Markethaus Musings

Jobs (and I don't mean the economy)

2011-11-22T12:40:00.000-05:00

If you haven't, read it. Nuff said.

Analyzing Ad Agencies or "How to build better car marketing"

2009-10-22T12:59:00.002-04:00

Disagree with the tenor of this article by Mr. Zimmerman of Zimmerman Partners, CEO of the Omnicom agency (Omnicom is in a difficult review on the Chrysler account). Generic analysis yields generic results. Car purchase is the most highly considered purchase...other than maybe choosing your spouse/next spouse. You can't build confidence in a poor product with advertising. Just like a fake match.com profile won't fool you in real life.

Advertising is the least influential of all the messages about a car/truck. The most influential is word of mouth, personal experience, testimonials and reviews. None of which can be influenced with super bowl tickets or other form of clever media bribes. Do we really think people watch ads and think, "yeah,...I believe that!"

The experience each of us has with the product, and what we tell our friends and neighbors about it matter 10x of the ad and ad campaign. No amount of advertising could fix the Escort and no amount of bad advertising could un-sell the Camry over the past 20 years. It's a simple mathematical formula that ignores ad budgets and executions. I would argue that Camry has had the worst advertising, consistently, over 30 years. Can't remember any of it. I do remember VW and Jeep ads. Just some very uneven product executions.

The whole, "let's review the agency" circus is counter productive. Basically, most of the people get re-hired at the new agency anyway and get pushed around by clients like peas and mashed potatoes on a plate. However, the executives at the car company and/or the cars themselves...rarely change.

Regarding VW...they had the worst quality of any car for many years running. Although they've improved, there are still many angry former VW owners running around telling shoppers..."DON'T BUY IT."

Here's a thought. Want to improve brand recognition? Give your car a memorable name and make sure it's readable in traffic. By doubling the type size someone can actually say...hmmm...that must be an Oldsmobile Alero.

;-)

My point about generic? Chevrolet has amazing durability as a "brand." Think trucks. Very, very loyal group of return buyers. For both Chevy and Ford. The American car companies abandoned the car market a long time ago because they failed in efficiency for decades and failed to compete effectively with Toyota and Honda. Now, they are making a comeback. Watch closely...Both Ford and Chevy have produced some very interesting small cars in the past few years and the quality gap is shrinking...in fact is probably gone. Now the race moves to technology, design and the ability to customize to consumer tastes through variable and lean manufacturing. Advertising is, frankly, the A** end in that equation.

From a Former anti-generic ad guy

Duracell and Chrysler

2009-05-21T10:57:00.004-04:00

Back to the future...Mr. Nardelli is gone and the former head of Duracell is now Chairman of Chrysler.

Most of us forget that the electric car played a large role early in automotive history, until petroleum took over. We're seeing a resurgence in electric and hybrids but the technology is still struggling to become affordable. And, unless most Americans want to make major economic and lifestyle changes, pure electrics have a long way to go.

Back in 1995-6 we wrote a paper on the impact of limited range. Conclusion? Pure ZEV (zero emission vehicle) needed a range of 100+ miles to gain a penetration of over 5 to 10%.

When we did a price sensitivity analysis, we felt that if gasoline went over $4/gallon that people would look for alternatives...mmm. We were surprisingly accurate, 13-14 years ago!

NeoSynergy Shopping Widget

2009-02-20T11:51:00.002-05:00

Have been very lazy lately and have not been posting...we developed a great google gadgets that allows consumers to shop for new car and truck specials. You can download and install it via google gadgets. All you need to do is search for NeoSynergy here , install it using the instructions at the bottom of the page.

We also have a google mapplet that maps the location of these deals as well as a google toolbar for best deals.

Would love comments...we are adding more inventory all the time.

Porsche Cayenne it is

2008-04-28T16:35:00.000-04:00

Neglected to mention...I chose the Porsche Cayenne S...needed the extra room and AWD for the winter (see garage photo)...and it was the best choice given those requirements. Heard a couple of comments that the Cayenne isn't up to Porsche quality...based on my research, quality was not an issue starting with the 2006 MY forward. Plus...I won't own it past the factory warranty.

It was easily the best handling SUV out there...although it was definitely not, "the best deal/value for the money." The dealership did give me a "great deal." I've had a month in the car now and enjoy it immensely...nothing but good things so far. Still working on getting my I-Phone/I-Pod integration though...Porsche's factory PCM system does not make it easy.

I did look closely at a number of pre-owned (that means "used" in the luxury market) Cayenne but opted for a new vehicle lease.

Car Shopping Continued

2008-03-12T13:41:00.000-04:00

Enter the Taurus X Limited...I'd read some good reviews of this vehicle so I decided (against the recommendations of others) to try it out.

Submitted a "price quote request" after seeing a "Best Deal" on our trusted Motoralley site and AolAutos.com and after a week of back and forth (without getting a price; complex reasons, makes my brain hurt) decided to just go to the store and drive the car. I did drive it...my recommendation...never drive a 2006 Audi S4 right before you drive the Taurus X. Mind you, the Taurus is a nice ride...leather "trimmed" seats and all wheel drive with a nice 260+ hp engine...but a completely different ride...

It's not fair to compare the two, but I shall anyway. This isn't a fair column. The Taurus is far superior in things I desire but don't have in the 2006 Audi S4...more room, primarily...and gas mileage. Steering is softer, heavier and the seats just don't compare either. Again...don't forget, the S4 cost almost double...so this makes sense. If only I could find the S4 with more room...shoehorn the Audi 4.2l V8 in the Taurus X, tighten the steering, replace seats, etc. Voila. Unfortunately...Audi doesn't build this car.

Mind you, it doesn't mean I don't like the Taurus X...I do...I just don't like it enough...yet. Need to go drive the Cayenne...(does this sound insane...but this is how I shop). Need to decide, definitively whether I want to spend the extra $ to justify better ride/handling. Of course I will go check out a few others as well...

Car Shopping? My process...

2008-03-02T14:07:00.001-05:00

So, the 2006 Audi S4 lease is due (actually way past due). Have been busy with work, life etc. and have started thinking about the next vehicle...

I thought it might be helpful to others to see how an industry insider figures out what car/truck to buy.

My needs? Perhaps a little more space, and a place to put the road and/or mountain bike. My kids are now teenagers...and too large for the backseats of the S4. The next generation S4 will have larger backseats...but I don't want to wait for that vehicle. So, the choices are...a larger Sedan (e.g. Audi A6 or S6, BMW 530 or 550, Mercedes C class, Lexus GS430 etc.) or an SUV (e.g. Ford Explorer, Jeep Grand Cherokee, Audi Q7, Acura MDX, BMW X5, Saturn Outlook).

Where to start? Well...first there's budget. I spoke to Audi and they made a nice offer at low interest rate to get me to "keep" the S4. Audi is trying to avoid a glut of A4/S4 at the auction...they are launching the new A4 and the theory is...too many of the old bodystyle at auction drives down residual values and that equals big losses. More later...

The Toyota-ization of Chrysler Group

2007-09-06T17:24:00.000-04:00

Ever since Bob Nardelli took over, the auto world has been wondering how he will "fix" Chrysler. The two most visible moves? Hiring Toyota sales and marketing executives seems to be the answer.

Let me be the first to say, I'm not sure that this fully addresses Chrysler's need. I know both Jim Press (new co-President) and Deborah Wahl-Meyer (new CMO) are very talented sales and marketing executives. But is that really Chrysler's problem? My $.02 says Chrysler's biggest issues are in engineering and product planning, not sales and marketing. Here's the situation as I see it:

Dodge/Chrysler need to freshen key products in the line up and launch them successfully (Minivans, trucks, Durango) and improve its powertrains/transmissions.
Chrysler brand needs to move up market (to avoid on-going collisions with Dodge) and lacks the product/powertrains to be an entry level luxury/luxury brand that can compete with Lexus, Infiniti, Acura, BMW, Mercedes, and even Audi; not to mention the dealer service and quality issues
Quality reality and image lag behind the leaders (we used to say it takes 3-5 years for quality improvements to be "accepted" by the market)
Dealer sales and service satisfaction lag behind leaders (note that Toyota does not have good sales satisfaction scores)
Jeep's attempt to re-brand itself beyond an "off road capable" vehicle -- jury still out...personally, I don't like it. Jeep says off-road/4x4 capability, but then, I didn't spend millions on focus groups to prove that this would work. I like it about as much as a Porsche Cayenne SUV...which is...not at all (in all candor...the Cayenne has sold well...for now)

Given those challenges, it seems that Chrysler should want to hire some Toyota product planners, engineers and manufacturing people to help the sales/marketing execs. I suspect it's a bit harder to lure them away...the NUMMI people (manufacturing JV with Toyota to make Corollas and Geos...remember Geo???) at GM didn't fare well even though they demonstrated that a Big 3 plan could rival Japanese quality/productivity.

The challenges at Chrysler will be much different than at Toyota/Lexus during the go-go 90s. The Lexus product and launch was practically flawless from a product standpoint. Fantastic V8 and fit/finish with industry standard dealer support...the chance to get it all right the first time...with a management team in Japan that said, "do whatever it takes to become the leader." The Toyota Camry is the gold standard for Sedans...and it's not because of its styling or advertising. It runs like a refrigerator. If you can get the product right...everything gets so much easier. Jim Press was quoted as saying he thinks he can strengthen the dealer group...I don't know...but my guess is that Toyota's dealers are strong because they sell more new units/store than any other franchise in the US...and that's because of products like the Camry, Corolla, Tercel, Prius and Sienna. To me at least, Toyota is an engineering and manufacturing company first and a sales/marketing company second. That explains their success.

As a friend of mine from J. Walter Thompson used to say...there's no amount of advertising/marketing creative and media that will save the Ford Tempo.

Trouble In Auburn Hills

2006-11-14T14:28:00.000-05:00

What with GM digging out of a hole and Ford still in the hole, it seemed only a matter of time before DCX felt the brisk winter wind whistling around its financial ankles. Like Ford and GM, Chrysler Group has launched hot new cars and crossovers like the Chrysler 300 and Dodge Caliber but many of its Cars, Trucks and SUVs are not moving as well as originally "programmed." Blame the economy, gas prices or the favorite reason for market share losses, Toyota. It doesn't matter, $1.5 billion in losses in the most recent quarter get your attention. "Domestic" products, especially SUVs and Trucks have gone from cash cows to financial boat anchors. New Sales chief, Steve Landry has his work cut out for him and further production cuts are underway. The problems are deep enough that aggressive discounting is once again front and center.

The cutbacks are underway...from production cuts to supplier cuts and a new aggressive leasing program that carries with it the usual residual risks. When you fly into Detroit Metro airport, you may see large parking lots of new cars...likely, those are Chrysler products, waiting to be shipped to dealers who have cut back on their order banks. Unlike Ford and GM, however, Chrysler group's parent in Germany has already whispered the word, "spin-off."

We're not sure how DCX would spin-off Chrysler Group should the sales/profit story worsen. It would likely require a suitor...perhaps Nissan? Plus...how do you unravel the cross product plans? One thing for sure about the current car business...it's not boring!

Au Revoir Nissan - Renault - GM

2006-10-04T16:34:00.000-04:00

GM and Nissan/Renault announced today that they will be disappointing its largest shareholder, Mr. Kerkorian by not linking up. I don't consider this to be surprising. Nobody at GM wanted to deal with a gigantic merger and the potential loss of control.

GM apparently wanted additional compensation because Nissan/Renault would reap greater benefits in a link up. I recall, in an earlier life (Electric Vehicles) that GM wanted us (Ford) to pay a premium to form a JV on electric vehicles. Why? Because the EV1 was such a great hit. Our feeling at the time was that the Ecostar Electric Van had just as much promise for sales because it fit the duty cycle of many fleets. In the end, the alliance faltered...just as this one with Nissan/Renault.

Interestingly, the end of these alliance talks might signal the beginning of alliance talks with another faltering domestic car company. Ford has just hired a new CEO and continues to lose market share and profits. Chrysler Group is also beginning to struggle and has no volume presence in Europe and has never done well in Europe in the mainstream passenger vehicle business without a partner. Although Mercedes offers more entry level vehicles, it is still predominantly an upper end brand.

Anyone remember Renaults in America? Yes...in the 80s...as part of an alliance between AMC/Jeep. That alliance died in 1987, when Renault sold AMC to...Chrysler! That's how Chrysler acquired the rights to the Jeep brand. Renault left the US market, the largest in the world, in 1989.

Finally...BMW has Vaporware

2006-09-13T11:48:00.000-04:00

In 2004, BMW demonstrated its version of a clean, sustainable energy future with its hydrogen powered vehicle. Now it has announced that it will build and lease the BMW Hydrogen 7, the first hydrogen driven luxury performance car.

BMW has done extensive research in Hydrogen and has cleverly taken advantage of its ICE (internal combustion engine) technology so a new powertrain is not necessary (unlike hybrids and electrics). Some great side benefits of hydrogen:

Much lower emissions, basically water vapor
Infinite supply (H2O)!
Good performance...albeit not as good as the gasoline powered ICE, it still has 260 HP in Hydrogen mode (the BMW 760 is a 12 cylinder)
Great mobility with 400 miles range...unlike pure electrics who are limited to 100 miles with advanced batteries

Of course this technology is still very, very expensive but in volume...manufacturers will be able to drive the cost down. Very exciting stuff for those of us who worry about the environment and the safety of our energy supply.

The major challenges are the investment to drive down cost of this technology and switching our fuel supply infrastructure to hydrogen. Don't underestimate the time and cost to create the infrastructure. It's taken us 100 years to build infrastructure for oil (exploration, pumping, delivery, refineries, retail gas stations, etc.) and switching will not happen in a few years. Still...I believe that hydrogen is much closer to the ideal future than hybrids and electrics.

Oh yes...for those of you linguistically challenged, Wasserstoff = Hydrogen in German (see sign at fuel station)

Now That Ford Has Wings, Will It Fly?

2006-09-06T18:34:00.000-04:00

My initial reaction to Alan Mulally's hiring as Ford's new CEO was surprise, then fear...then serenity. Ohhhmmmm...

I lived in Seattle so I remember him from Boeing...and Boeing has had its share of major market swings and contretemps. Two CEO resignations in a short span, the silly move of its HQ from Seattle to Chicago (so...they wouldn't have to "fly" so much?) and a nasty Air Force contract scandal leading to a jailterm for the Boeing CFO.

Although I initially felt Alan Mulally lacked the auto experience necessary to be immediately successful he does have the engineering, manufacturing and union background necessary to successfully manage an international company. It's always difficult to assess whether the upswing in Boeing's commercial aircraft division was due to him...or another series of factors (i.e. a rising tide lifting all boats, product that was put in place before his arrival, etc.)

He gets universal praise for his performance so there is strong hope that he can translate success and passion for building the best aircraft to the car business. Those watching the car business will immediately recognize that outsiders have rarely been successful in Detroit. More recently, whiz kids from packaged goods, consumer electronics and banking have found that success in pampers, banking or contact lenses do not a car marketer make. Something about the inherent value in a disposable good that lasts a week or a few months, vs. the second largest expense a household is likely to undertake in their lifetime. Plus...who spends 6 months shopping for dog food, frozen snacks or their next bank?

At least he understands the long term product development project has to fit the market...or you have the predicament of Ford today. Products that miss the market need. Everyone in Southeast Michigan feels that pain. Let's hope this idea flies.

BMW and The Dangers of Blogging

2006-08-10T14:51:00.000-04:00

I wrote a piece about why it's a mistake for BMW to drop, "The Ultimate Driving Machine" tag line...based on a column by Al Ries, famed marketing consultant. Turns out Al assumed the tag line was changing...it's not. In the comment below, Eric Webber of GSD&M, agency of record for BMW says, "NOT TRUE."

My apologies to BMW and GSD&M...

I once saw this happen on the Ford business. Quality is Job 1 was the corporate slogan. Some thought that was the Ford brand slogan. No...the Ford brand slogan, at that time, was "Have You Driven A Ford Lately? (agency was JWT)" "Quality is Job 1" (agency was O&M) was intended to be a halo across Ford, Lincoln and Mercury (this was before the PAG/Premiere Auto Group and Volvo were added to the Ford family).

In closing, I'm glad the tag line remains...it's distinctive and fits the brand perfectly.

BMW's Advertising Changes Lanes

2006-08-09T08:27:00.000-04:00

After forever and a day, BMW's abandoning "The Ultimate Driving Machine." I think it's a mistake...a big one. BMW's entire brand DNA is based on building the best handling small, midsized, large luxury cars and trucks. So, why change it? According to Al Ries, a changing of the guard at BMW (a new Exec. VP) means it is finally time for a new ad slogan.

A business associate of mine once said...it's really easy to change the "image" of something that has little or no image...because you're starting from scratch. Sure you will need PR and an Ad budget. But try to change the image of Oldsmobile? Now that is going to take some work...because Oldsmobile stood for something for a long time. As most of us know...Oldsmobile failed and is now on the heap of dead brands, having lost its way as it attempted to change it image and products.

I'd say the same is true for BMW. The new campaign makes me think that BMW is chasing someone else's business...maybe Lexus or Infiniti or Mercedes. But, in changing its ethos, BMW is likely to alienate its core owner base...the people that identified with BMW's obsession to building great handling luxury performance cars. For the past 20-30 years, in the US, BMW has delivered driving machines in spades, passing Mercedes in luxury sales in the process. What, did everyone suddenly decide they don't want the Ultimate Driving Machine? BMW's US sales say otherwise. I think the old saying, "be careful of what you wish for...you just may get it" applies here.

If BMW isn't the ultimate driving machine...then what is it? According to the new folks in charge (and Al Ries), BMW is now,

"A company of ideas"

I don't want a car that is full of ideas. I want performance and luxury in a nice looking package.

GM Merger Thoughts

2006-07-08T16:26:00.000-04:00

The airwaves in Detroit have been buzzing with the GM/Renault/Nissan merger discussions. There are at least two camps:

1. The, "don't distract us while we're fixing GM" camp
2. The, "let Carlos Ghosn loose on GM's problems" camp

I listened to an interview of Mr. Meyer, former Chairman of American Motors yesterday, on WJR760. He opined that the merger discussion were coming at the worst possible time for the GM team. "It is a distraction from the task at hand."

My view is the opposite. Perhaps a distraction is needed? GM has lost market share equal to all of Toyota's sales in the U.S. market. If GM management team had managed the company properly (with no distractions mind you), there wouldn't be a merger discussion.

Anyone watching Kerkorian buy GM shares had to know that he wasn't investing because he wanted a discount on his next Cadillac. No, Mr. Kerkorian has a reputation for acquiring shares and then demanding value enhancement. My guess (and only a guess) is that he's watched his GM shares flounder and recognized the value of the assets under stronger leadership. He sees Mr. Ghosn as a better leader than Mr. Wagoner, given his turnaround record. Mr. Ghosn has already brought Nissan back from the brink with aggressive cost cutting and stylish new models. Nissan is healthier and share has increased. The same can't be said for GM. So, here's betting that Mr. Kerkorian and Jerry York prefer Ghosn's leadership over that of Rick Wagoner.

Who Killed EVs Part 2

2006-06-18T23:38:00.000-04:00

I have to say, I was pleased to see so many passionate responses to my last post. Reading them brought back the fervor with which most of us on the EV team tried to solve the "problem."

My thoughts on some of the comments...

If you "worked on EVs" for 5 years, you sure must be oblivious. The EV1 had a range of 110 miles for the lead-acid car that gm crushed, and 160 miles for the 1999 EV1 that gm crushed. Today, I drive a Toyota 2003 RAV4-EV with 68,000 miles on it and a range of 120 miles.

The only reason auto makers were forced to put out EVs was California's ZEV mandate, and they sabotaged EVs and lied, cheated and stole by raising gas prices.

