz, the American CEO, saving the 9-11 in this moment. And a lot of talk about whether this actually happened.
Acquired
Porsche (with Doug DeMuro)
Like, did he actually just draw the line and make the complete 180 in decision?
Acquired
Porsche (with Doug DeMuro)
Right, especially if you're trying to boost the reputation of the CEO among the workers.
Acquired
Porsche (with Doug DeMuro)
I always wondered if the story was true. I worked at Porsche 10 years ago and had become friends with Porsche's general counsel in North America. When Peter Schutz retired, he moved to Naples, Florida, and the general counsel at Porsche and Peter Schutz were neighbors in their homes in Naples. And one day, he went over to his house and asked him, you know, is the story real? Did it happen?
Acquired
Porsche (with Doug DeMuro)
And apparently, Schutz said, not only did it happen, but Helmut Bott was grinning like the Cheshire Cat when I drew that line. Like, it was like this moment, like, we're going to do this. And it, like, really, apparently, really, in his words, it really actually was a true story.
Acquired
Porsche (with Doug DeMuro)
Now, of course, if you're shoots, you'd want to tell the story because it's become so famous. But, you know, from his mouth at least, the story is real.
Acquired
Porsche (with Doug DeMuro)
The problem with this decision, you'll get into more economic realities of this situation as the 80s kind of draw to a close, whatever. But the problem with this decision was the company was planning on ending the 911.
Acquired
Porsche (with Doug DeMuro)
And so by drawing that line, symbolic though it was, we're going to keep doing this, it also committed a lot of the company's resources to now refreshing something that they hadn't planned on refreshing.
Acquired
Porsche (with Doug DeMuro)
so much so that like and doug you work to portia you have content like i think to this day the rivalry between mercedes-benz and portia like there's some bad blood it heats up and it cools down and there's there's more to discuss on that in the future for sure but they ultimately do share that town too so like there's rivalry but like they're also you know you hang you have beers with you know you can't avoid hanging out with mercedes-benz employees also love it
Acquired
Porsche (with Doug DeMuro)
It's not a good situation because now you have three aged products. And so the economy is slowing and your cars are not really competitive. Yes.
Acquired
Porsche (with Doug DeMuro)
And it just so happened that at this time, you know, Japan was kind of having an economic boom. And as a result of that, they started making these sports cars, the exact sports cars you're describing. So the Nissan 300ZX has to show up, the Toyota Supra, you know, all these cars are showing up.
Acquired
Porsche (with Doug DeMuro)
And by the way, they don't have four-cylinder engines and they're not 25, 20-year-old platforms like the 968 was. And there was very little reason to buy a 968. Right.
Acquired
Porsche (with Doug DeMuro)
Yeah. This is that era. They were all just starting to come in then and starting to blow up. And they offered, just as they do today, this great value proposition of big power for not as much money.
Acquired
Porsche (with Doug DeMuro)
Like nobody's buying those anymore. And the 928 by then was so old that sales were a trickle. By 90, there were three products, which was the entry level, which was the 944 that became the 968. Then there was the 911. which was actually the 964 911 by that point. It only makes things even more confusing. And then there was the 928, which was the front engine V8 flagship car. That nobody wanted.
Acquired
Porsche (with Doug DeMuro)
It was a complete disaster. I mean, Porsche's never named cars well, even now. But yeah, at the time, again, you had to speak the language. And by the way, the 911s all said Carrera on the back. So everybody's like, what the hell is a 911? You know, is this a 911? Why does it say Carrera? It never made any sense.
Acquired
Porsche (with Doug DeMuro)
That has changed over the years. Then there was a trim level of the 924 called the Carrera. It was actually called the Carrera GT, which they later named this car. None of it, it was all confusing. No, you had to be like a German who was into this stuff to like figure out the precision level with which it made sense.
