Pity the poor car buyer who wants to be a smart consumer and reads all the quality studies before going to the showroom. How do you know what to believe?
For example, Consumer Reports’ Reliability Survey gives props to the Scion xD. But Strategic Vision’s Total Quality Award gives props to the Scion xB. And J.D. Power puts Scion near the bottom of the list of its Vehicle Dependability Survey. Who do you believe?
Automakers are closing plants to reduce overcapacity and make themselves profitable again, and as strange as it sounds, that’s going to be bad for car buyers.
In the global auto industry today there are probably 20 million units of overcapacity. That is, the industry can build more cars than there are people to buy them. And you know what happens when you have a surplus like that? Prices go down.
For the last two decades car buyers have been the beneficiaries of this overcapacity. Automakers have had to keep a lid on prices, or offer all kinds of incentives, to lure people into their showrooms and not their competitors.
But now, with so many automakers losing money, they’re closing plants and reducing that overcapacity. And that means the next step is that prices of new vehicles will start edging up every year. My guess is that in the next five years the average MSRP is going to be somewhere around $40,000.
What’s it like driving a car powered by compressed natural gas? Well, you don’t notice anything at all, until you go to fill up.
I just got to test drive a Honda Civic that runs on natural gas. Or I should say, compressed natural gas. There are a lot of places where you can buy natural gas, but not a lot that sell compressed natural gas. It has to be compressed because the only way you can get a semi-decent range is to really cram it into the tank.
In southeast Michigan there are only about 5 stations that sell CNG. If you get online it looks like there are more stations, but good thing I called ahead, because a number of those listings no longer sell CNG.
But the good news is, CNG is a lot cheaper than gasoline. I paid the equivalent of $1.94 a gallon, and I filled the tank for less than ten bucks.
Back in 2002 Mazda launched an all-new family sedan. Called the 6, it was designed to battle the segment-topping Toyota Camry and Honda Accord. Nevertheless, it came up short in a few key areas, and it never sold as well as its targets. Blame it on a lack of horsepower as well as the fact that it was slightly smaller than its competition. For 2009, Hiroshima’s hometown automaker has completely redesigned the 6, and the results are truly eye opening.
One of the newest suppliers to the auto industry sees a lot of opportunities out there, as long as it has the right products in the right markets.
Arvin Innovation is the name of the newest supplier coming into the auto industry. But it’s a start-up that’s being carved out of Arvin Meritor, and on it’s first day of business it will have $2.5 billion in sales and 9,000 employees in 16 different countries.
Phil Martens, who used to be at Ford, is the CEO of Arvin Innovation, which is headquartered in Detroit. And he sees big opportunities in coming out with products like composite springs that are half the weight of steel ones. And with what they call smart motors, and smart latches.
Martens says that as long as you look at the auto industry on a global basis, and get into product lines that can boost fuel economy or safety, there is plenty of growth opportunity out there.
Private equity is not as engaged in the auto industry as it was a few years ago, but the experts say just you wait, they’ll be back.
Private equity deals have dropped off dramatically in the auto industry this year, and that is a global phenomenon. But Frank Dunne, a senior counsel at the law firm Dykema Gosset says one of the reasons is that the private equity firms have to put more money into their existing investments, rather than go out and cut new deals.
But he says private equity will be back in the auto industry because now they’re looking downstream. Instead of looking at automakers or suppliers, he says they’re now very interested in the retail end of the business and in the aftermarket.
And he says that the big automotive retailers, like Auto Nation are just the kind of businesses that private equity would love to get into.
Ford has come up with a new product development process it calls DCDQ, and here’s what those letters mean for the company.
DCDQ stands for dependable, contemporary, driving, quality. It’s the tagline Ford of Europe is using for its new product development process and the plan is to drive that plan through the entire company. To put it simply, in April of this year Ford merged its product development and engineering organizations, and it assigned a buyer from purchasing to work with an engineer for each and every commodity.
The idea is to slash investment costs by using fewer platforms and power trains and yet come up with more unique models in the showrooms. Of course, that’s what every automaker’s trying to do. But it all hinges on how well they execute, and DCDQ is the way that Ford wants to get it done.
Honda established its reputation by building high-quality, fuel-efficient small cars. And that tradition continues today with its completely redesigned Fit. The popular subcompact is all-new from the ground up and offers drivers a lot in terms of features and dynamics. Now, as truck and SUV sales cool down to arctic levels, consumers have been tuning up the heat. The small car market is smoking hot right now and Honda’s right in the heart of the segment. But has the company kept the good, baked-in “Fitness” of the original or have they watered the new car down?
When Jim Farley was at Toyota he was stunned by Detroit’s total lack of response to the small car market.
What really put Jim Farley on everyone’s radar screen in the auto industry is when he was put in charge of launching the Scion brand for Toyota. He led a brilliant launch of three small cars, the Scion xA, the xB and the tC. At the same time, Toyota launched another small car, the Yaris.
Sales of those small cars quickly boosted Toyota’s sales by 250,000 units and gave the company more market share. Farley says he braced himself, fully convinced that Detroit’s Big Three would respond to Toyota’s bold move.
Instead, he was flabbergasted by the total lack of response from the American automakers. But that was then. Now Farley is at Ford, and it will have 6 new small cars coming out in the next four years.