We did all of the range studies. Our Sodium sulphur vehicle had a range of over 100 miles per charge if conditions were ideal. The EV1, with lead acid...was more in the 60-80 miles range...again, depending on conditions. In perfect conditions, you could approach 100, no doubt. 160 was definitely possible with the nickel metal hydride battery pack.

The gas price comment...I don't know what to do with that. GM lost close to $10 billion last quarter. Ford is doing poorly as well. High gas prices are killing the domestic car industry, threatening hundreds of thousands of US jobs.

- Consumer ignorance causes us to buy more from lust than from love. I really don't think there is much focus beyond the glorious sheet metal, the smell of the leather and the monthly payments. The entire concept of long term thinking is under educated and under evaluated when making purchases.

I agree...but that's what drives a capitalist society. Supply and demand. It takes a while for Americans to begin associating excessive gasoline use with marines dying in the Middle East. And it requires courage and political will by Americans and its elected politicians to change policy. The entire U.S. Energy policy needs a radical re-thinking. The U.S. economy is 100% reliant on access to oil half a world away; sitting in the ground of nations who are not entirely friendly towards American society. Can you imagine writing that plan? We will build an economy that relies on the free flow of energy from countries that hate America?

G'day, Dave!

Like the rest of America, you, too,knew not of the 1991-1996 battery electric technology development at Toyota that was secretly trying to meet the California mandate, and found the going quite easy.
Can't make money on them? Rather, an ev showroom and small service bay is the inverse of ICE economy/Detroit model. Our NiMH batteries run great, at 5 years like others'.

I heard a good one. Next time you see someone in a ev golf cart, odds are they'll be having a good time; our EVs provide our EV grin.

Actually, we were very aware of both Honda and Toyota's EV programs. I personally drove their cars and our engineers looked them over carefully (as they did ours). We were impressed with their efforts. During that time frame we were arguably ahead of Toyota and Honda (we certainly weren't behind). Our vehicles were on the road with advanced batteries years ahead of Toyota and Honda. We gave up the lead when the ZEV mandate was scrapped.

You're right...NiMH batteries can be very reliable...back in the mid 90's costs were still exorbitant though. And even to this day, a Hybrid is no cheaper to own/maintain than an ICE (internal combustion engine) powered car -- if it is a high mileage car, the ICE is probably cheaper, even at current gas prices.

The only problem was that Honda only built 300 of these EVs for California. When others asked where they could get one, all of the limited production were already leased. And Honda had no intensions for selling them.

And they required almost no maintenance. After 90,000 miles it was still a zero-emissions vehicle, with no smog check, no oil changes, etc. The problem is, the auto repart market couldn't do anything to improve this vehicle, even with 10-year old technology.

Everyone who rode in the EVplus loved it. And every morning it had a full-tank, costing only $0.02/mile in electricity to fill up. Typically we could drive up to 600 miles per week without having to fill up anywhere else except at home in the evening. No smelly expensive gas stations nor waiting in line. What a concept.

The lower service costs (aside from battery replacement) were/are a major attractor to EVs, along with avoiding the carcinogens at gas re-fill. All of our research showed women especially loved the EV's simplicity. Make no mistake, however, the price on the car you drove was in the extreme luxury territory...that's why the were leased. Too expensive to sell and the car companies needed to get those cars back for exactly the reason you mentioned. Too expensive to support long term because of parts, training, etc.

I find it hard to believe that you have worked in this field and hold the opinions you do, but like I said, having yours is the best part of our Democratic Republic.
I KNOW if we had known about the EV1 we, as a family, would have purchased more than two-and remember you weren't ALLOWED to own them; very un-American. My parents own a hybrid as do we, and so do my borthers and sister. We are neither tree huggers nor greenpeace wild environmentalists; I simply DO care about leaving my children a future and don't like seeing HUMMERS idiling next to me-it is a selfish waste and always seems to be a single guy too. While I cannot contradict myslef and say that too is not the American way-choice, I know better. Do your homework. There was MAJOR deception in (lack of) advertising.
Last point on the UN-availability of these cars by the Majors, and the market; As a technician (ASE certified and all) I have worked for Toyota, Chrysler, and private shops over the last 20 years. I never ever even ONCE heard the name EV1 or RAV4-EV while standing in a Toyota shop and reading the monthly newsletters of my industry. Uninformed? Me? NO!
Lack of advertising and effort on the part of GM and others? YES.
Don't blame ME if you bring something to market and keep it hush hush. If American Idol was on a community access channel, I doubt you or I would know who Ryan Seacrest is, much less any others on the show.
Good day to you sir.
-EVRIDER

As I mentioned before, leasing was necessary because none of the companies had the infrastructure ready to support EVs when the EV1 was available. We had many meetings on that subject.

I'm actually a marketing/advertising guy and I totally disagree on the lack of advertising/promotion. Remember, gasoline was just over a dollar a gallon. Very few were interested - even now some hybrids have incentives. You can't crank up assembly plants when gas prices suddenly go through the roof. Doesn't work that way. Planning and producing a car from scratch requires 36-48 months, you should know that. I always believed EVs were a good short range solution for commuters. Even faster is ride share. Cuts gas use in half, same with smog. There are many solutions; incl. EVs, bicycles and sensible commuting.

Keep the comments coming...really enjoying the exchange. I'm not that enthused about Hybrids...I am very interested in the potential of Hydrogen and, in the meantime, conservation/improved health via bicycles...

Who Killed The Electric Car?

2006-06-08T09:53:00.000-04:00

The Consumer killed it. Not George. Not Big Oil. Not Greed. No one cared except CARB and a few hundred consumers that bought the GM EV-1 and Ford Ecostar and Ford Ranger EV (the latter two purchased by fleets).

Saw the preview...I will admit I haven't seen the movie. If the movie follows along the lines of the video, as an acquaintance used to say, "if it's not Scottish, it's crap!" Frankly, for those of us who worked on the EVs, and saw consumer reaction, this crap enrages me.

As some know, I worked on Electric Cars. For 5 years. 1991-1996. Hopeless. Problems:

Where do I start?

Not enough range (50-60 miles/day)...worse in cold weather states and with AC running
Not enough charging stations for slow charging (120 v/40 amp plugs) at work places to charge in 12-24 hours
Not enough charging stations for fast charge (240 V or higher) to charge in 1-4 hours
Batteries were expensive (Thousands of dollars requiring replacement every 2-3 years)
Vehicles were very expensive. If sold based on true cost, $30,000 or more each. And that didn't include the battery replacements every 3 years (Minimum $3,000-$7,000). In 1996 dollars, not 2006 dollars.
Not enough energy/power in most applications and duty cycles. EVs are great 1 or 2 person haulers/commuters in traffic going 50 mph. Or short haul light delivery. Terrible if you're moving lots of people (families) or going distances in stop/go with drains on load (AC, heat, etc.)
Consumers hate changing behavior...we don't buy cars based on need...we buy them based on want. We loaned EVs to consumers and found that it freaked people out to know that they could get stranded if they didn't charge regularly. I did several trips this Sunday...total of 40 miles in 2 hours with AC running. Various errands. Not in an EV if at 40 miles you realize, damn, I might not make it home. Take a look at the best selling Accord and Camry. 200 hp with lots of electronic gadgetry and convenience that suck power.
Very, very limited market - movie stars and people with an axe to grind (Nader and various other people who don't mind living an impractical lifestyle). Limited market means low volume which means high cost. You can't build safe cars inexpensively at low volume. Ever notice how low volume cars typically cost $50k and up? Cost of tooling and assembly can't be spread over large production.
Can't make money selling EVs. In a capitalist market, companies have to make a profit or "GM" happens to them. Massive layoffs and shrinking market share. Out of 17 million new cars and trucks to be sold this year...how many hybrids? Quick, quick!! Less than 1% The only one selling well is the Prius. The rest have incentives.
The EV1 is/was a 2 seater. Anyone know how many 2 seaters are sold in America in high volume? That's right...zero. The Corvette is the best seller. Why? Two seaters ARE NOT PRACTICAL for ANYBODY. It's a toy/fun car.

Better solutions?

Many...yes, many. Conservation is about changing lifestyle and/or making other alternatives more appealing emotionally and financially. We could cut our energy consumption in half if people commuted on bikes. Said this a long time ago in this blog. Lots of people laugh. We solve several problems

Obesity...Americans are gargantuan beasts.
Energy reduction...short trips pollute the most and use the most gas
Potential for reduction in traffic deaths. Bike on bike accidents rarely result in airbag deployment and twisted wreckage. I'll admit...Car on bike is a different story.

So, Dubya, get moving. Let's get some bike lanes approved and tax credits for riding a bike to work. Let's get tax credits for showers installed at work. Even better, all of us idiots paying for health club memberships? Buy a bike and invest in a shower at work. Leave the car at the office for "important" business meetings. And a change of clothes.

And puuuuhhhhhllleeeeaze. Enough with the idiotic electric car initiatives. A 30 Kw battery, that gets 70 miles range and weighs about 800 lbs has about as much energy as a gallon or two of gasoline that weighs 7-15 lbs. Our Ford Ecostar had a 75 horsepower motor. There are no cars sold in the US with less than 150 hp these days. Do you understand the problem now?

More later...when I calm myself.

Nissan "Gets It"

2006-06-01T16:59:00.000-04:00

Interesting article by Jean Halliday of Ad Age. Excerpts below

DETROIT (AdAge.com) -- Jan Thompson, VP-marketing of Nissan North America, today scolded the U.S. auto industry for resorting to "a less risky approach to marketing," leading to a big disparity in where automakers spend their ad dollars and consumers invest their time.

Auto advertising soared in the past 20 years by 1,378% while new-vehicle sales increased by only 17%, Ms. Thompson said. The industry-wide marketing cost per new vehicle sold increased from $50 to $1,000 in the past two decades. When incentives are added, which she said totaled roughly $51 billion last year, automakers are spending around $4,000 in marketing and incentive costs for each vehicle sold.

Nissan North America spent $1.02 billion in U.S. measured media last year, according to TNS Media Intelligence. The automaker spent $950 in measured media per new Nissan and Infiniti sold, based on the automaker's 1.07 million units it said it sold in 2005, an Advertising Age analysis reveals.

Jan was shocked at the $17 billion ad spending figure, most of which goes into traditional media.

Time for me to vent...

Forgive me for being annoyed, but Nissan was and is just as guilty of over-investing in "traditional" media. I see a lot of Nissan dealer association and national advertising on traditional media. I'm still glad Jan is pushing Nissan hard on interactive.

As far as the increase in $/sale goes...it's an arms race. Practiced by the ad agencies...to absolute perfection. The imports simply copied the traditional ad practices of Ford, GM and Chrysler. Agencies made a nice living telling clients that to launch a vehicle line properly required at least $50 million - $100 million to, "get above the noise level."

Automotive Interactive History

A short history lesson in automotive interactive from someone who has lived it for over 10 years. It wasn't Nissan who paved the road to interactive bliss. Actually, it was Ford and GM, who aggressively pursued online consumers and attempted to sponsor e-commerce companies as early as 1999-2000, while Nissan was in a deep, corporate slumber, ending with the hiring of Carlos Ghosn. It was Ford and GM who created, respectively, forddirect.com and the now dead GMBuypower.com to help consumers connect directly with its dealerbody. We can be critical of their executions if we like, but they did it. Further, both Ford and GM were aggressive in pursuing 3rd party car shopping sites to advertise, conquest import shoppers, gather data and leads.

I remember meeting with an august body of "import" marketing execs recently and getting quizzical looks when we discussed the subject of engaging with on-line consumers in real time. Gosh...why would we actually talk to consumers when we can...buy lots of banner ads on really risky sites like...Google...and Yahoo...and slyly run banner ads past consumer visages, softly illuminated by the warm glow of their flat panel displays. At only $1,000/sale? Who cares about cost/sale? What's the incrementality?

I'll never forget the meeting I had with yet another set of "import" agency folks who complained that it cost them $250/lead conversion when they bought banner advertising that drove people to their brand site. I replied, "how about you buy the leads directly from us for 1/10th the price. Because...we're really good at that." Didn't happen. Something about the need to, "brand" the experience.

Nothing Risky About New Media Brands

What's creative/risky about Google, Yahoo or AOL (ok, I'll throw in MSN too)? Google, Yahoo and AOL have 50 million unique visitors or more each day. How is that...risky? 70% of car buyers use the Internet to shop (By the way, 100% of car buyers also watch way too much TV and yack on their cell phones while driving). There's plenty of internet investment by car companies. The problem is that they aren't always creative about finding new avenues to use the internet...aside from Google, Yahoo and AOL. Spending money there is easy. Call local ad rep/SEM "expert" who arrives in shiny new company car. Demand a creative way to sponsor new vehicle launch. Ad rep takes order for banners, RSS and yada yada and creates insertion order. Just like buying TV ads. Media buyers/planners carefully watch click throughs to make sure they aren't spending more than $1,000/unit sold...which btw, is the single dumbest ad measurement in the history of ad measurements. Nissan, Ford or GM would sell 70% of its cars with zero advertising. 3rd party ad sites, bloggers and news outlets trumpet the arrival of new cars and trucks with amazing impact. Advertising influences, at best, 30% of sales.

The risk in advertising on Google evaporated when their IPO went through the roof and Bill Gates began fearing them. Further, how would you spend $17 billion on the Internet. Can't be done...there's not enough, "inventory." I've heard media planners complain, "all the good inventory is gone." Huh? I wish I had that problem. A lot of money...and nowwhere to spend it. Ahh...maybe I should go back into the agency biz...

The Truth (in best Jack Nicholson's voice)? The Truth? There's no risk in those online "brands." I'd say there's more risk in being on Television. We talk to thousands of consumers/day and it never ceases to amaze me how few of them recall even one ad for the car they are shopping.

For those who need ad "inventory"...let me make a suggestion. Here's my phone #: 248-232-7979.

Call me. I'll get you inventory.

Great Internet New Car Scams - Toyota Prius Clearance!

2006-05-23T17:31:00.000-04:00

There are many great Internet scams...here's a good one - and so believeable.

While Toyota dealers are as much as 6 months behind on Prius consumer orders, some New Car web sites promise a solution.

Yes...some sites advertise the Toyota Prius as being overstocked...all you need to do is...fill in your name, address, city, state, zip, phone and email...and you too, can get to the front of the line...

Because, did you know?

"The Toyota Prius is Overstocked in Most Cities?"

Then...wait by your phone for your special deal.

Easier, Faster Online Car Shopping

2006-05-22T15:32:00.000-04:00

We just launched a significant enhancement to MotorAlley, our little version of the new car shopping world...we call it... (drumroll). Take a look and then read further if you care to read a rant about Google's algorithm.

The New Car Filter

Like a good pool filter, it removes all the "impure" elements. With as many as 30 entries in every category, clutter is a problem because, realistically, who can test drive 30 sedans? For example, click on Sedan, and then you can sort out all the cars that don't fit your browsing need using price category and review grades. Want to switch to minivans? One click does it.

Right now, we're killing fleas with a howitzer, so the next generation of filter will go to more granular levels; e.g. SUVs with 7 passenger seating, Sportscars with more than 300 hp, Sedans with All Wheel Drive and over 300 hp, etc. But first, the team (Dan Terry, Todd Ridley and P.J.) need to rest and recover from the first filter.

Does any other site offer this ease of shopping? MotorAlley let's you target cars that fit your needs quickly...and then find out what, if any, best deals are being offered directly from the dealership. We even list most of the dealers in the United States along with their awards and qualifications (if they won customer satisfaction awards, for example). No other site offers the combination of those elements. Let us know how we can improve.

On a related note, we're thinking of blocking all search engine indexes of our site to prove a point. If we block Google from indexing our site, we can actually make the claim that we are the only new car site that has a database of the best dealer advertised specials -- and that you won't find our data anywhere else...including Google, Yahoo and MSN. So don't waste your time going there.

The whole, chasing Google SEO traffic has gotten extremely tiresome. Why do we have to "increase our inbound links" to prove we have unique/better data? It simply is better. What? You prefer filling out a form at SuperBargainNewCars.com to find out what the dealer has to offer? Now you've given up personal info in the hope of getting back something useful. Our site already has that information. Do your research at MotorAlley, then, fill out the form IF you want to see if a dealer can beat the best deal you can find on our site. Now that is helpful. No wonder over 95% of consumers drop out of new car forms.

The "algorithm" is forcing sites with interesting/unique data, to prove to Google they have good data by creating ever increasing inbound links. That kind of thinking is what causes some sites to commit fraud by creating inbound links. We see them everyday.

The Google algorithm rewards older sites/URLs with inbound links (and often, lots of B.S. inbound links) and punishes newer sites (like ours) with new ideas on data (best deals database, dealer awards, car review summaries) and browsing (new car filter). We don't have linkfarms nor do we own 152 machine generated sites, with b.s. content, all pointing back to motoralley.com to increase our "inbound links" and "pagerank." We have unique data and tools to help new car shoppers. We post our phone # and physical address and let consumers instant message us if they have a question. Quickly, name a new car shopping site that offers all of that?

In other words, we're a real business, trying to help consumers find the best deal, on the best car, from the best dealer.

Chrysler Inventory Rising...Incentives to the Rescue

2006-05-08T10:01:00.000-04:00

According to Automotive News, Chrysler dealer stocks have grown to an average 80 days supply. Domestics tend to like about a 60 day supply (the Japanese seem to be much happier with 15-30 days) on the ground so this does not bode well for Chrysler's ongoing recovery. As a result, Chrysler Group is offering $1,250 in cash back for dealers who take their allocation of units.

80 days isn't necessarily a disaster except that interest rates have been rising, increasing the cost of holding larger inventories. The largest offender, unfortunately for Chrysler, is the Jeep Commander, one of their newest models, with a staggering 197 day supply, followed by the highly profitable Ram trucks.

Although many have suggested that Chrysler is the strongest of the former "Big Three" those of us living in town here have seen the overflow lots full of Rams and Commanders. What's next? According to Chrysler COO Ridenour,

"Chrysler plans to trim production over the course of this year."

Although Jeep has needed a 3 row seat vehicle for years now, it's unfortunate that they waited to launch the vehicle in the face of new GM product and $3/gallon gasoline. As noted in one of our previous columns, this vehicle was at least 10 years overdue...

We expect that Jeep Commander lease and purchase deals will get very, very attractive...

VW Unpimp Your Ride Ads Unpimping Sales?

2006-05-04T22:23:00.000-04:00

Recently, I've read heavy criticism from Ad experts like Rance Crain of AdAge regarding Crispin Porter's Unpimp your ride tv spots.

"VW has already started its retreat by pulling its high-priced Phaeton off the U.S. market. The Crispin Porter ads are so horrendously awful that they smooth the way for a quick and complete withdrawal, saving the company a ton of money.

In a previous column I asked if Crispin Porter has what it takes to develop a strong selling idea that cuts across all demographics.

Well, we now see it's got the villain/thug/psycho segment locked up, but that's all part of the plan for leave-the-country baddom."

Mmmm...somehow, I don't think CPB was targeting Rance with these ads. I happen to think the ads are hilarious and have received serious attention across the net by the target audience. People are actually talking about the ads. Can't say that about a single Toyota ad...but that hasn't really hurt their sales, now has it? In fact, as a former ad guy, I'd venture to say the ads have done a great job of positioning VW GTI has the original, original pocket rocket. No need for enhancements...

To blame VW's flagging fortunes on an ad, or worse, suggest that an ad agency could prevent the collapse of a brand is, frankly, laughable and one of the many reasons I left the bloated, vapid, self-important ad business. In the car business, no ad is going to save a flailing buggy whip company (or, for that matter, car company). Pray tell, oh, ad geniuses...what ads will save GM or Ford? The answer is ads about really, really good cars and trucks. But to do those...you need...ahem...really good cars and trucks. Not the other way around.