Acquired
Porsche (with Doug DeMuro)
It was an unbelievably difficult time. And it's kind of funny to think about because now people think of Porsche as Porsche. Like, this crazy company. It's one of the hottest brands, like you said, probably one of the most valuable brands. And it's only 30 years later. Only 30 years later. It was dire straits. I pulled up the U.S. sales figures for Porsche from this era, which is so insane to me.
Acquired
Porsche (with Doug DeMuro)
They dipped in 91, 92 to 4,100 units. That was worse than 1965 sales. They had routinely sold between 13 and 30,000 cars a year throughout the 60s, 70s, 80s. 13 and 30,000. And in the U.S. at 92, they dipped to 4,100 cars. That was the level that we were talking about. It was complete dire straits.
Acquired
Porsche (with Doug DeMuro)
And it actually wasn't commercially successful, sort of in keeping with Porsche's world at the time. But it was kind of a testbed for some new technology, including four-wheel drive in a supercar, which has now pretty much become standard fare. The 959 was really the first car that had that.
Acquired
Porsche (with Doug DeMuro)
After the 959, Porsche was so desperate, though, that they started taking on projects for other manufacturers. And so it's known in the car world, but not as much in the general world. Porsche built a Mercedes-Benz, which was called the 500E. It was a midsize sedan. Mercedes didn't have the capacity or didn't really want to do it. Oh, so they built a sedan for Mercedes.
Acquired
Porsche (with Doug DeMuro)
It was a Mercedes car. So it was a Mercedes E-Class, like a regular Mercedes sedan, but with a larger engine. And Mercedes felt that having Porsche involved would give it some sports car credibility. Porsche literally produced the car. And then Audi did the exact same thing. Audi needed more credibility because they were still kind of a fledgling luxury car brand.
Acquired
Porsche (with Doug DeMuro)
They wanted to get into the sports realm because that's where a lot of money was being made. And so Audi came to Porsche and said, can you help us develop a car? And it was called the RS2. And I actually had one and just sold it last year. It was a station wagon. And that was the conditions under which Porsche agreed to build the car.
Acquired
Porsche (with Doug DeMuro)
They said, we'll do it, but we don't want to compete with our cars as a coupe, you know, a sports car. So we build it if you build a station wagon, which essentially touched off the like high performance station wagon thing, which Audi is still known for to this day more than almost any other thing.
Acquired
Porsche (with Doug DeMuro)
But Porsche was so desperate, they even allowed Audi to license their name and put it on those cars. So the RS2 had Porsche brakes that branded Porsche. The Porsche logo appears in the badge, like the literal emblem on the side of the car. Porsche was just like, yeah, fine, because it literally kept the lights on in Stuttgart at Zuffenhausen.
Acquired
Porsche (with Doug DeMuro)
They were desperate. They were completely desperate. So when you mentioned like the Porsche-Mercedes-Benz relationship, that 500e was an interesting thing because- Around Porsche at the time, there were a lot of ways that it could have gone totally wrong. And I went there and I did a factory tour a couple years ago.
Acquired
Porsche (with Doug DeMuro)
And the guy who gave the tour had worked there for like 25, 30 years through this time period. And he said that in his mind and in the mind of a lot of Porsche employees at the time, Mercedes-Benz helped save Porsche. Mercedes could have built that car. But their brothers in Stuttgart down the street were having really tough times.
Acquired
Porsche (with Doug DeMuro)
Here's a project that you can work on to keep the factory workers going.
Acquired
Porsche (with Doug DeMuro)
Yeah. Like when you have union contracts, maybe this was part of the circumstance, you have union contracts, you get to pay these people, whatever, you're not going to make money. But like, we're doing it. Wow. And it's something. It's a project for you. We'll keep your lines going.
Acquired
Porsche (with Doug DeMuro)
Wow. It was a tough era. It was like indescribably tough. And I think this is lost on a lot of younger people who have only seen Porsche in the world of crazy expensive cars and all the money they charge for colors now and all that. There was a period where it almost all came to.
