Well, it depends on the car being sold, doesn’t it? TTAC commenter and Hyundai salesman dwford writes in with a prime example too get the conversation started: the 201;0 Hyundai Elantra (sold at full MSRP).
From that, the dealer pays: My commission: $100, a portion of my weekly salary and related taxes, the cost of the detailing for delivery, any floorplan expenses if the car has been here longer than 90 days, and then a percentage of the costs of running the store – electric, heat, rent, phone, etc. Couldn’t tell you what that all adds up to.
The dealer could potentially earn extra profit from the sale of financing, extended warranties etc., but let’s keep it simple and talk about front end profit.
Ever since the auto bailout began, the majority of Americans have opposed the government’s efforts to fund and restructure the auto industry. As recently as July, polls showed that 56 percent opposed the bailout, according to the Detroit News. But now a new Rasmussen poll shows that opposition has fallen to 46 percent with 38 percent in favor and 16 percent unopposed, the first time a poll has found less than 50 percent opposition to the auto bailouts. 70 percent of Americans now believe GM will still be in business a decade from now, and 50 percent believe the government is either “somewhat” or “very” likely to be repaid by GM and Chrysler. Of course, the Treasury still believes that it will lose some $17b on the auto bailout, but then you don’t exactly hear that trumpeted by the White House.
What you do hear about the auto bailout is an increasing tone of triumphalism, an endless repetition of the phrase “the critics were wrong.” And yes, the auto bailout has certainly progressed better than some of its harshest critics here a TTAC might have imagined. But if, over a year after the bailout ended, some 46 percent of America still opposes the government’s intervention in GM and Chrysler, marketers for both of these companies (not to mention the politicians) should sit up and take notice. After all, the “success” purchased with that $80b still depends on the goodwill of the American people, and if the bailout-haters never drop their grudge, GM and Chrysler’s already-overblown “success” won’t last. And for all the “Mission Accomplished” moments since GM and Chrysler emerged from bankruptcy, we still haven’t heard a compelling pitch to the resilient anti-bailout plurality.
Legendary GM CEO Alfred P. Sloan long ago came up with the formula for success in the automotive industry: a family of brands that could sell “a car for every purse and purpose.” Starting with Chevrolet, Oakland, Oldsmobile, Buick and Cadillac (in ascending order), Sloan oversaw the expansion of GM’s brand ladder to include such intermediate steps as Pontiac, Viking, Marquette and LaSalle. And though Sloan create a dizzying (and ultimately unsustainable) stable of brands, he never changed the top and bottom rungs of the ladder: Chevrolet was always the cheapest GM car available, and Cadillac was always the most expensive. But fast forward to 2010 and, though many of Sloan’s brands are long gone, the burgeoning Chinese market has given way to the unthinkable: a GM brand that slots in below Chevrolet
The Nissan Murano may start at a reasonable $28,500, but stepping up to the recently-announced CrossCabriolet version will set you back a healthy $46,390 (before $800 destination charge) according to Nissan ‘s website. That makes it the second most-expensive Nissan after the GTR, and it comes in only one trim level (with navigation, heated everything, a Bose system, HID headlights and more). So, why wasn’t the CrossCabrio released as an Infiniti again?
Because success in the auto industry depends upon both the buildup of industrial might and deft maneuvering on the winds of fashion, analysts often struggle to determine how business decisions impact consumer choice. For example, GM and Chrysler long resisted the pressing need to file for Chapter 11 bankruptcy protection because their leaders believed that Americans would not buy a car from a bankrupt firm, and that sales would go into an irrecoverable tailspin if they filed. Needless to say, that assumption proved to be deeply flawed, and sales during the GM and Chrysler bankruptcies barely dipped (if only compared to the miserable months preceding bankruptcy). In any case, the rating agency Moody’s is taking on the challenge of translating good business news into sales by arguing [via Bloomberg]
U.S. consumers who don’t know anything about over- allocation options or the need for strong liquidity in a cyclical industry knew that something exceptionally good happened to GM last week. That knowledge makes it more likely that they will consider buying a GM vehicle and possibly buy one. That’s good for the company’s credit quality.
But does the general air of positivity surrounding the IPO actually make a difference with consumers?