Cars aren't chiclets. You don't chew on them and then spit them out when the taste is gone. You don't buy them on a whim , like that Snickers bar winking at you at the Kroger's check out counter. Ok, so there are a few that can buy on a whim, but unless you wear an Ascot or go fox hunting and have servants that address you after bowing, $20-$30,000 purchases are rarely executed on an air of caprice (for those of you following the cliff's notes, I stole that quote from S. J. Perelman). Consumers buy them and consume them every day for 3-8 years after agonizing, desperately over blue vs. black, sunroof, no sunroof, and going dealer to dealer for as much as a month, or the gestation period of a marsupial (koala bear gestation period is 35 days).

The question, as posed by one intelligent blogger is simple. What was the point of these ads?

To get attention with minimal GRPs (Gross rating points...a measure of audience viewing)? If so, the commercials achieved their goal.
To make the point that GTI is the original...while having some fun? Give that one a big yes.
To sell lots of GTIs? I'd give that one a big no...you'd need balloons and a fast talking car dealer with a friendly smile...

So, before we blame VW's market share issues on a few spots, poking fun at the competition, let's remember that VW's real problems are really around product and quality. Checked the latest quality ratings? Not much Crispin Porter can do about those...

Rick Wagoner, Thumbs up/Down?

2006-04-10T11:24:00.000-04:00

According to Automotive News, Rick Wagoner asked for and received the GM Board's backing in early April. In another article, the WSJ journal indicates that GM needs a "strong leader" to survive its current contretemps. So, the real question, which no one seems to want to ask is, this:

Let's assume Rick Wagoner is the right guy. If he is the right guy, what has changed now that makes him the right guy, vs. the guy who oversaw the largest share decline in recent Automotive History?

Here's how the WSJ sums its up:

GM dealers placed an ad in this newspaper Friday announcing their support of him. But Mr. Wagoner's record after six years at the helm isn't inspiring a lot of confidence among shareholders. GM racked up losses of $10.6 billion in 2005 and last month announced a series of accounting errors that span Mr. Wagoner's tenure as CEO.

On the positive side...for Rick:

He understands, better than anyone, which numbers need to be fixed. GM has an accounting problem (he's the former CFO)
He has overseen the implementation of ruinous UAW contracts, predicated on GM market share of over 30% (currently hovering in the mid 20's) and knows better than most, the current players and the land mines in the various contracts
He doesn't need 90-180 days to get up to speed with what's wrong...at least we hope not
Even if Rick goes, it would be wise to keep him in office in some capacity because he knows where the land mines are

On the negative side...against Rick:

In football analogy...he took over a Superbowl contender that was making money and selling out the "stadium"...and now they are both out of the playoff hunt and losing money. In the world of Football, he probably would not have made it through the end of this season.
According to most, he's not a car guy. GM's problems are both financial and product. Although he gets credit for trying to bring in a car guy (Lutz) the results have proven inadequate. The product portfolio is very uneven and the continued market share decline is harsh evidence suggesting that better product concepts need to arrive...and fast, to stem market share losses.
The Marketing/Advertising hasn't gotten the job done. After changing the marketing team the first idea out of the blocks was doomed to fail. Employee pricing simply pushed the sales problem into the future...and now we're back to the future. After initial market share gains, the true disaster of employee pricing came to light (as predicted here). Market Share has dropped again. It is obvious that these "pricing" programs do not address the fundamental market share issues. The GM programs appear to only "pull ahead" future sales out of the GM intender pool. An example of this is is "lease pull ahead." This is kind of a typically American disease -- when you run out of credit you don't spend less, you just get another revolving credit card! GM needs to focus on marketing that explains why its products are either superior, or at least as good as or a better value than its competitive set consisting of

primarily Ford and Chrysler/Dodge/Jeep
secondarily Honda, Toyota, Nissan, Hyundai, Kia, etc.
GM marketing needs to focus on how to sell its cars more effectively relative to competition. Forget pull ahead "deals."
Where are the stories of Toyota, Nissan and Honda owners trading in their overpriced cars for the value laden Chevrolets, Pontiacs and Saturns?
Where are the stories about GM's improved quality?
Where are the marketing programs that build positive word of mouth?

Can Rick Wagoner pull it off? If we use history as a judge, he's going to have to bring game we haven't seen before. Let's hope that the current pressure finally brings some breakthrough, desperation and focus. I think GM's history has been to ride things out, shrink and hide out in a segment where the Japanese don't compete (remember Luxury Cars, SUVs, and now big trucks?). They can't ride this one out. The safe harbor segments are all gone now. I truly wish him and his team best of luck...Detroit needs some good news out of GM.

Internet Leads Buy Cars

2006-04-07T16:58:00.000-04:00

Here's a newsflash...Cobalt/Dealix studied purchase rates of Internet leads and discovered most of them buy a car. Even better, most of them buy a car other different from their original price quote request.

This is mostly derivative, 3 year old opportunism by Dealix. Nice Job Dean Evans -- good job of reprising good info. We conducted a study back in 2003 at Stoneage and Car.com that found the same basic information. Unfortunately, car companies/dealers aren't much smarter now than they were back then. To wit:

Most Car companies don't buy internet leads on behalf of their dealers...because, "they are going to buy our cars anyway"... NOT
Dealers are now deciding that they only want to invest in their "own" traffic...except...consumers like to comparison shop. So, comparison shop sites will never go away and consumers will continue to switch because there are so many choices. Smart move is to invest in both
Dealers still "cut off" lead providers who have lower closing ratios...and keep spending money on other marketing/advertising programs that have 1/10 the ROI
Ad agencies and automotive marketers still believe in the "orderly" purchase funnel. There is no order...it's chaos. Shoppers don't neatly move from awareness to consideration to shopping and purchase. Sure...a small percentage do...but the rest? Total chaos. I've spoken to many internet shoppers on the phone...sadly, most auto marketers don't.

My favorite finding? Majority of people are looking for...wait for it...a low price. Here's a challenge. Go to Google. Search for a dealer price on, let's say, Toyota Camry. Good luck. You'll get lots of sites that offer up the "form" but you won't find "deals." Except on MotorAlley (shameless self promotion).

Audi...Rules...The 2007 Audi TT

2006-04-07T10:23:00.000-04:00

Whoa Nelly

Saw the Press photos for the 2007 Audi TT. Beautiful...I dare say, better than the original. Visually, more aggressive than the rounded, friendly look of the original.

In a previous rant, I talked about the need for originality. Audi styling is a personal favorite (the new grille notwithstanding) and I must say that if Audi can maintain its Quattro performance edge and quality reputation, they will take a chunk out of BMW and Mercedes.

It's no secret that I recently traded a Porsche C4 for the "avuncular" 4 door 2006 Audi S4. Two growing sons no longer fit the Porsche 2+2 configuration. The S4, imho, is a beautiful swine of a car...a rumbling V8, quattro power and seats that would make Porsche proud. When I drive the S4, I feel like I'm carving turkey at Thanksgiving. Stay with that analogy...it grows on you.

The First Ding

Oh yes, checking my S4's passenger side door, I found the first ding. Whoever did this...I will find you. I will hunt you to the end of the earth.

Parking - The Lost Art

2006-04-05T14:17:00.000-04:00

Those of you who know me (a rapidly shrinking tribe, I might add), know that I like to occassionally sit in Starbucks and watch Americans park (note photo is actually from the Continent, courtesy of Haywardsheath.com). I will attempt to follow this more closely in the coming days, using my trusted Treo 650 camera phone.

Some observations:

"I have a really big car so it's not my fault"

Today, a fine person (could have been a woman, but that would be gender bashing) pulled into a space next to me in a large Chevrolet Suburban, with alacrity. The parking lines were oblivious...his/her passenger side door ended up about 8 inches from my driver's side door. She was parked sort of diagonally across the silly parking lines, meaning that if I backed straight out, I could likely clip her fender. Why is this ok? As a friend once said, many large SUV owners seem to think it's just ok to park in others because, well, they have a large SUV and parking it, don't you know...is really hard.

"I just pretend my car is a boat"

At least once to twice a week, I'll be walking into Starbucks for rocket fuel when I hear a loud scraping sound...the sound of a vehicle's spoiler or under carriage abrading concrete. Some believe parking is an exercise in driving a vehicle until it meets a barrier...kind of like parking a boat...except...cars don't have "fenders" to cushion the impact. But wait...cars do have tires...so, maybe you just keep driving it up on the curb until you pull the spoiler off (never mind that grinding sheet metal noise and the pedestrians fleeing in fear), waiting for the gentle thud of the tires hitting the curb.

"My door is a battering ram"

I recently returned a nice sports car at end of lease. A nice ding was added near end of lease by another nameless large SUV (ok, it was a Ford Explorer). Door was flung open, striking my passenger's side rear quarter panel. Thankfully, only a minor ding (although, is a ding ever really minor on a Porsche?) and I made the mistake of assuming that a "minor" ding would get past the end of lease inspection. Received Bill for $200 to "repair" ding. Fortunately, I was able to talk the leasing company out of the ding by referring to the lease contract. But it brings up a fair point. Why do so many people think it's ok to wield a car door like a battering ram? Try walking up to a well dressed woman at the mall, and taking $200 out of her purse. Same basic thinking.

Hybrids Use More Energy?

2006-04-03T16:02:00.000-04:00

According to Art Spinella of CNW Research, Brandon, OR, hybrids use more energy overall and therefore cost more to own than the venerable gasoline powered vehicle. The article hit the wire on March 31-April 1...so perhaps this is Art's way of treating us all to a nice April Fool's joke?

CNW, long known for its expertise in analyzing automotive leasing trends as well as consumer purchase motivation, took into account both the fuel costs as well as production and recycling costs of hybrids vs. traditional internal combustion engine vehicles.

"If a consumer is concerned about fuel economy because of family budgets or depleting oil supplies, it is perfectly logical to consider buying high-fuel-economy vehicles," says Art Spinella, president of CNW Marketing Research, Inc. "But if the concern is the broader issues such as environmental impact of energy usage, some high-mileage vehicles actually cost society more than conventional or even larger models over their lifetime."

In the Autoblog comments I noted, with a wry creeping smile, that many doubted the numbers. I don't know the specifics of the study but I imagine that the advanced battery recycling costs, the battery replacement costs and higher acquisition costs probably off-set the fuel mileage advantages of the hybrid. Plus, there's the ugly factor, of course...something that can't currently be measured.

In my salad days (read: when I worked on Ford's Hybrid and Electric vehicle programs in the 90s) we noted that the total cost of ownership, energy costs and pollution impact of Hybrids and electrics depended entirely on which costs you chose to include in your study. For example, if you recharged your electric vehicle in a power grid with coal fired plants, you actually increased pollution relative to a brand new ICE vehicle (ICE=Internal Combustion Engine). Lifecycle analysis is all about...assumptions. On the other hand, if you include in the price of every ICE, the cost of maintaining peace in the Middle East plus the military industrial complex...well, you might get an entirely different cost equation. :-)

Since I have to get back to work now, I'll leave this for others to ponder...perhaps someone in the Bush Administration (Photo courtesy of the US Army)

Google Pontiac! Kelley Blue Book Compares!

2006-03-23T22:21:00.000-05:00

On the heels of the Chevrolet cry to visit Edmunds to dare to compare (see Blog entry March 5), we have exhibit b and c in the annals of marketing. In the quest for relevance and approval, the Pontiac brand invokes two powerful brand names; one that capitalized on the search phenomenon, the other a prime destination for auto shoppers on the web. Does this really help Pontiac? We think, at best...it's a push.

Exhibit B:

Google Pontiac. We did. Several of the sponsored results take you to sites other than Pontiac...some do their best to send the user to any brand, including Carpricesecrets, Carquote.autodiscountgroup.com and Alltheautomotive.com. One of the links we tried in AlltheAutomotive is for WhyPaySticker.com that encourages me to submit a price quote for the Kia Amanti and Mitsubishi Galant when I request a quote for the Pontiac G6. Hmmm....not sure this is what Pontiac had intended.

Exhibit C:

"Check out our stats and see how the others can't match up using the KBB New Vehicle Comparator." Again...we did asked.

Here's how a Pontiac Grand Prix V6 2WP69 Sedan 4d fared relative to the class leader, Toyota Camry LE V6 2552 Sedan 4D, according to KBB. After reviewing a mind-numbing row of stats (no helpful editorial to assist the amateur car shopper), the thing that jumps out the most is that the Camry has about the same price and horsepower, but some important technical and safety features not included or standard in the Grand Prix, including

standard disc brakes with ABS
standard traction control
standard full spare tire

The Grand Prix however has some standard advantages, incl.

Nav system
Hands free phone

Knowing the Camry's better resale value (not shown) and purported quality (also not discussed) would make one lean towards the Camry. A Nav and hands free phone, although nice, are not as important to me as improved brakes, traction control, the full spare and the better resale/quality potential. You can add aftermarket Nav and phone. Not the knock out punch that needs to be delivered...and in heavyweight bouts, the challenger rarely wins a close fight with the judges. So...why advertise a brand name that potentially detracts and distracts from the Pontiac brand?

An Ad Campaign Gone Wrong

2006-03-05T11:23:00.000-05:00

I don't wonder how agencies and clients get ad campaigns wrong. I've been in the room when the ad is lovingly birthed. Recently, several ad friends of mine and I were amazed to see Chevrolet advertising its "head to head" campaign, on television, with the offer, "go to Edmunds.com and click on Head to Head." Mmmm. You are spending literally $millions/month to promote the wholesomeness of the Chevy brand and you tell me...the potential buyer...to go to Edmunds.com? And here I thought Chevrolet had its own web site to promote Chevrolet...

As a web literate automotive cognoscenti, I smelled the cheese in the proverbial mousetrap so I quickly moused my way over to Edmunds in search of the "Head to Head" comparison advertised. Living in Motown means we have frequent sightings of the Chevrolet Cobalt (GM's competitor for the almighty Civic and Corolla) bifurcating our snow-covered roads. Perhaps Chevrolet's products had improved so much that Edmunds was recommending Chevrolet. Or, GM had somehow convinced Edmunds to say, "nice things" on behalf of Chevrolet for letting them promote the Edmunds name on national television. Because...why else would GM promote Edmunds?

Here's what we found:

Nice clean comparison. Prices, Market value, yada, yada. We thought, let's click on comparison since we're ostensibly shopping Cobalt and trying to figure out...why is a Cobalt $2-$3,000 more expensive than the top selling Corolla and Civic -- especially since every ad emanating from the Ren Cen (GM HQ) talks discount? That's when the wheels came off the proverbial wagon/Cobalt. Here's what we found in the "opinions."

Some nice comments in the "pros" section to make up for the fact that the Cobalt is $ thousands more than its competition...then the coup de grace (for those who can't read the fine print),

Cons:

Cheap interior plastics, cramped backseat, dire lack of interior storage, dull handling, mediocre fit and finish.

I can't speak to the advantages/disadvantages of the Cobalt vs. its competition because I haven't driven all of them. Clearly, the consumer has voted and to date, the victors are Civic and Corolla by virtue of their huge retail sales leads. And you have to admire Edmunds for not pulling any punches in its comparisons while still getting the almighty ad dollar to pay for its editorial staff. What we find odd is that with so much negative news in the air about GM, its struggling product line and its potential for Chapter 11, someone in marketing decides to hang out a lantern, glass jaw in an all-out barroom brawl and then pay a bonus to the first person that punches them in the mouth. To analogize during Oscar season, when you see studios promoting their movies, they don't ask you to read a review that proclaims,

"...a cheap production, dull storyline with mediocre cinematography."

I don't get it.

Here's our recommendation. Call Edmunds and ask permission to use the snippet,

"Strong acceleration with any drivetrain, smooth and quiet ride, solid brakes, good crash test scores."

Forget the rest.

Gaining Market Share - One Formula

2006-01-28T10:19:00.000-05:00

(graph courtesy of Daily Game Plan News)

Something has been bothering me. Standard formula for fixing market share in the Domestic Car Business (ok, I over-generalize and I will try to keep this short...but stick with me, it's worth it). Also, I ask for your indulgence as I deliver some of this with tongue firmly planted in cheek:

Call multi-disciplinary meeting involving marketing, sales, product
Discuss why vehicle isn't meeting plan volumes
Whine about lack of "budget" - note to domestic car companies -- You're outspending the retail market share leaders.
Solution set involves mix of the following cake mix ingredients:

Consumer Incentives...lower price
Dealer/Sales person incentives...that's invested in more newspaper and local marketing dollars and balloons at the dealership to create a sales frenzy
Change product mix (make more cheap ones in the colors and options that sell)
Switch advertising...instead of showing car lovingly navigating down a wet road, surrounded by lush vegetation, advertise the deal (see Chevy, "An American Revolution")
Convince Dealer Associations to run the same deal as national so that the mass media consciousness is wall-papered with the same message over and over and over and over and over and over and over...until the shopper is literally, verbally bludgeoned. The problem? So far...this tactic has lost the domestic car industry 20% marketshare since the 90's.
Whine about lack of budget

So, you say...what's wrong with this picture? Instead of pursuing the same tired formula I'd recommend a different approach:

Talk to those who bought your car and find out why they bought it/liked it...and still like it
Find out what they didn't like...and fix that. And when it's fixed, tell your owners...as well as anyone else that is in market.
Find out why your owners bought your car instead of your competition
Talk about that directly to both your owners and competitive owners...and focus on 2 segments:

In-market shoppers...waste not one single penny on mass media until every in-market shopper has been exhausted. Only 10-15% of all US households will actually buy a new car in the next 12 months. So...why are you talking to all households with 90% of your budget? Trust me...they hardly remember your message now...much less in 1 year, 2 year or 3 years...when they actually enter the shopping phase.
Opinon leaders...those whom we trust to advise us in our purchase decision.

The best way to reach in-market consumers is with internet leads...talk to them! They are shopping now! You can call them personally and learn about their shopping process. You'll be really surprised by what they tell us. If you're not sure what to do...call me.
The best way to reach opinion leaders is via P.R. Involve opinion leaders early in the product development and launch of a car/truck. Listen to them. Follow their advice. Forget advertising. The best ads reflect trends...they rarely create them.
Finally...in the car business...if the product is 90% of the story...that still leaves 10% for the smart marketer...the marketer who knows how to market more effectively and help dealer and salespeople to be more successful. Because car companies don't sell cars. Dealers do.

Detroit Auto Show Day 2

2006-01-11T21:48:00.000-05:00

GM/Camaro

I'm glad GM decided to show the Camaro, but let me quote two Union guys, both of whom had Camaros at some point in their misspent youth:

"What is that thing? It doesn't look as good as any of the four classics (we were standing in front of the roped off classics)"

"Why didn't they just take the 69 and put a new engine in it, better brakes and build that? The Challenger that Dodge did is much better. It looks like a modern version of the original. It looks awesome. And it's got that Hemi."

Ok...so, that's a bit harsh. Many liked the Camaro. Most Camaro club enthusiast were begging for the car to be built. Obviously...you can't just copy the old design...can you? While I heard some 'wows' I heard a fair amount of criticism from the journalistic throng as well. I didn't hear that about the Challenger, or for that matter, the new Mustang. My visceral reaction is the same. I preferred an "update" to one of the Camaro classics. The new Camaro seems surreal...but then, I'm not likely to ever buy one, so I defer to...the two union guys who were genuinely disappointed. Further, it is a concept vehicle. Concepts should stretch, even if they go too far; that's why we call them concepts. On the other hand, the Challenger looks like a ready-to-go production car.

