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.