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Tuesday
Apr212015

Heightened Competition

The auto business has always been competitive, and will continue to be competitive.

With the emergence of big data, the competition has made quantum leaps in sophistication, harnessing a myriad of variables. Needless to say that gaining a competitive advantages is increasingly demanding, complex, and at times simpler.

In the auto business everyone knows, or should know that once an advantage has gone public, has hit the street, its immediately diluted, and can be replicated by a competitor.

A simple example:

Its a well known fact that the actual purchase month is from 10 to 40 as an example. Customers delay their decisions towards the end of the month, which often implies an incrementally better deal. Although all the product and pricing information is readily available on the Internet. The various incentives/bonuses from manufacturers to dealers are not available.

There are usually month long incentives, while depending on the sales volumes, there might be addtional incentives towards the end of the month. Interesting that these month end incentives that are geared to facilitate a decision are nowhere to be found on the Internet. Reflect on this for a moment...

Once any level of infirmation becomes common knowledge, its empowering for one individual, and of little value to another. It usually narrows the perspective.

As we have seen during the first quater of 2015, the competition among manufacturers, dealers, and customers availing themselves to the best deals increased. When auto sales reach new records, to gain incremental sales entails that one gains, and another loses. Its in the nature of the auto business...

 

 

Monday
Apr202015

The Paradox of Older Cars

By now we are all familiar with the mantra that "Cars (vehicles) are better, the quality is up, they last longer, and the population of older cars is increasing."

The other often heard mantra "Cars last longer consequently finance terms can be extended." Which implies that CMS (Citizen Main Street) will keep a car for 5-8 year time frame. The lenght of the finance term.

As we often mention the auto industry runs on a 36 month cycle, always did, and always will.

With record new vehicle sales in Canada for the past few years, you have to wonder where all these old cars are hiding, who is driving them, who is maintaining them.

Yes...all manufacturers have access to immense computing power, and can deal with massive amounts of data. Which permits them to acquire market insight that was not available a few years ago.

In Canada MerBimAu (hate to always bring these guys up) has been doing a phenomenal job in selling more vehicles, adding new models, remarketing, increasing CPO sales. We also know that the bulk of the new vehicles they sell are leased.

Lets break it down...some components...

Lease Term: Ideally 36 months, with the occasional stretch to 39-40 month to better position the return of the vehicle, improve the residual risk factor.

The vehicle returns in 36 months, not 60 or 72 or 84, the magic number is 36. It has a remainder of factory warranty, can be reconditioned at a reasonable cost, can apply an addtitional factory extended warranty to CPO the vehicle.

Remarketing / CPO: The idea is to make money twice with a vehicle, dealers that leased vehicles 2 generations ago knew that when the lease reached its term the vehicle would come back offering an opportunity to lease another vehicle to the lessee, and remarket the lease return.

In many instances the lease return is remarketed as a CPO and the supporting financial instrument is a 36 month finance term with a balloon amount at the end of the term.

The Chain Reaction: In the auto business having a chain reaction, taking trade ins, retailing used vehicles has always been a key to generating additional business, and obvious making more money.

Think about this...where are all these older cars? Are they still with the original owner?

 

 

Saturday
Apr182015

Volvo P1800

I you are of a certain age you remember Volvo P1800's not the fastest car, but a cool car in its day. The Colonel remembers taking many Sunday morning rides in a P1800...enjoy the video.

 

 

Friday
Apr172015

Vroom Room

Good Morning,

Its Friday, its the Vroom Room make yourself comfortable we have cappuccino and biscotti. Join the conversation.

The days are getting longer, and finally the climatic conditions are milder...must be that time of year. Hopefully you started you motorcycle.

Have you noticed how RM Auctions presents vehicles in catalogues for auctions? The catalogue for the upcoming Andrews Collection is simply stunning...take a look.

Yes...we are Ferrari fans, been like that for a few decades, there are all sorts of stories, reviews, road tests about Ferrari's from a myriad of pundits. Interesting that after he passed away a few year ago, it seems everyone knew Luigi Della Grotta, and Nicola in Montreal, although less people knew George Wooley from way back in the day.

Take a few moments or bookmark it, this is a fascinating experience/story about, Fiorano, an F12, and Kimi.

It would seem that The Benniss from last week attracted attention. Agreed we took a different and imaginative approach.

Have you noticed that every manufacturer is scouring the planet to find a more cost effective location to assemble vehicles. Technology empowers this scouring, while robots that handle complex tasks on assembly lines make it simpler to relocate to cheaper locations.

Needless to mention that Canada is on the losing end.

If like us you have an interest in older cars, and follow auction results. This report of the Auction America Ft.Lauderdale sale offers unique insight with comments on 99 cars, that sold, or did not sell, how much they were paid, how often they have been at auctions.

We urge you to take a few moments to review the article...here.

 

Thursday
Apr162015

Luxury Engines

Pundits talk about luxury cars, SUV/CUV, interiors, amenities, and rarely talk about luxury engines.

What is a luxury engine?

Go back a few generations when luxury cars of the day had an engine with more cylinders, more power than regular cars. Duesenbergs with a supercharged straight 8, Cadillacs with V12's and V16 to name a few.

