Comments on: The Car Questions http://tleaves.com/2009/04/20/the-car-questions/ Creativity x Technology Sat, 17 Mar 2012 05:09:58 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Dave http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5353 Dave Tue, 28 Apr 2009 14:51:31 +0000 http://tleaves.com/?p=1703#comment-5353 (1) and (2): Because 60 years of marketing have convinced the American car buyer that cars are not about transportation, but about self-image. Hatchbacks and station wagons are practical; practical isn't cool. As an Apple employee, you should be comfortable with this reasoning, no? (3): See erink's response at #3. (4): Because people really do need vehicles like hatchbacks and station wagons that can transport people and stuff efficiently, but the American carmakers painted themselves into the "practical != cool" corner and couldn't turn around and actually try to sell them hatchbacks and station wagons. So they raised the suspension a couple of inches, reworked the body styling, threw in AWD, and called them "compact SUVs" and "crossovers". (Fleet MPG requirements also play in, as Amos alludes to in #16 -- a "crossover SUV", instead of dragging down the "car" average MPG, will pull up the "light truck" average MPG.) Of the ten best-selling SUVs in 2008, only two (the Jeep Wrangler and Chevy Tahoe) are actually based on light truck platforms. 5: Information asymmetry + large, infrequent purchase events. Car dealers know more about the car, its cost, and the buying process than do the buyers. Dealers (and particularly individual salesmen) can optimize for short-term returns, because the car-buying event is generally rare enough that "repeat business" isn't a compelling motivator. So a salesman will readily forgo a chance of a sale ten years down the road in order to squeeze an extra 2% out of a $25k purchase. In my experience, the best way around this is to break the information asymmetry - go in obviously armed with reams of data. (1) and (2): Because 60 years of marketing have convinced the American car buyer that cars are not about transportation, but about self-image. Hatchbacks and station wagons are practical; practical isn’t cool. As an Apple employee, you should be comfortable with this reasoning, no?

(3): See erink’s response at #3.

(4): Because people really do need vehicles like hatchbacks and station wagons that can transport people and stuff efficiently, but the American carmakers painted themselves into the “practical != cool” corner and couldn’t turn around and actually try to sell them hatchbacks and station wagons. So they raised the suspension a couple of inches, reworked the body styling, threw in AWD, and called them “compact SUVs” and “crossovers”. (Fleet MPG requirements also play in, as Amos alludes to in #16 — a “crossover SUV”, instead of dragging down the “car” average MPG, will pull up the “light truck” average MPG.) Of the ten best-selling SUVs in 2008, only two (the Jeep Wrangler and Chevy Tahoe) are actually based on light truck platforms.

5: Information asymmetry + large, infrequent purchase events. Car dealers know more about the car, its cost, and the buying process than do the buyers. Dealers (and particularly individual salesmen) can optimize for short-term returns, because the car-buying event is generally rare enough that “repeat business” isn’t a compelling motivator. So a salesman will readily forgo a chance of a sale ten years down the road in order to squeeze an extra 2% out of a $25k purchase. In my experience, the best way around this is to break the information asymmetry – go in obviously armed with reams of data.

]]>
By: WCE http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5342 WCE Mon, 27 Apr 2009 18:31:20 +0000 http://tleaves.com/?p=1703#comment-5342 On Autonation - For various reasons I am very familiar with AutoNation. What you describe is correct. They abandoned the used vehicle market and left it to CarMax. Now AN looks to sell something like 1 out of every 10 new cars in the USA, their dealer network is that big. Also, they have survived the downturn pretty well in that they are able to break even off the service department alone, and sell less than 40% US makes. On Autonation – For various reasons I am very familiar with AutoNation. What you describe is correct. They abandoned the used vehicle market and left it to CarMax.

Now AN looks to sell something like 1 out of every 10 new cars in the USA, their dealer network is that big. Also, they have survived the downturn pretty well in that they are able to break even off the service department alone, and sell less than 40% US makes.

]]>
By: WCE http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5343 WCE Mon, 27 Apr 2009 18:28:24 +0000 http://tleaves.com/?p=1703#comment-5343 Thanks Mike for bringing up diesel fuel. We are finally starting to see price rollbacks from very high levels attained in the gasoline price spike/changeover to "clean" diesel. As more refineries produce it (and as long as trucking demand stays low in the meantime) the price will revert to something like normal old levels/ratios, but not quite, given the new fuel composition. Where I am (Texas) has seen the new low sulphur diesel fall sharply in price recently. Now it's selling at $2.09 a gallon, compared to $2.10 for plus and $1.99 for regular. I haven't run pure biodiesel in it yet, but have splashed some in at mfg warranted levels, and that brings the price down some. Or it would if you didn't factor my time futzing with biodiesel. ;) Labor of love and all. Thanks Mike for bringing up diesel fuel. We are finally starting to see price rollbacks from very high levels attained in the gasoline price spike/changeover to “clean” diesel. As more refineries produce it (and as long as trucking demand stays low in the meantime) the price will revert to something like normal old levels/ratios, but not quite, given the new fuel composition.