Acquired
Porsche (with Doug DeMuro)
Imagine the Porsche of the 80s, early 90s, like commanding that kind of, it would never have happened. But now the brand has changed so much that like 15 grand for a color, people are like falling all over themselves to do it.
Acquired
Porsche (with Doug DeMuro)
Right. If you as a child wanted a 911, guess what? It's still around. It still looks about the same and it's still the same level of desirability that you wanted back then.
Acquired
Porsche (with Doug DeMuro)
It was always a weird aspect of the brand that like you actually weren't necessarily only marketing to like adults. You also had to market to like people who would cultivate this passion that you knew that would become a thing later when you weren't even an executive or you weren't even working there.
Acquired
Porsche (with Doug DeMuro)
But like, that's part of the brand is like hooking people young and making them feel like this is a cool thing.
Acquired
Porsche (with Doug DeMuro)
That's a good question, but you have to assume they didn't expect, you know, in 1948 that they would ever even be in the position to deliver that, right? In 1950s.
Acquired
Porsche (with Doug DeMuro)
Looking back on it, it's insane. But at that time, it seemed like, you know, now all these icons have emerged and all this lore has emerged over the years. But when you really think about, you put yourself in the perspective of those eras.
Acquired
Porsche (with Doug DeMuro)
Yeah, yeah, yeah. And it's also important to point out the interiors were almost entirely shared as well.
Acquired
Porsche (with Doug DeMuro)
The wheel, all the buttons. In fact, if you get into a Boxster, which was a two-seater car, it has a coat hook on the back of the seat because the 911 had a coat hook on the back of it. You can't put a coat in a Boxster. The seat is right up against the... But they shared everything.
Acquired
Porsche (with Doug DeMuro)
It shared the design language. It shared the design language. And I think Wittekind's thought was, The entry-level Porsche has always been looked at as a second-class citizen, like Furman literally said, which was true. I mean, everybody thought it, but he said it. How do we make it not look like a second-class citizen? And the answer is make it look like a 911 and make it literally share.
Acquired
Porsche (with Doug DeMuro)
I mean, it didn't even just look like it. It literally had the same fenders, the same headlights and hoods.
Acquired
Porsche (with Doug DeMuro)
The thinking was that they would continue to move the 911 upmarket, more expensive, more power. So the Boxster comes out in 97, for the 97 model year, and it was a huge deal. I mean, it was on the cover of every car magazine. The whole Porsche has a new car. This is incredible. It had 200 horsepower, and the 911 of that era had about 300.
Acquired
Porsche (with Doug DeMuro)
So it was a significant difference, plus the 911 was just more of a, it was bigger, it was wider, it was faster, you know, it was more of a muscle car.
Acquired
Porsche (with Doug DeMuro)
And it has, over time, it has evolved even more significantly from 97. Now the 911 is kind of playing more of a luxury car, like touring car role almost, where, you know, with the special colors and the stitching and all that. And it seems like the more Porsche has focused more of its sort of true sports car efforts on those, the mid-engine cars, as they call them, the Boxster and the Cayman.
Acquired
Porsche (with Doug DeMuro)
And it was mid-engine again, so arguably it was the correct place for it. It felt like a true Porsche sports car. For the first time, Porsche's entry-level car felt like that in decades. Yeah.
Acquired
Porsche (with Doug DeMuro)
It wasn't the most attractive car. There's no question about that. Everybody hated the design language. And you know what? It's been 20 years. It has not grown on me at all.
Acquired
Porsche (with Doug DeMuro)
The new Cayennes look great too, honestly. Ever since they redesigned in 2011. But those early Cayennes, you see them now and you're like, still ugly.
Acquired
Porsche (with Doug DeMuro)
Right, that's sort of like sloping. What happened was... The Cayenne was an interesting situation because Porsche was kind of a first mover. They weren't exactly. Mercedes came out with an SUV first for the 1998 model year called the M-Class, which was a, that was a revolution. And they built it in America, which was a really big revolution.
