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Performance, excitement and economy

Those that know me well, realize that I am a bit of a gearhead and lately I’ve been thinking about certain aspects of automotive culture unique to the USA, in particular our high reliance on oil and the seeming untenable bias towards vehicles with lousy fuel economy. Certainly part of this is healthy profit margins, along with economic and political corporate interrelatedness for existing infrastructures. However, most of the reasons come down to culture. It might surprise many to find that even with the price of oil going through the roof, large trucks are still some of the hottest sellers. Of course you know why companies are pushing them. Here’s a hint: It’s because they are soooo profitable. Assembling trucks is cheap. Dirt cheap. Two rails and a couple of boxes is essentially what it is about, so profit margins are often as much as $10-15,000 or more per vehicle. DaimlerChrysler (Dodge) knows this as do Ford and GM which is what has inspired Toyota and Nissan to jump into the full size truck game. I admit that trucks are absolutely necessary for some folks, even practical, but for the average commuter or person on the street, I just don’t get it. I have owned a pickup truck in the past and while it was convenient for a couple of moving events and towing on occasion, for the most part it was a commuter vehicle, and a none too reliable one at that.

I know quite a bit about automobiles and consider myself an aficionado as I have worked in the past as a mechanic and driven everything from the pedestrian Honda CVCC and Suzuki Samurai to Porsche 930s with wildly modified massive dual turbo engines. I’ve also wrenched and driven exotics including 1960s era Ferraris and a 1968 Lamborghini Miura show car pictured in the intro image that Ferrucio Lamborghini himself drove down to Monaco to show in front of the Casino Monte Carlo, as well as restored Studebakers such as the modified ’53 coupe below with a supercharged Avanti running gear and my wife, H in the passenger seat doing her best impression of a 1950s cool chick.

I’ve driven these autos on wide American roads and interstate highways and can appreciate the open nature of driving in the American west. So, given the geography, nature and repair (or lack thereof) of American roads along with issues related to sharing space with large automobiles, I understand why there may be some reluctance to driving small vehicles that traditionally have not been able to inspire lust or excitement. However this is changing along with technology and the price of oil.

Now, even though I am a gearhead, I ride my bicycle just about everywhere I can practically travel to and I understand and am sensitive to issues of environmental awareness. While that perspective will appeal to some folks, most consumers need an incentive that perhaps is due to more selfishly motivating reasons like image, performance, convenience and cost. However, consumers have shown they are willing to pay more for what they see as desireable products. So the reasonable (and responsible) task for automotive manufacturers should be to generate excitement and desire for more fuel efficient automobiles before governments begin to implement mandates that result in automobiles that are bereft of any spirit. We will all lose if that happens, after all, remember the late 70’s and early 80’s US car market? This move does not necessarily have to mean loss of economic competitiveness for manufacturers, rather it could mean more business from new consumer purchases and increased efficiencies of production from sales of cars whose engineering and production is already paid for in other parts of the world. The task here in the USA would be to invest dollars into advertising and promoting vehicles that are sold just about everywhere else in the world. This job is not necessarily so difficult as advances in suspension and tire technology have made small cars more comfortable and capable of higher performance than previously possible while the implementation of safety technology such as air bags and crumple zones surrounding a protective cage have made them much safer than ever before. If you combine those advancements with new engine technologies and clever styling, there is no reason why smaller automobiles could not become great sales successes. For instance, the Mini has created a cult following and showed that the small upscale automobile can generate huge sales and be extremely popular even with those who do not own them. Given that there are a number of exciting small cars being built around the world and that Americans are now starting to pay prices for gasoline that folks elsewhere in the world have been paying for years, one would think that manufacturers of small cars from other places around the world would start to look more seriously at the US market. There are companies that are currently in the US market that one would think could relatively easily begin to market cars they already produce and sell in other parts of the world here in the US. In fact, the distribution, supply and repair networks are already set up for companies like Smart, Volkswagen, Toyota, Honda, Audi and others, including domestic companies such as Ford.