Where I am (Texas) has seen the new low sulphur diesel fall sharply in price recently. Now it’s selling at $2.09 a gallon, compared to $2.10 for plus and $1.99 for regular.

I haven’t run pure biodiesel in it yet, but have splashed some in at mfg warranted levels, and that brings the price down some. Or it would if you didn’t factor my time futzing with biodiesel. ;) Labor of love and all.

]]>
By: Amos the Poker Cat http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5352 Amos the Poker Cat Sun, 26 Apr 2009 17:09:29 +0000 http://tleaves.com/?p=1703#comment-5352 Rats, always another point. Figures, nearest AutoNation from The PIT, is in Canton OH, and it is an old legacy dealer, i.e. Mullinax Ford. Nearest AutoNation transplant dealer, Leesburg Honda, Scion, or Toyota. Rats, always another point.

Figures, nearest AutoNation from The PIT, is in Canton OH, and it is an old legacy dealer, i.e. Mullinax Ford. Nearest AutoNation transplant dealer, Leesburg Honda, Scion, or Toyota.

]]>
By: Amos the Poker Cat http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5351 Amos the Poker Cat Sun, 26 Apr 2009 16:59:41 +0000 http://tleaves.com/?p=1703#comment-5351 Oh, and #5, the adversarial relationship. Saturn tried the opposite. Sort of. Except, they charged a fixed premium price for an economy product. Didn't work so much. AutoNation tried something similar. <a href="http://www.nytimes.com/1999/12/14/business/autonation-to-close-stores-and-cut-jobs.html" rel="nofollow"> AutoNation To Close Stores And Cut Jobs Published: Tuesday, December 14, 1999</a> <i>AutoNation entered the auto business by setting up used car superstores on a far grander and more lavish scale than anything the industry had ever seen. The parking lots had 1,000 or more used cars. The showrooms had computer kiosks with information on every car in the lot. The prices were prominently placed on every car, with no negotiations allowed. And there were dozens of young, college-educated sales people who worked for salaries, instead of the commissions that had long given used car salesmen an incentive for aggressive sales techniques. But rival used car sales businesses responded by undercutting AutoNation's fixed prices. One morning two years ago, shortly after AutoNation's used car superstore in Coconut Grove, Fla., had opened for business, a well-dressed woman stood at a kiosk and furiously scribbled down prices. Asked what she was doing, she replied that she was going to take the prices to another dealership to get a better deal.</i> They lost a ton of money on the used cars, and made all their money on new cars, which are actually more competitive on price, industry wide, to start with, because of dealer incentives. Oh, and #5, the adversarial relationship. Saturn tried the opposite. Sort of. Except, they charged a fixed premium price for an economy product. Didn’t work so much.

AutoNation tried something similar.


AutoNation To Close Stores And Cut Jobs
Published: Tuesday, December 14, 1999

AutoNation entered the auto business by setting up used car superstores on a far grander and more lavish scale than anything the industry had ever seen. The parking lots had 1,000 or more used cars. The showrooms had computer kiosks with information on every car in the lot. The prices were prominently placed on every car, with no negotiations allowed. And there were dozens of young, college-educated sales people who worked for salaries, instead of the commissions that had long given used car salesmen an incentive for aggressive sales techniques.

But rival used car sales businesses responded by undercutting AutoNation’s fixed prices. One morning two years ago, shortly after AutoNation’s used car superstore in Coconut Grove, Fla., had opened for business, a well-dressed woman stood at a kiosk and furiously scribbled down prices. Asked what she was doing, she replied that she was going to take the prices to another dealership to get a better deal.

They lost a ton of money on the used cars, and made all their money on new cars, which are actually more competitive on price, industry wide, to start with, because of dealer incentives.

]]>
By: Amos the Poker Cat http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5350 Amos the Poker Cat Sun, 26 Apr 2009 16:49:06 +0000 http://tleaves.com/?p=1703#comment-5350 1) Hate the hatchback? See the Vega. 2) Station wagon dead. See EPA fleet mileage rules. 3) SUV, see EPA fleet mileage rules, light truck. 1) Hate the hatchback? See the Vega.