Acquired
Porsche (with Doug DeMuro)
BMW came out with the X5 in 2000, and that was also a revolution. The M-Class, Mercedes never had the sporty pretense that BMW did, so that car was just for suburban families. The BMW X5 actually had to be sporty, and it was like, oh, so not only can luxury brands build SUVs, but they're sporty. So, Porsche comes out in 03. I mean, they beat Audi. Audi didn't come out in an SUV until 07.
Acquired
Porsche (with Doug DeMuro)
Porsche was there, like, early, early, early. So, but the problem was Porsche had no clue. Because they were early, they had no clue what to do.
Acquired
Porsche (with Doug DeMuro)
And so, I remember at Porsche, when I worked there talking to some of these people about the early Cayennes, Porsche literally didn't know what to offer in an SUV to the point where they actually legitimately asked some of their American employees, do we need to offer gun racks as an option for the American market?
Acquired
Porsche (with Doug DeMuro)
They just didn't know. They literally, they were only building sports cars, and they just, they had no concept. No concept of, like, what people would want and what. The early Cayennes had an optional spare tire on the back, like Jeep Wranglers do. Like, you couldn't get that.
Acquired
Porsche (with Doug DeMuro)
The only ones were Land Rover, but they were focused so far on off-roading. But part of the reason the Cayenne was ugly when it first came out is because Porsche decided, we're Porsche, we're going to do it best. And so they come out with an SUV that is both amazing on-road and off-road. And the early Cayennes actually have an unbelievable off-road capability. They have a two-speed transfer case.
Acquired
Porsche (with Doug DeMuro)
They can go high-low gearing off-road. They have air suspension that can lift them up and lower them. They had all this off-road hardware that, like, you would never put in a luxury performance SUV now. But because Porsche didn't know what customers would want, they decided to give them everything. And so the result was, it was a big, bulky, heavy car to carry all this hardware.
Acquired
Porsche (with Doug DeMuro)
And so it looked... It just wasn't... It wasn't executed that well from a styling perspective. But from every other perspective... It was a hit.
Acquired
Porsche (with Doug DeMuro)
Right. This was before the days of an Escalade even. Cayenne came out in 03. Escalade came out in 99. So it was, the Escalade was a hit.
Acquired
Porsche (with Doug DeMuro)
And they were just, at that time, they were just Tahos that looked nice. Like now Escalade has become a real thing. But at that time, it wasn't. Porsche was really pushing into some new territory. It was a crazy decision.
Acquired
Porsche (with Doug DeMuro)
And Porsche must have been thinking, hey, we've got all these customers who love our sports cars, and we have this brand name that's always been associated with performance. How else can we hook these people? Right, they have families. Right. And by the way, with those families, they're buying an X5. And it's like, why don't we...
Acquired
Porsche (with Doug DeMuro)
So Pietsch is running Volkswagen at the time, comes out with the Touareg, which was Volkswagen's SUV. And that served as the basis for the original Cayenne. Really? Yeah.
Acquired
Porsche (with Doug DeMuro)
That's right. They were built in the same place. And, you know, I think that goes back to the point you just made that Porsche, the SUVs, yes, you'd think you come out with an SUV, it destroys your brand credibility. We've seen this with Maserati come out with all these sedans and now nobody wants one.
Acquired
Porsche (with Doug DeMuro)
But Porsche always made sure to be making other cool stuff and to keep coming out with other cool stuff, reinvest in the performance, like you said. And so they used this new factory that Cayenne was built in to also create this supercar. And that was important. It really showed people, hey, they might be making an SUV, but they're also making this. So they're legit. Yeah.
Acquired
Porsche (with Doug DeMuro)
Like, what is this thing? The Carrera GT, in my mind, is the greatest driving car ever built. And a lot of people actually said it. It's not objective by any means, but a lot of people who have driven, you know, this and a lot of other cars feel that way about this car.
