Markham Lee_

The Latest Bad Idea: Government Sponsored Vouchers for Car Purchases

G. Kahn - people who can afford new cars but are sitting on the sidelines due to the economy, aren't likely to be swayed by further discounts. Saving $3, $5, $7k isn't the issue, the issue is that their current vehicle works just fine and they don't want deal with the larger costs around buying a new car.

I personally put off buying a new car because of the economy and the voucher program wouldn't sway me one bit, it's not an issue of saving $5k it's an issue of saving the rest of the purchase cost.

The other issue is that if this program is co-sponsored by the automakers they would be selling the cars for a loss, something they already do with their big incentives (the boys in Detroit at least) how does that help anyone?

As for 50% off I'm basing that on the prices some local domestic dealers are charging now based on the historical price, it's not advertised that way but between the incentives, employee pricing, etc, it's in the neighborhood.

The local Ford Dealer is offering Explorers at about 1/2 of what they would've cost about 18+ months ago.

-M

Auto Manufacturing: What Does 'Buy American' Even Mean?

Tundra Headquarters: any similarities are coincidental as I've never heard of your blog before. It's just a matter of different people thinking the same way about a particular topic.

On Ross Perot: he joined the board in the early 90s and began going to dealerships, talking to customers, dealers, etc, buying cars, all to gather intelligence on the marketplace and the car buying process. He was ignored by the board and quite out of frustration.

Pricing & Competition: generally speaking Toyotas and Hondas cost more than their Detroit counterparts, especially when you consider that the former don't use anywhere near as many incentives, discounts, etc.

Let's not forget that Detroit was selling many cars for a loss for most of this decade just to get them off the lot.

Perhaps that's the reason they sought out foreign parts, it wasn't so much to remain competitive as it was maintain their business model.

I.e. it's fairly easy to pay $25-$30k for a Camry or an Accord, while it's fairly easy to get a loaded competing model from Detroit for much less.

The idea that Japanese cars are cheaper is based on how the market operated in the 80s, but it hasn't been true for quite some time.

Thanks for reading

-Markham

Detroit: Please Bring Back the Stripped Car

I understand your point of view Bob, however I shouldn't have to buy a product I don't find appealing just to support Detroit. This is America after all.

I drive American cars all the time when I travel for work and I'm always quite happy to get back into my German sedan, it's not about the name plate it's the way the car performs.

If America catches up they can get my money.

Detroit: Please Bring Back the Stripped Car

There is one major flaw in this argument: in the 1980s cars weren't as reliable as they are now, and the used market wasn't as strong. In other words there is no point in buying a stripper Malibu when I can get a used Accord for the same price.

That's the real problem Detroit faces as far as resale a lot of consumers would rather have a used import than a brand new American car.

I know this consumer (I've always bought Japanese or German) would rather have a 4 year old import than a brand new American car, and to be honest it isn't really about longevity - it's the simple fact that I like the styling, performance, interiors, etc, a lot better.

Speaking of which:

I would buy a Ford Mondeo if I was looking at a midsized family car, too bad it isn't sold in the U.S. and some dolt at Ford thought that the American consumer would prefer the Fusion...

...even though European customers are buying Mondeos instead of Accords.

-M

Buy a GM Car, Get 50 Shares Free?!

Car_guy:

What say you to the fact GM was offering employee discount pricing last month in an effort to prop up sales? Isn't that the largest incentive a car company can offer?

Toyota may have been offering 0% financing to a few select customers, but let's not forget that Toyota turns a profit per car sold and GM wasn't doing that BEFORE their deep discounts.

How about the fact that you can still lease a Japanese or German car and the American car makers are discontinuing their leasing programs?

If the demand for the Malibu is so high that it is selling for a higher price than the Camry (I've seen no evidence of this), how do you explain the fact that the Camry is outselling the Malibu by nearly 2.5:1? Per a recent WSJ article GM sold 16k Malibus in July and Toyota sold 42k.

I seriously doubt recent numbers would show much of a difference.....

You may find my articles to be poorly researched, however I don't see any data that supports your view of the world and would be happy to review it if you would point me to it.

As always, thanks for reading


-M

Sick and Tired of Financials, Carmakers Blaming Everyone but Themselves

I think the markets and the analysts look for a sign from the company that things will improve, and they more or less make "bets" that the rest of the market will buy what management is selling.

