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David Leggett's unique web log on the global automotive industry, key events, people and his own daily experiences. If you would like to offer your comments, opinions, suggest topics or just have a good rant, please feel free to email: David Leggett. |
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A Europeanised Caddy
9th May 2008 15:03
This week I have been driving around in a press fleet Cadillac BLS 1.9 CDTI Wagon. I wanted it to coincide with the interview I did with Jonathan Nash (below link). It's a pretty good piece of kit - the 1.9 litre diesel engine is turbocharged, there's plenty of load space, nice interior finish, subtle but definitely not bland styling (the Cadillac 'origami edges' figure). And the handling is sharp on what is a fairly sizeable car. No complaints and an easy car to live with. Comments in the office on the styling were pretty favourable, too - plenty thought it resembled a Saab (BLS is also made in Trollhattan).
In short, it deserves a fair hearing amongst its mainly German peers here in Europe. But will it get one or more accurately, will there be enough customers who are attracted to the idea of a Cadillac badge on their status symbol? 'Do different' might make an appropriate brand tagline. One thing though - I certainly don't think Cadillac will be emphasing Teutonic-like peer values, as per Citroen C5. This is an American brand and there's a project ahead on communicating or maybe even reinterpreting Cadillac values for Europeans. But hang on, it's built in Sweden...but there again Saabs will be built in Germany with the next 9-5, BMWs are built in the US etc. Place of final assembly is perhaps less important if other associated brand values are very strong. It's a question of balance.
THE EDITOR’S INTERVIEW: Jonathan Nash, MD Saab GB and GM UK's Caddy man
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Citroen C5 advertisment
9th May 2008 13:03
Marketing and selling large premium cars isn't all that easy for the French outside of France. The German brands have something of a stranglehold - in Europe, especially. PSA is developing what it believes is a credible strategy - 'competitive premium' - essentially levering off the volume business on component sets to produce a low-cost premium offering in each segment and undercutting the established premium brands.
I think it will be an uphill struggle in an area of the market where brand equity counts for a lot. Citroen is most definitely a value-driven brand and I think that counts against it in premium segments. But it will be interesting to see how the strategy unfolds in the market. The right price point can count for a lot, too, so maybe with good product there's a chance to build a reputation (and people who consider a Citroen brand premium car may have low initial expectations). And first off, perhaps you'd want to mix it a bit on the old brand image front, try and dispel some ingrained perceptions and maybe even suggest that you are already right up there with the established players...
In the UK, Citroen is certainly having a go with the C5 and an advertising campaign on TV that has drawn some criticism for its 'Nazi imagery'. A group of MPs said this: 'This house notes with regret the stereotypes used by Citroen to market the new C5 as Unmistakably German, including imagery, symbolism and style reminiscent of the 1930s.
'[We believe] this is counterproductive to the reputation of Citroen and urge it to withdraw the advertisement.'
Personally, I think it is harmless and rather funny. Judge for yourself.
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From Russia to Australia...
9th May 2008 11:46
Russia's Ural Motorcycles is selling its two-wheeler product with funky sidecars to Australia. Is the 'George and Mildred sidecar' due a revival and maybe a reinvention? I dunno and it's a slightly disturbing thought in some ways. I came across Ural Motorcyles in Australia via something in the Sydney Morning Herald and I must say I find this all rather amazing - there are even sidecar adventure tours Down Under. I guess it's a relatively fuel-efficient transportation mode and Two Fat Ladies on their venerable Triumph with sidecar certainly rocked. One of those weirdly cool cult things due a mini revival? Fido's chariot?
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Chrysler's creative incentive
7th May 2008 17:56
I see the creative juices have been flowing over at Chrysler which is being hurt more than most by high gas prices. Buy a selected Chrysler model and Chrysler will subsidise the cost of the fuel going in the tank via a special credit card. It's an interesting one and I must say I like the inherent gambling element involved with holding the fuel price constant for the next three years. Will the actual pump price rise or fall and by how much? Who's judgement do you trust - Chrysler LLC's Chief Economist or your Auntie Pam's?
Seriously, I wonder if other manufacturers are looking at this.
Sure, you can say it's just another incentive (and it's capped of course), but it might be one that flies with consumers on the back of a feel-good factor which goes with filling the tank for 'just' USD2.99 for the next three years. A guy at Goldman Sachs has just forecast that the price of oil could conceivably rise to USD200 a barrel within six months. Yup, that 2.99 price might start to look like a real bargain.
There again, the price of oil might just go the other way when peace breaks out in the Middle East, the dollar recovers on a stronger than expected 2009 US economic rebound and yet more oil is discovered off Brazil. As any gambler knows, there are no sure bets.
And I wonder what the most fuel uneconomic Chrysler vehicle covered by this 'fuel protection' incentive is?
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Electric power - how cheap will it be?