Acquired
Porsche (with Doug DeMuro)
it was a true analog supercar which means manual transmission there's very few driver aids in this car like you'd get in a modern car stability control traction control that sort of stuff is either non-existent or heavily dialed down full carbon fiber body like no expense was spared basically and the coolest part was that the powertrain which is a big v10 was shared with initially it was developed for formula one racing
Acquired
Porsche (with Doug DeMuro)
And then it was evolved to Le Mans racing. And in neither cases did it ever actually see the light of day. They created a Formula One engine. It didn't work out. It's a little bit like the original 911 engine that Ferdinand Pietsch designed for racing, but then only made it into the... Right.
Acquired
Porsche (with Doug DeMuro)
it's exactly like that the crazier thing here though being in that time you could do that because there were no emissions regulations the concept of taking a race car engine today and putting it into a road car is just non-existent like to get a lamar or formula one engine homologated for road use is just like mind-blowing so that's that's the cool thing and and this car has um
Acquired
Porsche (with Doug DeMuro)
It originally came out, you know, in this era and was thought of as cool and special and whatever. But its legend has sort of grown since then as sports cars have moved away from some of the things that made this car so special, specifically this analog feel. You know, all exotic cars now are automatics and hybrids and that sort of thing. And this was kind of the end of the end.
Acquired
Porsche (with Doug DeMuro)
Yeah, it has a reputation for being difficult to drive. Which I think is somewhat unfounded, but also, especially by modern standards, cars have gotten so much more powerful than this. You know, a new Audi RS3, which is just a high-performance Audi sedan that you can buy for $65,000, $70,000. It's faster than this car's 0-60.
Acquired
Porsche (with Doug DeMuro)
It's not that crazy by modern standards, but at the time, it certainly was something.
Acquired
Porsche (with Doug DeMuro)
And this car was kind of the end of that era, and I think that's why it's so special. It was like the last of these cars that really you could get into trouble. And Paul Walker died in one, and there were some other deaths too that weren't quite as high profile, but there were some serious accidents, and some people died in them, and maybe still will.
Acquired
Porsche (with Doug DeMuro)
I think that car people had always known the car had kind of this reputation. They weren't like... lawsuits against Porsche about this. Porsche got sued. Yeah. It went to jury trial. Porsche was found liable, at least partially liable. Wow. And that's a big deal if you're an automaker because they got 1,300 of these out there. Right, right, right.
Acquired
Porsche (with Doug DeMuro)
They had some weird issues happen. There was a changing regulation that forced them to build a lot of them sooner than they thought. So they ended up flooding dealerships with them earlier than they expected to. And the car didn't sell well when it first came out. The sticker price was $440,000. And they dropped fast. You could get them in 08, 07, 08. You could get them for $250,000 all day long.
Acquired
Porsche (with Doug DeMuro)
And now they don't exist under a million dollars. It's a crazy thing. Should have all invested in Carrera GTs. Yeah.
Acquired
Porsche (with Doug DeMuro)
It also had that effect. It also helped legitimize that facility. Because up until that point, except for the ones built in Austria, all the Porsches had been built in Stuttgart, in Zuffenhausen, in that factory, that same factory for all these years. And so this car helped legitimize like, oh, we might be making a factory in East Germany where we're building SUVs, but we're not straying too far.
Acquired
Porsche (with Doug DeMuro)
Right. And Porsche would go on to do it again, which I'm sure we'll talk about shortly. Oh, yes.
Acquired
Porsche (with Doug DeMuro)
Of all things. I suspect in most of these cases, though, to take advantage of it, you would have had to have kind of been insane. Like to have invested in Porsche at that point, you would have been nuts.
Acquired
Porsche (with Doug DeMuro)
Especially because he was the fourth CEO or whatever. Right, right.
