Summer’s Automotive Summary

We’ve been getting quite a bit of email wondering where we have been and why we haven’t chimed in on a number of large automotive issues. The short answer has been that It has been a busy summer over here. We provide content to a number of different publications, so quite simply put, it was the Four Wheel Drift that suffered.

For all of you who were desperately waiting for our view on current events, here is a summary of where we stand on the issues.

Cash For Clunkers: With our reputation for being involved with collector cars, people assumed we’d be absolutely against CFC. They were right, but not for the reasons they figured.

The conventional wisdom circulating in the classic car and hot rod circuits is that CFC would cause the destruction of thousands of tomorrow’s classic cars…and therefore the program must be stopped at all costs.

We take a different…more pragmatic view that exposes our business backgrounds. The crushed future classics affect from CFC will be far less noticeable than from rising scrap prices prior to WWII…or from the use of salt in a particularly bad winter in the Northeast and Midwest. In other words, most of the vehicles succumbing to the CFC crushers a) are mass-produced vehicles, b) are family cars, c) consequently are less likely to be restored in twenty to thirty years as collector vehicles.

There are two big issues we do dislike about CFC. The first is that we’ve always felt that rebates simply create sales by cannibalizing future higher price/profit sales. Part of the decreased demand in 2007, 2008 and 2009 comes from the direct result of massive factory rebates in 2001, 2002 and 2003. Rebates are an ongoing nightmare for good product marketing folks who battle sales, finance and PR departments who are more focused on making numbers now so they can get their gold Rolexes from bonuses. Rebates kill the pipeline, dilute product value and image (although admittedly the CFC rebate doesn’t dilute product image like a standard manufacturer versions), and create a way for local dealers to provide vehicles at the same price as before the rebates, but without giving up any profit themselves.

The second reason we dislike the CFC program is that unlike a standard manufacturer rebate program that puts the financial burden on the corporation, the CFC program puts it on taxpayers. And before you start writing the comment regarding that the program replaces the current fleet with more fuel-efficient vehicles, that’s a total red herring. This exact same thing would happen anyway – as the current fleet ages, it is replaced with newer vehicles – all which are more fuel efficient. The difference is cost. The artificial way costs taxpayers several billion, the other doesn’t.

The bottom line is that the CFC program is nothing more than a boondoggle for auto manufacturers, dealers and scrap metal recyclers in a wrapper of good intentions paid for by taxpayer money.

GM Selling Cars Via eBay: Here’s a whole lotta nothing. Simply an official program that mimics what hundreds of dealers have been doing with varying degrees of success for nearly a decade. It would have been a real story had GM found a loophole for the anti-trust laws prohibiting manufacturer-to-consumer sales to allow such sales using eBay as the “dealer”.

New Hybrids: Yawn. Meet the new boss – same as the old boss. These are still uninspiring vehicles that struggle to get better mileage than the original Geo Metro despite delivering not much more in terms of performance, size, comfort, or enjoyment. Again people, hybrid technology is over a century old.

Seller Beware: Autoweek reported in its current issue how people consigning their classics to Kruse have reported not receiving payment from the auction house for more than six months after their vehicles sold at auction. Even scarier for vehicle sellers – there is the Washington State court opinion at http://www.courts.wa.gov/opinions/index.cfm?fa=opinions.showOpinion&filename=614185MAJ , which results from the mess created when a car consignment operation (AGS Performance) closed prior to distributing the funds received from selling a Ferrari F355 on consignment. To complicate the matter, the selling party never provided the title for his Ferrari. The courts maintained that since AGS was in the business of selling cars, it didn’t need the title to facilitate a legal sale, leaving the buyer (Hensrude) with a legal purchase and the former owner (Sloss) with only the recourse of suing AGS for non-payment on a contract.

The bottom line is that sellers of collector cars need to be very careful these days.

Porsche Panamera: If we have to read another column in a major publication or hear another enthusiast question if the four-door Panamera is a “real Porsche”, we’re going to set ourselves on fire. It was a valid question when the 914…and maybe even somewhat valid when the 928 replaced the 911 as the “top-of-the-line” model in the late 1970s, but not anymore.

Note to publications, enthusiasts and auto manufacturers: the Cayenne is the best-selling Porsche ever and no Porsche enthusiast or purist not wearing a tinfoil hat has ever cared about its affect on the brand, other than to thank it for providing the necessary cash flow to develop low-production high-performance cars like the Turbo, GT3, GT etc… More manufacturers need to ignore the purists, because if you cater to them, you get the GTO, Challenger, retro-Mustang, and new Camaro. Purists love these, but people with money don’t like them enough to buy them.

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2 Responses to Summer’s Automotive Summary

  1. Ries says:

    While both of your objections to Cash for Clunkers are true, they sidestep one of the main reasons for the program- that is, to keep 5000 or 10,000 second, third, and fourth tier suppliers across the midwest from going bankrupt this summer.

    Aside from accelerating a normal process of replacement, and raising overall fuel economy in the USA by a small amount, one of the big effects of the program has been to get plants making parts again, fast. And a lot of jobs across the midwest and south were slipping fast.

    You may not agree with this as a legitimate use of tax dollars- but obviously, enough of our elected officials did, and voted for it.

    In addition, there is an unmeasurable, but real, psychological effect that helps the entire economy when a half million cars get sold in a few weeks. And lord knows, we can use some happier thoughts about the economy- its only half real, after all, and the other half is emotional.

  2. Robby says:

    I’d be more concerned with the fact that GM motors, who clearly was hit by the effects of the GFC has resorted to ebay as an avenue to sell its cars.

    Yes it is true that the concept of selling a car isn’t new, I believe it is a first for the car manufacturer to go straight to ebay? I could be mistaken, but it is an alarming thought for me.

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