What is meant by an update that's faithful to the original? My analogy is how faithful Porsche has been to the 911. Same goes for the basic Jeep. Yes, significant changes...but the silhouette and styling cues are unmistakeable. Why, oh why...do some insist in ruining a good thing for the sake of, "change?" Probably, the desire to leave an "imprint" as a designer or marketing guy. I'd suggest that the only change that is needed is continuous improvement of the mechanicals (engine, transmission, handling, safety, features). If the shape is right...the shape is right.

I hope Chevrolet builds the Camaro again (and Pontiac brings back the Firebird). The heritage requires it. GM needs them to revitalize their engineering and design community. Heck, they need it to revitalize sales! At one point, Chevrolet sold over 200,000 Camaros (peaking in the late 70s and early 80s). The 69 1st generation Camaro sold 243,085 units. The current rumor is a 2009 model year launch...Dodge and Ford will probably be ready for their next gen of their respective muscle updates when Chevrolet launches. As someone once said build it and they will come...as long as you're faithful to the originals that put those brands on the map. We'll know the General is alive and well when we see that happen.

Just for grins...a photo of the very rare 69 COPO Camaro (courtesy of Camaro Highway). COPO stood for Central Office Production Order and was a means to cleverly circumvent Chevrolet's attempt to limit performance, enabling a few cars to be built with the 427 engine that cranked out 435 or 425 hp.

Hard to argue with 200,000 sales that evoke fond memories.

Detroit Auto Show Day 2

2006-01-10T22:00:00.000-05:00

Toyota

Unlike Chrysler, GM or Ford, Toyota's press conferences are short on tangential entertainment value. I'm going to throw deep here and suggest that this is perfectly in character. Chrysler likes to swing for fences with its product bets and its press conferences reflect the go for broke approach (Eva Longoria and Angie Harmon on stage with former engineers?!); GM and Ford are not afraid to compete with Chrysler's lights, glitz and comedy. But Toyota? Toyota quietly sneaks up with metronomic efficiency. Or to use one of my earlier analogies they are very "Belichik" - like (Patriots football coach - dry as sandpaper...but folks in New England like the results). Every day is spent finding ways to continuously improve with a selfless focus on the team effort. One could accuse them of winning through "boring" efficiency. But for those of us who have had "exciting" cars that lose parts as they drive down the highway...we know why "boring" efficiency, quality and predictability attract such high repurchase loyalty and resale values.

The core of Toyota's middle market sales and quality success is best defined by the Camry. Camry (and Accord) have been the stake in the heart of the domestic car business. Although many domestics benchmark Camry as a target, few bother to actually engineer to beat it. Most see it as a noble goal, but not one worth attaining due to the "negative" short term cost impact. Most appear to see passing Camry as overreaching and prefer instead to target the "wounded" gazelles in the car herd. So, it's not surprising that many domestics saw evidence of Toyota widening its lead with the 2007 Toyota Camry. Continuous improvement touches many different areas, but the most symbolic enhancement is the addition of hybrid drive in the mainstream, market leading sedan. Per Robert Farago, The Truth About Cars, I did check to make sure that there was a battery behind the rear seats. Note photographic evidence.

I waxed poetically to several others willing to listen about the good old days when Ford, GM and Chrysler built hybrids as part of a Government contract in the 90's before the research dollars moved into more profitable ventures -- building full size SUVs (while the Japanese quietly picked up the hybrid flag). Now, Camry sports not just class leading power, refinement and fuel efficiency with its line of engines but enters the avant-garde hybrid elite with Toyota's Hybrid Synergy Drive. One auto exec. was purported to comment that if the Nissan designers ever went to Toyota, game over. One man's view of the 2007 Camry -- It's still boring...but its customers wouldn't have it any other way.

Detroit Auto Show Day 2

2006-01-09T22:45:00.000-05:00

Jeep

We could argue, as I have, that some brands have lost their way. Jeep is not one of those. Although Hummer may have stolen some of the "General Purpose Government Vehicle" halo from Jeep, Chrysler execs and its designers have done their best to be faithful to the Jeep brand essence.

Jeep has done a lot with very little product the last few years. No, I don't mean bad product. I mean few products. Where some brands crawl into every segment available, Jeep has focused - until now. With the recent launch of the Commander Jeep finally did what we'd been hoping for...offer a full sized utility.

Now, the line up grows further with the addition of the 2007 Jeep Compass. To be sure, the Compass is a bit of a departure for the Jeep brand. I'm certain that the Compass was cause for some consternation in Auburn Hills. Why? Not because of styling - The Compass is more of a - gasp - car (anyone hear CUV?). It is designed more for the urban customer. It is a risky move...I am not a big fan of "departure" vehicles because they tend to cause a loss of focus on the core essence that makes the Brand great. Brand histories are replete with brand tangents into "extensions" that initially succeed but later fail, often spectacularly. The good news is that the Jeep Compass appears to retain some core Jeep strengths including AWD capability and an updated CVT.

Almost as if to counter balance the new Compass, Jeep also introduced the new 2007 Jeep Wrangler...the real throwback, trail-rated Jeep - by driving it through a plate glass window at the Show.

Improvements for 2007 include more interior space, a new 4-wheel ABS system and more grunt with the new 205 horsepower 3.8 liter V6. Jeep also improved frame stiffness by 100% and re-worked the suspension to improve handling on and off-road.

P.S. Don't try this at home.

Detroit Auto Show Day 2

2006-01-09T22:19:00.000-05:00

As I mentioned yesterday, don't expect exhaustive coverage...my focus is commentary on the overall show and on products where I think I can add some value or knowledge. For "exhaustive" coverage I direct you to MSN Auto, they are providing "bumper to bumper" coverage.

Lincoln

Lincoln once consistently gave Cadillac a run for its money in the luxury segment - some of us remember an apology from Cadillac to Lincoln for manipulating year-end sales figures to keep their sales crown in 1998. Those were the "good old days." DeVilles and Town Cars were the quintessential expression of American luxury and Lexus, Acura and Infinity were just finding their legs. Fast Forward past 15 years of European and Japanese product introductions and Lincoln has become almost irrelevant in the core luxury volume market. I can remember Ford finance execs explaining that the Town Car contributed a signficant percentage of the company's total profit in those days. Today, the biggest question facing the Lincoln brand is this: How do you recapture the brand's unique American character and express it with product excellence?

One answer suggested by Lincoln is to enter the rapidly growing CUV segment with the 2007 Lincoln MKX (Mark X). Strategically, Lincoln seems to be saying that they prefer to outflank the competition rather than attempting a frontal assault at the core entry and mid-luxury entries offered by the competition.

"People's attitudes are shifting," said Peter Horbury, exec. director North American Design. "This is an opportunity for Lincoln to reclaim its rightful place in the American luxury market."

Let's hope so. The 5 passenger Lincoln MKX seems to have the right accoutrements; 3.5 liter engine with 6 speed transmission, the Vista roof (also seen in the Ford Edge CUV entry), the largest cargo area in its class and the usual power and safety features expected in a proper luxury entry. The ultimate question will be answered soon. Vehicle Dynamics and quality must be competitive or the MKX will have the rapid rise and fall of the unfortunate LS. Large cargo areas don't win customer favor. In the ad business we learned the hard way that better rear seat legroom didn't help the Tempo and Taurus compete with the Accord (really...we had that on the comparison charts). And it won't be a deciding factor between a Lexus and a Lincoln.

If I had a vote, I'd vote for Lincoln to develop and produce mid-size and large entry luxury sedans that make Americans want to buy domestic again. To me, the CUV is simply a more sensible version of the SUV. 98% of Americans NEVER go off road anyway. The CUV simply moves the balance of execution in the direction of sedan refinement and away from SUV crudeness. If you squint, every CUV looks like an SUV without the OWL tires.

Detroit Auto Show Day 1 - GM

2006-01-08T23:54:00.000-05:00

Hybrids are in. For those that have read previous blog entries, you know that I once worked on Hybrid and Electric vehicles and have watched the domestic lose its technology edge in “eco-friendly” technologies with dismay. Only ten years ago, the domestics led in battery technology (anyone remember the USABC – US Advanced Battery Consortium)? So, I was glad to see GM announce its own hybrids for production, the 2007 Saturn Vue Greenline Hybrid and 2008 Chevrolet Tahoe Two-Mode Hybrid.

The 2008 Chevrolet Tahoe Two-Mode Hybrid improves fuel economy by 25% and will be sold along with its brother, the GMC Yukon

The 2007 Saturn Vue Green Line offers an affordable hybrid system (full vehicle price of about $23,000) with an estimated 20% fuel economy improvement.

Detroit Auto Show Day 1 - Mercedes

2006-01-08T23:50:00.000-05:00

Mercedes announced Bluetec, an advancement in diesel technology along with the new GL class SUV. Per the press release:

“As a powerful, economical and clean drive system, BLUETEC can significantly help American drivers continue to enjoy large, powerful cars for many years to come – whether you are looking at large sedans, vans, light trucks or SUVs”, Dr. Zetsche explained. “BLUETEC diesel vehicles have the potential to meet the world’s most stringent exhaust emissions standards, including those of all 50 US States.”

As a result of rising fuel prices, more and more car buyers in America are considering the option of a modern diesel vehicle. Proof of this is the success of the current E 320 CDI since its market launch in April 2004. At the same time, Mercedes-Benz in the USA has seen growing demand for a wider range of the brand’s diesel offerings. Mercedes answers this demand by launching the M-Class and R-Class variants with a 320 CDI engine in the fourth quarter of 2006. Other models are set to follow. The DaimlerChrysler plant in Tuscaloosa, Alabama has just what it takes to respond quickly to the new market situation in the USA. The Mercedes plant produces the M-Class, R-Class and GL-Class for all markets around the world – including the economical and clean diesel versions.

I’ve always been a big fan of diesels (my mother drove both a 240D and 300D so, “it’s personal”). Older Diesels produced significant emissions and poor performance. Not anymore.

The new GL class finally enables Mercedes to compete effectively with BMW, Lexus, Infiniti and Cadillac in the large/luxury SUV wars.

Totally out of the reach for most duo-peds is the mouthwatering S65 AMG. I almost don’t want to quote horsepower and price…because, as they say, “if you have to ask…you can’t afford it.”

Steering wheel shifter paddles, 6 liter V12 biturbo, active body control, 612 hp (yes, that is six hundred and twelve) – I had to look twice as well – all good stuff. No, I didn’t ask, “how much.”

Detroit Auto Show Day 1 - Chrysler Group

2006-01-08T23:44:00.000-05:00

As always, Chrysler Group has the most interesting press conferences. At one point, Eva Longoria (Desperate Housewives) wandered across the stage, desperate for something. After things returned to normal, we got to see, once again, why Chrysler is the healthiest of the “domestic” manufacturers and why Eva was, “desperate.” As I said earlier, I am not a big fan of concept cars that never see production because they are, A.) over designed and B.) can’t be manufactured because the design goes too far and C.) have a powertrain that can’t, realistically, go into mass production (e.g. Hydrogen cars, pure electrics, flywheel cars, etc.)

I have no doubt that both the concepts shown by Chrysler Groupwill be in production soon because they have a past history and, more importantly, a current Chrysler Group platform accommodate their production (the 300).

The Dodge Challenger concept continues Chrysler Groups’s back to the future strategy. Shown in a lovely burnt orange, it brings back memories of cruising Woodward Avenue (the main drag strip for those who spent their wayward youth in Detroit). Of course, it has a 425 hp hemi with 0-60 times in about 4.5 seconds and a top speed of 174 mph. Well…so much for the energy crisis. If we’re gonna go, we might as well go in style, right?

Back in the day you knew you’d arrived when the hood of your car came up to your armpit. Well, we’re back in the day now. The Chrysler Imperial concept is all hood…and then some. Like its predecessors in the new Chrysler/Dodge sedan lineage, one is reminded of a Rolls Royce. Or as the press release says,

Like the great Imperials of Chrysler’s storied past, the 2006 Imperial concept vehicle is designed as Chrysler’s flagship, a luxury sedan that is elegant, provocative, aspirational, yet attainable.

For inspiration, the designers looked not only to the classic Imperials of the 1930s and 1950s but also to Chrysler’s long tradition of creative concept cars, from the earlier Chrysler d’Elegance and Falcon to the more recent Chrysler Chronos and Firepower. This rich heritage is expressed in the crisp line that parallels the sill, then arches up over the rear wheel and flows to the rear of the car, signaling that this is a powerful rear-drive automobile.

One also realizes…Chrysler has once again taken the lead in being distinct and continues to extend that philosophy with this latest powerful rear wheel drive saloon. One interesting feature, the doors hinge at the A (front) and C (last) pillar so the doors open similar to French Doors (once known in the auto industry as, “suicide doors”). Oh yes, it’s got a 340 hp hemi. Sensing a theme here?

Detroit Auto Show Day 1 - Hyundai

2006-01-08T23:41:00.000-05:00

Why Hyundai, you ask? Hyundai (and Kia, for that matter) remind me of where the Japanese were in the 80s. Every time we turn around, the Koreans launch a new vehicle. As I was chatting with John McElroy, of Autoline Detroit and American Driver fame, he reminded me that they recently invested in a Michigan design/engineering center (190,000 square feet) and plan to hire a thousand engineers. I wouldn’t be surprised if a fair number of Ford and GM engineers make their way across town to Hyundai. And now, they are launching the first vehicle conceived and built in a US plant, the new 2007 Hyundai Santa FE SUV. Good news for Southeast Michigan Real Estate values.

Ok…but who really wants a Hyundai you ask? 500,000 sales tell us lots of Americans like Hyundais. And 56% owner loyalty (according to US President Bob Cosmai) suggests they are pretty happy with the product and its dealers. Take a look at Marketpoint internet demand and you’ll notice that Hyundai is rapidly becoming a household name in car shopping.

Detroit Auto Show Day 1 - Audi

2006-01-08T23:40:00.000-05:00

New Audi S6

I was hanging around the Audi display, chatting with Audi PR folks about how the S4 would be my perfect next car, except for the rear seat legroom. They said, “Stick around…you might like what we’re announcing.” I did like. The new S6 (and S6 Avant wagon) fits the bill. More rear seat legroom in a taut AWD package. Performance? A ten cylinder engine in V configuration with 420 hp mated to the 6 speed tiptronic promises to deliver 0-60 in 5.2 seconds.

Perfect for the Michigan winter! The downside? Not available until spring time 2006…meaning it might miss my purchase window. My lease expires beginning of March.

Detroit Auto show - Day 1 Continues

2006-01-08T23:16:00.000-05:00

Ford Plays Cobo Arena

No…it wasn’t Van Halen, reuniting for a show at Cobo arena. It was the Ford Motor Company press conference, starring Bill Ford, Jim Padilla, Mark Fields, Carroll Shelby and J. Mays. The theme, Driving American Innovation leaves me cold, frankly.

I won’t dwell on the concepts too much…I’ve never been a big fan of concepts that are futuristic. I’ve always preferred concepts that are grounded in reality…and could be produced in short order…and the Ford Super Chief (based on the Fseries) and Reflex just struck me as vehicles that are not likely to be built anytime soon.

The all new Edge and Shelby GT500 are a different story, however. Let’s start with the Shelby…it’s nice to see this car make it back…and from the specs…Ford has done the right thing. Here are the numbers that matter to fans…5.4 liter, supercharged V8, 475 horsepower, 18x9.5 inch wheels and the familiar racing stripe down the center of the car. Although I don’t believe much in the halo effect of performance cars on sales, I do believe that cars like this make people remember the Ford that used to lead instead of follow (e.g. Taurus, Explorer, Mustang). And THAT is a good thing for the future of Ford Motor Company.

Ford enters the new “CUV” segment, Crossover utility vehicle, with the 2007 Edge.

"Edge underscores the bold, American design direction for all Ford vehicles going forward," says Mark Fields, president, The Americas, Ford Motor Company. "Edge also is packed with Ford innovation – from its panoramic glass roof and laptop-friendly center console to fuel-saving engine and advanced safety features. We expect Edge to make waves in the hot crossover market this year just like the Fusion did for midsize cars last year."

One can see the new signature Ford grille as well as clean lines. In addition to a 250 hp engine, Edge offers a Panorama roof and will be available in AWD.

Ford’s Press materials wouldn’t be complete without charts that show how Ford will be the only “domestic” in the modern/aspirational CUV category. Based on what I see…a very nice execution in styling, powertrain and features for the volume market. If Ford can deliver on quality, a strong step in the right direction.

Detroit Auto Show Observations

2006-01-08T22:58:00.000-05:00

Day 1 Highlights

My strategy? Walk around the floor and take in the sights and report on developments of interest to me. If you want exhaustive, complete coverage, I highly recommend the official site, MSNAuto.

Honda Sweeps North American Car and Truck of the Year

The show gets off to a start with the announcement that the Civic and Ridgeline win the respective car and truck of the year, the first automaker to sweep in the 13 year history of the award. Last year’s winners were the Chrysler 300/300C and the Ford Escape Hybrid.

The Civic, Honda’s perennial small car champion, has been the entry point in Honda’s successful brand move-up strategy. Get consumers with a first rate, high quality small car and keep moving them up through the company into their other offerings (Accord mid-size, Odyssey Minivan, Honda Pilot SUV, Acura, etc.) The combination of one of the best powertrains in the business plus first class ergonomics and quality were probably they keys to winning the votes of 49 journalists that are in the voting panel. The Civic beat the second placed Ford Fusion by 40 points.

The Ridgeline is Honda’s foray into the pickup market. An unusual execution, it has not sold well, perhaps due to its high base price ($27,000) and unusual styling. The Ridgeline finished ahead of the Nissan Xterra and Ford Explorer.

Toyota Leads Online Shopping

2006-01-04T09:31:00.000-05:00

We recently began publishing predictive statistics showing which new makes and models generate the most price quote requests. And although both Chevrolet and Ford actually outsell Toyota, consumers are most likely to search for a Toyota and submit a pricing inquiry. Ford's share of price quotes has dropped significantly since the summer. Those of you following sales closely, know that Ford Division was in danger of losing its sales lead to Chevrolet for the first time in over a decade...

Internet purchase inquiries are a predictor of future sales. Consumers typically submit a pricing request with a dealer 30-60 days prior to purchasing. Incentives, financing, trade-in allowance "salesmanship" and the "deal" all influence the final purchase, but the pricing request is a strong predictor of market share trends. Shown below are the data from Dec. 1-10...an incomplete month, but a harbinger of things to come...

Toyota / Share	12.00%
Chevrolet / Share	11.60%
Honda / Share	7.20%
Nissan / Share	7.10%
Dodge / Share	7.00%
Ford / Share	6.90%
Jeep / Share	3.40%
Chrysler / Share	3.30%
GMC / Share	3.30%
Kia / Share	3.00%
Lexus / Share	2.60%
Mitsubishi / Share	2.60%
Pontiac / Share	2.60%
Hyundai / Share	2.50%
BMW / Share	2.30%
Cadillac / Share	2.30%
Acura / Share	2.00%
Volkswagen / Share	1.90%
Mercedes / Share	1.70%
Mazda / Share	1.60%
Subaru / Share	1.30%
Audi / Share	1.20%
Infiniti / Share	1.20%
Saturn / Share	1.20%
Buick / Share	1.10%
Hummer / Share	1.10%
Scion / Share	1.10%
Lincoln / Share	1.00%
Mercury / Share	0.60%
MINI / Share	0.60%
Land Rover / Share	0.50%
Porsche / Share	0.50%
Suzuki / Share	0.50%
Jaguar / Share	0.40%
Volvo / Share	0.40%
Saab / Share	0.30%
Isuzu / Share	0.20%

What do the data tell us?

