Has The Affordable RWD Sports Coupe Become A Money Loser?

[Tcoat]

Originally Posted by gramicci101

Thus reaffirming my opinion of the majority of the population. Sigh. The two cars have absolutely nothing in common, other than the brand. Oh, and they might share window switches.

Actually after thinking about this for a minute even some car guys get sucked into the whole brand image thing.
How many times do we see somebody justifying their rebadge with a comment like "Well it isn't a Scion it is a Toyota and that is how it should be seen"?

[extrashaky]

Originally Posted by gramicci101

Which I don't understand. Who is going to think "Man, that corvette is sexy. But you know that cobalt is pretty sweet too! Hmm..."

Or if they're looking for an economy sedan, are they really going to think "Hmm, I should look at a cobalt. After all, it's made by the same company that makes the corvette..."

It's not exactly that simple, but it does work. The halo cars get you thinking about the brand.

My dad always loved Corvettes from the time he was a teenager. Liking the Corvette had him thinking of Chevy whenever we needed a car. We had a Malibu when I was a kid as a result. Then we eventually got a Chevy van. Once his business took off, he bought a '66 Corvette. Then he bought a series of other Corvettes over the years.

That just reinforced the GM brand loyalty. When it came time for my brother to get a car, he couldn't afford a Corvette, but he went looking for a Chevy. When my dad needed a small truck for his business, he bought an S-10. Then he bought another. My brother now has an S-10. My mom now drives a Malibu.

When a younger guy is looking for a car, he might briefly consider a Corvette. "Can I afford it?" So he goes to the Chevy website to see what a build would cost. He quickly realizes it's out of his range. But here's the important part: He's already on the Chevy website. So maybe he looks around, and maybe he settles on a different model for now.

Same thing goes for Chrysler. Not many people can afford a Hellcat. But having the Hellcat in the stable is selling a lot of Avengers, despite the Avenger being a complete and total piece of shit.

Same thing will go for the FT-1 whenever it hits the showroom. Halo cars have a definite marketing function, and they work.

[Dadhawk]

Originally Posted by Tcoat

This, this and this.
Unless your core business is RWD sports cars (Porsche, Lambo, Ferrari, etc) you do not build them expecting a profit. You build them to get people talking about your brand.
Close thread all done!

I think the difference is the conversation brought in the Camaro and Mustang, neither of which are sports cars and both are intended for profitable sale. Maybe at the very top end there is some loss-leading going on there.

I think its debatable that the Corvette qualifies in the loss-leader category either. They obviously build it in quantity where they expect it to make money. Maybe 50 years ago, but not now. GM doesn't seem interested in going after that type of market presence.

The new Ford GT is an example of what I would consider a Halo/Loss Leader car, similar to the halo cars from Toyota/Nissan/etc.

[Tcoat]

Originally Posted by Dadhawk

I think the difference is the conversation brought in the Camaro and Mustang, neither of which are sports cars and both are intended for profitable sale. Maybe at the very top end there is some loss-leading going on there.

I think its debatable that the Corvette qualifies in the loss-leader category either. They obviously build it in quantity where they expect it to make money. Maybe 50 years ago, but not now. GM doesn't seem interested in going after that type of market presence.

The new Ford GT is an example of what I would consider a Halo/Loss Leader car, similar to the halo cars from Toyota/Nissan/etc.

Agreed and was going to say something along that line. When talking about Mustangs or Camaros they should be broken out into two totally separate categories. There is the run of the mill two door coupe and then the much different in pretty much everything but basic body style sports versions. The sports versions may bring in the bodies but it is the two door coupes that sell many more units and make the money.

[OnkelC]

Originally Posted by gramicci101

Which I don't understand. Who is going to think "Man, that corvette is sexy. But you know that cobalt is pretty sweet too! Hmm..."

Or if they're looking for an economy sedan, are they really going to think "Hmm, I should look at a cobalt. After all, it's made by the same company that makes the corvette..."

Originally Posted by gramicci101

Thus reaffirming my opinion of the majority of the population. Sigh. The two cars have absolutely nothing in common, other than the brand. Oh, and they might share window switches.

Thus the highly lossy engagement of car manufacturers in motorsports.
"Win on sunday, sell on monday".

[Dadhawk]

...and by the way, to me at least there is a difference between a "money loser" (title of thread) and a "loss leader". A loss leader makes money for the company, just maybe not directly. A money loser..not so much.

The Ford GT is a Loss Leader, the Pontiac Aztec is a money loser.

[strat61caster]

Originally Posted by OnkelC

Thus the highly lossy engagement of car manufacturers in motorsports.
"Win on sunday, sell on monday".