2) Station wagon dead. See EPA fleet mileage rules.

3) SUV, see EPA fleet mileage rules, light truck.

]]>
By: Mike http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5349 Mike Sat, 25 Apr 2009 02:48:56 +0000 http://tleaves.com/?p=1703#comment-5349 3) Of course there will always be better cars available if you wait a year or two, just like there will always be better computers, phones, etc. But if a used car beckons, I've always liked the <a href="http://en.wikipedia.org/wiki/File:Lexus-IS300-SportCross.jpg" rel="nofollow">Lexus IS300 SportCross</a> which seemed like a nice, tidy size, or the old Jetta (IV) wagon, which looked smaller than the current Jetta wagon (in truth, they're both roughly the same size, with the Jetta V clocking in roughly 6 inches longer -- hardly noticeable). VW's done well by doing the legwork to get diesels over to the States, but I suspect we're just another round of $4 gas away from getting a better diesel infrastructure to support more diesel automobiles. 3) Of course there will always be better cars available if you wait a year or two, just like there will always be better computers, phones, etc. But if a used car beckons, I’ve always liked the Lexus IS300 SportCross which seemed like a nice, tidy size, or the old Jetta (IV) wagon, which looked smaller than the current Jetta wagon (in truth, they’re both roughly the same size, with the Jetta V clocking in roughly 6 inches longer — hardly noticeable). VW’s done well by doing the legwork to get diesels over to the States, but I suspect we’re just another round of $4 gas away from getting a better diesel infrastructure to support more diesel automobiles.

]]>
By: WCE http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5348 WCE Fri, 24 Apr 2009 21:28:37 +0000 http://tleaves.com/?p=1703#comment-5348 The Jetta Sportwagen TDI. I've mentioned it before. 1. Wagon 2. Not too big 3. Fun to Drive 4. Not expensive - about $26 loaded and you get a "green" tax credit of (I think) about $1700. 5. Safe 6. Quick (off the line especially) 7. Not Pretentious 8. Great milage, especially on the highway. It holds a bike with one seat folded down. Clean to run with new Euro diesel technology, and you can run biodiesel in it if so inclined. Seriously, from what you describe this is your car. It's mine and I love it. The Jetta Sportwagen TDI.

I’ve mentioned it before.

1. Wagon
2. Not too big
3. Fun to Drive
4. Not expensive – about $26 loaded and you get a “green” tax credit of (I think) about $1700.
5. Safe
6. Quick (off the line especially)
7. Not Pretentious
8. Great milage, especially on the highway.

It holds a bike with one seat folded down.
Clean to run with new Euro diesel technology, and you can run biodiesel in it if so inclined.

Seriously, from what you describe this is your car. It’s mine and I love it.

]]>
By: jfb http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5347 jfb Thu, 23 Apr 2009 03:46:27 +0000 http://tleaves.com/?p=1703#comment-5347 <blockquote><a href='#comment-32482' rel="nofollow">Originally Posted By Mike</a> And didn't Toyota have a supercharged engine in the Previa?</blockquote> The Previa was like the freaking Lotus of minivans -- supercharged, mid-engined, rear-wheel drive, with a 50-50 weight balance. You could even get a 5-speed, although apparently not with the supercharger. Too, it looked like a spaceship. I sort of want one.

Originally Posted By Mike And didn’t Toyota have a supercharged engine in the Previa?

The Previa was like the freaking Lotus of minivans — supercharged, mid-engined, rear-wheel drive, with a 50-50 weight balance. You could even get a 5-speed, although apparently not with the supercharger. Too, it looked like a spaceship. I sort of want one.

]]>
By: Chris http://tleaves.com/2009/04/20/the-car-questions/comment-page-1/#comment-5346 Chris Thu, 23 Apr 2009 02:01:10 +0000 http://tleaves.com/?p=1703#comment-5346 <blockquote><a href='#comment-32479' rel="nofollow">Originally Posted By psu</a> The new Hyundai Elantra touring might also fit the bill.</blockquote> The Elantra has those crappy 'panging' doors... sounds like they are made of something akin to tinfoil :( Most of the innards are also pretty lame looking/feeling. Though, they seem to wear pretty decently (based on my sister's Elantra)

Originally Posted By psu The new Hyundai Elantra touring might also fit the bill.

The Elantra has those crappy ‘panging’ doors… sounds like they are made of something akin to tinfoil :( Most of the innards are also pretty lame looking/feeling. Though, they seem to wear pretty decently (based on my sister’s Elantra)

]]>