Raw consumer demand on the internet is highest for Toyota products. Honda and Nissan are also heavy in price quote demand, relative to their actual sales
Ford and Chevrolet sales (as well as their sister brands) appear to be inflated by fleet sales, fleet influenced sales (small business fleets that do not get counted as fleets) and agressive discounting. Ford especially, is suffering from very low demand.
For Ford and Chevrolet to maintain their sales momentum, they must continue to discount retail sales, turn their consumers faster (accelerate purchasing through leasing and early turn-ins) and push fleet sales...or eventually lose their sales leadership to the Toyota brand
Despite heavier advertising dollars by some domestics, the message isn't translating into lower funnel shopping (interest in purchasing). Without lower funnel shopping...you need incentives.
Interesting demand fluctuations at the local level. Compare zipcodes in, let's say...Detroit (try 48084) vs. Seattle (98101) and you quickly realize...just like politics...it's all local. The demand differences are shocking. If the domestics want to fix their share problems...it must be done locally. Find your weaknesses...and fix them for a good opponent will surely leverage them against you. Find your strengths...and attack. If you're not sure, read David Halberstam's book on Bill Belichik. "Break down the film." What does Football have to do with car sales you say? Ahh...do not doubt, grasshopper...read. Ok, enough arcane analogies. A hint...domestic quality is close statistically, yet...seen any good ads lately?

Want to see more? Take a look at Marketpoint

Let us know what you think! (Note that Marketpoint only works with Internet Explorer...for now)

Best Deals this Month? Jeep!

2005-12-30T09:46:00.000-05:00

Jeep Grand Cherokee 4x4

Through the January 3rd, you can get a reasonably well equipped Jeep Grand Cherokee Laredo 4x4 for $3,480 using a one pay lease at Golling Jeep in Bloomfield Hills, MI. That's crazy good. The retail on that car is over $29,000. How does this work?

You "rent" the car for 24 months/12,000 miles and hand it back to the dealer! This happens to be the employee price and Golling was allowing non employees to get the same deal. Additional fees include tax, title, document and plates. The military discount applies in that payment as well so if you're not in the military, you back that out (still a great deal, anyway). You also need A tier credit through Chrysler Financial. Click here to see if a local dealer will match that Golling deal. The current Jeep incentives will end January 3rd.

The Shopping List Changes

2005-12-19T22:19:00.000-05:00

Ok...still a few months to go but of late, I've warmed and cooled on several cars:

Cooling...

Audi S4

Very, very nice car...but can you have a smaller backseat? Uhm...yes...in my C4 :-(
I'm thinking, more and more...that the backseat won't be large enough.

Audi RS6

Obnoxiously expensive...hard to find...better rear seat legroom though.

Warming...

Porsche Cayenne S

This one shocked me. I've written and spoke passionately in the past of my disdain for a Porsche SUV. It doesn't feel right...and I still don't like the idea...but if given a choice...I'd rather drive a Porsche SUV if I HAVE to have a car with ample rear seat legroom that can manage a Michigan winter.

I must say that as I looked around for "deals" on a Cayenne I really liked what I saw at Luxury Motors. Very nice site...and excellent use of LivePerson to help browsers find a car. I had a request to chat from one of the live operators. I think this is an excellent use of the technology and not too intrusive.

Finding the Best Deal

2005-12-07T15:57:00.000-05:00

Ok...so, here is the current line up of cars that we're considering:

Lexus GS430
Infiniti M35
Audi S4, used RS6 or new A4 3.2
BMW 5 series, probably new
Mercedes E500 (maybe 4WD), probably new

The last car makes no sense whatsoever...but then, I'm human:

Used Porsche C4 (2003 model year) and a used Jeep, Ford Explorer or one of those old Land Rovers from Daktari that will run on gasoline, diesel, turpentine or sheep's urine in case I have to take the kids somewhere. I could get a hunting rifle, a hat and fill the roof compartment with Lion cages, extra fuel tanks, water, beans, rice, etc. I'm going for a certain look. I'd lease the C4s and buy the 4x4 used, of course.

What will be my strategy? I've already been doing research using our top secret new BestDeals application on what dealers are offering around the country. In the next few weeks we'll show how that search feature works. But, basically, it will allow me/you to look both locally and nationally to see what dealers will sell a new car for...should be fun.

Speaking of best deals on a new car...year-end is especially a good time to buy. Why? Dealers are trying to close out the year and make "numbers" and, potentially, write off bad debts, fix their inventory, etc. etc. If you're serious about buying...now really is a good time...especially if you're shopping domestic makes that have high inventories (that's basically all domestics with the exception of hybrid vehicles and a few other high demand vehicles).

If all this fails, I'll buy my brother's race Ducati 996 (uses race fuel only) and tow the kids.

My Search For The New Car Part 2

2005-11-21T11:11:00.000-05:00

The Search for the Best Deal on the Best Car

One of the things we tell people that are looking for their next car is this: Don't pick just one. Why? I really like the new M5, but I'm not fond of putting Thousands of dollars on deposit for the right to "stand in line." When I was single, I had the same rule about getting into clubs and bars. Never stand in line to give someone your money.

As I was thinking about this, I got a call that warmed my heart. Dealer in FL has 2 brand new Audi S4s, with "slight" hurricane damage. $Thousands below invoice. How bad is the damage? Slight nick/scratch...nothing substantial. Now there's a deal!

Save $4,000 on a never driven car and fix it up with $50 in touch up paint. Car can be shipped for $700. So what are we talking about here? Instead of a 500 horsepower, 2 wheel drive BMW M5, I could get an S4 and save $500/month. BMW has more rear seat legroom and newer technology. BUT...the S4 is a Quattro for lovely winter driving...with "ONLY" 340 horsepower. The extra $ saves on the S4 means I could buy extra winter tires and have enough left over for a boat. Mmm...but then...I couldn't tow the boat with the S4.

The BMW has more wow factor but I don't care about that too much. Now...if I could get the S4 with more rear seat legroom...

Need to think about this a bit longer. Plus...my lease isn't up for a few more months. But...you can see how an open mind allows you to consider a better deal?

One Consumer's Search For The New Car

2005-11-04T15:25:00.000-05:00

February 2005

Realize lease is coming due May 1 on wife’s Honda Odyssey. It’s been a good vehicle for us but she is tired of minivans so time to get something more fun

Problems?

Sliding doors sometimes don’t open or close all the way. This can be rather annoying…especially when you need to be someplace. Sure, we could read the owner’s manual…but who does that?
Not so stain resistant carpeting
Paint shouldn’t peel off the dashboard on passenger’s side.

Good stuff

Almost 36,000 miles all across the U.S…Yellowstone, Montana, Idaho, Washington, Michigan with bikes on the roof and our dog snoring in back, sleeping on, over and under the luggage, food wrappers, DVDs and CDs.
Awesome engine, pulling power and stable ride at speed
Heated leather seats, Michigan winter, enough said

Wife mentions Jeep. Why?

4WD…we have a steep driveway and the Odyssey was leased when we lived in Pacific Northwest…where it almost NEVER snows. Too many Michigan days where she felt un-safe and got stuck in our neighborhood after snowstorms. Try ramming that beast up a snowy driveway? Traction control is useless. Must backup into neighbor’s driveway, gun the Jap V6 and hope that I don’t skid right through the garage door.
Chrysler employee discount potential
Had a Durango in Northwest…she hated it so much (the ride, hard to park, terrible 3^rd row seat entry/egress etc.) that her next vehicle was a Honda Odyssey. I think we would have gotten the Chrysler or Dodge van except the salespeople at 2 different stores were so incompetent that it soured us on the whole deal. Sometimes, you just pack it in and move on. Unfortunately for Chrysler, there was a nice young former Marine at the Honda dealer who had worked hard on how to sell.

We also talk about the Honda Pilot, which we looked at briefly when we went with the Odyssey.
Strangely, no one from Honda has called us. Not even the local dealer where we’ve had service. Makes you wonder…either a database problem or they just don’t want our business. Or business is too good at Honda so they don’t need to try that hard. Probably the latter…
Used MotorAlley reviews to read up on the various products and get a sense for what people are paying for these products. Also looked at the Manufacturer sites.

March 2005

I introduce idea of Audi AllRoad…AWD and, I think, very attractive products

She immediately takes liking to the All Road
Big lease payment is scary. About double that of the Grand Cherokee. We attempt to submit an interent pricing request but don’t hear back from the dealer.

We also decide to look at a Saab 9-5 Wagon…good products and I once met Deborah Kelly Ennis, the president of Saab. Day we submit a pricing request on the Saab station wagon it is announced that she resigned to become chief marketing officer of Diageo. Probably not the first or last GM exec that’s been driven to drink (attempt at humor).
I decide to also look at the Ford Explorer XLT to compare one pay leases to the Jeep Grand Cherokee Laredo. Both companies tend to have aggressive one pay leases and I have some fondness for the Explorer due to some earlier work with Ford. Also, we like the option of the 3^rd row seat…could come in handy.
Read some more reviews on MotorAlley and went to the Audi site to look at some of the certified pre-owned products.

The tally so far using the online quote system, April 2, 2005:

Lame emails from Saab (want to come in for a test drive?) and nothing from Audi other than a quote from Florida relative. Also, a lame email from Honda. It’s now the 3^rd day and only calls from the Jeep dealer internet manager (3 calls, he’s doing a good job) and one from the Ford dealer.

April 5th to April 9…no calls from anybody…

Was able to get a coupon for Audi and went online to try to get a price. None of the 3^rd parties (including us…gulp) has a participating local dealer. Looks like I’ll have to call instead. Too lazy…putting it off. I’m busy.

April 11^th

Took the Odyssey in for last service before turn in. Friday is the inspection and needed oil change. They found that it also “needs” brake pads so instead of $150 for brake fluid, oil change and other miscellaneous, we’re now talking $400. Ouch. Service guy says, “sure you want to do this?” I said yeah…it’s the right thing to do. Could have gotten away with not spending the money, but safety is a concern.
Susan gets excited because there’s a Pilot, “on sale” and we never heard back from the dealer on our one pay lease. Salesperson runs the numbers and explains why the Pilot is better than the Grand Cherokee. One pay lease is almost $10k for 24 months. I fail at attempt to contain laughter. Nothing as intimidating and depressing to a good salesperson as a customer laughing at the price. The G.C is almost half that on a one pay lease. Yes, the Pilot has leather and arguably better trim in some areas. A comparable GC might only be $3k cheaper. I explain, “I can get two Grand Cherokees for the price of one Pilot.”
I feel badly for the sales guy. Selling Hondas in Detroit is tough work. We know…we have an Odyssey and paid through the nose for it. No more. We drive and dispose as long as someone will let us in and out of new cars for next to nothing. It’s an appliance.

April 14^th

Jeep salesman calls again with new incentives and will run one pay lease program again. Really like the follow up. Only one really working for the deal.

April 15^th

Honda turn in-inspection. Vehicle is in good shape but he discovers an indentation in the body panel. It was there when we originally leased the vehicle. About 3 inches in diameter, it looks like the body panel was painted with the dent or it was damaged in transport to the dealer before it was sold. I had noticed it when we first leased the car but figured it was the way the body panel sloped. A few months later I compared it to the other side of the car and realized that it was indeed slightly depressed. I should have said something to the dealer in 2002, but didn’t think it was a big deal. It is now. $399 damage. I told the inspector that I wasn’t happy about it because the car was bought that way but since I didn’t complain about it in May of 2002, I’m out of luck. Mmmmm…well…so much for considering that Pilot. The car is in excellent condition and under the mileage, and the area of the indentation has no pain chip or scuff. A word of advice, if you’re leasing a vehicle…and there is even the slightest concern about anything, HAVE THE DEALER NOTE IT IN THE ACQUISITION PAPERS OR YOU COULD HAVE A BAD INSPECTION DAY.

April 25^th

Call Audi dealer to get pricing on A4 Wagon. Salesperson does a nice job and calls me back twice on the same day to work on pricing.
Looked at Cost of Ownership info on Audi and decide that although it’s a great car…it’s still a lot of cash
Love the Audi but this time, the Jeep is such a great deal…can’t pass up. Briefly consider the Certified Pre-Owned Wagons. They have a nice used S6 rocketship with extended factory warranty. Mmmm…that stops me in my tracks. But the Jeep is still a great deal and I’m more comfortable with a new vehicle than a 3 year old with factory warranty. All wheel drive systems, when they go bad, are really, really expensive to fix. Thousands of dollars.
We go to the dealership so Susan can test drive the Durango, to make sure the GC is the way to go. She hates the Durango. Nice vehicle, but too big for her and same complaints as before. She hates it as soon as she gets in.
Later that day, Jeep salesperson calls to give me the one lease price. I tell him we’d like to pick it up Wednesday. “You made my day,” he says. We opt for the richer content package with leather, heated seats. He throws in the 24 month free service package. Nice.

April 27^th

We pick up the car. I write an up front check for the 24 month lease. Sign paperwork. He does the traditional walk around explanation and asks us to make sure he gets top scores on the salesperson satisfaction survey…his bonus depends on it! No doubt he’ll get it…he did a great job, earned the sale and at the right price.

May 2

I drop the Odyssey at the dealership. Honda waives any damages on the car as it falls below their lease repairs threshold. That’s nice…we’re all good again with Honda.

Summary:

Combination of great Grand Cherokee one pay lease and poor follow up by the competition led to the decision to get the Jeep. Audi was a strong consideration but we were more price conscious this time.

My Search For The Next Car Begins

2005-10-17T10:48:00.000-04:00

Like many Americans, I am once again looking for the next car. The lease on the current car (Porsche Carrera 4) is expiring in a few months so I'm beginning to think about what's next. I'd love another C4, but I need more room...boys are getting bigger! So...imagine a C4...with 4 Doors. What would that be? And...which dealer will get me the best deal? New or Used? I'll track my shopping on the blog.

Here's what's currently on the consideration list...without extensive shopping.

Audi

Big fan of the AWD Audi. Leaning toward the A6 (would love the RS6) because I need size/room.

BMW

M5...enough said. Probably need snow tires...it will be an all season car. Definitely SMG.

So...the shopping begins...feel free to add cars to my list!

SUV sales Plummet....good time to save money on an SUV!

2005-10-14T09:41:00.000-04:00

Gas prices have pushed SUV sales down in the month of September, especially the larger SUVs. Ford has even announced the end of production for the Expedition, the full size SUV that was launched only 3 years ago.

Using our reverse logic at MotorAlley, someone's misfortune is often another man's opportunity...now is a great time to get a deal on a large SUV..even on some of the mid-sized SUVs.

Okay, you say, but shouldn't we worry about gas prices? People are overreacting to the gas price shock. Prices will drop again...below $2/gallon and then you'll be glad you bought the vehicle you really needed...and saved a lot of $. The current high prices are a temporary phenomenon and as supplies improve, prices will drop again. Dealers are sitting on a growing inventory of mid-size and large SUVs (especially the domestic companies, GM, Ford and Chrysler Group). To find out how much you can save check out what other people are currently paying for your vehicle of interest and then request a price from a local dealer using our easy, free quote form.

Korean Autos Following Japanese Model

2005-10-10T11:05:00.000-04:00

As Kia replaces its US CEO, Peter Butterfield, with the former head of VW and AUDI in the US, I thought it appropriate to comment on the growth of the Korean imports in the US market. Interestingly, the Korean model follows the Japanese experience very closely.

Early Japanese forays into the US market were often ridiculed. I remember the discussion of "rustbuckets" in the 70s and "underpowered rice burners." But the Japanese weathered the storm and continuously improved at the edges of the market...where the Big Three were most vulnerable...small cars.

Same with Hyundai and now Kia. Hyundai was the punchline for many a joke when the first vehicles arrived. No one is laughing now. Both Hyundai and Kia have established themselves at the lower end of the market and are now creeping slowly into traditional "import" territory once occupied by the Japanese and Germans. Their small cars are affordable and quality has improved considerably. The dealerships are increasingly "exclusive" (meaning that dealers are investing in stand alone showrooms because they believe the brand has staying power) and sales are rising. At MotorAlley, we see strong demand in the car segment for both Kia and Hyundai models, especially in traditional import markets on the coasts.

When shopping for a new car, minivan or SUV (and soon, pickup!), it makes sense to test drive the Hyundai and Kia products. You will be pleasantly surprised. Fit and finish are competitive and quality and resale values compare nicely to the domestic and import competition. Best of all, prices are very aggressive at the 650+ Kia and Hyundai dealerships.

VW's Troubles

2005-10-06T11:22:00.000-04:00

VW has always built cars with class leading handling and performance. The first car I ever owned was a VW Rabbit -- back in the late 70's and early 80's, it was the best handling/driving compact car on the market (in my opinion, of course).

Although its recent products are attractive visually and continue the heritage of "driver's cars" we think most of VW's problems with the launch of the new VW Passat and VW Jetta (see photo) have nothing to do with its advertising and more to do with its competitive positioning and product quality.

VW price points are aggressive relative to its core competitors (Honda, Nissan, Toyota)
VW design is competitive with the core competition, but it's word of mouth on quality isn't as strong

If I were actively shopping for a small, mid-size sedan or large SUV, VW would definitely be on my shopping/test drive list. With sales sluggish, VW dealers and VW may be willing to offer some good deals.

And, if I were VW, I'd probably run some aggressive test drive vs. the competition promotions with internet shoppers.

Subaru says good bye to GM and Hello to Toyota

2005-10-05T16:42:00.000-04:00

Subaru and GM announced today that GM would sell its 20% stake in Subaru. Toyota announced it would buy an 8.7% stake in Subaru.

What does this mean? GM needs cash because it is losing money in automotive operations and selling its interest in Subaru generates cash and, hopefully, gives its auto operations more focus on building market share.

It also means that Toyota grows its empire and relationships in the market.

For car buyers, it means that the Saab 9-2 will continue to be built jointly with Subaru (also known as Fuji Industries) but that future collaboration on Saab platforms is now dead.

I've always been a fan of Subaru products because of their focus on rugged, small off road vehicles. They have always had a strong following in import and 4 season markets because of their 4WD capability.

How To Fix Our Energy Crisis, Reduce Heart Disease And Obesity And Generally Improve The Welfare of All Americans

2005-09-30T18:30:00.000-04:00

Tax credits for showers at work
Ride Bicycle to and from work (if you visit customers...leave car at work)
Save car for trips longer than 10 miles, grocery shopping, etc.
Reduce highway deaths, improve general health, traffic/congestion and oil consumption
Pay for bike/nice bike clothes, etc. by saving on health club membership

Questions?

Oil Prices Fuel the Alt Fuel/Electric Dream

2005-08-25T09:04:00.000-04:00

Back in my 'salad' days not only did I have longer hair, but I also worked on Ford's electric and hybrid electric vehicle programs. I recall several papers we published that showed that if gasoline prices were comparable to Europe (at the time, between $4 and $5/gallon) that we could create a viable mass market EV/Hybrid market.

Watching gasoline prices rise to $3/gallon, and the waiting lines for Toyota hybrids lends credence to our "models" back then. In fact, we attempted to justify the serial and parallel hybrids with exactly that formula, as a world car. Needless to say, adherence to the CA ZEV mandate (must sell 2% of volume in CA as ZEV - zero emission vehicle) meant we couldn't focus on hybrids, although that was the better short term solution.

Interestingly, for those wondering, why are the domestics once again behind on hybrid technology? In 1992-96...we were ahead...we had several hybrids driving around CA and we'd been working with the DOE (Dept. of Energy) on a $122 million project to build viable hybrids. We used some of the DOE funds to conduct research that showed consumers would be willing to buy hybrids at a premium as long as it was a good commuter vehicle (2+2 seating, 0-60 acceleration of 10 seconds and no need to "plug in" to refuel, and 40-60 mpg).

Shortly after we finished that project, I distinctly remember wanting to leave EVs (and did leave to go build websites) because I knew EVs wouldn't work...hybrids, however...that was a different story. We had a nice vehicle on the drawing board at the time but the funding just wasn't there for a world car based on Hybrid propulsion (EV only for CA, NY and MA). Maybe $400-$600 million in investment, as I recall? It's been 10 years...

