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Monday
Nov032014

Luxury Tools

Lets get the month going by connecting a few dots.

A few days ago we were reading a perspective from Seth Godin, which immediately started connecting dots for us. 

"Hundreds of years ago, Hermes and Louis Vuitton started out as luxury makers of tools. If you needed a saddle or a suitcase, they offered an extraordinary option, both elite and useful.

Over time, they shifted gears, no longer competing on whether or not their luggage was the most useful, or their saddles the most efficient. They competed on luxury, which is a fundamentally different promise than the optimal design of a tool."

A few decades ago a Mercedes-Benz was a luxury tool in North America, a W116 (450SEL) was the supreme luxury tool (sedan) it did everything well, was the ideal compromise, and you could drive it flat out for hours.

It had shortcomings, but the overall package was superlative for its time compared to other offerings. Yes...it was expensive, it was exclusive, and it did its job very well. It was the ideal tool of the time, with compelling street presence. In addition to having a serious f...k you factor.

The W116 morphed into the W126 (560SEL) which was a refined tool compared to the W116, and the rest is history as they say. 

The other day coming up to the rear of a novel CUV, yes there are a ton of CUV's on the road. What is this "thing" as the GLA250 appears on the tailgate and the immediate thought of "It looks Japanese or Korean" then from the rear view mirror the grille seemed out of place. 

The luxury brand (being optimistic) might be there, but the luxury tool aspect is long gone.

Swiss watches are luxury tools, no one needs an expensive Swiss watch to tell the time, when a smart phone is more accurate. The maintenance on a luxury Swiss watch buys several watches. 

Fine writing instruments are luxury tools. This mechanical pencil does a better job than most mechanical pencils, and its reflected in the price.

Its fascinating to watch the automotive migration from luxury tool, to luxury, to premium economy.

 

 

Saturday
Nov012014

1937 Ford Woody

Everything you always wanted to know about "woodies" with Jay Leno...

 

 

 

Friday
Oct312014

Vroom Room

Good Morning,

Painting by Jay KokaIts Friday, the last day of the month, its the Vroom Room, enjoy the cappuccino and biscotti, join the conversation, leave a comment.

In case you missed it (just scroll down) this week we published or thoughts on Canadian sales...the sales are off the chart...while our thoughts on Canadian sales are increasingly gaining momentum.

We're entertained by the coverage provided to extended loan terms. Again...its interesting to see how the mass media focuses on one aspect while missing the entire landscape.

Four years ago...times goes by, we published i-Dealer, its revealing that dealers are finally catching up to a digital dealership as an intrinsic part of their business that must be nurtured, developed, and protected. Pardon the sarcasm, the Internet has been around for 20 years.

You have to wonder what would happen if everyone "accelerated time" by only a few increments. Then you wonder why its not happening...time is the ultimate equaliser for everyone.

Approaching that time of year again, our thoughts on winter tires. Not which brand is the best, simply that you need winter tires, and you are the traction manager.

You could see this coming that FCA would spin off Ferrari to raise capital.

Can we say that 2014 is the year of the recalls? Can we also say that consumers are increasingly jaded with all the recalls? Cost savings? What do you think?

The Toronto Fall Classic Car Auction is this week end at the International Center.

Our usual old race cars from Thompson Motorsports Festival.

 

 

Thursday
Oct302014

Interview with Bill Ford Jr.

An informative, revealing, and thought provoking interview with Bill Ford Jr.

 

 

 

 

 

Wednesday
Oct292014

Auto Loans

Have you noticed when the mainstream media catches on to "something" everyone has an opinion, several did a study, and suddenly we are close to hitting the alarm button.

This past week auto loans have captured the imagination of numerous pundits, with a myriad of pedestrian opinions.

Sometime time ago we shared our thoughts on the entire auto financial services in Canada with Money for the Deal.

The picture painted today by the mainstream media is that CMS (Citizen Main Street) is highly leveraged and if interest rates increase auto loans will default before mortgages. In addition to the longer loan terms extended on auto loans.

Lets consider a few points:

Cash Flow: In the glory days of leasing in Canada over 40% of new vehicles sold were leased, and afforded on cash flow. Extended term loans are the replacement of leasing enbling CMS to still drive with cash flow.

Consumer Risk: CMS is astutute in letting manufacturers with their incentive programs relieve them of the value risk of the vehicle they "own" by trading it in on a new vehicle.

36 Months: Remains the magic number for the auto industry to function at its best. The loan might be 96 months but the trade cycle remains 36.

Loan Interest Rate: The low rates down to 0% are supported by the manufacturer, its always a cash incentive of "xyz" or a rate of 0%. In most instances CMS picks the rate.

Lender Risk: Have you noticed...since major Canadian banks are more active with auto loans more vehicles are sold in Canada. Are manufacturers supporting a "risk factor"?

Big Data: Permits manufacturers and financial service providers to calibrate the monthly offers, incentives, to maximise sales.

Dynamic Pricing + Incentives: Manufacturers and financial service providers make extensive use of dynamic pricing and incentives to increase sales and capture new customers from competing makes. This strategy will endure.

Technology: Permits the dealer and CMS to quickly and efficiently close a deal on the basis of a "monthly payment".

Maintenance: CMS has a limited appetite for performing maintenance on a vehicle beyond replacing the wear items. Yes...maintenance can quickly devour several months of payments, in addition to being unpredictable at times.

Paradigm Shift: From vehicle ownership to vehicle usage for a monthly fee. If CMS is in a "trap" of monthly payments, manufacturers are in a "trap" of constantly enabling CMS to trade, and roll over deficiencies.