Maybe...it was a good idea?
08-03-2005, 03:56 PM
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Maybe...it was a good idea?
Well...the numbers are in:
Big 3 auto makers rake in huge sales jump
They sure needed it...that's for sure. I hear next year they will be reducing the price on some cars. I think they got the hint that they needed to cut the price a bit.
But...Nissan and Toyota had good gains also.
Big 3 auto makers rake in huge sales jump
They sure needed it...that's for sure. I hear next year they will be reducing the price on some cars. I think they got the hint that they needed to cut the price a bit.
But...Nissan and Toyota had good gains also.
08-03-2005, 04:15 PM
#3
as a sidenote to the report, automotivenews.com has a chart of all major north american carmakers' sales report for month of July and year-to-date report, and guess what, Mazda is a solid fourth among Japanese makers (buh-bye Mitsubishi!, so long Subaru!), with a 5.7% gain for the month of July over last year, they also solidly beat July sales and year-to-date sales of VW :D
for a niche maker, Mazda is doing quite well i'd say :D
for a niche maker, Mazda is doing quite well i'd say :D
08-03-2005, 04:28 PM
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Did it sell cars? Yes.
Was it a good idea? No.
Consumers will now expect absurdly low pricing on their American vehicles. We saw the exact same thing happen when GM introduced 0% financing in full-force in 2001. Back in the '90s a rate of 6 or 7% was perfectly acceptable for a car and you were doing good if you got 3 or 4%. Now we expect 0 or 2% and think that 5% is the most one should really have to pay.
And the price-cutting thing isn't the greatest idea either. Consumers aren't that caught up on the price. If they were you wouldn't see a bunch of them driving Civics, probably the most over-priced vehicle on the road. They want a car that they like, they think others will like (acceptance is a big deal when buying a car), will get good gas mileage, is a safe car, and most importantly, one they feel is reliable. I emphasize feel.
All you've got to do is look at the competition -- Nissan sales were up 20% last month (the same as GM) and Toyota was up 12%. The Big Three (not so much the Big Three anymore since Toyota pushed two of them out of the way, but that's what I'll call them) got people out and looking at cars. But when they were out looking at the competition, Nissan and Toyota were able to get them to buy their cars without even giving a price break on them.
I don't know why the Big Three feel they need to compete on price. They know that consumers buy Honda and Toyota for reasons other than price, so lowering the price isn't going to help much. If anything it's going to reinforce the idea that their cars are cheaper in comparison. As a general rule people don't really like to drive cheap cars; if they did Kia would be selling a lot better and Geo and Daewoo wouldn't have failed. Hyundai sales and reputation have gone up as they've increased their overall price.
Rather than pricing the car to meet consumer's expectations they should bring consumer's expectations up to a level that justifies their price. It's not like they're outrageously pricing thier vehicles. They're already cheaper than the competition.
American Automakers can, and do, make a good car. But they don't drill that into the head of consumers. If every commercial I saw the past 2 months about Employee Discounts was a commercial talking about how highly JD Power (amongst many others) rated a significant number of the Big Three's automobiles, perhaps people's feelings would change.
Your average consumer doesn't know that time and time again Lincoln, Buick, Cadillac, and Mercury beat out Toyota in reliabilty rankings. Or that, in addition to those brands, Ford, Chevrolet, and Chrysler are all above average in long-term reliability. Probably 90 of consumers don't know that GM is ranked #2 overall in vehicle reliability. Most probably believe that it's damn near the bottom. Most people probably don't know that Honda's reliability has been steadily slipping the past several years, and out of the 20 categories of vehicles that JD Power ranks in long-term reliability (comparing 2002 models over past 3 y ears), Honda only placed 3 cars in the Top 3 (and the venerable Civic wasn't one of them, it got beat by a Chevrolet). Only 3 out of 60 places. GM won 8 of the 20 categories and placed 18.
The Big Three don't need to sell their price, they need to sell their cars.
Was it a good idea? No.
Consumers will now expect absurdly low pricing on their American vehicles. We saw the exact same thing happen when GM introduced 0% financing in full-force in 2001. Back in the '90s a rate of 6 or 7% was perfectly acceptable for a car and you were doing good if you got 3 or 4%. Now we expect 0 or 2% and think that 5% is the most one should really have to pay.
And the price-cutting thing isn't the greatest idea either. Consumers aren't that caught up on the price. If they were you wouldn't see a bunch of them driving Civics, probably the most over-priced vehicle on the road. They want a car that they like, they think others will like (acceptance is a big deal when buying a car), will get good gas mileage, is a safe car, and most importantly, one they feel is reliable. I emphasize feel.
All you've got to do is look at the competition -- Nissan sales were up 20% last month (the same as GM) and Toyota was up 12%. The Big Three (not so much the Big Three anymore since Toyota pushed two of them out of the way, but that's what I'll call them) got people out and looking at cars. But when they were out looking at the competition, Nissan and Toyota were able to get them to buy their cars without even giving a price break on them.
I don't know why the Big Three feel they need to compete on price. They know that consumers buy Honda and Toyota for reasons other than price, so lowering the price isn't going to help much. If anything it's going to reinforce the idea that their cars are cheaper in comparison. As a general rule people don't really like to drive cheap cars; if they did Kia would be selling a lot better and Geo and Daewoo wouldn't have failed. Hyundai sales and reputation have gone up as they've increased their overall price.
Rather than pricing the car to meet consumer's expectations they should bring consumer's expectations up to a level that justifies their price. It's not like they're outrageously pricing thier vehicles. They're already cheaper than the competition.
American Automakers can, and do, make a good car. But they don't drill that into the head of consumers. If every commercial I saw the past 2 months about Employee Discounts was a commercial talking about how highly JD Power (amongst many others) rated a significant number of the Big Three's automobiles, perhaps people's feelings would change.
Your average consumer doesn't know that time and time again Lincoln, Buick, Cadillac, and Mercury beat out Toyota in reliabilty rankings. Or that, in addition to those brands, Ford, Chevrolet, and Chrysler are all above average in long-term reliability. Probably 90 of consumers don't know that GM is ranked #2 overall in vehicle reliability. Most probably believe that it's damn near the bottom. Most people probably don't know that Honda's reliability has been steadily slipping the past several years, and out of the 20 categories of vehicles that JD Power ranks in long-term reliability (comparing 2002 models over past 3 y ears), Honda only placed 3 cars in the Top 3 (and the venerable Civic wasn't one of them, it got beat by a Chevrolet). Only 3 out of 60 places. GM won 8 of the 20 categories and placed 18.
The Big Three don't need to sell their price, they need to sell their cars.
Last edited by Sigma; 08-03-2005 at 04:34 PM.
08-03-2005, 08:05 PM
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With that said...maybe if more of their cars are sold...people will be sold on the brand too. Take a hit now...let them see your cars are quality products, then hopefully you will build return customers.
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