On page A4 of the Monday January 29, 2007 WSJ are a couple of interesting items. GMAC is still trying to get the accounting right of its sale of 51% of GMAC to Cerberus Capital. Meanwhile at Porsche which has stayed in the car business, first half net rocket to 1.05 billion Euros. IT now expect a 2.1 B profit for the year, and this on sales of only 39,750 cars. But then Porsche is using the equity method to account for its 27.4% stake in VW, which brought in another 520 M euros!. And then there was the successful stock hedging which we are now discussing before class in Intermed II.
All of which goes to show that tending to one's knitting and having a long term vision, Porsche, there is no substitute, can pay off. Just fifteen years ago, Porsche had to re engineer the way it built cars learning from the Japanese. It has paid off amid continued rave reviews for the Boxster and the new Cayman.
But stop and think about this. We have discussed the woes of GM and Ford ad infinitum. Those companies sell MILLIONS of vehicles per year and are losing billions of dollars. Here is a tiny company selling less than 40,000 units per year and making over a billion euros profit. To put that in further perspective, GM sells about that many Corvettes in a year. BMW sells about 550,000 cars year. Mazda sells about 15,000 miatas a year. This should give you an idea of just how far awry things have gotten in Detroit!
I will address Jason's question shortly , how did the Big Three get in this shape, by couching the answer in Deming's TQM points that we will be discussing in the grad class Sat morning.
DLE
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