smk4565
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Everything posted by smk4565
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I have a 2008 E550 with the AMG sport package, the car has 7 AMG badges on it (4 wheels, 2 exhaust tips, 1 trunk). So I agree with your point, they basically already made this car, but now call it Mercedes-AMG E43 rather than Mercedes-Benz E550. All they did was go from E350, E550, E63 to E300, E43, E63. It is still a 3 step engine lineup, aside from the diesel which they usually offer.
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Cadillac has 3 VSports and 2 Vs (IIRC). Mercedes is going to have FORTY-EIGHT AMGs. Do you REALLY not see any difference? Because Cadillac is weak. As are Infiniti, Lexus, Acura, etc. Mercedes for years has been the best at smooth ride, bank vault solid luxury. So now they decided to be the best at performance too. This is about sticking it to BMW and Porsche. They don't want people going to the former Ultimate driving machine or to Porsche for their performance luxury car, they want them. These are big spenders that Porsche conning to spend $1,000 on leather trim air vents. Now these people will buy superior Mercedes-AMG's.
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This is all spot on. Cadillac PR says they aren't interested in volume because they have no volume. Let's suppose GM makes $5,000 profit on a Cadillac, $2,500 on a Buick or GMC, and $1,000 on a Chevy. Wouldn't they want to sell more Cadillacs since that is where the profit margins are? Let's supposed Escalade sales doubled next year. Would the Escalade be a less profitable vehicle? Would less people want it? The answer is no, GM would just rake in even more profit, the Escalade wouldn't suffer in any way. I am not saying Cadillac should make a version of the Cruze and sell it for $28,995 to compete with the Acura ILX. That is a bad way to chase volume. I am saying that Cadillac needs more CTS/ATS sales and rear drive performance crossovers that have big margins. Porsche is the classic example, even 10 or so years ago they had 911 and Boxter, making nice margins. Then they put out the Cayenne, Panamera and Macan, the total brand sales volume triples, yet they are making $20,000 per car profit. Per unit profit is up, and sales volume tripled. That is kind of thinking Cadillac needs.
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Well I think we can all agree that the 320i and the ATS 2.5 are both bad cars. Neither hold a candle to the Tesla Model 3 that with the $7,500 tax credit on the first 200,000 cars sold will undercut both of them in price.
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276,000 pre-orders. Unheard of demand.
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These F Sport packages on any Lexus are a joke. They are charing more for a mesh grille and different wheels, which probably doesn't cost any much more to make than the standard car. Why isn't there a power bump to go with any of these F Sports? People that buy this dressed up Toyotas are fools. This is $46,000 for a Rav4 Turbo with leather.
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252,000 orders for the Model 3 now. This for a car that hasn't had a single advertisement or tv commercial made for it. I agree with Sauviloquent. Most automakers are worried about selling trucks or whatever their cash cow is, they haven't thought about 10 years down the road. I will say Mercedes is working on an electric car platform that will produce 2 sedans and 2 crossovers. That is an area they need to steer money to, as it looks like the Model 3 will put a hurt on the C-class.
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You would think with you and I repeating this at some point it would stick but????? Suppose CT8 costs $500 million to develop, which is actually cheap for a car, but we'll assume most of the work was spent on CT6 or other GM product. If they make $10,000 profit per CT8 sold (which is a strong number, but doable for a $100k car), they need to sell 50,000 cars just to break even. If the car costs $1 billion or the profit margin is lower, it could be as many as 100,000 units to break even. Let's split the difference and say 75,000 units is break even, they would need to sell 15,000 per year for a 6 year life cycle just to break even. With only China and U.S. sales they could probably hit that, but at that low volume they aren't making any money. They probably need more like 30,000 units a year to make money on the car. The XLR was low volume, and how did that work out? It lost money and got cancelled. Even Jaguar was thinking of ending the XJ or making the XJ a large crossover because sales have fallen.
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I am not saying make the CTS cheeper, I am saying sell 300,000 CTS per year and raise the base price $3,000 as well. $60,000 ATP times 300,000 units = $18 billion in sales. At a 10% margin that is $1.8 billion in profit. That alone would represent 20% of GM's total net income for 2015. I think they should have given Cadillac $24 billion for new product, not $12B. If Cadillac is #1 profit margin brand, it should get the most product. There are plenty of people spending $40-50k (or more) on Explorers, pickups, Chevy Tahoes, Avalons/Maximas, etc. Vehicles not from a luxury brand, but yet still cost $50k. Cadillac should try to steal all those customers. Why pay $47k for an Explorer when for $52 you could get a Cadillac SUV or CTS, it is just $20 more a month. That could even be their billboard.
