Insider Opinion: Big Dog on the folly of the ‘Hyper Car’
As investment bank analysts sit at their desks in Frankfurt or London, else ponder the future from New York, Bloomberg screens glowing and P&L models churning quietly in the background, perhaps they might consider a new and exciting way to view the possible success of a car company. It's big, it's bad and it makes absolutely no business sense at all. But CEOs seem to be addicted, says Big Dog.
These analysts get regular phone calls and visits from company Investor Relations (IR) representatives, desperate to extol the virtues of their company, and - far more important to their career - the bloke at the top. They'll tell the analysts how the company is run only for the benefit of its shareholders and how the boss earns as much as a Patagonian shepherd on a bad day.
They'll say it's a labour of love because - and please highlight as appropriate: he's connected by family/loves the company and is its saviour/is a lifelong employee and loyal to the end/is a genius of such proportions that he would be instantly made president, or a new God if he ever left and everything he does should be seen as part of his grand plan that can't possibly fail.
Now this old hound may be a bit on the short side and have rather more interest in sniffing trees, but even Big Dog can remember how many simply hopeless, helpless or hapless CEOs we've had in the last few years. They've been at Ford, Fiat (so many it's embarrassing), BMW, Rover (don't get me started), VAG (I can't say Audi USA because he barely got to sit down), GM, Mitsubishi, Daimler, Jaguar, Chrysler and no doubt you can think of a few more.
Sometimes they're a victim of circumstance and sometimes they are just scarily overrated (how the heck do these guys get the jobs?) but one thing that should act as a signpost to a possibly well and truly out-to-lunch CEO is the unerring ability to ignore reality and happily use company resources to pander to an obscenely oversized ego.
Now I'm not saying he'll marry his PA - some don't (nor even the children's nanny) - and I'm sure that some don't even insist on the Gulfstream being met by a full security team every time they fly. Nor will a remarkable ability to get a huge bonus that flies in the face of overflowing red ink on company accounts be a completely clear indication of possible demonic tendencies. No, what should give every analyst in the world a reason to put a company on SELL is the announcement of - the "Hyper Car" project.
Our CEO, so fluffed up by his minions that he feels invincible, has a great idea. It'll be his present to the world, his finest creation, how the world will think of him.
He has personally overseen the engineering, while the designer - hounded by the great man - has fully reflected his master's instinctive understanding of the nuances of all that is best in a car. The only thing standing in the way of a project that will rival the Great Pyramid for grandeur is the small matter of the business case, which in well-run corporations is where the whole shooting match should come unstuck. But hey, this is the motor industry.
The great man calls in some minion of the senior-but-still-hoping variety, or perhaps still junior enough to be scared-of-being-sacked type. The God details his great idea, of annual build of 1,500 per year at a price of $250,000 for a beast that will top 350, or will be trimmed with the hide of the last Mountain Gorilla left alive in the wild. (It is worth noting at this point that the penchant of the CEO to drive or be driven does seem to have quite a bearing on the creation being hyper sports or hyper luxury.) All it needs now is the financial sign-off and volumes approval.
Sweating over a hot JATO machine, our minion pretty quickly discovers that total sales in segment amount to tens of units rather than thousands, that the car is too expensive by 85%, that three other demented CEOs intend to launch similar products and the world economy is about to go through a shudder. There is no business case that would stand up even in the most hopeful mind. Quite simply the whole project will cost a packet and be a disaster.
So our man now invokes the 5th and 8th laws of arse licking - yep, you've guessed it - the mythological world of "brand development" and "new market potential"! Come on you product planners, hang your heads 'cos you've likely all been there to pay off some fanciful idea, be it a ludicrous sound system or a jet. Meanwhile, the entire development cost somehow gets assigned to the door handle, which rather fortuitously is the same as the one on the most popular car they build so it's hidden in five million units; well even accountants can arse lick!
So the vehicle is launched a year or so late, and the press love it, as they love anything with a full tank of fuel and a trip to somewhere lush; the public suddenly realise how far they are from achieving it and feel sad and resentful to the brand; while the CEO has something to drive in his retirement that cost him nothing.
And the shareholders? Well they just write the checks - many of them - time after time - and whenever they ask how the hell it happened, they're shown a chart detailing how the car might have extended brand recognition and are reminded that the vehicle is right, it's the market that's wrong. In fact, one thoughtful IR chap is even reported to have told a crowd of analysts that it was their fault - they were rich so why didn't they buy one?
But Big Dog has an idea that might at least put the brakes on this crazy nonsense. From now on, all CEO's wishing to develop a hyper car should be forced to underwrite the full cost of development and promise to buy all unsold stock at list, if the beast sticks to the showroom floor like chewing gum on trousers.
There again, I'm sure that this wouldn't actually make them change their minds as, after all, these cars always make a fortune and are a superb idea. Dismal little car companies like Toyota, PSA and Renault-Nissan (how sad must Renault be to only build a car to mobilise the masses rather than a B17 hyper car?) will miss out, while other companies headed up by much more far-sighted and magnanimous leaders bask in the terrific success of creations like the Bugatti Veyron, Maybach, Rolls Phantom, Phaeton, MG SV etc, etc.
- Big Dog
The strong views expressed in this column are exclusively those of Big Dog and are not necessarily reflective of those of the publisher, editor or other members of the just-auto editorial team. just-auto gives Big Dog an occasional platform (and dog biscuits).