Acquired
Porsche (with Doug DeMuro)
No question. Looking back, that has become especially true as Porsche's business and all luxury brands' business have grown in Asia. At the time, though, I think they just, they had an SUV, they had done that. So it was like, all right, you know, sedan is the next place we want to compete. Let's replicate the success we had in the SUV.
Acquired
Porsche (with Doug DeMuro)
Don't you think? I mean, I think they looked at it and said, holy crap, Boxster made us a ton of money, came and came, and it made us a ton of money. Cayenne showed up and made us a ton of money. We got cash.
Acquired
Porsche (with Doug DeMuro)
Let's go after the Mercedes S-Class and the BMW 7 Series, the big luxury sedans from their German rivals, because they knew there was profit there, and they could do it better like they had done with the Cayenne. Hmm.
Acquired
Porsche (with Doug DeMuro)
All the German brands. I mean, you know, most of them use Jewish labor in their factories at that time. And
Acquired
Porsche (with Doug DeMuro)
Especially for cars like the Beetle, which were... produced in many countries over many years. I mean, they were building them in Latin America through a couple of years ago, maybe 2003 or something. And so it's, like, difficult to figure out. But it obviously, whether or not it was the most or one of the most, it was obviously, the effect of that car is clear, you know, today.
Acquired
Porsche (with Doug DeMuro)
Yeah, and the 918 helped to introduce plug-in hybrid technology, which Porsche knew it would be going in that direction. And so the 918 was like an example we were talking about before of how they covered the Cayenne with the Carrera GT by saying, we're still doing this. The 918 helped them say, hey, we're going to make hybrids, which is viewed as this like...
Acquired
Porsche (with Doug DeMuro)
cheap, you know, like little car, the Prius. And so you think of, well, here's the hybrid and we're going to do hybrids, but we're going to start top down with this crazy, crazy supercar.
Acquired
Porsche (with Doug DeMuro)
It's like a once in every 10 or 15 year cycle they're making one. But it's a very, yeah, it's a rare and special thing that they do it. And it seems to be they do it only to kind of prove something or prove a technology. Like the 959 was all-wheel drive and this car was kind of this new production facility. And And the 918 was the plug-in hybrid technology.
Acquired
Porsche (with Doug DeMuro)
And how many years do they make them for when they decide they're going to do it? It's a short model run. So this car they made 1,270, which is considered a lot for a supercar. The 918, they only made 918 units. And in fact, that was considered a lot for a supercar. Its biggest rivals at the time, which were the McLaren P1 and the LaFerrari, they didn't combine to make 918 of those. Wow.
Acquired
Porsche (with Doug DeMuro)
These days, yeah. It was new. It was like $900 or so, maybe a million after you got a bunch of stuff, and it's double. It's done well. All the supercars have done well.
Acquired
Porsche (with Doug DeMuro)
But even if you figured the base price was like 900 grand, they made 918, you do the math. Doing a supercar is real money to be made fairly quickly as opposed to a Cayenne that's a long tail and you make them over a long time to spread out the cost and all that. Yeah.
Acquired
Porsche (with Doug DeMuro)
All supercars are now. But the 918 Spyder was Porsche saying, we're going to go into this plug-in world. Because they knew what was coming up. I mean, we'll get to it in a second with the Taycan. But they knew what was coming up, that hybrids and electric cars were going to be a thing. And so instead of introducing that with a SUV, for example, which is where they should have, right?
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Porsche (with Doug DeMuro)
Because that's where the market wants it. They said, no, we're going to do it with a supercar and show people we're going to do it and we can do it well. And then we'll trickle it down. What did the car world think of that?
Acquired
Porsche (with Doug DeMuro)
It's important to keep in mind the 918 Spyder, being a plug-in hybrid, it had an electric component, but it also still had a massive V8 in it that had a zillion horsepower screaming and all that. And it was the same with the LaFerrari and the McLaren P1. They still had massive engines also, so it was fine. The next crop of supercars will probably be full electric.
