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Why You Need a Spreadsheet to Choose Your Porsche

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Old 11-18-14, 03:55 PM
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Hoovey689
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Default Why You Need a Spreadsheet to Choose Your Porsche

Shopping for a car isn't easy, even for Porsche 911 buyers. The cornerstone of the brand's lineup comes in 22 variants -- more than its paint options -- and Porsche isn't alone in offering a plethora of choice.

Some BMW AG crossovers and Audi coupes differ by inches, as automakers invent new niches and mix existing body styles at an unprecedented pace. German carmakers alone have expanded their lineups by about 25 percent in the past three years and now offer more than 200 models.

That growth may start flattening out by 2018, though, as an ever-wider array of choices becomes more of a handicap than an advantage for both customers and manufacturers, according to consulting company PwC. Producers are under pressure to shift resources to develop new technology, like self-driving cars, while consumers sometimes struggle with all the options.

"I'm looking for a safe, compact car that'll work well for my family since we have a toddler," said Olga Froestl, a 31-year-old Munich resident. "The amount of choice is confusing, and I'd prefer to have less complexity."

Froestl needed a spreadsheet to compare price, navigation systems and safety features as she tried to figure out how to spend a 500-euro ($621) monthly lease allowance from her employer, a social media company.

Overlap Risk
BMW is aware of the risk of overlapping offerings and may need to rethink some of its cars as trends change, Ian Robertson, the company's head of sales, said in an interview at its Munich headquarters. Already, space constraints are forcing dealerships to turn to virtual presentations to show the breadth of offerings.

"The retail environment is probably at the most significant crossroads in the last 100 years," Robertson said. "I'm sure there will be points in the future where we look at certain cars and say, ‘Maybe we need to think differently now.'"

PwC predicted the number of models made by German car companies would level off after peaking at about 230 in 2018. The growing choice puts strains on auto manufacturers to cut production costs and better differentiate their offerings to consumers, even as they integrate in-car Internet service and other technology, said Felix Kuhnert, head of PwC's automotive industry division for Europe.

"We expect this strategy of segmentation to continue for the next five to 10 years," Kuhnert said. "The car industry is facing some exciting tasks."

Dueling Audis
Luxury-car models started multiplying in the '90s, according to Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. At the time, Volkswagen AG (VOW)'s Audi offered about 10 different variants. Now, the world's second-biggest luxury-car maker sells about 50, including the lookalike four-door A5 and A7 coupes. In the crossover segment, only 4.8 inches in length and about $1,100 separate BMW's X6 and a 5-Series Gran Turismo.

The effort is often wasted. The expense of stocking so many cars means most customers don't get to see all the choices, said Detlef Kuhlmey, sales manager at Autohaus Kramm in Berlin, which sells vehicles from General Motors Co. (GM)'s Opel. Across town, Audi Zentrum Adlershof relies on touch screens to show what won't fit in the dealership, said managing director Andre Reiser.

"Carmakers look for something special to present," Kuhlmey said. "To most customers it doesn't really matter."

Porsche Cap
While the strategy has helped boost market share, it also adds a demanding level of complexity. As model offerings fan out, marketing budgets need to stretch to cover more ground, and dealers sometimes struggle to explain the differences. It's reaching a saturation point.

"Every single variant increases development and logistics expenditure," Achim Schneider, a spokesman for Stuttgart-based Porsche, said in an e-mail. "Operationally this only makes sense if there's production of a certain number of units over the life of a model."

As a result, the company is capping the number of variants of the 911 for now. Next year's model will also have 22, which includes the 20 displayed on its website as well as convertible and hard-top GTS variants.

Carmakers are looking to offset the rising expense of developing new models and technology. Ingolstadt-based Audi wants to rein in costs by about 2 billion euros a year. BMW has said it's seeking to damp rising development spending by saving several hundred million euros annually.

Peugeot Cuts
There's "always a tension because it's the balance between efficiency and innovation," said BMW's Robertson. "A premium brand such as ours lives on innovation."

PSA Peugeot Citroen (UG) is reversing expansion to return to profit. Europe's second-biggest carmaker said it plans to shrink its lineup to 26 from 45 vehicles by 2022. The shakeup is supposed to boost the Paris-based company's margins by focusing on the most profitable segments.

Others aren't slowing down. After more than doubling its range of compacts, Daimler AG's Mercedes-Benz is revamping its naming policy, including rechristening the M-Class SUV as the GLE, to make space for even more models. The world's third-largest luxury-car brand plans 11 all-new models by 2020.

GM's Opel is investing $4 billion through 2016 to develop 23 new vehicles in a bid to end losses. The entry-level Karl subcompact, which is due out next year, doesn't have a direct predecessor, like the recently introduced Adam city car and the Mokka compact SUV.

Choice Paradox
The lineup expansion meant investment in its production facilities and in training to teach workers how to build a wide variety of vehicles, the company said in an e-mail. Opel is also extending partnerships in low-volume segments like family vans to control costs as it expands.

"All these options reduce the likelihood that people will choose any, and reduce satisfaction when people do choose," Barry Schwartz, the Swarthmore College social theory professor who wrote "The Paradox of Choice," said in an e-mail. Lots of choices are helpful when people know what they're looking for, but "in general, people don't know exactly what they want."
http://finance.yahoo.com/news/porsch...ZUITgAanTQtDMD
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Old 11-18-14, 04:15 PM
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swajames
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I suspect the most important thing that spreadsheet would have shown her is that you're not going to get much in the way of a 911 with a 500 Euro lease budget.....!
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