Monthly Archives: September 2006

Not so smart move, Daimler-Chrysler?

Once upon a time in a land far, far away (Detroit), a Prince of Industry, tried his hand at selling cars on TV and it worked. (Well, that and a huge loan guarantee from the government.) Lee Iacocca brought Chrysler back from the brink of death by going on TV and selling his K-cars to the public. For some reason, they believed him and bought those Chryslers.

The current Chairman of Daimler-Chrysler, popularly known as Dr. Z, or Dieter Zetsche, tried the same thing in a quirky $100 Million ad campaign, but it doesn’t seem to have worked as well, according to the Detroit News. While there is more interest in D-C as a result (over 6 million questions have been submitted in the “Ask Dr. Z” web link), the sales didn’t go up so they’re going back to the tried-and-true zero percent interest. Free always works.

Smart move, Daimler-Chrysler?

Smart fortwo

That’s the Smart fortwo. Yes, “fortwo” is the model name. Any guesses why? Right, it’s only for two people (and two bags). Only available in the U.S. through a company who modifies the gasoline engines to meet current standards, the Smart car is the latest in European city cars. Over 750,000 of them have been sold in Europe and they’re coming here, supposedly in 2008 for a base price somewhere around $15,000.

 And what do you get for your money? An economical (40-50 mpg) three-cylinder diesel motor and automatic transmission. It is tiny, tiny. Two can fit in the average single car garage. But they have this steel and aluminum cage around the passenger compartment (ok, the whole car) that is supposed to protect you in a disagreement with an SUV – say like if they don’t see you.

But, like all urban cars, they have this built-in practical and cute in an ugly way mistique going for them that’s almost unexplainable. Just like the original Beetle and the Mini (both versions). If they can keep the price down they’ll sell like hotcakes.

They also have (only in Europe) another two types, the forfour (go ahead, I dare you to guess) which looks even uglier without any of the cuteness and a two-seater roadster. I don’t think D-C is going to bring the roadster over the pond. Stupid decision, expecially to me. I’d practically kill for one – a two-seater sportscar that gets 50 mpg! Bring it to me, por favor! Oh, wait. I get thousands in change from a $20K bill? Bring it now!

The whole process will almost inevitably go like many others like it before have gone. Management decides on a low number for sales projections, they’re wildly underoptimistic, and there’s a shortage. So the dealers get to ration them with higher pricing that drops directly into the dealers’ pockets, in the process shafting the consumer.

Right now there are so few available, they sell on eBay with buy-it-now pricing in the $35K range and that is surely the true defnintion of rip off. Dr. Z, send enough that they don’t get a premium attached to them. Make them available, like a true people’s car ought to be. I’ll tell you a secret that no one in Marketing knows. The laws of supply and demand tell us that if you price it right you’ll sell every one you can make and the lower the price is, the more of them you sell. Take a risk, Dr. Z. If you sell it, they will come.

GM is Number 1?!

Ok, sure, Jim. This is a flashback post, right? Or a dream? Nope, actually, according to Newsweek (a print article, remember print?), GM’s Buick Divison is number 1 in sales – in China, anyway. And Toyota is number 5. Holy reversals, Batman! What’s happening here? Wait, it gets even better – they’re number one in quality and are known for “style and precision design.” So obviously a Detroit automaker isn’t really all that different than a Toyota plant in Georgetown, KY, then, is it? Especially if they can compete in China against Toyota.

Sorry, there are differences. Although GM runs some of the most efficient plants in the U.S., (as does Ford) they only make models that are not selling well at those plants and GM can’t convert the plants over to make something else. The Toyota plant is Kentucky can make everything from sedans to SUVs and vans, according to Newsweek. Plus there’s the built-in inefficiency that comes from making a GM, a Buick, a Cadillac, and maybe a GMC version of each vehicle, plus all the marketing and other administrative people necessary for each version. An industry economist says that a recession next year could wipe out both GM and Ford before they can focus on what they need to do and get cars built that more people will buy. Good luck, guys. You need it and I hope you make it. I know too many people depending on your pension funds.

GM has a bettter idea?

(Well, obviously if Bill Ford had to step down as CEO, it isn’t Ford that’s been having them lately.) According to blogs at Edmunds.com, GM has a better idea for reducing your gasoline costs – if you live in Florida or California, that is. (Oh, and the other catches are that you have to buy a big SUV and get OnStar.) They guarantee you’ll never pay more than $1.99 a gallon for gas. You’re probably thinking by now that there really is a conspiracy between the gas companies and U.S. auto makers to control the price of gas and this is the final proof, right? Wrong, sorry.

So what’s the deal? Well, GM will use the data collection information resources that OnStar provides to determine how many miles you’re driving and then they’ll cut you a check for the difference between what you’re paying (I guess an average price for your state) and the $1.99 price.

What a company! That’s got to be way cheaper than actually having to think of a solution that doesn’t involve vehicles barely capable of two-digit MPG ratings. No wonder GM and Ford are barely still in business. Sigh.