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That is nowhere even close to comparable to what Balthazaar is talking about and you know it. And your Escalade logic can be easily applied to the fools who continue to buy the fifty year old G-Wagon. I'm sure MB gets a good chuckle on their way to the bank each day, as a result. His original point is how AMG cars depreciate fast, and cost $50,000 or more in depreciation. So let's compare 2 cars using NADA projections. An S550 with a $97,400 MSRP depreciates $64,299, but an E63 with $101,700 depreciates $56,364. So the AMG brand car holds higher % of value and loses less total dollars. That debunks his theory that AMG badges hurt resale value, they help it. An Escalade Platinum 4WD with $91,950 MSRP loses $56,333 in 5 years of depreciation. Loses 61.2% of value over 5 years. Let's compare to the G550, $115,400 MSRP, depreciation of $62,981. Loses 54.6% of value over 5 years. So yes it loses more total dollars, but it costs $24,000 more when new. Throw in a 3rd vehicle, a 2016 GL550 with MSRP of $91,300, virtually the same as the Escalade Platinum. The GL550 loses $49,843 over 5 years, over $6,000 less than an Escalade will lose. Balthazar wanted to say how horrible of a purchase a Mercedes is because it looses a big dollar amount in money, the Escalade is even worse, why not criticize it? That is my counter to the argument, personally I don't think the people spending $100,000 on a vehicle could care at all how it depreciates. These are people that have money to burn, they'll spend 1 million on a house, $50,000 a year on property taxes and not really care. Personally, I also like to buy a used car, after that first 3 years of depreciation has hit.
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Wouldn't GM be better off if they were selling 300,000 Cadillac CTS per year (globally) at a $5,000 per car margin? If you told any exec at GM would you rather sell 300,000 Cadillacs or 300,000 Malibus, 100% of them would take 300,000 Cadillacs and zero Malibus. This "Cadillac needs to limit volume to be exclusive" mentality is an excuse for poor sales. Should they limit the Escalade to 15,000 units per year to keep it exclusive, and turn away another 15,000 people willing to spend $85,000 on their product?
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The Model S battery pack is $10,000 for 60 kW and $12,000 for 85 kW. If they can get the battery and electric motor down to like $5,000 then you are getting close to cost of a gasoline engine/transmission, etc. They have work to do, but as cost drops look out. The higher trim Model 3 is expected to do 0-60 in under 4 seconds. So that is Corvette level performance in a $50,000 sedan that seats 5 and has 2 trunks worth of storage space.
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By that logic, a Chevy Spark is a better car to buy than an Escalade. And Escalade will lose $54,000 in depreciation in 5 years. The Escalade has a 5 year cost to own of $87,000 according to NADA guides. Yet it is Cadillac's number 2 seller and GM's #1 profitable car. Why are people buying Escalades? If depreciation is so bad and driving customers away, they should just stop making the Escalade by that logic. Which of course makes no sense, they will keep building Escalades as long as there are people willing to pay for them. And GM will take their money and laugh all the way to the bank.
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I know the current (or proposed) Model 3 isn't the price of a Camry, I mean 10 years down the road. Once the Gigafactory is up and running they will produce over 50% of the lithium ion batteries in the world. That kind of scale along with technology improving will drive down the cost of the battery. So what if the 2nd generation Model 3 is $25,000? Then the consumer has a choice between a Tesla or a Camry/Accord type product for equal money, with the Tesla having better performance. The Model 3 is $35,000 base (which includes Autopilot) and expected to be $42,000 for the average car, since buyers will take options. Then take $7500 off those numbers for tax credit. I think the C-class, 3-series, A4, IS, ATS, etc are all going to take a sales hit. Those 200,000 buyers are coming from somewhere. Even if they are driving a Camry now, but buying a Tesla next time, that is still a lost potential sale for Toyota/Lexus. Lots of hypothetical with the battery cost, I know, only time will tell how it will play out. They need to be able to get production up to meet the demand as well. If they can pull it off though, they could make a huge impact.
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Cadillac's current management did nothing at Infiniti, and while head of Audi USA, what did he really do? They are selling the same Audi around the world, and Audi does worse in the USA than they do in Europe or China, and Audi has grown in the USA since Johan left. And the current plan is to make a Cadillac Enclave, a Cadillac Terrain, and, a CT8 that won't sell. That is the path to success?