From our perspective V12's are the ultimate luxury engine, and if you have never owned and/or driven a V12 with serious horsepower. Put it in your bucket list to spend some time in a car with a V12, to experience of how it delivers power is unique.

There are are V8's, 6 cylinders, 4 cylinders and so on. You surely grasp what we are saying.

As superchargers, be it a blower or turbo have gained in popularity engines have down sized in cylinders, and displacement. Often for the sake of fuel economy. Ford as an entire line of Ecoboost engines topped by a V6.

A V8 with a turbo is comparable to a V12, a V6 with a turbo to a V8, and a 4 cylinder with a turbo is comparable to a V6...on a spread sheet it all makes pragmatic sense.

But...we are humans, and emotional and when it comes to luxury what is under the hood is part of the luxury value proposition and package. When most econo boxes are powered by 4 cylinders, powering a luxury vehicle with a 4 cylinder even with a turbo misses the luxury mark.

Agreed...there are a ton of "premium economy" vehicles powered by a 4 cylinder; with a ton of folks acquiring or leasing these vehicles. As you probably know 4 cylinders over 2 liter displacement have rough spots, accompanied by the rough 4 cylinder sound.

From our perspective to uphold the traditional essence of luxury, a vehicle must have a "luxury engine".

 

 

Wednesday
Apr152015

Simplicity

Have you noticed the emerge quest for simplicity?

When an individual is very good at doing "something" it looks simple and easy.

When most folks have shortened attention spans, keeping it simple, short, impactful,  is a "de rigueur" requirement.

At t time when everyone can generate and publish content, being your own editor as we have been saying for years now is essential.

You have to wonder when the auto business in general will embark on a heightened quest for simplicity. Taking a myriad of complex components and making it simpler, easier, more intuitive for folks to understand and use.

A rear view mirror is simple.

A back up camera which should be simple is complex with a myriad of different settings, to almost ensure that you will bump into an obstacle until you get used to its specific distance settings.

Do you really need a computer in the center of your dash?

Think about this for a moment...if you just paid more money to have a premium sound system, why are there so many settings to fine tune or completely mess up the sound coming from the system.

How many ways do you really need to see a map? With a computer and the myriad of settings you can possibly get lost within the map, let alone getting there.

Back in the day of mechanical cars it was simple, intuitive, pre set.

Have you experienced the drive settings in cars.

Economy is often giving up on horsepower, accompanied by totally relaxed shifts from the transmission.

Normal is usually what you would expect while being somewhat conservative especially with the newer multispeed automatic transmissions.

Sport is either what normal should be or totally over the top thinking you are on a track with a vehicle that is not track oriented from the outset.

Today its complex, often counter intuitive, and infinitely variable.

Think about this, some products command a premium price...they use technology to simplify complexity, make it intuitive, and control the variables.

 

 

 

Tuesday
Apr142015

Powershift

If you have been a drag racing aficionado for a few decades, you surely remember folks "powershifting" a 4 speed manual transmission with a clutch pedal.

Not familiar with powershifting? Simple, never lift you foot from the gas pedal and shift gears at WOT (Wide Open Throttle).

What did you need to powershift?

  • A scattershield to be safe in case you missed a shift and blew a clutch.
  • Modified synchros in the transmission.
  • Very stout shift mechanism for the transmission.
  • Clutch pdeal adjusted to you preference, usually engaging close to the floor for a quick start.

Powershifting was not something you did with a normal street car, especially with you right foot very close to the bellhousing. It was the 2 to 3 shift that was the most challenging.

Take a look...

 

Monday
Apr132015

Canadian Sales - First Quarter 2015

Our thoughts, and observations on Canadian Sales during the First Quarter of 2015.

We have included links that permit to quickly visualise some vehicles.

 

 

 

Saturday
Apr112015

1937 Talbot-Lago

Its a 1937 Talbot-Lago Type 150 CS, a beautiful, stunning car, accompanied by a fascinating conversation between Jay Leno and Peter Mullin. Wait for the shift mechanism act up...

 

 

 

 

Friday
Apr102015

Vroom Room

Good Morning,

 

Another Garage
Its Friday, its the Vroom Room, come in make yourself comfortable. We have cappuccino and biscotti, join the conversation, leave a comment.

 

The ongoing Cadillac, and Lincoln conversation...Cadillac has been trying to garner a foothold in the luxury segment for the past decade...think about it, at least 10 years. They are great world class cars, and still in the starting blocks...go figure.

Lincoln...they have the MKC and MKX that are selling reasonably well in Canada, while they seek the true essence of a luxury car.

Imagine for a moment if Cadillac instead of showing the CT6 would have shown the replacement for the SRX.

Several years ago we concluded that utility vehicles are lifestyle vehicles, family kickers, and make a fashion statement, and fall out of fashion. We are of the opinion that folks have a different "luxury" expectation from a utility vehicle, than a car.

More forgiving towards utility luxury shortcomings.

Looking at Canadian Sales for the first quarter, its emerging that "premium economy" is superceding "luxury" for the Germans. We did say that they were engaging in a fine line. You know the saying water flows dowhill.

Looking at the big picture these folks have the top end covered, although selling less, and now are inexorably moving downstream with their product offerings.

A brilliant photo gallery from the Sebring Historic Races.