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

GM: What's the Point in Being Number One if You Can't Turn a Profit?

Quick Clarification:

1) I don't hate GM or Detroit for that matter, I grew up in a household that only bought GM cars and can probably rebuild one of the 70s era Buick Elektras from scratch if I had to.

My articles are written from the perspective of what they should do to in order to thrive again and/or possibly gain my business.

There is a difference between constructive criticism and pure bashing, my articles are the former.

2) The point of this article is that for the last 10+ years GM has been #1 in market share, and has over the course of that time done nothing but bleed red ink. It's a mathematical fact.

Over that same time period Toyota wasn't #1 yet made more profits as did many smaller car makers, also a mathematical fact.

Therefore profit per car sold can easily trump market share.

3) Toyota (like many automakers) will lose money for a bit as it has to readjust operations to a marketplace that buys fewer cars, and buys lower margin cars. BUT, Toyota will find it's way to profitability relatively quickly, nor does it have the hard road ahead of it that Detroit does.

4) It's not possible to have a productive conversation about the auto industry if we're not going to be objective.

Thanks for reading.


-Markham

Will Hyundai's Luxury Car Be Like the VW Phaeton?

I never understood VW's reasoning behind the Phaeton when they own the Audi brand as well, it just didn't make sense to even waste the time to try and take VW more upscale when they could just sell the Phaeton as an Audi. At the end of the day it's actually a great car so it's just a total waste that it wasn't marketed as an Audi.

-M

Will Hyundai's Luxury Car Be Like the VW Phaeton?

Glenn I have to say that I agree with you 100%.

Hyundai is working off the assumption that all they have to do is make the car and sell it at a competitive price, they're not considering the customer experience part of the equation.

As someone who has shopped and/or purchased cars from the local luxury dealerships, and accompanied others to the local Nissan, Honda, et al dealerships, I just can't imagine a current luxury customers deciding to spend a similar amount of money on a Hyundai whilst tolerating a significantly downmarket experience.

At least, you won't catch me doing it.

-M

Will Hyundai's Luxury Car Be Like the VW Phaeton?

First thanks for reading.

Second: I think Toyota was in a better position than Hyundai when it launched Lexus than Hyundai is now, especially since the marketplace is a LOT more crowded than it used to be. Plus let's not forget that Toyota launched a new brand, while Hyundai is trying to go upmarket with its current one.

The other issue is that shoppers considering a well established luxury brand (Infiniti or Acura) vs. a Hyundai Genesis is much more likely to pick the former. All things being equal you're getting a luxury car buying experience, a tried and true car and higher resale value.

It's not so much the cost of the Phaeton vs. the Genesis as it is the degree to which it goes upscale from its current models. The Phaeton is a big jump up from the $30-$40k Passats VW already sells, and the Genesis is a jump up from a Sonata.

Let's also not forget that the Sonata competes in a rather generic field (mid-sized cars) by being cheaper and/or offering financing to people who may not be able to get it at the Honda dealer.

I don't think they have the customer base and again, why bother with a Genesis when you can get an Infiniti, a car that does a credible job of challenging BMW performance wise or an Acura TL?

I don't see how Hyundai successfully competes when they're alternatives in that price range with better reputation and a luxury nameplate.


-M

Automaker Rebadging Revisited

Launching the Lexus brand did well for Toyota, ditto for Acura (Honda) and Infiniti (Nissan), the issue isn't so much in launching a brand in general as it is

1) Proper Brand management & development

2) The right brand matched with the right product

Eagle wasn't a new brand for Chrysler it was a brand they bought from AMC.

Saturn started out as a great brand with loyal customers (how many other American brands in the early 90s had fan festivals?), then GM began to mismanage it.

GEO was a mistake from the beginning as it wasn't really selling anything different from the rest of GM.

New brands have indeed been launched successfully so there is nothing inherently fatuous about launching a new brand, the problem is that launching a new brand is pointless if you don't do it RIGHT.

Mind you Subaru is a small brand but it does have a reputation for building high quality products, and the very people you needlessly derided are indeed the very ones who often purchase Priuses and would be interested in the Volt.

As always, thanks for reading



-M

Automaker Rebadging Revisited

Quite the spirited debate this article incited!

If GM doesn't reposition its brand in the hearts and minds of customers, a host of new products won't save the company even if they're the best cars on the road for the simple reason that people won't try them out in the first place.

Merely putting out a new product with a commercial saying "we're the best" isn't going to get the job done, if the customer is already convinced that the competition is better and GM is trying to saw them with marketing fluff.

So for the Volt and other new GM products to be successful they need to do something innovative and/or drastic to fix their branding issues, whether that's partnering with a foreign automaker via rebadging (or selling Volts under a new brand name at their dealerships, etc), or something else that increases the standing of the GM brand.

If you don't fix the brand, you can't fix the company.

Management and Union quarrels in my mind aren't the reason why many Americans look down their noses at the products coming out of Detroit. It's more than that, it's how the cars perform, styling, quality, etc, people feel they're making a smarter decision when they buy Japanese.

One of the failings of the J.D. Power Surveys is that they're often touted by the automakers themselves, so when Buick says "Hey we're tops in Quality" consumers ignore as marketing fluff and focus on their own experiences, or maybe someone like consumer reports that seems more objective, and whose rankings favor the Japanese cars.

The other issue is that it's just not about quality, resale value, levels of luxury, styling, cachet, etc, are all factors as well. A Buick SUV and a Lexus SUV may cost the same and be the same quality, but which one would most people rather drive?

Ames I serious doubt that Chevy is the #1 selling brand in the U.S., especially when they need to use incentives to sell their cars and Toyota and Honda don't need to. Furthermore if I want a Malibu I can to the local Chevy dealer and walk away with one from a sales person who will roll out the red carpet for me, while the Honda dealer won't negotiate and will tell me if that if i don't take the one I'm looking at now it will be sold by tomorrow.

During the month of July over 2 1/2 more Accords (ditto for Camrys) were sold than Malibus: analyticalwealth.com/b... and Honda and Toyota are crushing Chevy in terms of resale value.

I don't see where you get #1 brand from.

In the end it's just an idea, domestic brands rebadging foreign ones has never worked, so maybe the opposite direction will. Of course you run into many of the same branding issues, BUT if people find out that the Hyundai they bought is really a Chevy it could potentially have more of a positive effect then people finding out the Chevy they bought is really a Hyundai.

The former surprises people and makes them think: maybe that company is better than I thought, whilst the latter just reinforces their negative feelings: "See, Chevy is so bad they had to get Toyota to make the car just to get people to buy it".

-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