It is all about numbers when you run a big business. That's too bad sometimes, but it seems to be business reality these days. We maintain that the car business should be run by "car guys", not number crunchers. I read the other day that the creative people in the movie industry say that they should run the movie companies rather than number crunchers. Sometimes the numbers are more interesting than other times. I want to show you some of these interesting numbers this week.
Automotive News published a list of the "true luxury" manufacturers and their relative sales in the first six months of 2006. Care to guess who is where on the list? I found it surprising. They define a true luxury car as one that sells for more than $42,000, and they do not include the low volume brands like Rolls-Royce and Ferrari.
| |
Sales
|
% of total sales
|
| Mercedes-Benz |
92,843
|
80.7
|
| Lexus |
75,221
|
49.9
|
| Cadillac |
72,760
|
65.8
|
| BMW |
69,973
|
48.8
|
| Lincoln |
45,046
|
70.4
|
| Infiniti |
26,311
|
45.5
|
| Acura |
23,915
|
24.8
|
| Volvo |
23,408
|
39.6
|
| Land Rover |
20,729
|
90.7
|
| Porsche |
18,601
|
100.0
|
| Audi |
17,995
|
44.5
|
| Jaguar |
8753
|
75.1
|
| Hummer |
8556
|
26.1
|
|
Saab
|
3245
|
18.3
|
It is well known that expensive cars make more profit for their respective manufacturers. It shows that Mercedes sure sells lots more expensive cars than BMW even though BMW outsells Mercedes in total sales in the U.S. But Cadillac selling more true luxury cars than BMW? Wow. And I wonder just what Lincolns sell for more than $42k.
While I am talking about Mercedes, Automotive News also published an analysis of pricing of the R- and ML-class SUVs. As you know the R is a bigger (and I do mean bigger) version of the ML. I maintain that the R looks a lot like a hearse, but that isn't the point of this. The point is that when the R was introduced, it was thought of as a much higher end vehicle than the more plebian ML. But the market really shows what people think and what they buy. Sometimes (it is rare) a manufacturer cuts the price of a vehicle to sell them when they are slow sellers. Look at the price (average monthly transaction price, including customer cash rebates) of these two Mercedes models as a function of time.
| |
R-class
|
ML-class
|
| Sep '05 |
$62,503
|
$48,355
|
| Oct '05 |
$61,899
|
$48,237
|
| Nov '05 |
$59,539
|
$48,176
|
| Dec '05 |
$54,518
|
$46,180
|
| Jan '06 |
$57,097
|
$47,194
|
| Feb '06 |
$50,118
|
$46,542
|
| Mar '06 |
$50,293
|
$47,078
|
| Apr '06 |
$50,938
|
$46,598
|
| May '06 |
$51,109
|
$46,574
|
| Jun "06 |
$49,629
|
$46,048
|
It is almost unbelievable that the R-class has been reduced in price almost $13,000. That's a 20% reduction in price. Not all Mercedes "true luxury" vehicles are big sellers. In fact, now the two models are nearly the same average selling price (including options).
The numbers being looked at this time aren't stated directly. You have heard and read a lot about U.S. jobs being exported overseas, right? But what about jobs in Europe? Their manufacturing costs are higher than ours. What do the European manufacturers do? They export their jobs... east. Building plants in Eastern Europe isn't something really new, but it is happening now even more quickly than in the past. It started almost as soon as the iron curtain was dropped. The suppliers to the European manufacturers have built plants in Eastern Europe also, but what about the manufacturers themselves?
Czech Republic: Volkswagen bought the Czech Republic car brand, Skoda, before the Czech Republic separated from Slovakia. It isn't surprising that the plant is still there building variations of Volkswagen models. They make four models and expect to build 500,000 this year. A joint venture of Toyota, and PSA builds the very small Aygos (Toyota), 107 (Peugeot), and C1 (Citroën) models, at a rate of 300,000 a year. Hyundai planned a plant here too, but it is on hold due to the management corruption problems in Korea.
Slovakia: Peugeot has a plant here too building 207s at a rate of 480,000 a year. Kia builds 300,000 cars here. VW has a big plant here that builds the Polo, Touareg and Porsche Cayenne bodyshells.
Slovenia: Renault produces 178,000 cars here.
Hungary: Audi builds their TT here with painted bodyshells coming from Germany. They build 1.2 million engines for other VW plants. Suzuki builds several models here as well as a Fiat model, and Subaru model.
Romania: Their national manufacturer, Dacia, is owned by Renault and produces 150,000 cars under the Dacia Logan model name. This is a seriously cheap car by European standards, priced at $7300. They also produce Logan kits for assembly elsewhere in the world.
Poland: Fiat makes 280,000 cars here. Fiat also will build a Ford model here in 2008. GM and Toyota have engine plants here. GM also has a car plant.
That's a lot of Western European jobs exported east. Most recently, Peugeot announced closing a plant in Coventry, England. Production will be shifted east.
While I'm in Europe let me point out the Cadillac BLS. This is the Cadillac adapted from a Saab 9-3 that won't be sold in the U.S. It was launched in March. Cadillac doesn't have a great image in Europe. They're viewed as gas guzzlers with poor resale value. They sold a resounding 205 BLS models in May. Oops. GM was quoted as saying, "We are not panicking, although meeing our targets will cost us time and money." Hmmm. They expect that the BLS will account for ¾ of Cadillac's European sales by 2010 and that they will sell 20,000 cars in that year. Sure...
And now, a question: Which manufacturer in the U.S. is the most productive? It's Nissan, not Honda. They make an average vehicle using 28.46 hours of labor. Who's least efficient? It isn't too surprising that it is Ford at 35.82 hours per vehicle. That's a difference of just 9.8 hours in 2004 (the last data taken). In 1998 the Japanese led the U.S. manufacturers by 16.56 hours per vehicle, so things are getting better. Toyota was number two at 29.4 hours per vehicle, and Honda's is 32.51 hours per vehicle.
Finally, I have another question for you: What is the top selling Ford car in the United States in June? The Fusion? Nope. The Five Hundred? No way. Well, then it must be the Focus. Again, a big No. Ford's best-selling car model in June was the Taurus. Remember that I said that Ford needed power and commitment two weeks ago? This sure makes it clear. The Taurus is a fleet-only car this year. You can't buy one if you walk into your Ford dealer. Those fleet buyers bought 20,418 of them and that is just 2362 short of the combined sales of Fusion and Five Hundred models. The Taurus was also Ford's biggest selling car for the first six months of the year. Ford seriously needs a big selling car in their lineup.