[extrashaky]

Originally Posted by Dadhawk

I think its debatable that the Corvette qualifies in the loss-leader category either. They obviously build it in quantity where they expect it to make money. Maybe 50 years ago, but not now.

Oh, yes, definitely it fits, not because it loses money, but because it doesn't make nearly as much money as it could.

GM uses the Corvette as a development platform for technologies. The development of a new Corvette costs a LOT more than the development of any other car they sell. They use it to develop engine technology. They used it to develop the water injected steel frame molding that found its way into trucks. They spare very little expense on the car.

If they really viewed it as a profit center, they would spend as little on it as possible to pull in their target consumer. They don't. They treat it as a loss leader that's so successful that it doesn't actually lose.

[gramicci101]

Originally Posted by OnkelC

Thus the highly lossy engagement of car manufacturers in motorsports.
"Win on sunday, sell on monday".

Exactly. People are sheep. If I was in the market for a 2 door sportscar, I wouldn't buy a Mustang because Ford also makes a GT500 and they're making a new GT. I'd buy a Mustang because it fit all my requirements and I liked it.

If it was something that directly correlated to on-track testing, such as tech from the Corvette racing teams making it into consumer Corvettes, that's a little different. But I wouldn't assume that tech from a Corvette racing team was making its way into any other random Chevy car.

[OnkelC]

Wrong way of thought: the halo effect is for attracting the watchers, not for the sun. iE people who stand in the showroom admiring the Corvette/Mustang/Charger but have to shop for a small compact or family van.

[Tcoat]

Originally Posted by gramicci101

Exactly. People are sheep. If I was in the market for a 2 door sportscar, I wouldn't buy a Mustang because Ford also makes a GT500 and they're making a new GT. I'd buy a Mustang because it fit all my requirements and I liked it.

If it was something that directly correlated to on-track testing, such as tech from the Corvette racing teams making it into consumer Corvettes, that's a little different. But I wouldn't assume that tech from a Corvette racing team was making its way into any other random Chevy car.

My mother and all her NASCAR cronies have based their car purchases upon what ever make their favorite at that point was driving. Many of them even buy the same model 'cuz "it is the exact same car that Billy Bob Redneckinski drives so it's gotta be the best".
They don't have to actually use the tech they develop it is just the fact that it exists that attracts the "normal" person.
We "car guys" make the mistake of thinking that all car buyers need or even want to know what we do. For about 99.8% of the car buyers that is just not the case.
My daughter in law just said this weekend she is trading her 4 year old, fully loaded Matrix for a new Mitsu Mirage. When I asked her why her response was simply "they make purple".

[gramicci101]

Originally Posted by OnkelC

Wrong way of thought: the halo effect is for attracting the watchers, not for the sun. iE people who stand in the showroom admiring the Corvette/Mustang/Charger but have to shop for a small compact or family van.

The halo effect is where people have a generally positive impression about a company's products based on one superior product. If I was shopping for a Cobalt/Focus/Dart-level vehicle, the fact that those companies also make sports cars and muscle cars would have no bearing on my decision. A Hellcat having 700 hp doesn't make me think that the Dart will be a better car.

Originally Posted by Tcoat

My mother and all her NASCAR cronies have based their car purchases upon what ever make their favorite at that point was driving. Many of them even buy the same model 'cuz "it is the exact same car that Billy Bob Redneckinski drives so it's gotta be the best".
They don't have to actually use the tech they develop it is just the fact that it exists that attracts the "normal" person.
We "car guys" make the mistake of thinking that all car buyers need or even want to know what we do. For about 99.8% of the car buyers that is just not the case.
My daughter in law just said this weekend she is trading her 4 year old, fully loaded Matrix for a new Mitsu Mirage. When I asked her why her response was simply "they make purple".

That's what I said: sheep. I saw the same thing when I lived around the Dover Speedway. Those people just couldn't understand that their Malibu and a NASCAR "Malibu" were not the same thing. They drove like it, too.

[Tcoat]

Originally Posted by gramicci101

The halo effect is where people have a generally positive impression about a company's products based on one superior product. If I was shopping for a Cobalt/Focus/Dart-level vehicle, the fact that those companies also make sports cars and muscle cars would have no bearing on my decision. A Hellcat having 700 hp doesn't make me think that the Dart will be a better car.

That is because you are a "car guy"!
I bought my FRS because Orange!

[gramicci101]

Originally Posted by Tcoat

That is because you are a "car guy"!
I bought my FRS because Orange!

I will admit, once I had decided on these cars I was tempted by the orange.