2nd May 2008 14:42
With the price of oil where it is, there's a general assumption going around that the issues for future electric plug-ins are confined chiefly to vehicle (lithium-ion battery) range and performance alongside some consideration of the CO2 used up in power generation. I've not heard much on what the issues may be for the electric power utilities. If that aspect is not completely ignored in the discussions that go on in the auto industry, it's often assumed that what comes out of the wall socket will be there and at the same kind of price as we pay today. It couldn't actually end up being more expensive than liquified fossil fuel could it? This article in the WSJ caught my eye.
Utilities, Plug-In Cars: Near Collision?
Your Comments
So much sense so little time! There appears to be some belated attempt by European governments to at least recognise there are issues surrounding BEVs and PHEVs - they are not a panacea for all our green transport needs. However, with joined-up-thinking, long-term power generation planning, greater public awarness and the harnessing of innovative distribution methods (of both vehicles and power delivery) they are likely to make a significant contribution to the human race over the next 30 years or so. Its the long-term and joined-up thinking bit that worries me.
Paul Evans, United Kingdom
Simon: All true, except that the physics of PVs mean you need your house pretty much covered with them to "reverse meter" (sell power back to the utility). Windmills inevitably run into neighborhood opposition even if you have many acres / hectares, and that's before you even begin to chat with the migratory bird folk. No easy solutions here ... which is what makes it all so fascinating.
John Voelcker, United States
The price of electricity might be one potential threat to the uptake of EVs, however users could always invest in home-based solar-powered charging systems if the price reaches such levels. The issue of higher consequence is the effect of electricity usage on governments' environmental targets under Kyoto and similar agreements. In countries that rely on coal-fired electricity, an increase in electricity usage may result in government regulators resisting the introduction of EVs in their country.
Simon Arthur, Australia
The complexity is immense and desperately needs organising by Federal Government if EVs are to work and make a difference. The concern would be that the general de-regulation we've seen in utilities (that previously helped reduce prices) may need to be reversed to provide the central planning needed to achieve the end-goal. As witnessed at the Milken Institute this week,
there is investor interest in US and global infrastructure, the question is...would be a new round of clean energy / recycled plutonium nuclear power stations be built to feed the need? It's only a theoretical "no" right now. (That's what we're seeing in the UK even before the issue of EVs, and the problems of wind-farm and bio-fuel business models being challenged). With this in mind, the probable public-private investment partnerships would want to reach break-even and amortise CapEx ASAP, so that era of cheap electricity could have well come to an end. For a myriad of reasons the Californian & Israeli initiatives will be keenly watched. EVs - Exemplum Veritas.
Turan Ahmed - 'investment-auto-motives', United Kingdom
The WSJ article you cite is solid, but the headline is overly sensational. The key to understanding these issues is that utilities are VERY eager to "fuel" cars, and will push their various regulators for the ability to price aggressively to make that happen at night when they have oceans of unused capacity.
There will need to be some public education to prevent drivers from reflexively plugging in during the day (as people tend to do with their laptops), but as noted, smart metering is the key to that--as well as to letting utilities bring PHEVs into the grid on a staggered basis while their owners are sleeping. The pitch is something like, "We'll only charge you a penny per kilowatt-hour if you plug in your car by 10 pm, don't unplug it til 6 am, and let us decide when to turn it on."
The greater challenge in the short term is for the US OEMs to make contact with more than 100 different utilities--and the 50 state bodies that regulate them--in order to set standards and begin to understand each others' languages. The Volt team simply doesn't have the TIME to do that, I suspect, so they'll work with the CA utilities--PG&E and SoCal Edison--to prototype, and the rest will have to be caught up later.
John Voelcker, United States
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Ubiquitous premium brands and the 'Burberry effect'
1st May 2008 18:30
Just how far can premium or prestige brands go down the volume road? It was a question that had me thinking after meeting with Jonathan Nash, who's in charge of Saab and Cadillac sales in the UK. He turns low volume on its head and maintains that it can be an advantage in terms of delivering a more personalised customer experience. There might be a few people out there who snigger at that one, given the way Cadillac has undershot on volume, but I think he has a point.
Does the brand image start to suffer if the brand's cars are everywhere you look? How far can you take it? I guess if the tide is rising and people have more money to spend, the fact that millions of people can buy formerly exclusive designer clothes and upmarket car brands is a good thing - a simple consequence of rising affluence. BMW 3 Series outsells Ford Mondeo in UK these days; so what? And when these things do become ubiquitous, then the people who formerly wanted exclusivity can move on to something else. In Europe, a Caddy is a pretty exclusive thing, not exactly a cool thing (let's leave gold wheel Escalades to one side, that's a hip-hop micro-niche) but maybe that will come?
In Motor Industry Magazine, Martin Derrick asks whether BMW can avert the “Burberry risk”.
“Remember Pierre Cardin? Or Ben Sherman? Or Burberry and Stella Artois?
“What they all have in common is that they were premium brands which lost some of their sparkle as a direct result of boosting sales volumes too aggressively. Worse, they started being associated with – how shall I put this? – less than premium customers.”
As sales volume grows, is there a worry that BMW’s nice cars will fall into the wrong hands? Derrick said that growth will continue: “because people are getting more affluent and are living longer so there’s no question of demand for premium cars falling in the short term”.