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If what is happening to BMW happens to all the others, you'll see a brand like Chevy with 5 cars and 10 crossovers. And there will be press releases claiming "no longer a business case" for some long standing models. The Hyundai Azera is dying, Taurus probably dying, eventually Impala, Avalon, Maxima will too. Camaro and Mustang will probably survive, since there are so few coupes left. I hope one day people get sick of these crossovers, but it doesn't seem to be happening.
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Mercedes cars are on a 7 year life cycle with a refresh after 4. The Corvette is on an 8 year cycle, the C4 ran for 15 years. The Silverado and F150 7-10 years before a new model comes out, yet people are still buying them. Most of the industry has cars on 6-8 year cycles, yet people still trade in for new, some people keep a car 10 years. Depends on the buyer's preference. If they lease, they will trade it in after 3 years, if they buy they'll probably keep it 10 years. That could hold as true for a Ford Focus as it does for an S-class.
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AMG doesn't hurt resale value, in most cases that would help it. Cars that cost $200,000 new are going to have $150,000 in depreciation in 5 years. Mercedes actually has one of the better residual values by % among luxury brands. And Mercedes also doesn't have a lack of demand for their V12 cars that tank in value. The people buying them have more money than sense, and last year they actually made a move to increase V12 engine production. Daimler's corporate mindset is not revenue above all else, the mission of the past couple years has been to get Mercedes operating margin to 10%, because that is where BMW and Audi are.
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Imagine never having to go to a gas station, never having to drive out of your way to get to one, or never having to stop on the way home from work and spend 5-10 minutes pumping gas, smelling fumes, stating in the cold in winter, etc. The electric car lets you plug in in your garage, and never need a gas station. The cost savings are big too, you can drive a Tesla Model S 10,000 miles a year for about $300-$400 of electricity. A V8 gas car would easily drink $1,000 more in gas. It is still possible that Tesla fumbles the ball here, but if they get it right, the Model 3 could be a huge hit, and each following car as technology gets cheaper and economies of scale increase, the scales tip in their favor.
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But will they sell? EV sales are not even half of 1 percent. EV's don't sell now because they are all bad except for the Model S. The Model S despite the $100k price outsells the Leaf and Volt. The EV range and charge time will improve and the technology get cheaper. Suppose 10-15 years from now Tesla (or whoever) has an electric mid-size sedan that has a 400 mile range, 0-60 time of 6 seconds and virtually no maintenance and it costs less than a gas powered Toyota Camry. It is game over for the mid-size gasoline car.
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Is Cadillac's goal to post profit? Cadillac should be producing more dollars of profit than Chevy. That is what luxury brands are for.
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Chevrolet News:What is the Future of the Chevrolet SS?
smk4565 replied to William Maley's topic in Chevrolet
One day Tesla will outsell GM. The technology will shift, GM will be too slow to respond to it, and they will be the Blackberry of cell phones wondering how Apple took 50% of the market out of no where. -
Their sedans are getting clobbered, but the crossovers are up. This is happening everywhere. What is sort of scary is that BMW is the brand for driving enthusiasts, and even they are struggling to sell sedans, coupes and convertibles. Pretty soon across the automotive industry you'll see more and more cars and performance cars die since they can't sell them, and in their place will be yet another crossover.
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Cadillac's global sales aren't that good though. The Audi A6 sells over 500,000 units a year world wide. Cadillac's whole brand doesn't do that. I am all for investing in global luxury cars, but Cadillac is nonexistent in Europe, and they sell like 75,000 cars a year in China, Audi sold 570,000 cars in China last year. But even the S-class which is the #1 selling large luxury car by far sells 80-100,000 units globally per year. Cars like the 7-series and A8 sell closer to 40,000 units per year globally. Lexus LS460 even less than that. So the full size segment is not where it is at. The mid-size and small segments are.
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Chevrolet News:What is the Future of the Chevrolet SS?
smk4565 replied to William Maley's topic in Chevrolet
It is very possible that in about 10 years the Chevy car line up in the USA is Volt, Bolt, Cruze, Malibu, Camaro, and Corvette. I could see them having 6 gas powered crossovers and two Volt-like or pure EV crossovers. If the crossover trend doesn't reverse, I think large sedans are dead, and the compact or subcompact cars are dead. Basically just the small to middle size sedans will survive.- 105 replies
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