Acquired
Porsche (with Doug DeMuro)
And so that transition, I think, is going to be more controversial. The interesting thing that seems to be setting Porsche apart now, though, is that they're standing behind it. Ferrari has already said that the technology is old, all the plug-in stuff, we don't want to be any part of the LaFerrari. And so like no one's really sure how that's going to age.
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Porsche (with Doug DeMuro)
Yeah, exactly. It's a scary situation if you own that car and the battery's gone. You don't know what to do. You go to the supplier. But Porsche has always been big about standing behind the cars in part to preserve resale value and to make sure that owners of the next supercar know that they'll be protected. And so like this car is already almost 20 years old. All the parts are still available.
Acquired
Porsche (with Doug DeMuro)
It is the smart brand thing to do, but it's not easy. Like if you really think about it, plus Ferrari, they don't need to. They don't care. They can make the next one and the next one.
Acquired
Porsche (with Doug DeMuro)
Yeah, there were all these—oh, God, Ferrari's a story that is a crazy one also. But the Fiat group eventually had stepped in because Enzo had just driven the company to—but in his pursuit of racing, had, like, driven the company into financial ruin.
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Porsche (with Doug DeMuro)
No, it was quite different. It was actually a very Italian thing versus the Pursuit of Drivers is kind of a very German thing. But yeah, that was a real bad situation also. None of those companies are independent anymore. It's not really possible either because of the way that regulations are structured, especially fuel economy.
Acquired
Porsche (with Doug DeMuro)
You have to spread out your fuel economy over your corporation and you have to hit certain targets. And so actually, this in some senses may have worked out well for Porsche because it would have been difficult to get Porsche to kind of work on the corporate average fuel economy standards.
Acquired
Porsche (with Doug DeMuro)
because all their cars are kind of inefficient, but because they're under the Volkswagen umbrella, you can kind of get that whole spread and it works a little bit easier.
Acquired
Porsche (with Doug DeMuro)
And it's interesting when you think about the Beetle because young people today look at it as a cute, classic car. But at the time... It was what you drove to drive your family around. And we'll talk more as we get to post-war, but like in Germany at the time, it's like a real, you know, important, practical family car.
Acquired
Porsche (with Doug DeMuro)
Right. The Cayenne is the midsize and the Macan is the compact. Okay. Exactly. And a lot of Volkswagen stuff shared with all these cars. Engines are shared across tons of model lines now.
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Porsche (with Doug DeMuro)
That's right. It's for an engineering company to doing this kind of sacrilege. But the engine in the Cayenne Turbo, which is the best Cayenne, is in the Lamborghini Urus, an Italian car, the Bentley Bentayga, a British car. But Volkswagen owns all of these. It's in the Audi RS6 and the Audi SQ7. It's like everything is now just spread across all these brands.
Acquired
Porsche (with Doug DeMuro)
2012 model year. So Porsche was pretty early with the concept for Mission E, yeah. Yeah. Not everybody was sure that was going to catch on.
Acquired
Porsche (with Doug DeMuro)
Toyota just came out with their first electric car yesterday. I'm not exaggerating. It was like eight weeks ago.
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Porsche (with Doug DeMuro)
Totally. The Prius, they invented it all. And now they're like, electric? I don't know. They're still like waiting and seeing on electric.
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Porsche (with Doug DeMuro)
Yeah, no, it's been well received. It drives like a Porsche, which I think was everybody's fear about an electric car, that you'd lose the engine sound, you'd lose the feel of it. But the Taycan does indeed drive like a Porsche.
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Porsche (with Doug DeMuro)
Yeah. I think probably because development started about when they started Mission E, and that was in 15, and sedans were still a big part of the market. But most brands now that are coming out with electric cars as their first car are coming out with SUVs. You look at Rivian, Pure SUV and Truck, Hummer EV, there's a ton. I think Porsche made a mistake.
