Check Your Mirrors

Check Your Mirrors

Odds and ends about cars and the car business

By Brendan Moore

09.22.2008

WALL STREET woes are probably going to affect Main Street in regard to auto sales. Both consumer and commercial credit is tightening considerably. Consumers are having a tougher time getting approved for auto loans and auto leases are getting scarce. The buyers that do get approved are not getting the same sort of terms that they were getting a year ago from the banks and the captive finance companies because their cost of funds is much higher. Furthermore, the costs associated with inventory financing at the dealerships have risen substantially, which translates into the dealer needing more profit on each vehicle in order to cover his operating costs. This makes the average purchase price higher. What all this means is that fewer prospective buyers are getting approved, and a smaller percentage of those that do get approved can actually afford the payments. Take this one more step further, and you can see why some auto analysts are saying that 2009 will be an even worse year for auto sales than 2008 is shaping up to be.

FORD says that even in a slowing European economy, it expects to sell more of the new Ford Fiesta than the outgoing model. Ford is forecasting sales in excess of 400,000 units in Europe for the new car, the sixth-generation of the Fiesta. Ford sold 378,200 units of the outgoing model last year in a much healthier economy. “The last Fiesta was a great success but we will improve annual sales with this model,” Ingvar Sviggum, head of sales for Ford of Europe, stated. Sviggum noted that the Fiesta buyer population is very loyal to the model, and further, that there are a lot of them. Over 12 million people have bought a Ford Fiesta since the model was launched in 1976. The new model is very attractive and Ford expects to get quite a few conquest buyers from other cars in the segment as well. The new Fiesta launches in Europe over the next few months and is slated for North American sales in 2010, with production for the North American market sourced from Ford plants in Mexico. The launch of the 2010 Ford Fiesta is eagerly anticipated by some consumers and by Ford of North America itself.

DODGE is launching their redesigned 2009 Ram pickup with an incentive. The pickup truck segment has gone into freefall the last six months, and it is apparent that Chrysler, Dodge’s parent, feels that the excitement of a brand-new and improved pickup truck model is not going to be enough to entice buyers. You know it’s a tough market when you have to launch with incentives just to get people to buy something that’s much better than the old model. Dodge is offering $1000 USD incentives on the 2009 crew cab and quad cab models and $500 on the regular cab model. Just as an aside, Doge dealers are having a very difficult time of making the 2008 models go away, and this despite the fact that those trucks have as much as $12,000 discounts on them from a combination of consumer rebates, dealer incentives, and dealer discounting. In other news about the new 2009 Dodge Ram, the “RamBox” option is priced at $1,895. The Rambox package gives you the following: A lockable box on each side of the truck bed capable of storing anything from shovels to 240 12-ounce beverage cans, as well as enough ice in the box to keep them ready for a party, a sturdy bed divider and a bed extender. The lockable box component of the package is obviously the big draw here, and it is very well done from an engineering and appearance standpoint. Chrysler expects a 20% take rate on the package, but most dealers think it will be more. I agree with the dealers on this one – once people see them in action, those RamBox pickups will be popular. But, it surely won’t make anyone that wasn’t going to buy a pickup in the first place suddenly decide they want a new pickup truck.

MSNBC has a piece titled “Seven Sexy Hybrids You Can’t (Yet) Buy” that is sublime in it woefulness. Almost none of the hybrids listed are anyone’s idea of sexy, a couple of them are mere imaginings, and one of them is the Volt concept, which has already been made superfluous by the photos of the conventional-looking Volt pre-production vehicle. The article is a curious piece of fluff. C’mon, guys, you’re better than this.

MAZDA wants to bring the Mazda2 over to North America, at least sort of, anyway. They are leery of the Mazda2 taking sales away from the brisk-selling Mazda3. The Mazda dealers in North America want the Mazda2 in the worst way, since the well-reviewed and good-looking car would be a natural competitor to cars like the popular Honda Fit and Toyota Yaris. Mazda says they’re still thinking about it, and what that means exactly is only known inside of Mazda.

DAN NEIL is an excellent auto journalist; he is also pretty funny when he wants to be. We have not gotten the exciting Cadillac CTS-V to test here yet, but Neil has, because he’s a lot more important than anyone that works here. You can read his review of the car here. The non-hooligan, standard Cadillac CTS is a huge favorite here at Autosavant – it’s a car filled with automotive goodness through and through.

PARIS will be the place next week where the Paris Motor Show makes the case for once again being one of must-see auto shows in the world. The Paris Motor Show had some off years in the last decade, but has now come back with a vengeance in terms of importance. The Mondial de l’Automobile has a healthy amount of electric and hybrid concepts showing, but look at the amount of actual production cars making their debut at the Paris Show this year:

Audi RS6
BMW 7 series
Brilliance BS4
Brilliance BS6
Chevrolet Cruze sedan
Citroen C3 Picasso minivan
Ferrari California
Ford Ka minicar
Ford Fiesta ECOnetic
Ford Focus RS
Hyundai i20 small car
Hyundai Santa Fe hybrid
Hyundai iX55 SUV
Kia Soul small car
Lexus IS sedan, convertible
Mazda MX-5 roadster
Nissan Pixo minicar
Nissan Note minivan
Opel Insignia station wagon
Renault Megane small car
Suzuki Alto small car
Toyota Avensis sedan
Toyota iQ small car
Toyota Urban Cruiser SUV
Volkswagen Golf (nee Rabbit) compact

Not to mention that they will also have a “Taxis of the World” exhibit with 40 taxis used in different parts of the world currently and in the past. Of course, there’s a Checker Marathon in there, the best taxi ever produced in North America and still lamented in its absence today. Yeah, I admit it – I’m going to check out the taxi exhibit while I’m at the show, as nerdy as that may be. You can draw your own conclusions. The very first press conference (which is Volkswagen’s) on October 2nd at the Paris Show kicks off at a very early 7:45 am, which is 2:45 am Eastern Standard Time, so there will be a lot of bleary-eyed North American writers there for that one. We will provide real-time coverage from the show.

GM is a making a huge PR push on the Chevrolet Volt, but many people believe the Chevrolet Cruze that debuts at the Paris Auto Show is going to be much more important to GM from a profit perspective than the Volt will ever be. I agree with that point of view. Don’t get me wrong, the Volt is extremely important to GM from a halo perspective and from the standpoint of getting GM some green credentials, but the Cruze is going to be key in the profit and volume columns when they do the books at GM end of year.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Share This Post On

2 Comments

  1. Looks like Honda might have some nervous rear-view mirror soon when the Ford Fiesta and (hopefully) the Mazda 2 came in North America, with their “zoom-zoom” attitude, they might cause a surprise and there the Fiat 500 aka Ford Ka and Renault/Dacia Logan and Sandero even if they aren’t in the same league. (Speaking of the Sandero, there a hilarious Italian ad then I spotted at http://www.leblogauto.com/2008/09/pub-massacre-a-la-dacia-sandero.html and the French version from Switzerland at http://www.youtube.com/watch?v=Aj58iG7N7tY

  2. That review of the CTS-V by Dan Neil is priceless.

Submit a Comment

Your email address will not be published.