Porsche’s $200,000 Sedan

By Douglas A. McIntyre Published May 10, 8:41AM EDT

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Porsche has decided to test how much people will pay for a luxury car with the launch of its Panamera Turbo S Executive. Porsche management has given it a base price of $200,500. Porsche likely does not sell many of these cars, but the fact that it sells any at all demonstrates just how much people will sacrifice for a car which can be driven off the dealer’s lot.

The main reason that Porsche can ask so much for any car is that the brand is greatly respected America’s 0.1%. The German car brand has an amazing valuation of $7.2 billion according to Interbrand. That is not far below the brand value of Ford (NYSE: F), one of the largest car manufacturers in the world, at $10.9 billion.

The appeal of the Porsche brand, even at $200,000 a car, is enhanced by an element which buttresses brand–quality. In the J.D. Power 2014 U.S. Initial Quality Study, the luxury car company led all brands with only 74 problems per 100 vehicles. The average problems per 100 vehicles across all car manufacturers was 116. The mighty Mercedes just avoided being average, posting a score of 115.

One of the reasons people pay a great deal for a car is extravagant features. In at least one case, the Porsche Panamera Turbo S Executive has something which is effectively useless. The vehicle can hit a speed of 192 miles per hour. However, it does have better back seats than most cars, which includes an entertainment system for bored riders.

Porsche management understands the Panamera Turbo S Executive is little more than a “halo” product, the way a $70,000 Corvette is for Chevy. Porsche sells a car for as “little” as $52,000, the entry price for the lowest end Boxster. However, the Boxter can reach a maximum speed of 164 miles per hour, which indicates that every Porsche has at least one useless feature.

So much for balancing a car of impractical price with another for the masses.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.