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Porsche (with Doug DeMuro)
Yeah, yeah. No, absolutely. And they'll continue to innovate. There's an electric Macan is coming soon, so they say. And so it'll be fine. And Taycan, I mean, one could argue that Porsche needs to come out with an electric sporty car first because if you come out with an electric SUV, that's your first one. It's like, eh.
Acquired
Porsche (with Doug DeMuro)
That's what they would say. But let's be honest here. The future is electric. There will be electric versions of all these cars, and probably within our not-so-distant lifetimes, they will be purely electric.
Acquired
Porsche (with Doug DeMuro)
You know, the thing about electric cars is they all can accelerate incredibly well. And that's like insane. And Taycan is faster than this. It's faster than everything. It does zero to six in like two seconds.
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Porsche (with Doug DeMuro)
Yeah. And so it's beneficial in that too. But at the end of the day, a four-door car, especially one that's made in not limited quantities, is never going to have the effect that like a supercar, halo car has on like really showing people what a brand can like do. And so they will, I suspect in the next couple of years, they will come out with the next supercar, which will be...
Acquired
Porsche (with Doug DeMuro)
you know, look like this and they'll only make a thousand and it'll cost $2 million and it will be fully electric and do zero to 60 in one and a half seconds and even more ridiculous.
Acquired
Porsche (with Doug DeMuro)
So I think that will continue to help the values of these cars increase. Because at the end of the day, as cars age, they all get slow, right? This car is now that fast by modern standards. So you start to look for other things that make them special, which is the feel, the sound, etc. I had a press car dropped off the other day, a Kia EV6 GT, which is the electric Kia crossover.
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Porsche (with Doug DeMuro)
It is sized and designed to compete with like the Toyota RAV4. But this is the high-performance version. It does zero to 60 in like 3.2 seconds. It's faster than a Carrera GT. So yeah, like what does a supercar even mean anymore? Like ultimately, like what does it offer that a Kia EV6 GT for, by the way, $51,000 does not offer?
Acquired
Porsche (with Doug DeMuro)
And the answer just has to be like, it's lower, it's wider, so it handles better. I mean, that's one of the big missing things from a lot of these fast accelerating electric cars is that they're not necessarily like sports cars really. They're fast, but they're not really sports cars. And so I guess that's going to kind of be the future. But you're right. Power is being democratized.
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Porsche (with Doug DeMuro)
Everyone can now access a car that does zero to 60 in three seconds. Right. And so I don't know. It'll be interesting to see how the sports car responds.
Acquired
Porsche (with Doug DeMuro)
Purportedly. But even then, how do you financially extricate development costs of a powertrain that's used in multiple vehicles or a platform? I mean, there's an Audi version of the Taycan called the e-tron GT.
Acquired
Porsche (with Doug DeMuro)
One of the interesting things is, you know, the Chinese only buy four-doors. They only want four-door cars. There's almost no, because there's no heritage Porsche in China. It's a luxury good. It's a cool brand that sells SUVs. And there's a lot of chauffeur-driven vehicles there. And so, like, they don't, it's almost none as sports car sales in China. Wow.
Acquired
Porsche (with Doug DeMuro)
Hard to believe, but we think of Porsche as such a sports car brand. It's like part of the ethos of it. They're just like a kind of.
Acquired
Porsche (with Doug DeMuro)
Which is funny because people see it as such a high-end brand. It's almost like the SUVs have managed to get under the radar of the people who buy the sports cars. And the sports cars still have this elevated viewpoint, even though you can actually go to a Porsche dealer and lease them a con for, I don't know, $750 a month, whatever it is.
Acquired
Porsche (with Doug DeMuro)
At what scale? If it doubled again. It's interesting about BMW because if you think about it, if you saw Porsches as often as you saw BMWs, would it be special? Of course, the answer is no.