Both cars are very nice, and perhaps a small percentage of buyers will opt for the higher HP brand. However, there is still plenty more that goes into that kind of decision, and IMO the RS7 does not equally compare to the luxury, build quality and exclusivity of the Panamera.

 

Porsche is saying more about the Panamera Turbo than the RS7 with this choice. The reality is, Porsche does not want to encroach on the Panamera turbo's power sales by giving the GTS too much power. Given the similarities between the two cars, they are banking on the luxury feel of the Panamera turbo with similar performance winning out for the additional dollars over of the more pure sport feel of the RS7. i'd go further and say I think they consider the S7 the more equivalent version to the GTS.

 

porsche is currently the most profitable car company in the world and not having any trouble selling their models. this could be adding to their potential arrogance. i will say, i see the RS7 as the only real direct competitor to the Panamera, but the tt RS7 at a price point of the panamera GTS is not necessary a fair fight (for the panny). that RS7 is crazy fast, but that's not the only aspect to this decision and i think porsche feels that have the RS7 'handled' in that comparison. it may not be the right choice, but i am sure they have drilled the numbers over and over and determine where each panamera model has to be to be attractive. for me, the panamera excels with the interior and the handling. the RS7 has a wonderful interior (audi interiors have been great for years now), but a direct comparison has me wanting the panamera interior much more. the center stack is very appealing once you live with it a bit. in respect to handling, no contest - the porsche wins that comparison easily. the audi, at that price point, is a great choice, but those are the clear winners to me and there is probably enough market share for both. plus, porsche and audi are MUCH more worried about ALL the SUVs they're selling anyway...

 

Porsche brings in about $24 Billion revenue, so I do not think they are too worried S7 is undercutting their vehicles.
Porsche is known for utmost attention to detail and luxury, combined with name recognition and styling.
Put all these together and bring near a customer with some hefty dollars, they will not be asking to haggle, they will purchase what they want, without whining about the price much.
if you spend 200k on a car, vs 220k or 180k, it wont matter to you because you can already spend that much on a CAR.
That is Porsche. That is attention to higher price customer. us who buy cars second hand are not their target audience.