We were trying hard to live up to the mandate...instead of figuring out what the consumer might be willing to buy. But I must admit, it must be frustrating for people like John Wallace (the director of Alt Fuels) and Brad Bates (Ford Research Lab propulsion technologies) to see Toyota and Honda introduce their hybrids first and for Ford to have to license some aspects of the technology from Toyota, according to MixedPower.com.

The New New Thing in Auto Marketing? Not Really...

2005-08-02T11:03:00.000-04:00

I'm confused...how does reducing rebates make a customer want to buy a Ford, GM or DCX product? The whole reason we went down this road is because, "gasp," they couldn't sell cars at sticker price...

Product planners price cars relative to competition and try to build packages that make their vehicle more attractive ('we have more legroom for the same price,' 'for the same price...you get leather')
Added to that price is a nice amount of "pad" for marketing "cost." Otherwise known as incentives, holdback, spiff, yada yada
The amount of the pad is determined in a series of meetings in which sales, marketing and product guys argue about the intangible, unpredicatble future of the car..."I think we can sell 200,000 if we get x marketing dollars and y ad dollars."
Finance guys try to talk down the amount, marketing guys try to talk up the amount to ensure the "launch." "My god, man...you can't expect me to launch an all new name plate with only $100 million in advertising!!! Why...it's suicide!"
In the end, sausage is made...and tada...you have the quintissential product that can be sold in the market for $5,000 off and if it meets its volume requirement...help the corporation break even in year 2 or 3 of production (yes, it frequently takes that long to pay off long lead investment in an all new product...or, yikes...longer).
Also...in the end, most of the meetings and discussion were/are about advancing one's career in the boardroom...in my days, I saw little real discussion of what's actually going on in the market. I saw a lot of chinmusic about how "we" were going to beat the Japanese (insert volume market leader in any car market segment here) with the all new Krelman super charger (imaginary name).

What's most confusing about all of this is this...the domestics (if I include DCX) spend more ad dollars per unit than any of the imports...so I don't think the problem is exposure. One could argue it's the kind of exposure...that it's "deal" oriented. But frankly...the only reason an agency presents "deal" advertising is because the client is itchy and scratchy about dwindling sales. No one wants to launch a product with deals. We advertise deals because WE HAVE NO CHOICE!!!!

Changing prices to reflect lower incentives is not all bad...but the dealer better have room to negotiate because we've conditioned consumers to expect cash back and negotiating since the original 2.9% GM incentive launch (anyone remember that? Back in the 80's).

I go back to a basic tenet of long considered product marketing/advertising. The single most important influence in a long product purchase cycle is word of mouth. Followed by more word of mouth...and, you got it...more positive word of mouth.

So the question I have is...not, should we adjust pricing. The question I have is...how do you build positive word of mouth for domestic brands...because there is good news across the board. I don't think the domestics need to abandon "deal" advertising as much as they need a new formula for promoting their products. I've told several friends that I have yet to see the Iacocca ad. Why? I just don't watch TV. And, as I like to say...I especially don't watch car commercials if I'm not shopping. So...how do you build a brand? I really think people in Detroit believe you build a brand by advertising on television...or showing a car on a rain slick road in Oprah.

MarketShare 101

2005-06-22T17:01:00.000-04:00

As the WSJ indicates, the deals at GM are stout. And according to the JD Power Information Network GM's market share does appear to be rising. But, is it really?

Back in the day (that day being my "agency" days) we used to analyze market share in partnership with our car company marketing and incentives clients. We found a phenomenon called, "pulling ahead sales." It means, you advertise such a great deal that you suck your future buyers forward. Then, when the deals abate, your sales and market share drop, because you didn't actually "conquest" any sales from your main competitors. And in this business, market share is everything. Because if you only steal future sales, at a discounted present market value, you do several horrible things:

You cheapen your brand...anytime you talk price, you suggest that is all you have to say. Features, quality, benefits, etc. are crushed by the price message...clowns, balloons do not enhance your brand image.
You sell the vehicle to someone who was going to buy it anyway...for less
Many of your hard working salespeople get reduced commissions...and the salespeople can be the difference makers when the products are equal...so you stand to lose good salespeople who can no longer make a living by selling "mini" deals at $100/car.

Based on what I've read from PIN, as well as my personal experiences, my guess is that GM's strategy will have a nice short term bump but moves GM's problems into the "future." Is that a good thing? Perhaps...if new products can come in to save the day.

It's unfair to overly criticize GM...they have a huge glut of cars out there. They needed to reduce inventory and this will do it. On the other hand, they're certainly smart enough to know that this will not solve their long term market share problems. The only way to increase market share is to take sales from your competitor, not pulling ahead your own sales.

Of course, I have a perfect solution for this and am waiting...waiting...for a call back from Ford, GM and DCX. Please, Mr. Phone, won't you ring?

The New GM Strategy

2005-05-31T08:44:00.000-04:00

Insightful interview of Mark LaNeve by Paul Eisenstein, writer for TheCarConnection.com. I've been reading about GM's desire to "rationalize" its lineup for sometime now. As more and more entrants dive into the US marketplace, GM's individual models are losing relevancy, especially among the younger audience. Fewer and fewer young Americans are growing up with a Ford oval or Bowtie imprinted on their foreheads. What to do?

I'm actually going to propose the opposite of what Mark LaNeve and the other experts say. I believe GM's marketshare losses have nothing to do with the need to rationalize its individual brands and combine dealerships. No...it has to do with GM's (and Ford's for that matter) obsession with trying to "manage" multiple brands via a corporate culture that looks for "price" and "cost" wins at every turn. There is not a platform that doesn't have to serve multiple masters. The decision on what to build and for whom more often is based on cost instead of potential demand at a higher margin. Simply put...we must make all pencils out of wood and with lead. Makes for boring pencils from GM.

The Solution?

Ok...strap in. This is shocking. Give each Division (car/truck brand) the authority to build what they want...as separate identities. Let them find their own alliances and let them act unilaterally. And if the Division head doesn't cut it...you cut the Division head...instead of "promoting" them to the next job. How long does GM need to nurture a loser like Saturn? On the other hand, if Saturn had been given more autonomy it could have sourced engines and, possibly a platform, from the Koreans and built SUVs sooner...thereby making a profit. Sure...this would have "upset" the careful "GM strategic" plan to have each division get exactly its correct marketshare without eating into the neighboring divisions market share. Only one problem...it hasn't worked in 30 years! Let's be real here...a Chevy dealer's # 1 competitor is not Ford...it's the next Chevy dealer, or GMC/Pontiac dealer! Instead of rewarding mediocre product by slicing it thinner (like baloney) via re-badging...force Division heads to start thinking like....Division heads instead of marketing guys with a big fat ad budget that gets spent on TV.

My favorite quote in the interview?

TCC: You've long been the biggest advertiser in the U.S. , but a huge portion of your billion-dollar-plus ad budget goes to network TV. We hear that's going to shift. True?

LaNeve: I'm not sure, over the years, that we were totally effective. Here's an example. Pontiac was a small player on TV, but they could be the biggest player on the Internet if we choose to be there.

Could be? When, oh when will someone wake up and realize that you don't build a brand by running TV commercials? You build a brand by developing a unique product and then promoting it. How you promote it is almost irrelevant! The Wassmann math once again, quickly. 10-15% of US households buy a new car in a given calendar year. TV indexes at 100 vs. new car buyers. Therefore, 85-90% of TV ad dollars are wasted on people who could give a rat's a** about your message. Worse, since less than 30% of those who are actually in market, will actually CONSIDER your specific vehicle...the math gets much worse.

You'd be better off hiring 500 GM retirees and paying them $1,000/day to call each and every potential new car buyer and telling them why XYZ brand should be high on their consideration list.

CONVEY THE GOOD NEWS IN A MEANINGFUL WAY!!!! GM did great in the recent JD Power surveys. WHO KNOWS THIS???? WHO CAN BE PASSIONATE ABOUT THIS VIA A TV AD?

Ok...enough for today.

Sorry I haven't posted more regulary (to my 5 readers).

Crash Free Cars from Microsoft?

2005-05-02T11:49:00.000-04:00

Hmmm...am I the only one that sees the humor in this declaration by the world's richest man? Bill Gates indicated that he believes the industry should embrace technology that would make a car resistant to crashing. Cough, cough...sputter.

Ok, I know...Microsoft's operating systems are less crash prone than they used to be. And it is easy to blame Microsoft for all the ills that befall our lovely computers. It's not always Microsoft's fault that a program crashes our PCs. Having said that, the ubiquitous software company does lack some credibility when it comes to lecturing on passive safety systems. Last week, my laptop crashed 3 times...processor spiked, everything froze for 20-30 minutes and I was finally forced to shut down. So...until that gets resolved, count me out of Microsoft crash avoidance systems for cars. ;-)

Also, please note, this is all said, tongue in cheek. We use Microsoft .NET and SQL to run our website, MotorAlley.

Lincoln Wants To Be Somebody

2005-04-29T09:29:00.000-04:00

When I read this post from Paul Eisenstein this morning, I spit up my coffee. In Paul's article, he covers statements from Paul Horbury, chief designer for Lincoln:

'I would hope we could make a change like they did at Cadillac,' which has been transformed from a stodgy, sinking brand into one of the market's hottest marques, said Horbury. 'We have to get something on the road that is desirable to the sort of youthful luxury buyers who drive market trends,' added Horbury, who has been trying to pump new life into Ford styling since assuming the North American post last year.

Cough, cough. I encourage you to go to the Lincoln website this am and peruse their product offering. Two weak car entries and three trucks. Like it or not, Cadillac has world class vehicle dynamics and performance in some of its new vehicles - that's how they separated themselves from Lincoln. That's the difference! A luxury buyer wants to know that the vehicle they are buying has some high level of excellence....somewhere. Styling is a small part of that package. Styling, we used to say, is a differentiator, not the required level of entry. Powertrain, handling and package are the requirements to compete with true luxury buyers.

Lincoln's problems have a lot more to do with their basic product platforms. Ride, handling, powertrain...etc. In comparison reviews, the products are routinely left out or savaged by the press. That's not a styling problem. Look at the Thunderbird...press/people were wowed by the styling. Consumers stood in line for months. Turns out the car was less than adequate in other areas. Now, the car is DOA. Don't get me wrong, I'd love to see Lincoln I could buy...uniquely styled with a powertrain that says, "this is as good as anything out there." We need a Lincoln that can go head to head with the M series from BMW or the S series from Audi. Then...we will know Lincoln has arrived. Making large SUVs with chrome is easy. Take an F150, put rear seats in it and slap in a nice sound system and some opera windows/gaudy trim. Lee Iacocca was the king of rapid 1 year makeovers. But a luxury brand this does not make.

Perhaps the Zephyr will rival Cadillac? Let's hope so, we need 2 strong domestic luxury brands to compete with the folks from Germany and Japan (and now...even Korea).

GM Redux

2005-04-28T18:53:00.000-04:00

Have really enjoyed some of Robert Farago's insights into the car business. Whether speaking about the mistakes by GM or his insight into specific.

The concept of putting GM on every seatbelt...in every GM brand car is completely puzzling to me. GM is a holding company that makes products. GM adds nothing to a Saturn, Saab or Cadillac. If anything, it detracts...because it suggests to me that I'm buying something that may be watered down. Especially in the current automotive climate. GM's brand name doesn't connote a special level of excellence, quality or financial strength. Hurts to say it, but right now, GM connotes, "how the US automotive business went wrong."

I also see this in their advertising...when I do see it (I don't watch much television anymore -- I often feel dumber, fatter and older after watching TV -- please, no jokes abou the fact that I am dumber, fatter and older than I was 10 years ago...I already know that). I don't understand the idea of a mass mailer to me that piles all the brands together in one mailer and offers me discounts. Same goes with the GM brand commercials. GM is not a brand, despite what some at the corp. ad agency insist. GM is a stock that you buy and sell. Cadillac is a brand. Sure, it's nice to squander $100 million/year on "communicating" with our stockholders about how great things are at the corporation. But, I'd rather put the money into explaining what makes Saab special and unique. That's what sways consumers and helps sell cars. Incentives, practiced the way they are today, simply avoid the inevitable. Profit and share decline. You can buy customers for only so long. And...it's really expensive.

We took a look the other day at our internet traffic at www.motoralley.com. We compared demand for Chrysler Group, Ford and GM in every zipcode in the US vs. the "imports," Toyota, Honda, Nissan. Rather shocking. We'll be publishing that info in real time soon so everyone on the web can get their fill of a mass of colorful and confusing statistics. Here's the most important tidbit. From our little perch, the 2 most researched brands are Toyota and Honda. Strangely, GM is not researched at all. Which takes me back to my original point. Why is the GM logo going everywhere?

MotorCity PR

2005-04-14T10:12:00.000-04:00

On the Today show, Alison Vaughn, the Founder of Jackets for Jobs was interviewed. She helps the unemployed in Detroit through her non-profit Jackets for Jobs." What a great idea.

Why do I bring this up? The Today show was talking to people about making a difference in your town. They went on to say that Detroit has the highest unemployment of any major city in the country...this of course primarily due to the struggles of the formerly Big Three car manufacturers based here (GM, Ford and what used be Chrysler and is now DaimlerChrysler). At the end of the interview...are you ready for this (please be seated), Al Roker donates a van...courtesy of, not Ford, not GM and not Chrysler...but Toyota. The company who has had more to do with unemployment in Detroit than anyone. I couldn't help but think, "wow...how embarrassing."

I know for a fact that DaimlerChrysler has provided assistance to the organization but wouldn't it have been better for one of the Big Three to help?

Toyota Moves To Detroit...or Honda

So, before anyone beats me to the punch, imagine the increase in consideration and market share in the world's largest market, if Toyota moved their HQ to Detroit? Wouldn't take much, really. Boeing moved to Chicago. Of course, they lost 2 CEOs in 2 years in the process, but that wasn't move related.

I think it would be a brilliant PR and marketing move. Why? Suddenly Toyota becomes "American." They have North American HQ in Detroit. They could even buy a few half dead brands and jam Toyota powertrains into them. How about Packard? Or Oldsmobile? This is definitely not your father's Oldmobile now. How about Plymouth? Tucker?

Ok...so, I joke a little...but I am serious about the PR potential. They'd be on every show in America, talking about how they will revitalize the inner city and reduce unemployment.

So, you doubt that Toyota, Honda or Nissan could be Americanized? Hmm...don't forget...DaimlerChrysler is actually a German company. But they sure act like one of the Big Three domestics. It can be done.

The biggest objection will be the Michigan winter. But that's why you keep all the California design facilities...for frequent visits to check on prototypes, in say, February. Also, another huge benefit? Cost of Living. Southeast Michigan real estate is bottom of the market and salaries are much more reasonable due to cost of living. Most employees would actually live in better homes. A Toyota employee could sell their $750k house in congested LA and live in a palace here.

I'm thinking I have a burgeoning career in PR. Toyota? Honda? Nissan? Governor Granholm? Feel free to contact me to hatch and execute the strategy. I stand ready to assist in greasing the skids. This can work!

Let's go! Let's do it!

GM Woes -- Some Positives

2005-04-13T15:55:00.000-04:00

Ok...so, it has been fashionable to bash GM lately. I'm going to do something unusual and focus on the good stuff:

GM has memorable brands. Everyone has heard of Cadillac, Buicks, GMC, Chevrolet, Pontiac, Saturn, Saab and Hummer
GM has some excellent powertrains and Cadillac has successfully (in my opinion at least) made their lineup younger and more attractive with some high performance entry luxury products. I'd seriously consider them if I were looking at a 4 door entry luxury car alongside the best European and Japanese products. I am not happy about the sacrilegious abuse of Led Zeppelin, though.
Saturn is still a great brand...the products could be better, but the dealer network does a great job of taking care of its customers
GM has great dealers and reach and service capabilities unmatched by any other automaker because they are in practically every small town in America. Is this being leveraged?
GM has a large base of current customers that would buy another GM, give them a chance, if they deliver the right product and stand behind it
GM, Ford and Chrysler (DCX) might benefit from the increased focus on how screwed up our health care costs are...frankly, when Pharmaceutical sales reps make the income they do..."selling" stuff that "must" be bought, we know the system is broken.
GM has a huge base of retirees...wouldn't it be great if those folks could somehow be leveraged to build a grass roots campaign for GM's brands? A support/advocacy network? Imagine how many retired GM engineers there are who might be willing to spend an hour or two on the phone helping a customer with a problem...

Certainly, there's more...but sometimes, it's good to think about the bright side. But please stop with the Zeppelin campaign...I grew up with Zeppelin and it's just not right. If you're not sure, check out the Led Zeppelin site and tell me if Cadillac and Zeppelin are a match. Still not sure? Ok...check out the lyrics. Ok...so, it's a great song...but what does this have to do with Cadillac? know what they were thinking..."breakthough...it will make people say...wow...Cadillac and Zeppelin. I need to go buy one now...NOT." Everytime I see it, I cringe. I will say this though...you get points for trying to change the image.

Rock And Roll
(Bonham/Jones/Page/Plant)

It's been a long time since I rock and rolled,
It's been a long time since I did the Stroll.
Ooh, let me get it back, let me get it back,
Let me get it back, baby, where I come from.
It's been a long time, been a long time,
Been a long lonely, lonely, lonely, lonely, lonely time. Yes it has.

It's been a long time since the book of love,
I can't count the tears of a life with no love.
Carry me back, carry me back,
Carry me back, baby, where I come from.
It's been a long time, been a long time,
Been a long lonely, lonely, lonely, lonely, lonely time.

Seems so long since we walked in the moonlight,
Making vows that just can't work right.
Open your arms, opens your arms,
Open your arms, baby, let my love come running in.
It's been a long time, been a long time,
Been a long lonely, lonely, lonely, lonely, lonely time.

GM Woes

2005-03-24T20:34:00.000-05:00

I've written in the past of the declining fortunes of the Big 3/Three (now sort of 2, since Chrysler Group is really a German company). GM's marketshare has gone from the high 30's since I started working in the car business (80's) to the mid 20's today. All along, bonuses and salaries have been meted out on a regular basis. Makes you wonder...

Based on some of the research we've done over the past few years, the only way the domestics have stayed in the game is through liberal incentives and the fortune of a huge dealerbody that is constantly scrambling to move the metal out of inventory with huge incentives and massive ad budgets. Without car dealers, there would not be newspapers as we know them today...they fund most of the classified...and therefore, the newspapers.

Bob Lutz admitted that it may be necessary for GM to eliminate another brand. That was quickly ameliorated the following day by Mark LaNeve...but the cat was out of the proverbial bag. If Oldsmobile can die, so can Buick, Pontiac, GMC and/or Saturn. Or Saab. Same goes for Mercury and Jaguar on the Ford side. No, I'm not saying they are going to die...but the finance guys will soon make the determination without bothering to consult my blog for advice. It will be a cold, hard decision...just like Oldsmobile. Detroit needs a strong GM, Ford and Chrysler. And the stockholders and retirees have to be wondering about their pensions and health benefits. See the recent Detroit newspaper articles in the News and Free Press.

What About The Executives?

What strikes me as odd is this...GM has lost the marketshare of a company like Toyota in the U.S. (or Honda, let's say) in the last 15 years...about 10 points...in consumer speak, that's about 1.6 million sales.

In sales dollars that's 1.6 million units in lost sales times an avg $25,000 sticker price. Or about $40 billion in sales. Staggering.

Mr. Stempel paid the price in the early 90s...but so what? The path down continues. Others have tried to stem the tide and one sees occassional profits but one number doesn't lie. Take a look at the chart in the Detroit News article. In 1990, GM has 35.2% of the U.S. Market. Today, it's 25%. And that's with a lot of incentives. If you take away the incentives...sales plummet further and more plants have to be closed. If you maintain them losses continue. Not a good picture. The only way out of that hole is product. Let's hope that GM has a marketing and product strategy that begins to address segment losses to the "imports." In my opinion it starts with leadership at the top. Here's hoping the next generation of GM execs has solutions other than incentives.