THE EDITOR’S INTERVIEW: Jonathan Nash, MD Saab GB and GM UK's Caddy man
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UK market/motoring stats
1st May 2008 17:27
I've been sent a very well produced booklet from the IAM (Institute of Advanced Motorists) Trust. You can download it for free (below). It contains plenty of data on the UK but there's a section on international comparisons at the back. It's a good summary compiled from a variety of sources. I defy anyone to not raise their eyebrows over a few of the stats within it. Here are a few:
Today's new lorry (what us Brits sometimes call freight trucks) is quieter than a new car made before 1982.
The years 1934, 1941 and 1966 were the worst years for deaths on Britain's roads. Fatal and serious injuries peaked in 1966 and then began falling. Road deaths in cars and also pedestrians killed on the roads have gone down sharply since 1990. A recent significant decline in 'slight injuries' began as recently as 1998.
Which country comes out worst on road deaths per thousand population? Russia, by quite a big margin (careful on those Moscow streets if you're going to watch the big football game there later this month). And within the UK, maybe take a little more care when travelling in Northern Ireland which comes out worst among the regions in terms of KSI (Killed or Seriously Injured) rate on the roads per 100,000 population..
Over the last twenty years or so (comparing 1985 with 2006) annual UK sales of cars with engine size 1.8L-2.499L have trebled (0.3m pa to 1m) while sales of cars with engine size less than 1.2L have more than halved (0.44m to 0.18m). I wonder what that table will look like in twenty years time...
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'New' Mazdas getting disassembled and shredded
29th April 2008 16:15
Here's an odd one to check out over your coffee break. Do you recall an ocean going car transporter - Cougar Ace - in the Pacific that ran into trouble a while back, aground on its side (I've dug out the story links from our archive - below)? Its cargo of 4,700 Mazdas was rescued, but the cars had been resting at a crazy angle for weeks.
What damage may have been done to the cars? Not all that much you might think (they are well strapped in), but the mere uncertainty was enough for Mazda to conclude that its best option was to claim the loss on the insurance and scrap the cars. The Wall Street Journal got the story on the scrapping process and have sent us the link to use (bottom link, below).
The video clip in the article is worth a look. Sad to see such treatment meted out to 'new' cars, but there you go. They even smash the CD players with hammers and drill holes in the tyres to stop them finding their way out on to the black market.
JAPAN: Mazda rules out selling rescued cars as new
US: Mazda scraps 4,703 Cougar Ace cars
A Crushing Issue: How to Destroy Brand-New Cars
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Kerkorian likes FMC
28th April 2008 16:13
If there was ever a sign that Ford has really turned a corner with its latest financial results maybe it is the renewed buying interest of Kirk Kerkorian. This is the guy who took a hosing with his DCX shares (and lost a court case for compensation) and more recently failed to engineer control of GM via manoueverings involving Carlos Ghosn. Now he's taking an interest in Ford. I wonder what the Ford dynasty makes of that, but, as they own most of the voting stock, they probably aren't too concerned about any future Tracinda manoueverings. It looks more like a vote of confidence in Ford and it's turnaround course.
US: Good Ford Q1 prompts Tracinda stake hike
Your Comments
The $1.7bn in cost-saving looks impressive – esp NA producing two-thirds of it.
Tracinda seems to think this is the tipping-point even though subsequent NA cost-savings can’t sustain the Q1 achievement, ($2.6-3.2bn for NA FY08). But when married to an improved product mix (Flex, Fiesta, Kuga)to suit weak NA and global markets, Kerkorian obviously sees value. He also recognises his own stock-buy actions would (and did) lift the stock [closing at $7.50 only to open at $8.15]. The sentiment of NA market drag still hangs in the air, but Kerkorian’s continued buy strategy to 5.6% of the free-float, obviously puts him square between FMC management and institutional investors, just where he wants to be. On Tracinda’s $6.91 average stock buy, he’s already earned, so there appears to be little down-side for him, but unlike other activists who’ve been shorting auto-stocks, there seems to be good reason to stay the course right now.
Turan Ahmed - 'investment-auto-motives', United Kingdom
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Austin 'Wildgoose'
28th April 2008 14:28
I was up at BMW/Mini's Plant Oxford on Friday to meet up with Oliver Zipse, the Plant Director. We had a chat in a large building that is reserved for Mini events (an interview article for just-auto is in the works). It's also a place big enough to gather everyone together for occasional company meetings. There is some showcasing of the present product and, I was pleased to see, plenty of Mini heritage on display. There were wall-posters of old ads alongside some very pristine looking Minis. And in the corner of the hall was something truly extraordinary - the Austin 'Wildgoose' Mini Camper.
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What's this?
Your Comments
Wasn't this always on the (charge) cards? Although edmunds.com points out increasing incentive costs automakers are trying to avoid a discounting war. Stablised RRPs, contraction of the dealer-bases (avoiding blood-letting) and managed residuals are key to their & dealer margins. Question is what quantity/price basis Chrysler bought its gas contract? Nardelli may wish to think about being a gas-broker for all its V8 & SRT customers!
Turan, United Kingdom