Thursday, December 01, 2005

Domestic Winners and Losers

So who, in my great and highly respected opinion, are the domestic winners and losers for the end of the 2005 model year? What a great question, if I should say so myself. It is pretty obvious, and if it isn't to you, aren't you lucky to have me around to explain it.

Loser #1 - GM. Simply put, GM is the biggest loser of the three hands down. With a product line that is still boring and basically unchanged, GM still doesn't have anything really exciting to bring to the table outside of the Z06 Corvette and the Pontiac Solstice (which, by the way, still isn't better than the MX-5 Miata).

In addition, they have not adhered to the plan of Value Pricing. Value Pricing was the plan announced in the midst of the Employee Pricing plan. The idea was to rid the line of any high incentives and price the vehicles with a true price. By doing this, GM could stabilize their products and the resale/market value of their products in the long run. Instead, GM announced mid November their "Red Tag" event. The "Red Tag" event allows the buyer to see the lowest price of the vehicle in the window of the car and takes out all the calculations. This particular price is well under the MSRP and not a list price like the Value Pricing program would be.

Too bad GM. You will be dethroned in the American market by Toyota inside of six months.

Loser #2 - FoMoCo. Although FoMoCo is not as bad off as GM, they too have problems that need to be fixed. Unlike GM, FoMoCo has a real hit on their hands with the new Ford Fusion/Mercury Milan/Lincoln Zephyr (all built off of the Mazda 6 platform, a successful car in it's own right). With new competitive product available on the market and finally getting rid of the Taurus line of cars, FoMoCo can move on and compete.

However, they too need to adapt a Value Pricing plan to stabilize their market/resale values and put themselves on the right track. Like GM, they have a "Keep it Simple" pricing plan similar to the "Red Tag" event. With this particular plan, they will also continue to jeopardize themselves by continuing to allow the customer to expect high incentives to buy product. If they can get away from this after January 3rd, they too will move in the right direction.

The only Domestic winner - DamChry. That's right, Daimler Chrysler. Besides having the most intriguing product line available amongst the three domestic manufacturers, they have not succumbed to high incentive selling. Well, at least not as much.

DamChry has introduced their "Miles of Freedom." This plan is not a discount pricing plan, but rather an extended bumper to bumper warranty, free maintenance, and two years of free gasoline. Although still an incentive, it will not have a detrimental effect on the market/resale pricing of their vehicles, a crucial step in the right direction. To me, DamChry is #1 of the big three. Maybe not in volume, but definitely in terms of common sense.

MSN has a nice article outling the big three's promotions here. I advise you check it out should you choose to purchase a domestic vehicle this season.


At 5:32 PM, Blogger fingers said...

here's a question. is DamChry really still one of the big 3?
Isn't Daimler the bigger entity in that merger, or where they about equal and just merged. For the life of me, I can't remember now. Or is that the Daimler wing has no say of the US market/brands...? Just curious.

Mergers and aquisitions...can be hard to keep track sometimes. I mean, Daiwoo cars with Chevy logo-plates on them...that kind of thing.

If there's one car company i wish would get off their duff it's Moller International (they make flying cars, well, in theory). They have a working model too - the M400 Skycar, that runs on a gasoline combustion engine with basic VTOL tech. But they never release any real performance specs (ostensibly to protect design specs and attract potential investors without drawing too much attention from say, Lockheed, Boeing et al). Ehhh...maybe it's all crap, but hey - I grew up with Bladerunner and Ray Bradbury short stories. I want my flying cars!. Check it out:

At 8:56 AM, Blogger Disgruntled Car Salesman said...

Yes DamChry is still considered one of the big three. Although Daimler bought Chrysler, Chrysler/Dodge/Jeep are still technically considered domestic manufacturers. (Although most domestic manufacturers don't make much here anymore, Chevy with Daewoo is a great example).

I'm also familiar with a rotary powered skycar that someone is working on. Not sure which company, but rest assured, we will all have flying cars someday, just like in Back to the Future part II.

At 3:48 PM, Anonymous Anonymous said...

I am all of 28, so I'm a little short on life experience. However, based on those people I know (pretty unscientific, huh?), brand loyalty among car owners seems to be pretty high - provided you don't have problems with the vehicle.

I wonder if part of the reason the Big 3 continues to struggle is that all have done a terrible job of producing vehicles that appeal to young buyers?

When I bought my first car four years ago, there simply wasn't an American car being built that appealed to me as a young driver (and by young, I mean 24 at the time). I don't see a lot of young people driving American cars. I do, however, see a lot them in Hondas, Mazdas, and Volkswagens.

I also wonder if this low-ball pricing strategy isn't an attempt to compensate for the fact that many Americans believe the Big 3 make vehicles of inferior quality when compared to companies like Toyota and Honda. Reputations take time to change, and offering ridiculous deals may be the only way the Big 3 can keep people in their vehicles long enough to convince them that things have changed.

I agree with you that the new vehicles built off the Mazda 6 platform are a sign that Ford might be figuring it out. It took them long enough. Frankly, I think Mazda is just about the only good thing Ford has going for it these days.

GM's got brand issues. It's motto should be "boring cars for boring people."

And one petty gripe. Could Ford please introduce a logo? That cursive "Ford" on the front of a car is the epitome of uncool.

At 2:14 PM, Blogger Disgruntled Car Salesman said...

"The epitome of uncool..." Funny, but the logo happens to be an American icon and symbol. I doubt it will ever change.

GM's only hope with youth buyers is the Pontiac brand and the rebadged Cavalier known now as a Cobalt. Pontiac is the only division thats seems as if to me it can put something together that would appeal to youth buyers. The G6 is a good start, but not good enough. The Cobaltt SS is pretty cool, but sadly the only one of the Cobalt trim levels that is. The car is still pretty ugly too.

Ford's next generation Focus will be built off of the Mazda 3 platform, so it will definetly be a home run. Ford also has Volvo, which seems as if to me that it is doing OK.

I am not worried about DamChry at all.

The difference in quality between American products and imports is surprisingly little. Domestic manufacturers have built much better cars in the past couple years. However, if you beat a dog with a stick over and over and over again, eventually it's gonna bite you. In this case, one reason why American buyers have weened off of the domestic brands.

The beginning of the change whould start now, and means they need to dump promos. If they can start with this little step and suck it up for the next five years, they may return to their former glory.


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