What Makes A Great Brand - On A Personal Level

2005-03-13T18:36:00.000-05:00

As a life-long marketing guy, I've spent the better part of my career trying to help create and advertise 'great' brands. But sometimes, rather than read the textbooks, it's worthwhile to look at yourself in a mirror and ask..."why do I consume what I consume?" What do I think is a great brand? Especially...in my business of choice -- the car business.

What has made the greatest impression on me? What influences my buying choices? Sadly, for those of us in the ad world...it's never the ads. In fact, the ads that work the best, are the ones that present the product's unique identity in its best light. I remember a video on Dr. Porsche. Impressive...another one on Porsche's racing heritage. Ok...so I'm arguing against myself. I think my point here is -- the ad can only bring out a product's unique qualities. It can't make product what it isn't. Find the essence...and present it. If there's no essence...run for the hills.

My Favorite Automotive Brands/Products
Porsche (I prefer this site to Porsche's site...you'll see why)

Those who know me well, are aware of my porsche affliction. That, given a choice, I'll look first at a Porsche, because I love them. Why? My father had them. That alone doesn't explain it, of course. He also had a Bonneville...and I'm not afflicted with Pontiacs. Porsche has a rich heritage, and as a little boy, growing up in Germany, we used to watch the 24 hours of LeMans. And we rooted for the little German company, going up against Ferrari and Ford. We admired the longevity of the little cars and their ability to win endurance races. It was the ethos of the company. Racing improves the breed. Sadly...Porsche has taken a step back from racing and I worry that this will lead to more silly products...like the Cayenne. To me, Porsche will always be a sports car company and anything that departs from that central product concept is a dilution to the core brand.

I still own a Porsche catalog from the early 70s. I recall going to a dealer with my dad and getting it...maybe around 1972-3. I used to page through it and think...one day. When I finally got the first 911 (an 87 black coupe) it made me smile to just get in the car. I even bought an '87 catalog...AFTER buying the car. When I was at Ross Roy, we used to talk about the importance of the "catalog." I still have those brochures to this day. They have spelling mistakes in them...but I still love them.

Will my next car be a 911 (actually, 911 is not the correct factory nomenclature...the new 911 is actually the 997)? I currently drive a C4...great car but rear seats getting tight for the growing boys. And the cost...ouchies. By the way, I drive the C4 in spite of poor dealer service. So...a brand can overcome poor service...but I don't recommend it.

The brand has endured...the shape of the 911 is unforgettable. Can you think of another car with that unmistakeable shape? I can. But first...my favorite Porsches...

911S

1977 Turbo

Jeep

My wife loves Jeeps. She just wants one. And fundamentally...it's about the rugged sense of durability. Sure, they don't have the greatest JD Power scores on reliability. But we're talking 1 foot snow and if she needs to be somewhere, she knows a Jeep will likely get her there.

The Wrangler is a direct descendant of WWII...a symbol of what made America great. Now, it's Chrysler's job not to screw it up. The core success of the Jeep, in my opinion, is still 4WD, go anywhere capability. I've heard some talk at DCX that they need to "extend the brand." Ok...I'm all for that...just make sure the core is 4WD durability. In fact, if I were DCX I'd make darn sure I get the next govt. contract...Hummer is starting to steal your thunder. Favorite Jeeps?

WWII GP

Ferrari

Ok...so...who doesn't want a Ferrari? But it's easy to say it's a great brand and forget all the high performance brands that have died or are on life support in the meantime...Maserati, Lamborghini, Lotus, Jaguar...the heap is large. Only Ferrari continues as an icon.

Since I can remember, Ferrari means performance. Why? They race...their marketing budget is racing. You have to admire that...really. Ferraris that affected me? See below...two that I remember with great fondness...the 512 BB and the "Daytona."

The 512BB 1976-81

365GTB "Daytona" 69-73

More on great brands when I have some more time...

The Significance Of Online Promotions Via Simple Math

2005-02-27T10:20:00.000-05:00

As my few readers know, we manage a website called MotorAlley, a place where consumers can research new cars and trucks and get price quotes in the comfort of their home; thereby saving time and money (time = money, money = saving time). Even in 2005, many Car Companies leave it to their dealers to carry the weight of acquiring profiles of in-market shoppers. Does this make sense?

Background

As a long time internet marketer, I've watched the development of the online business with fascination. Initially, many of the car companies thumbed their noses at "lead generation" falling back on the more comfortable notion of banner ads, links and promotions. The theory is/was, that a consumer would go to the dealer and buy their vehicle anyway...why pay for opt-in consumers and reward 3rd party sites for collecting profiles that will go to the dealer anyway?

Proposed Advertising Effectiveness Calculus

Of course, one could argue, the same is true for advertising. For example, for a certain Detroit manufacturer, 50% of sales come from the current owner body. Does that mean that 1/2 of ad dollars are wasted because that consumer visits their dealer already and receives their owner magazines, so why advertise to that 50%? Further, 90% of households don't actually purchase a new vehicle in any calendar year...so that math now says.....0.9 x 0.5 = 4.5 percent of households are a potential ad target for the message as a new car buying household that doesn't already get deluged with "owner offers." That means, at best, 4.5 percent actually are open for consideration in typical demographically targeted ad messages.

Interestingly, much of advertising even "misses" that 4.5% of in-market households for a number of reasons:

Customer has previous, negative experience with brand. Close friend has a vehicle with a certain un named brand. He will never buy another. You've heard the story from a neighbor or friend, I'm sure. Everytime he sees the ad for his current brand name, his blood pressure goes up and he gets negative reinforcement. He tells many friends NEVER BUY THIS CAR...and NEVER FROM X DEALER
They don't see the ad...most consumers don't watch TV to watch ads. I'm myself am an inveterate channel surfer...drives my wife crazy. I only watch shows and sports I find entertaining...which is little (e.g. European soccer games, NFL channel, History channel, Hockey, and occassional dramatic stuff like Brothers In Arms). One of my media friends feels strongly that he needs to run a TV ad 17 times before the avg. viewer registers it due to surfing, in-attention, etc. That sucking sound is your ad budget.
They don't "get" the ad. Remember rocks and trees campaign to launch Infiniti? Or better, humor or avant garde creative that passes the targeted consumer like a ship in the fog (too clever and/or too arcane for the targeted customer).
Dishonest Ads. "This is not your father's Oldsmobile...this is the new generation of Olds." NOT. It was your father's Oldsmobile...
Unconvincing Ads. Let's say I drive Brand X. I like Brand X. Brand Y advertises their product. But I don't find Brand Y attractive and/or Brand Y's design and features don't interest me. Or, maybe I read a review somewhere that says Brand Y is not well executed. Bye bye, brand Y.

I'm sure we can think of others. But this isn't a PhD paper.

The ad calculus gets worse. In Allison-Fisher funnel research (as well as hundreds of focus groups), we've noticed an interesting trend. Car buyers can be easily influenced by a well informed product advisor. I've tested this theory on the phone with in-market shoppers. Spoke to a nice gentleman on the phone the other day. He had submitted purchase requests for a Honda CRV, Toyota RAV4 and a Subaru Forrester. He was genuinely unsure about what to do. He submitted at our site because his request at another site went "unrequited." That is, the dealer didn't call him. Because our "lead" was a duplicate to the same dealer, I told him he was out of luck with us as well, because his request would be de-duped, so he would not get a call. He asked my opinion and after some discussion he made his decision. I emailed and called the nearest dealer on his behalf and he bought the car, cash, the next day. His major concerns were, "my wife wants the moon roof and, David, do you think I should get an alarm?" I told him to get the moonroof, lose the alarm. You're in Arkansas.

The question in the aforementioned example (quite common by the way) is, what happened to the Ford, Chevy, and dozen other competitors of the small SUV world? He went straight to the aforementioned products because he was familiar with them and narrowed his decision quickly.

What To Do?

I like to say that it is easy to criticize the status quo. The hard part is to offer a sane, reasonable solution. We do this often but fight up the slippery slope of 80 years of Ad history. Direct consumer contact is expensive. Internet leads are expensive and they are "going to buy anyway." Calling consumers is inefficient. Mass marketing is cheaper on cost/thousand.

My response is simple...what do you do when nothing else works? We continue to educate about the in-efficiencies of both mass marketing vs. direct. Each have their place but properly applied, neither is expensive. Don't use mass to solve one to one ills...and vice versa.

More on this later...

Hunter S. Thompson...thanks for the Laughs, Thrills and Chills

2005-02-24T09:40:00.000-05:00

H. S. Thompson in 1977...with the trademark cigarette and holder...unequalled.

I promised myself that I'd only write about automotive topics in this blog...but every now and then, something happens that has a profound impact and I think H.S. Thompson's passing is one of those. Known to some as Raoul Duke in the Doonesbury cartoons, HST was a larger than life figure with an outsized appetite for life...essentially invented a style of writing known today as gonzo journalism. Whether you like him personally is beside the point; his style has influenced an entire generation of writers. I vividly remember the first time I read my first HST paragraph...the opener to "Fear and Loathing in Las Vegas"

Although he wrote mostly about sports and politics, his most famous screed, "Fear and Loathing in Las Vegas" is actually about....covering the "Fabulous Mint 400 bike race." Although...the race is lost somewhere in the mind-bending prose.

If you don't know him, or have never read him, here's my advice. Go to Amazon...or better, go to your local book store and read the first page of "Fear and Loathing in Las Vegas." If you're not hooked, move on. If the bookstore doesn't have the book...stop going there...the store is a fraud.

One of his last ideas was to change golf.

His most recent piece recommended devising a new golf game that would use guns to shoot balls out of the air rather than hitting them with clubs. - Denver Post

Uncle Duke...thanks for the ride...R.I.P. - 2/20/2005

Will Buick Lucerne Carry The Load?

2005-02-09T09:46:00.000-05:00

The New Buick Lucerne

Buick has had a difficult time of late, fighting off encroachment into its entry level premium sedan category. Oldsmobile paid a heavy price...can Buick find increased relevancy among shoppers with the new Lucerne, introduced today at the Chicago Auto Show. Depends on how well this vehicle is executed...especially on the quality and powertrain front...because it's not a styling breakthrough (and...fortunately...it doesn't have to be a styling breakthrough)

On previous rants, I talked about how imports have won marketshare with fewer brand entries and better product execution. GM has more brands than I have fingers (ok...I'm exaggerating...but it's close). Honda, Toyota and Nissan (making a vigorous comeback now) have done very well with 2 or 3 brands, respectively (Scion being the new kid on the block for Toyota). So, Buick has its work cut out...creating distinction in an extremely crowded Sedan marketplace.

I said in the opener that styling doesn't have to carry the day. Ever notice how the Accord and Camry aren't exactly trend setters? Great executions from a quality and powertrain and ergonomics standpoint. They certainly don't overwhelm you with luxury...they beat you to death with some of the best powertrains and quality, year after year after year. So, take a quick look at the Lucerne...does it strike you as breakthrough. No. But it doesn't have to be a 300...it needs to draw level with the better premium executions on powertrain and quality.

The Good News

Buick is drawing level on quality...if the latest surveys are to be believed. On to the next challenge then...powertrain, performance and handling. I haven't driven the car, so I can't speak to that, but guys like Paul Eisenstein will quickly give us feedback on how it performs. Will import buyers drive it and say, "mmm...very nice engine...handles really well...and I've heard great things about Buick's strides in quality...I think I'll take one of these." Or, will they say..."I like it...but my (fill in name of smooth import here) is smoother and rides better." We know the Buick will have good creature comforts on par or better with the imports, so this package evaluation will be critical.

How To Attack The Imports

Although Buick would prefer to compete with Acura, Lexus, BMW and Infinity, reality is they also compete with the more premium "entry" brands like Honda, Toyota and VW. If Buick's Lucerne stacks up well, I'd attack the imports at their core...reputation for reliability and performance. Although it takes years for the market to credit quality (lagging indicator as happy Buick customers tell their neighbors about their good experience), demonstrating it loud and clear via personal experiences can make a difference on the margin...and winning market share back is all about winning at the margin. Marketing can help sway those on the fence. Traditional ads, although nice for a broad message, will not get it done. Experiental, one to one experience is key. Hit them with facts (quality data) and close them with the test drive.

Easier said than done...but as we saw in the NFL playoffs and Super Bowl, throwing deep is easy when you run successfully and your quarterback has protection...shorthand for good blocking and tackling. There are lots of good opportunities for import consumers to get personal experience with an improved Lucerne...you just have to execute when it happens.

How Business Gets Done at NADA?

2005-02-02T21:17:00.000-05:00

Extensive review of the wine list at TuJacques in New Orleans. Rob Spence and Michael Nemirow consider the merits of various fermented grape products. The selected concoctions enhanced partnership negotiations all over NADA.

Rob Spence consults with me regarding the dessert menu. As you can see, I'm enthused by the possibilities.

Web Based DMS on Bourbon Street

2005-02-02T21:15:00.000-05:00

Charles Shamblee, Founder/CEO of NeoSynergy takes web-based DMS to Bourbon Street.

For those that missed it, Charles, a former Reynolds and Reynolds executive and founder of Dealerkid (acquird by Reynolds in 2000), officially announced a new web-based Dealer Management System. What's different? Pure web application with embedded e-commerce and CRM. The evening required a "quiet" cigar celebration. Best of luck to Charles, Brian Hoecht, Allan Green and the rest of the team.

The Best Marketer At NADA?

2005-02-01T01:40:00.000-05:00

Year after year, one company seems to consistently get great buzz...

Whoscalling

How do they do it? They do a great job entertaining their customers and creating interest in their company. They usually throw the most attended, "interesting" party every year. They also do a nice job promoting the party and connecting it to their business goals. Combine that with an easy to use, useful product that helps dealers save money (call monitoring and measurement) and you quickly understand why they have an aggressive growth curve.

NADA - New Orleans

2005-01-26T22:45:00.000-05:00

What Will Be Big This Year?

Starting Thursday (tomorrow) dealers and exhibitors and car companies descend on New Orleans. We (Motoralley) will be there too to meet with current and potential partners and it's always fun to wonder aloud about what will be "hot" at the show.

A couple of thoughts...from our e-commerce perch:

New challengers to the current DMS providers (Dealer management systems). About 80% of the market is controlled by Reynolds & Reynolds, ADP and UCS. But there are some new companies jumping in that bring new ideas. In all disclosure, one of them is a partner of ours, NeoSynergy. We like their web approach and like even more that they like the idea of letting consumers buy a car directly from their dealer, online. We've helped them by building a consumer interface into their DMS.
e-Commerce gets ever more serious. Ok...this isn't "new" news, but more and more dealers see websites, finance, used and new car leads as critical components to their business and so I think we'll start to see more and more of the dealer's budget moving from "off-line" to "on-line." More e-commerce, leads, email, etc...and a little less traditional media. The car companies are doing the same.

I'll write more about my observations at the show and if I remember, share some photographs too.

What To Do About Mercury

2005-01-20T11:15:00.000-05:00

First, pretend you're a consumer. That means, you don't get the company car/deeply discounted Mercury A plan/employee price. You live in Coral Gables, FL. You are not, in any way, associated with the Auto Industry. In fact, like most consumers, you ignore ads until you realize, it's time for a new car.

Would you consider a Mercury? Obviously, now you know why Ford Motor Company has often considered eliminating the Mercury brand...and why the Mercury brand has struggled in the sales race vs. both domestics and imports.

More recently, Ford Motor Company has tried to give Mercury some unique products...but alas, none of them have defined Mercury the way the Taurus helped re-define Ford's car line up.

Mercury's Identity

What/who is Mercury? What are they known for? Ideally, a brand name has meaning. That meaning comes from previous experience/history of the product. I think much of Mercury's struggles as a brand start with a missing identity...which translates into products that don't seem to create separation from the Ford brand. Too often...Mercury is seen as a Ford with a different grille.

A great example is Jeep. We know what that stands for. Rugged, off-road, Army, etc.
Porsche focuses on high performance, luxury sports cars (with an interesting diversion into SUVs). Honda is known for great engines, reliability. Same with Toyota. Both Honda and Toyota are fortunate in that they don't have a brand in their line-up that competes in the entry market. Toyota has created Scion...but Scion is very, very focused on the youth market.

Another difficult challenge for Mercury's product planners - Over a thousand Lincoln-Mercury dealers want a continuous flow of car, suv and minivan products to feed their dealer volume that complements the more luxurious (and also struggling) Lincoln brand. By defining Mercury more specifically, dealers fear they will lose volume products. So...what to do?

Some Thought Starters

Run in the opposite direction of Ford. Be the opposite of the Ford brand. Ford stands for inexpensive, reliable transportation. Create a Mercury brand that focuses on one specific attribute. For example...what if Mercury only made 4x4s? Sedans, minivans, wagons, etc. Oh sure...you could offer a down market version a la Audi...who successfully pushes its 4x4, upscale performance image but makes 4x2s available.

Focus on a specific market segment...like Scion, focus on hip, up market young and young "thinking" customers. Older people will still buy it...but you create separation from the Ford brand...and certainly the Lincoln brand and you begin to attract a new kind of customer. Race the Mercury brand to create some excitement and tradition.

Or...re-think your distribution model...what if Mercury became the vehicle that you could order and buy over the internet? And you guaranteed a level of service/satisfaction and built the brand around those guarantees. Some consumers want that added level of service/support and the Lincoln-Mercury dealer might be able to deliver it through premium pricing. Sure...that doesn't help plant volume...but it sure hasn't hurt Lexus...or Saturn (ok...Saturn hasn't made money...but look at how many vehicles they've sold...and what they had to sell over the years).

Here's wishing Daryl Hazel, VP - Lincoln-Mercury and his partner in product development, Phil Martens luck in re-defining the brand. Phil...one suggestion...remember that study I had recommended back in 1993-4, when you were segment strategy manager? Figure out the true market segmentation...what customer's really look for...and find the hole that Mercury can fill. We used a similar type of analysis to recommend that Lincoln...and Ford make luxury trucks (that was in 1992-93 when Jeff Bell was on the Luxury Operations Team - my how time flies). I don't have the answer...but I highly recommend looking in the direction. Ford's future needs a strong Lincoln and Mercury.

More Shameless Self Promotion

2005-01-19T13:29:00.000-05:00

At the Charity Preview. Scott Russell and I are definitely wearing clipons. From left to right, Colleen Bell, Julie Roehm - Dodge, Chrysler, Jeep Marketing Director, Jeff Bell - VP Chrysler/Jeep, Moi, Scott Russell, Exec. VP BBDO and International Man of Mystery.

Detroit Auto Show

2005-01-16T11:53:00.000-05:00

Eric Ridenour, Group VP Chrysler Group accepts Car of the Year for the Chrysler 300C at the 2005 North American International Auto Show in Detroit, 2005

Detroit Auto Show Charity Preview - Smart Marketing

2005-01-16T11:50:00.000-05:00

Detroit Auto Show Charity Preview

After chatting with Chrysler Group Execs, we took advantage of the clever, "can we take your picture and capture your personal info for future marketing" ploy at the Jeep display. What's not to like about marketing like that? Memorable stuff...

How does it work? Simple...collect personal info then email market to the list and, hopefully, viral market as we/they add friends to the distribution list. Smart marketing as long as it's not overdone. This is high touch, one to one marketing at its best. Had a nice offer from Jeff Bell to get the lovely Susan a deal on her next Jeep. Now that's real relationship marketing!