If you love data almost as much as you love cars, you’re in for a real treat. The EPA has issued a report [PDF here] on the last 35 years of light-duty vehicle efficiency trends, and it’s jam-packed full of fun graphs detailing the evolution of America’s car market. For example, the fuel-efficiency record of the major US-market players is laid bare in one particularly compelling collection of graphs (above). More detail on by-manufacturer efficiency over the last three years can be found here. Other fun graphs: production breakdowns by vehicle size and type, a comparison of performance and efficiency by vehicle type, and a distribution of vehicles by weight for 1975, 1988 and 2010 (weights dropped from ’75 to ’88, and are now back to nearly 1975 levels). You can also check out production share by weight to find out that the sub-2,750 lb died sometime after the year 2000. You can even see the breakdown of FWD-RWD-AWD by vehicle type and pinpoint the moment that Subaru started making an impact on the market. All told, it’s an automotive data-gasm that will leave you a lot better informed about the state of the US market. And the perfect opportunity to make sweeping generalizations about the American car market. Enjoy!
Hyundai could have timed this announcement a bit better. Wouldn’t the following announcement have been a fine crowning of TTAC’s Korea week? Instead, the week ended unceremoniously with a reflection on thee shitboxes. From shitbox to market leader: Hyundai has kicked Toyota from the pedestal as the largest Asian carmaker in Europe. In a way. Read More >
Hey Sajeev, maybe this has been covered before, but as I read thru new car reviews here on TTAC I see that every car maker has left out one of my fave features: the bench seat! I see these huge, gaudy, dust collector consoles in between the two front seats taking up leg and knee room! Am I the only one that misses the bench seat? And column shift? Say it ain’t so! I know they still exist on trucks to some degree but for me, my pref is a good ol’ bench seat. I prefer the 60/40 split and do think they are quite comfy (I am reminded of my years in a 96 Intrepid). I am sure the manufacturers are simply responding to market demands but what do you think? What does the B&B think? Am I sounding like a dinosaur here?
Redflex shareholders on Friday approved big pay hikes for the photo enforcement firm’s top management at the annual meeting in Victoria, Australia. Redflex has cornered 44 percent of the red light camera and speed camera market in the US, although Arizona-based rival American Traffic Solutions (ATS) is catching up to its down under competitor with a 41 percent market share.
With its lineup now reaching into realms where even Cadillac dare not tread (namely the $65k Equus luxury flagship), Hyundai is filling in the gaps with ruthless focus. Next up: the near-luxury large sedan segment, where Buick’s LaCrosse has been mounting a one-car comeback for GM’s premium brand. But starting next year, the LaCrosse becomes a mild-hybrid model, lifting its base price to near $30k and giving the Azera an opportunity to become a recession-special spoiler. And with handsome Sonata-meets-Genesis Coupe-meets-LaCrosse looks, the next-gen Azera could just be the first luxurious Hyundai to actually bring real sales volume to the brand. The Azera should launch next year as a 2012 model, and as the gallery below shows, it’s already crawling the streets of Korea, bringing the fight to the Daewoo Alpheon[Thanks to Walter Foreman for the spy shots].
Did you buy the GM share? If the answer is in the affirmative, then you should stop reading immediately. There are great new stories my Murilee Martin, just as a for instance.
Are we entre nous? Ok, here are the bad news: GM’s black hole in Germany, called Opel, turns out to be more humungous and more financial-matter sucking than ever imagined. Read More >
It’s a well-kept secret, which will give the willies to people who are (at least publicly) worried about intellectual property: Microsoft has one of their best R&D centers in China. Located in the silicone gulch in the north of Beijing, MSRA (Microsoft Research Asia) is working on advanced technologies, mostly in the visual area. I worked with them once, and they are NFSWing good. They just had another great idea: Why not mine the knowledge of cab drivers when it comes to proposing the best route on your in-car navigation system? Read More >
Have you ever wondered what would happen if a man went out in the streets, throwing money in the air? Handing money out to passer-bys? Well Nissan decided to find out and hired an actor to do just that. It has created quite a ruckus! In more ways than one … Read More >
The LeMons Traveling Circus has just made its way to the French Quarter, so I’ll cut to the chase: the Race Hard Race Ugly BMW 325iS took the win on laps at the Circuit At Grand Bayou today. Margin of victory? 8.5 seconds after 24 hours of racing. Read More >
The U.S. auto industry went to the brink. It was rescued by massive amounts of taxpayer money. Brands, factories and dealers shuttered. The business went through traumatic changes. But one thing has not changed: The antiquated way of selling cars. No, I’m not talking about selling cars via the Internet or Costco. I’m talking about build-to-order. A.k.a. “mass customization.” It’s not a pipe dream. It’s done every day. Just not in America. Read More >
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