After an abysmal Q3 of '07 (A big loss, negative revenue) Countrywide claimed that they would return to profitability the following quarter, and the stock popped significantly even though there was zero reason to believe that.

Every time a retail company misses its numbers it always has an excuse: the weather, paycheck cycles, etc, and many times the media and the analysts buy it.

It's sort of a weird con game where the mark asks for it.

It won't stop until investors start holding management accountable and/or calling BS more often.

Brand Names: Important, But Not Key to Investment Decisions

I would disagree with the notion that American cars are popular overseas, and would instead say that there are some instances where American cars do quite well overseas but they aren't a dominant brand world-wide.

Yes you do see a lot of Ford Mondeos in the U.K. (they're as ubiquitous as Accords) but the overall mix is heavily slanted towards the European brands.

Ditto for a lot of other countries, you may see an American model doing well but not enough (for me anyway) to say that foreigners prefer American.


-M

Brand Names: Important, But Not Key to Investment Decisions

First thanks for reading (as always).

Deep Value: I think that if you have two companies selling similar products and company A cannot demand either a higher premium and/or has customers who will refuse to buy the products of company B, then you cannot say they have the stronger brand.

Now it's hard to make general statements without having a specific product in mind, but really you need to have both: pricing power and customers who will refuse to patronize the competition. A truly strong brand should be one where the customer is more concerned about the product attributes then price, and has little to no interest in dealing with substitutes.

Perhaps the best example is what many people say about BMW drivers: "they would rather drive used BMWs then new models of other car makers".

As for GM you have a company that people see as the low cost provider, a company that doesn't exactly hold the public's confidence with respect to being a leader in automotive technology. So the car starts out at a deficit because some will be more skeptical about then they would a Honda or Toyota Volt.

Working out a partnership where it's quietly sold under a stronger brand name isn't a bad idea.

-M

Chrysler's Rebadging Plan: Strategic Blunder for Nissan?

Note the use of the word "potentially" in the opening sentence, I was writing this from the perspective of rumor or no it's just a bad idea period.

Also if you check my blog you'll see that SA aggregated multiple articles into one, so the messaging makes more sense on my blog.

I agree with the commentators who noted that margin wise the deal makes little sense as well.

Overall I just have little faith in this when these partnerships (in the past) have produced cars that were hits for the original manufacturer and flops for the company selling the rebadge.

When I was finishing college a coveted car was a '98/'99 Mitsubishi Eclipse, especially the Spyder version - even if they were still available, trust me, no one wanted a Plymouth Laser (or a Plymouth period). The reason for this is the weakness of the Chrysler brand, you can't successfully sell a rebadge when the consumer isn't especially fond of the "badge" in the first place.

As always thanks for reading, I always enjoy it when my articles stimulate conversation.


-M

Chrysler's Rebadging Plan: Strategic Blunder for Nissan?

SA writes the titles for the articles, not me.......

Rebadging has been a failure in the past and I doubt that will change in the future, because many consumers DO care who made the car and why bother with the rebadge when you can get the original? Especially when the original will have higher resale value? Besides most people research cars online and will be able to easily find out that Nissan made the car, which will likely push them to just buy the Nissan version.

If consumers didn't care who made their cars and just bought based on price, Detroit wouldn't be in trouble right now.

Chrysler's brands aren't worth much so it doesn't make much sense for Nissan (or anyone else to buy them), there is little point in putting a brand on your car that will cause people to think less of it.

-M

The Future of Ford’s Mid Sized Car Business

Honda has been chasing the Mondeo in Britain for years now, while in the U.S. I doubt Honda is particularly worried about Ford's offerings in the mid-sized car category. The fact that Ford is letting internal politics and misconceptions about the American market prevent them from bringing a car over to the U.S. market that is a legit competitor for the Accord is mind boggling.

To be sure it's probably not just politics and misconceptions that are the problem, it's the fact that Ford is undoubtedly trying to "prove themselves right" and win customers with an "American style Ford". Instead of just going with what the marketplace wants and selling a German style one. A lot of companies in trouble do this, they don't change they just try to improve upon what's not working.

It's probably a mixture of politics, misconceptions and psychology/aversion to real change.

Either way the Mondeo is a sweet looking car.

Thanks for the comments!


-M