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Automotive Perspective 2015

An insightful overview from Strategy+Business




Confessions of a Capital Junkie

By now you have probably read that Sergio Marchionne of FCA has been knocking on a few auto industry CEO doors seeking at minimum collaboration deals.

Below is the presentation that is spurring the door knocking.

If you have an interest in the auto industry the presentation provides insight on the platforms that all manufacturers use in their quest to save costs.




Managing The Risk

We have read a gazillion thoughts, from a myriad of pundits, analysts, experts on the length of loan terms for vehicles. Usually with an alarming note of the coming doom, when looking at the antiquated "ownership" model.

Then the discussion gravitates to longer terms since vehicles last longer.

In Canada CMS (Citizen Main Street) has an innate sense of shifting the risk to the manufacturer and financial service provider, and upholding a near constant monthly payment. While the auto business as we all know runs best on a 36 month cycle.

An informative white paper from NADA and although it pertains to the US, there are numerous similarities to Canada. You can almost feel that some form of a Vehicle Risk Score (VRS) will become an intrinsic part of the credit decision in the near future.






Honda S600

Its a diminuitive car, this is a cool version with a "patina", get a walk around and ride with Jay Leno.




Vroom Room

Good Morning,

Its Friday its the Vroom Room, enjoy the cappuccino and biscotti, join the conversation.

Its almost month end, it will be interesting the see the Canadian sales results for May next week. You can anticipate an aggressive and competitive June to close the first half of the year.

Think about this...

Way back in the day when the showroom knowledge base, skill set, craftsmanship resided in an individual's head. Many dealers tolerated all sorts of behavior not to lose an individual. Fast forward to today, when there is software available to deal with a bunch of  knowledge bases, and tasks. Dealers tolerate the inept use of the software...go figure.

In the auto business many folks are talking about transparency especially when a customer is involved. The need to be transparent here, there, and everywhere. Back in the day it was known as being honest, up front, ethical...has anything changed? Mind you its always been a trait of human behavior to perhaps tend on the side of being opaque.

What do you think?

An impressive photo gallery from Concorso d'Eleganza Villa d'Este 2015...enjoy.




Buick Riviera

Some cars are enduring, and the 63-65 Buick Riviera has been capturing The Colonel's attention for a few decades.

This morning The Colonel is with us, lets see what it is about the Riviera.

Q: Good Morning, you look well tanned.

A: Yes...working outside on week ends will do that.

Q: What is it about the 63-65 Riviera?

A: Lets start with Buicks of that vintage that have always fascinated me for a myriad of reason.

Q: Do you have a few reasons.

A: The nail head engine with the spark plug covers, and marine green was always of interest.

Q: The Dynaflow transmission

A: Not so much, it was hideous at the time compared to an Hydra Matic in Oldsmobile or Cadillac.

Q: Back to the Riviera

A: The 63-65 Riviera's were totally cool in their day, and they still are. Brilliant styling, with a European look about them.

Q: The styling was the first thing.

A: Absolutely, those cars were cool, they looked cool, European, flowing lines, a luxury coupe by today's perspectives. The grille, hidden headlamps, small tailights.

Q: The nailhead

A: Obvious the nailhead, ideally with dual quads merely enhanced the coolness of the car. Remember that 50 years ago nailheads had a hot rodding history too.

Q: The interior

A: The dash for its day was stunning with the center of the dash and console, wood paneling, and an almost 4 bucket seat layout.

Q: You could almost put a center screen like today's cars.

A: Precisely...really cool dash for the day.

Q: Its was not a sports coupe.

A: Buicks by their DNA were cruisers, and the Riviera was the ultimate cruising coupe.

Q: We heard rumours that at one time you were looking for a Riviera.

A: Yes...casually looking, and never landing on the right car, the right opportunity, the right deal. Its like the pieces of the puzzle never wanted to fit.

Q: Then life progresses, and other priorities take center stage.

A: Yes...and just imagine old Rivieras in Montreal, and corrosion, need I say more.

Q: But its still a cool car

A: Absolutely, a 63-65 Riviera from my perspective is still a a very desirable cool car.




Monthly Incentives

If you have been in the auto business for a while (decades) you hopefully remember when customer incentives were extremely rare to non existent.

The spread between cost including holdback and MSRP was appreciable, while appraising a trade in was often a form of cosmic guesswork.

The month started on the 1st and ended on the 30th or 31st.

It all worked, although many consumers had a presumed low opinion of auto dealers.

Today the spread from cost to MSRP is dramatically less, while software can appraise a trade in (almost).

There are ongoing consumer monthly sales incentives from various manufacturers.

Since CMS (Citizen Main Street) started playing out dealers waiting towards the end of the month for a better deal. The incentives gather an appreciable amount of momentum at the end of the month, to align with the waiting for month end mentality.

As you know the advertising for the incentives is widespread on all of the various platforms print, radio, TV, Internet, always with a sense of urgency, that its only good till June 1st this month.

The advertising makes it look as if its almost free, or close...only so much per month, bi weekly, or weekly, at such a low rate, for such a term. In a subdued voice (on the radio) the down payment is mentioned.

Its working every month...think about this for a moment.

The month end rush powered by incentives to close deals, and capture opportunistic deal seekers.

In addition to the myriad of e-mail and texting activity, and the usual one dealer making an additional effort to earn the business and close the deal.



The Suburban

You certainly do the same, scanning the vehicle landscape when driving. We do it all the time, while vehicles grasp our attention for one reason or another. Having one form or another of a "cool factor" is helpful in catching our attention.

How often do you see a Suburban with the base steel wheels?

Here is the deal:

A couple of weeks ago driving on a 400 series highway we come up to a black Chevrolet Suburban with the base silver steel wheels in the middle lane.

First thought is who would acquire such a Suburban?

Its so plain looking that it attracts attention.

Agreed it takes all sorts of vehicles to enrich the diversity...but still such a plain full size Suburban is a rare sight.

By now we have passed the Suburban...and thats it...enough attention on a plain Suburban.

Until the Suburban changes to the left lane, and from the rear view mirror we notice the "hockey pucks" on the roof.

Now we know who acquired such a plain Suburban with steel wheels. The folks that have vehicles with hockey pucks on the roof.




Go for a Drive

Impressive 1960 250 SWB Berlinetta Ferrari that was auctioned yesterday at Villa d'Este by RM...enjoy the drive.



Testarossa to the Sahara

A fascinating adventure...