Blog Entry

U.S. automakers bailout

Posted on: November 25, 2008 5:05 pm
 

So in a comment in my last blog, Hawks N Cards asked for my take on the possible bailout of Detroit's Big 3 automakers.

I actually think NASCAR is part of the reason Detroit is a sinking ship. For all intents and purposes, NASCAR has served as a marketing arm of the automakers, but the old mantra "win on Sunday, sell on Monday" hasn't held true for many years now.

Manufacturers had been losing identity gradually over the years, but the  COT threw the knockout punch. The new car has rendered manufacturer identity null and void. Now in the Sprint Cup world, aside from decals, a Toyota looks like a Chevy looks like a Ford looks like a Dodge.

From and R&D perspective there's little room to innovate based on NASCAR's strict specs.

It used to be true that NASCAR fans were a loyal bunch but there sure are a growing number of Toyotas sporting Johnson, Gordon and Earnhardt stickers.

It's great that Earnhardt Jr. drivers a Chevy and all, but consumers aren't blindly loyal anymore. Especially in these economic times, the buying public is going to flock to a more fuel efficient product that sells for less. Hello? Anybody in Detroit listening?

Now don't get me wrong, while the cars may not looking anything like a Chevy, Ford or Dodge, having their badge associated with a top-tier talent is still a strong form of advertising. But is it enough to offset the costs?

And pulling out completely could have its harsh negatives as well, such as allowing rivals to gain a stronger foothold with the NASCAR crowd. But is it addition by subtraction? Toyota was able to thrive without being involved in NASCAR until just recently.

NASCAR is just a small piece of the pie -- but I believe a piece nonetheless -- for why Detroit finds itself in this mess. However, mismanagement and complete lack of foresight are the biggest reasons for the U.S. automakers failures.

Ever hear of the law of supply and demand? How many gas guzzling SUVs did they think the American public needed?

I'm thinking (hoping?) that when the United States climbs out of this economic abyss, it will be better for it. Unfortunately, it's a greedy world we live in and people will try to milk a good idea for all its worth rather than build upon and grow that idea. Without innovation even the best product is destined to eventually fade away.

As for what the future holds for Chevrolet, Ford and Dodge in NASCAR, I'm guessing (key word -- guessing) that Dodge  eventually throws in the towel, while Chevy and Ford pressure NASCAR to give the new car manufacturer body stylings so that they actually resemble a street car again. Sort of what they were trying to do with a renovated Nationwide car before the bottom fell out of the U.S. economy.

Category: Auto Racing
Tags: NASCAR
 
Comments

Since: Oct 29, 2008
Posted on: November 28, 2008 2:57 pm
 

U.S. automakers bailout

I appreciate everything you said in your blog, but the big 3 have dug this grave themselves.  Sponsorships and advetising in Nascar equate to a very small portion of their advertising.  The American people are smarter now and have the internet to look things up.  I am in the automobile buisness.  90% of people go online before they make a purchase.  You can go onto Consumer Reports and see that all three have some of the lowest residual values.  They are worth nothing when you go to trade them in.  Very few are on Consumer Reports most wanted list and almost all have the highest cost of ownership in their class.    I will admit that they build great trucks but when it comes to competing with Honda and Toyota in the sedan and compact car department, they fail miserably  Honda and Toyota have built their cars will quality from day one and now they are reaping the reward.   



Since: Dec 7, 2006
Posted on: November 28, 2008 1:56 pm
 

U.S. automakers bailout

I certainly don't want NASCAR to lose their manufacturer support as I believe there is an advertising benefit to this form of investment.  I may be wrong but I don't see an R&D benefit.  At one time supporting racing technology related to the direction of the market.  It seems it is now 180 degrees from the market's direction.

Of greater concern to me is the public perception of corporate waste during a potential reorganization.  The CEO's have already decided to fly commercial (for a while) and if public perception comes down on racing development the Big 3 will be forced to make a significant gesture.  Their support of PBS will be the last to go.  Their support of what is perceived as a gas guzzling, environment ravaging, irresponsible pass time for rednecks may be the first to go.  (Everyone knows this is not my opinion, but I can see the media discovering a large cache of fresh meet here.)  I'm curious what defense NASCAR, and the other racing series receiving factory support, will come up with to justify their benefit to the general public.




Since: Aug 15, 2006
Posted on: November 26, 2008 10:33 am
 

U.S. automakers bailout

Brian, I pretty much agree with all you have said.   And I too believe there should be a presence in NASCAR for the automakers, because there is technology that can be found and used in the everyday car. 

And I believe the automakers see this too.  We saw GM cancel the contract with Tiger Woods this week, but there has never been talk by the manufactures, actually the reverse, saying they were pulling out of NASCAR. 

You mentioned Toyota thriving without NASCAR for all these years, that is true as far as the passenger car is concerned but look at how much their Truck sales went up once they entered the Truck series in NASCAR.  So although not as prominate as in the late 60's and early 70's win on Sunday sell on Monday, there is still a correlation, I believe, in winning and selling among fans.   




Since: Dec 7, 2006
Posted on: November 25, 2008 7:18 pm
 

U.S. automakers bailout

Aw, Brian, I have been chomping at the bit to rip to pieces your ludicrous attempt to justify NASCAR receiving millions of dollars from the failing US auto manufacturers.  I was hoping to challenge your lame R&D Benefit argument.  Well, I'm pretty disappointed because I agree with everything you said.

I don't want the US auto industry to fail.  I want it to get better and be competitive in the area of quality.  (Side Bar:  Have you ever read anything about the Demming Method of quality assurance?  If not, anyone would find it interesting that the man they honor in Japan as the father of quality was rejected by the US industrial giants.)  Most of the posters on the Auto Board has heard the story of my father, who was an automobile dealer and regional manager for Chrysler, when he drove my new 1973 Toyota Corolla.  He said, "The US auto manufacturers better watch out.  This is a solid and very well engineered little car."  As much as I hate to admit it, Big George was right.  At the time the US was responding to my little Corolla with the Pinto, Vega, Maverick, Pacer and Granada.  They rode the popularity of the Olds Cutlass to its grave.

We can blame the union contracts as the problem but it is their general arrogance and short sighted mentality.  Their goal involves a quartely report and current stock value.  Henry Ford got rid of the bean counters because he wanted "automobile men" in his company.  Are their any "automobile men" in Detroit today?  I don't see any.  They need to change their corporate culture and adopt a long range vision.

So what does restructuring or reorganization mean to NASCAR, especially if federal funds are involved?  I would guess the loss of the level of support the teams have been receiving.  My biggest question is what do the teams do with this support and how much do they acctually receive.  I can't see wind tunnel testing, engine development, tire technology, etc. benefiting the US auto consumer.  When this expenditure comes into the light of day the average American, who is NOT a racing fan, will cry foul as loud as they did when the CEO's landed in their luxury jets.

You pointed out that the "race on Sunday, sell on Monday" is a concept that no longer exists.  If the Big 3 need to spend R&D dollars the general concensus will be that racing series, especially NASCAR, is not the place to put it. 

I'm not saying that there is no advertising benefit in the high profile sport of NASCAR.  It is just hard to justify factory support as something other than big time payola to get the recipients to put a Ford, Chevy or Dodge sticker on the front of their identical, purpose built, race cars.



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