Statistics show that in most countries including the USA, automobiles carry an average of 1.2 occupants on most trips and since the 1950’s cities and suburbs have been designed increasingly around the automobile which will prove more and more difficult and cause greater environmental impact as populations grow. Some realize this and are turning increasingly to small automobiles for their personal transportation needs. Automobiles such as the Smart fortwo (produced by DaimlerChrysler) should be huge sellers in the United States with all the engineering and development of these cars having been done for some time. In fact, the Smart fortwo began its development back in 1994 and has been sold since 1998 in over 31 different countries around the world. Their own demographics show
that the Smart cars are purchased by relatively affluent individu
als who more often than not pay cash for the Fortwo. Smart is even offering the car in Canada and Mexico, so, what is the holdup in the US market? An ideal appropriate market here would be for students and faculty at academic institutions where parking is typically sparse or is available at a premium. If they were
SMART about it, they would also set up deals with large corporations with significant numbers of employees who commute to purchase these smaller vehicles for a discount, and because the Smart’s body panels are easily swapped out or replaced, cars can be sold with company emblems already discretely emblazoned into the body panel for built in marketing opportunities.

Also, they should carefully examine opportunities for state and federal governments. Have you ever seen the parking lots of some of the large federal buildings like the Pentagon? They are huge affairs with thousands of cars in them (67 acres with spaces for almost 9000 cars at the Pentagon alone) and people coming and going all the time. Smart should be setting up a cross country advertising blitz showing off the cars to selected markets, creating tie-ins with other hot products like the iPod and generating a buzz for their cars in places where viral marketing can be most effective, like blogs. Some of the blogs to focus on are ones hosted by students and faculty at academic institutions because of the greater ranking that academic servers typically have with search engines. For instance, I am constantly amazed at how much traffic comes through this blog from Google with search terms for everything from iPods to Keyspan products and Sonnet CPU upgrades I have reviewed. Other blogs which would be ideal are those automotive focused blogs and others with significant influence.

I worry however, that DaimlerChrysler is simply too large and has lost the edge and hunger that makes companies competitive. But if they get it right, realize that some divisions of the company could benefit from radically reduced CAFE averages, understand what their customers want and market with an understanding of some of the new economic perspectives, they may be able to successfully enter the US market with the Smart division and create a hit. If DaimlerChrysler misses the boat on this one, perhaps Audi will capitalize on this with their A3, BMW with their 1 series , Volkswagen with their SEAT division, or even the company that recently capitalized on this market, Mini with their plans for an expanded line.

P.S.

Today I had an unexpected birthday present, the CBS network broadcast of the Spanish Grand Prix. I’ve been watching Formula 1 for about 15 years now and for those that don’t know, Formula 1 is a forum for the best automotive drivers in the world as well as functioning as a technology testbed for the leading automobile manufacturers. Here is the USA, Formula 1 coverage has been pretty spotty over the years despite it being the worlds most watched sport ahead of the number two most watched sport soccer, which incidentally also receives very little coverage here. A treatise on why this is will have to wait for another time, however I will say that most Formula 1 coverage here in the USA has been via SpeedTV which is part of a premium cable package that I refuse to buy because of outrageous fees and the inability to get the channel from Comcast via ala carte packaging. Back on topic: While todays race was exciting, I have one comment for the FIA directors: Mark Webber performed one of the most dangerous moves I had yet seen in over a decade of Formula 1 viewing by briefly attempting a block at the end of a 200 MPH straight. If the FIA continues to allow blocking, somebody is going to get killed. In next years rule changes (if not sooner), please disallow this dangerous maneuver.


Categories: Daily.

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2 Responses

  1. Hi,

    Good post, very informative.

    Re: Formula 1, Speed now streams some practice and highlights online, in addition to FOX showing a handful of races per year. Hope you’ve been keeping up, it’s been a great season.
    take care,

    Les

  2. Hey Les,

    Thanks for the note. It absolutely has been an excellent season, though I have not been following it on television much due to the contract with Speed Vision. I have watched the races on Fox, but until I can either 1) get SpeedVision ala carte without having to pay for another large package, or 2) stream or watch the race live/delayed via iTunes, I’ll likely not be watching many more of the races.

    (I really wish FIA would allow the races to be shown on iTunes).



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