Charity Preview - Detroit Auto Show

2005-01-15T10:00:00.000-05:00

Likes

Raising $8 million for various charities. Bill Cook and the Detroit Auto Dealers Association do great things year after year.
Seeing old friends, catching up with how our children have grown and sharing successes and failures.
The displays....although not as ostentatious as in years past (remember the multi-level Ford Taj Mahal of years gone by?) always make the cars and the industry look fantastic. How can you not want to buy a new car? (until you see the stickers....)
The Auto executives...as crowded as it gets, we've never had a problem saying hello and enjoying a conversation with the senior execs. It takes a lot of patience and energy to stand for hours and talk about products...late into the evening. People like Eric Ridenour (Exec VP, DaimlerChrysler) and Jeff Bell (VP Jeep/Chrysler) are always generous with their time and enthusiasm about the industry.
Chatting with Steve St. Andre, President of Forddirect.com...about why a Porsche Turbo Cabriolet would look great in my garage...and why e-commerce is taking over the car business...finally.
Seeing Claude Ethridge...one of my early mentors in advertising at JWT. As I told him in the Ford display...when everyone is running around yelling there's a fire, Claude's the guy calmly unreeling the firehose.

Observations

I prefer the show without the loud entertainment/singing. The cars/trucks and concepts are the show
The evening is too short...because of slow limo traffic most people get there late...then rush out early to get to dinner and post black tie parties and dinner. Too hectic. All of this is aggravated by the long waits for coat check etc. Many people I know spent more time in line than enjoying the actual show itself.

Chapter 11

2005-01-12T08:59:00.000-05:00

Interesting discussion this morning on WJR 760 am radio with Paul W. Smith...the center for Big Three and all things auto. Several auto writers (ashamed to say I can only remember Paul Eisenstein from CarConnection) were discussing the likelihood that one of the Big 3 could file Chapter 11 due to liabilities, especially around health care and retiree/pension liabilities.

The CEOs (Wagoner, Zetsche and Ford) have all joined ranks to ask for some health care relief from Dubya. The thought is that since the Germans and Japanese don't have huge health care packages around their necks, they have a cost advantage. And the "imports" that have US employees, tend to have younger employees who use less health care/pension. I agree to a point. Health care is a major, major issue...I know, we're a small business and the costs are outrageous, frankly.

If you're not sure about this, think a little about the cost structure of health care. Look around you. When was the last time you heard of an MD getting, "laid off." Or better, getting a "salary reduction." Mmmmm. Get the picture? It's one of the few businesses where the consumer has little, if any say in allowing market forces to select the best provider/treatment. Imagine that all your food was purchased through "food" insurance. Can't shop at Farmer Jack, Hollywood (names of local grocery stores) to find the best fruit, produce, prices etc. Basically, you get what you get...and you pay a deductible. Actually, some no name accountant somewhere decides, on your behalf, where you should go/shouldn't go based on a contract negotiation. No one tells you what's good, what isn't. And you don't shop based on price...you shop based on the "collective" intelligence of some insurance agent.

The system is awash in excess dollars...and I can't blame the MDs, health care professionals and the Pharmaceutical sales reps (who make hundreds of thousands of dollars for "encouraging" MDs to write prescriptions) for taking what's there for the taking. The system needs market forces and checks and balances. The system needs consumers to think before accepting treatment...to hesitate and question...do I really need this. And if I need this, who else can provide the service for less? Unfortunately, the system doesn't reward consumer "shopping." Right now, consumers don't worry about the costs of health care because, "the insurance will pay." Hey...we pay the insurance companies! Then...they pay the Dr! Everytime you get healthcare, the system (that being all of us) have to cover the bill.

Getting back to the Big Three and health care costs, it's only going to get worse. The collision is coming. More retirees are entering the system...the boomers are aging and those of us born after 1960 will see a different health care system than our parents. I think the burden can be minimized if consumers start getting access to the real costs and are forced to see what the Dr. is charging for his/her services vs. the competition.

Yeah, I know...I'm crazy. But that's how market forces control price gouging. Bureaucrats are notoriously bad at directing markets (e.g. Soviet Union, Cuba, etc.) Here's hoping that we can find a way to bring market forces to bear in health care...so the Big Three can be competitive on pension and health care costs.

Toyota To Overtake GM?

2005-01-11T09:37:00.000-05:00

Who Will Be Number 1?

At yesterday's Autoshow events one of the topics of conversation was,

Will Toyota Overtake GM as the World's largest Auto Seller?

According to several sources, including GM executive Bob Lutz...this is a distinct possibility. A lot has been said about who will be number one and although there's some worry among local residents about not being home to the world's largest automaker, the trend has an air of inevitability about it. Toyota has been inching up on GM year after year, both in the US as well as international markets. GM still has a commanding lead in the US with market share in the high 20's.

How has this happened? A lot has been said about this as well. The answer lies, I think, in several areas:

Product excellence and quality
Expanding product portfolio
Lean Manufacturing
International investment

You'll notice I didn't mention marketing or styling. I believe Bob Lutz once said something to the effect, "Let's hope that the Nissan designers don't go to work for Toyota." I hope I got that at least somewhat correct. Toyota has never been known for its styling. And, I would argue, they have also not focused on "break-through" advertising over the years. In other words, no Joe Isuzu or Janis Joplin/Led Zeppelin in their ads. Nonetheless, they have slowly but surely taken marketshare, year after year.

Toyota is not perfect. They have made their share of mistakes. But what you have to admire is when they make a mistake...they fix it. An example is in minivans. Chrysler invented them, rolled them out and owned the market. The Toyota introduction (the Previa) was wrong in many ways from a design standpoint. But as I mentioned yesterday, they put their toe in the water and fixed in the next generation. The current Toyota Sienna is as good as anything on the market. We know they are likely to delivery a high quality product so once the design and package (engine, transmission, interior and exterior proportions/design) are right, they start to take market share.

2005 North American International Auto Show - Detroit, MI

2005-01-10T08:21:00.000-05:00

Most Significant Industry News?

There's a lot of talk about what is/isn't signficant at the 2005 Detroit Auto Show (ok...it's called the North American International Auto Show...but that's just too darn long). The Dodge Magnum won International Car of the Year, the Ford Escape Hybrid won Truck of the Year. Lots of concept cars being introduced starting yesterday and through this week. But here's my vote for the most signficant thing of the Show this year:

The Honda Pickup Truck

Why...you ask, is a truck that isn't even for sale yet (and hasn't been shown yet!), significant. A few days ago I wrote that the F-series pickup truck has been the best selling vehicle line in America forever (Thanks, in some way, to my contributions as VP, Account Supervisor at J. Walter Thompson to, "The Best Never Rest" Ad campaign of 1990-91 - a story best left for another time). A few years back, Toyota entered the fray and last year, Nissan took the plunge. Now...here comes Honda. Ok...pundits and domestic defenders will froth that they don't have an appreciable share of the truck business yet. But we used to say that about SUVs and passenger and luxury cars as well. Then came the 4Runner, Pilot, Acura, Lexus, Infiniti and so on.

Typical Japanese approach to any problem is to put toe in water and enter slowly. Use continuous improvement over years. I recall one of my Ford product planning friends, Paul Linden (where are you Paul?) telling me about his years planning Lexus when he was at Toyota. With admiration, he spoke about their methodical 15 year plan for Lexus. Trust me on this, 15 year plans do not exist in the domestic car industry. I'm not saying they should...I'm simply saying that long term focus is what drives companies like Honda and Toyota. That means...right about now, in 2004...the first 15 years would be up. Not a bad result with Lexus, considering the plan was to be at the top of the luxury pile after 15 years. I still recall the articles in the bible, Automotive News. Luxury car makers were saying things like, "our customers will not buy a Japanese luxury car..."

So it will go in pickup trucks, I bet. Ford, Chevrolet and Dodge still dominate. I'm hoping that they will maintain their leadership for the sake of our real estate values here in Detroit and because I have friends whose livelihood depends on the profitability of those truck lines. But watch out...the little motorcycle engine company is beginning to put its toe in the water, to join its competitors, Nissan and Toyota. And it would be tough to bet against those three, given their track record in cars, SUVs and luxury products.

"Success is 99% failure," observed Soichiro Honda, founder of the Honda Motor Company.

Success.org

The Ad Folly Continued Part 3, Tres, Trois, Drei

2005-01-08T09:57:00.000-05:00

Having been critical of the current Ad mantra, I do need to defend the auto ad practitioners at agencies and car companies and dealership. It's always easy to sit back, from the comfort of my warm, cozy blog, as the snow piles up on my suburban driveway. I'd like to take a moment to try and explain how we got here.

Imagine being put in the position of VP Marketing/Advertising at a car company and your job is to promote a car. To get to that point in your career, it's likely you've had to fight your way up the corporate ladder. At most companies, what you've learned is that no one gets punished for doing the obvious...but if you try something, "unusual" and fail...you're career ABS fails in a highspeed turn. This promotes risk aversion. The, "you never get fired for hiring IBM" mantra of days past. Much easier to go the "tried and true" direction. And if it goes wrong well...we did what we were supposed to.

Some examples:

On the launch team for a certain Ford car...we discussed ways to build buzz pre-launch by talking to current owners...but focusing on both sides of the equation...what is right, what is wrong...how do we make it right. But let's do it on a large scale...talk to tens/hundreds of thousands. All of these folks are going to buy a car in the next 24 months...or tell 10 of their friends about a great experience.

nice idea...too expensive...we wouldn't have enough money for the "roadblock" media/ad campaign that runs on the NFL.

Losing market share to certain competitors...on Plymouth. One of my co-workers suggested we use examples of those who had stayed with the brand or even switched from current "au courant" brands (like Honda) and reinforce those messages with current and potential owners. It would require us to focus our marketing on current owners and competitive owners

Mmmm...risky...can we just do the broad ad campaign? But like the idea! Atta boy. A gold star moment for not executing.

More recently...brand losing share to key competitors. Devise an interesting plan to intercept competitive shoppers and re-direct them...about 100,000/month (about 10,000 new car/truck sales generated from these shoppers). Requires personal conversation with each shopper to discuss options. In test, this increases purchase rates of the "not considered" brand by 2 to 3x.

Agency, with support from client decides to do direct mail instead...at higher cost and negative return. In fact, in 10 years, the agency/client have never produced a positive ROI "conquest" campaign with this method. But it's safe. And it's been done before...and no one was fired.

Yes...the corporate safety net looms large. Kind of like strapping yourself to an anvil and swimming...because that's what the previous guy/gal did.

How to fight this? Couple of thoughts:

Analysis...careful analysis

Make sure you have data...good data
Make sure you have actual consumer voices supporting the idea...whether clips on video or recorded responses...amazing how real stories can sell better than a powerpoint
Use less powerpoint (easy to get lost in fades and colorful bar graphs)

Sell...over and over

I know...booooring. But if you believe it, make others believe. Most great ideas die a slow corporate death because the anti-bodies kill it. I find that there are people out there who are willing to commit career suicide for a good idea well executed. Just have to keep talking until you see someone's eyes light up.

Go straight to the top

This fails 99/100 times. But just one time, a senior exec will say..."mmm...let's give it a try." You may still get ground into mincemeat by the next row of execs. But they'll think twice because there was some support from upstairs.

More on the calculus of word of mouth marketing in the car business next time. Now, I have to go and listen to some more Spanish guitar and flamenco records I found in the garage.

The Folly of Automotive Advertising Part 2

2005-01-06T08:26:00.000-05:00

I wrote at length the other day about why it is so difficult for a car company to get an edge in the business without a great product. To summarize...cars are a long consideration item because they are expensive, stay in the household for a long time and require ongoing service.

It stands to reason that a 30 second commercial will have much less impact on your next buying decision than your previous 3-5 years of ownership correct? In fact, research we conducted over the years showed that the majority of shopping consumers were much more likely to be influenced by a "trusted" friend or informant (a loudmouth, know it all like me, for example) with "inside" information on who has the best products.

Further, if you have had 8 problems with a vehicle, are you really going to buy the same brand again? This then...is the critical calculus in marketshare.

When we were designing the CRM (Customer relationship marketing...shorthand for direct mail, telemarketing, and other forms of direct response) programs for Chrysler there was a small band of philistines that believed that our salvation lay in "gifts" and giveaways. One day, one of the enlightened commented,

"Oh...I get it...so, let's say I have an xyz 4x4. Last week, my engine drops out of the car on the way home in a driving rainstorm. Basically, our CRM system would automate a direct mail with a coupon for a free NASCAR hat. If the bumper falls off, we send you a free jacket!"

Errr....

After a hearty laugh...there was a long silence. And we realized...yes, that's what it really was all about. Because there was no "budget" to "solve" the problem. Just a budget for stuff. I mean...we'd have to actually TALK to the customer...and SOLVE the problem. Talking to customers, one on one, for those of us in the CRM business, is REALLY expensive budgetwise. You don't measure one on one, productive conversations as a CPM (cost per thousand) but rather in a cost per contact.

But...there will always be hundreds of millions of dollars to advertise the new, shiny version. And...hopefully, the reasoning goes...you'll have developed amnesia about the little engine block incident. Strangely, we'll spend millions more trying to figure out why the campaign isn't working as well as we thought.

Next Time...we'll talk about a formula for solving this problem. Unfortunately, this formula has not developed a strong following in the ad community because it doesn't allow us to fly to Palm Springs for 3 weeks to shoot and edit a sexy tv commercial.

20 Most Researched Vehicles on the Internet...where are the Domestics?

2005-01-05T08:54:00.000-05:00

I wrote yesterday about the decline of the Big Three. Sure, there are plenty of bright spots...for example, Ford announced that the F-Series was the best selling vehicle in America for the 23rd year running. But the overall trend at the brand level is more negative. Take a look at the findings at Kelly Blue Book:

KBB.COM's TOP 20 MOST RESEARCHED VEHICLES OF 2004



    1. Honda Accord               11. Honda CR-V

    2. Honda Civic                12. Ford Mustang

    3. Toyota Camry               13. Ford Explorer

    4. Toyota Corolla             14. Ford Escape

    5. Nissan Altima              15. Infiniti G3520

    6. Toyota Highlander          16. BMW 3-Series

    7. Toyota Sienna              17. Mercedes C-Class

    8. Honda Pilot                18. Volkswagen Passat

    9. Honda Odyssey              19. Volkswagen Jetta

   10. Toyota 4Runner             20. Chrysler 300

Pretty frightening stuff. If you're wondering, how come the first "domestic" is only # 12 on the list (Mustang, followed by Explorer and Escape) but domestics still have the most marketshare?

Simple...a good chunk of the traditional Big Three sales are bought by large fleets (e.g. rental car companies). And fleet buyers don't do vehicle research on sites like KBB. Further, fleet sales are not necessarily the most profitable way to do business. Fleet buyers get big discounts.

When you look at pure consumer interest, the picture changes dramatically. These #s also explain why domestic products tend to have more incentives to achieve their sales targets.

On the good news front, it's nice to see Chrysler making the top 20 list with its stylish 300. When I was still Chief Marketing Officer at Car.com our editors voted it the Best New Design.

Finbar O'Neill resigns at Mitsubishi to join Reynolds & Reynolds

2005-01-04T16:27:00.000-05:00

This is a very interesting move...things were not going well at Mitsubishi. Car sales are down significantly and dealers are very unhappy.

Finbar O'Neill had the difficult task of reviving Mitsubishi after a disastrous 2002-2003. Appears that Mitsubishi tried too hard to meet their aggressive sales goals in 2002-2003 by underwriting high risk consumers. He's going from a very difficult situation at Mitsubishi into another difficult situation at Reynolds and Reynolds. Reynolds has essentially shrunken since 1999-2000. Although they are considered a "leader" in the Dealer Management System market, revenue has stagnated and it's not clear that Reynolds has figured out how to profit from the rapid transformation of the retail business. The good news is that Reynolds & Reynolds now gets a seasoned automotive veteran to help "right" the ship. The previous administration, although technology savvy, seemed to struggle with the direction of the company in the face of rapid changes in the retail environment.

Then, there's the onslaught from new and lean DMS companies like Neosynergy

If he can get the right combination of car business and technology people, I'm betting he'll be able to grow the company again.

New Car & SUV Prices - Shop & Compare at MotorAlley.com

2005-01-04T15:12:00.000-05:00

New Car & SUV Prices - Shop & Compare at MotorAlley.com

In case you didn't know...here's the website we're building...appreciate feedback/comments. It's a work in progress!

2005-01-04T15:05:00.000-05:00

The Folly Of Automotive Marketing/Advertising

2005-01-04T09:58:00.000-05:00

I wrote yesterday about the decline of what we used to call the "Big Three (3)." I often read in news articles that the Big 3 need to "improve their marketing."

Actually, it's the exact opposite. There is nothing really wrong with Big 3 advertising and promotions. In fact, I'd argue it is probably the best there is. Domestic producst have very high awareness, typically. They have more dealers and have been around longer so they are part of your community.

Further, domestics simply spend more on advertising. Why? Because they can and because for years, the product was inferior (it's probably on par with the leading imports now) so advertising, price reductions and cash back is all they had to promote products that had quality issues.

In the car business...it's about the product. (I'm going to duck now, because there are a lot of people out there who believe that it's about the marketing/advertising). And if your product isn't very good, you have your hands full...sure...you can work magic around the margins...but negative consumer feedback will kill the best ad campaign in a matter of weeks and months.

The car companies and their dealers (primarily the Big 3) spend about $40-$50 billion (yes, that's with a B) on marketing and advertising. 2/3 of that is spent on cash back, low rate financing and dealer /salesperson incentives. 1/3 of that is spent on TV, newspaper, radio, magazine ads to either tell you why it's a great car or why now is a great time to buy.

Some key reasons why product is king in automotive.

Cars are not kleenex, chiclets, canned chipped beef or even air freshener. A brighter, more noticeable box or endcap at the grocery store checkout line will not impact the decision making process significantly because the decision making process is, on average, 6 months long (based on consumer research I conducted/witnessed over the years as an advertising researcher and product dev. consultant)
Your neighbors and friends don't tell you how happy/unhappy they are with their breath mints at cocktail parties. They will, however, talk until they are hoarse about how much they love or hate their XYZ 4x4 because of the quality problems and the poor service and that the defroster doesn't work and they will NEVER buy one again.
You don't take dog food or tuna fish in for service 2-3 times a year. How you get treated, what you get charged and how the car is returned has a big impact on your view of that dealer and the manufacturer the dealer represents. I know people who currently won't buy another xyz because of the poor service received. Don't you?

More later on automotive advertising and marketing...

Decline of the Big Three

2005-01-03T11:32:00.000-05:00

For those of you who live in Detroit, this is an ongoing topic. I had plenty of time to think about this over the holiday weekend and the following things struck me:

They're not really the Big 3 anymore...Chrysler is now DaimlerChrysler, although they still have a large presence as a "domestic" manufacturer
Marketshare for what used to be the Big 3 continues to drop...year after year. I recall Bob Stempel being "fired" when GM's share was still in the low to mid 30% share. Last I checked, they were around 26 or 27%...and the trend is down.
Cutting edge engine technologies don't seem to be coming from the "Big 3." The "cool" new hybrids are coming from Japan...Honda and Toyota. Those of us close to the industry know that the core/essence of a vehicle platform is the engine. It is also an expression of engineering excellence and technology.
The Big 3 still seem to be able to develop interesting new designs (e.g. the new 300 and Magnum) but the question remains -- can these new vehicles sustain a la Camry or Accord? We can hope...
Increasingly, the Big 3 have become very successful "truck" and "SUV" manufacturers. This isn't all bad...they are, after all, profitable. But the overseas competition is moving into that profitable niche as well. At last count, Toyota had 5 SUVs...that's more than Dodge or Jeep!

Does any of this matter? At the current rate, it will cause some dislocations (selfishly...I think it's hurting the value of our home in Michigan...less jobs = less demand for homes/declining local economy).