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Family and Friends is my everyday journal. Captain's Log is where I pontificate on religion and politics.

Thursday, April 02, 2009

The Value of the Mustang

Auto bailouts and breakups are filling the news lately. Obama's Car Czar forced the dimwit at GM out. Chrysler could disappear as far as I'm concerned -- see previous post at Captain's Log. It was bought from Mercedes by a private consortium that included Dan Quayle. Now there's a recipe for disaster. Maybe Fiat can salvage it.
Notice of the Big 3 only Ford has not asked for a bailout. Why? I'll tell you why. The Mustang.  
GM and Chrysler have a competing sports car to go against the Mustang, but they've both been stupid on the price.
The Mustang is a sports car if you put in a V8 engine and fancy it up. The GT and Cobra are really hot. They sell for 30 grand and up. But it's also an economy car. With the V6 and basic package it gets good mileage and sells from 18 thousand to 24 thousand. That's why everywhere you look Mustangs are all over the road.
GM in a fit of pure insanity killed the Camero, and when it decided to bring it back took four years after the design was released to bring it to market. It was in the Transformers movie and two years later you still couldn't buy one. That's just plain stupid. Now that it's finally hitting the market they sell for Fifty grand. Why not just buy a Corvette? Do they really need two top of the line sports cars?
Chrysler brought back the Charger, but made it a four door killing whatever sporty or economy value it could have had and upping the price. When they finally brought back the Challenger they priced it from 45 to 60 grand.
Both of these cars, and I'd love to have either one, start at what the Mustang sells for at its top end. If the Mustang started at this price you wouldn't see many of them either. 
That was the genius of Lee Iocoa who came up with the car in 1964. A people's sports car. The Camaro and Challenger were developed to compete with the Mustang, which they did from the mid sixties until the mid eighties. Pontiac's version, the Trans Am was about the biggest selling car of the seventies thanks to the Smokey and The Bandit movies. 
If either of these car companies had a lick of sense the Challenger and Camero would be priced around 20 thousand with a V6 or Turbo 4 cylinder engines and they would sell like hot cakes, just like the Mustang. In fact many people might trade in their Mustangs to get the next best sporty economy car. But Corporate thinking is too dense to figure this out. 
Where's the next Lee Iococa? 


One Fly said...

Good points. We still need a really cheap vehicle!

P M Prescott said...

You're right.

Unknown said...

Cerberus Capital's only mistake in my opinion was hiring ex-Home Depot CEO Bob Nardelli--an idiot. Lee was good, but a guy who gets overlooked is Gerald Greenwald, Lee's CFO. Chrysler historically never seemed to be quite up to the quality/durability standards of GM or Ford in my view. I recall the excitement of the 1968-70 muscle car years with The Charger, Challenger, Dart and Road Runner. But Daimler ruined Chrysler. Remember, they said it would be "a merger of equals", then once they took control, they admitted lying and said it was a full takeover. They ran the company into the ground and now Chrysler reminds me of the saga of Studebaker in 1964 turnng to a Hamilton, Ontario plant to build trucks. GM let their brands go to hell and they never adapted. I was against the bailout. You and I are paying for nothing but a waste of time and money. Had they run their dealerships like their Saturn brand maybe they would have fared better. Bottom line: No marketing differentiation and bad management with no innovation. God, I miss John DeLorean!