MiniCase_PPTsC07MiniCasePorschePass-through课件.pptVIP

Currency Pass-Through at Porsche Currency Pass-Through at Porsche Based in Germany, and with manufacturing and assembly exclusively located in Germany, Slovakia, and Finland, Porsche’s entire cost base is the euro or Slovakian koruna (which is managed by the Slovakian government to maintain stability against the euro). This means that all of the direct costs in its automobile manufacturing are incurred (for practical purposes) in euro-denominated operations (cost, markup, basic pricing). The three different product lines (911, Boxster, Cayenne) are then exported and distributed through distributors in the major industrial country markets. Porsche therefore has little local sourcing or local currency costs in the non-European markets where it sells more than half its total annual volumes. Currency Pass-Through at Porsche If Porsche were not actively managing this exchange rate exposure, the company would see declining profitability – or at least declining rates of profitable growth – as a result of its euro-denominated products priced and sold in non-euro currency environments like the US dollar. Assuming there is a limit to the price consumers in US dollar market are willing and able to pay for Porsche products, the US price will hit a ceiling, and, if the euro continues to rise against the dollar, this will result in declining margins, or declining volumes, or both. A simple numerical example using the following equation can make the limitations of a dollar-price readily apparent. Currency Pass-Through at Porsche: Case Questions Which do you believe is more important for sustaining the sale of the new Carrera model, maintaining a profit margin or maintaining the U.S. dollar price? Given the change in exchange rates and the strategy employed by Porsche, would you say that the purchasing power of the U.S. dollar customer has gotten stronger or weaker? In the long run, what do most automobile manufacturers do to avoid these large exchange rate squeezes? Curre