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Vehicle Voice February 2006 Survey – Americans Getting Over Fuel Price Shock

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The Fuel Price Impact Survey (FPIS) conducted monthly by AutoPacific’s VehicleVoice indicates that the median fuel price paid by U.S. motorists declined from a September 2005 peak of $2.90 per gallon to about $2.30 in February 2006. The February data are based on the results of an Internet survey with 1,079 VehicleVoice panel members completing the survey between February 20 and February 28, 2006.
Vehicle Segment Shifts Moderating — SUV Loyalty Rebounds
In September respondents reacted to the price shock with about 27% of SUV owners saying they would consider buying another type vehicle when they replaced their SUV. Loyalty to SUVs rebounded by February 2006. Only 15% would consider shifting away from SUVs to another type vehicle. Similarly, interest in Small Cars, up by 41% in September, was up only 17% in February.
Powertrain Preference Shifting — 6-Cylinders Preferred
Fuel price declines have also affected respondent’s engine choices. VehicleVoice panel members are now much less likely to abandon 6 and 8-cylinder gasoline engines than they were six months ago. Interest in economical 4-cylinder engines remains at about 20% for their next vehicle; down by about 25% from the percentage of 4-cylinders they are now driving. Interest in hybrid-powered vehicles remains around 10%; substantially higher than the mix of hybrids presently on the road. The 6-cylinder engine remains the engine of choice for the highest percentage (40%) of panelists. Diesel fuel prices have increased relative to gasoline. Last September, diesel fuel was about 10-cents per gallon less than regular gasoline. In February diesel was about 25-cents per gallon more than regular gasoline nationally. Interest in diesel engines, primarily available in heavy-duty pickup trucks, has declined.

Ethanol Issues

President Bush’s State of the Union address in late January focused on ethanol fuels, and both Ford Motor Company and General Motors have aggressively promoted ethanol over the last few weeks. Two thirds of February’s respondents believe that auto manufacturers should offer more vehicles with ethanol (E85) compatibility, and the same percentage say that more gas stations should offer E85. In February, fully 93% of respondents agreed that America needs to be less dependent on imported oil — but only one-in-three was willing to pay more per gallon or accept increased fuel consumption to achieve that goal.


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2007MY Chevy Suburban Continues Value Pricing

Pricing for 2007MY Suburban Follows Tahoe with a Drop in MSRP
According to an announcement from Chevrolet, a comparably equipped 2006 Chevrolet Suburban LS was $2550 more expensive than a 2007MY LS. This may well be true for the new Suburban’s MSRP, but the transaction price for the outgoing SUV was far lower than MSRP, sometimes varying appreciably from month to month. GM’s new approach to pricing is logical, whether customers can be weaned off incentives or not. If your vehicles almost never sell for full price and there is a significant difference between transaction prices and MSRP, the MSRP is clearly set above what customers are willing to pay. Moving MSRP and transaction prices closer together, in the long term, should improve the image of the brand. Some buyers will feel smart for getting the “great deal” incentives can appear to be, but others are turned off by constant loud and dramatic incentives.
While a 2006 Suburban 1500 4WD started at about $42,500, the LTZ package (which included the 6.0L engine) also added almost $11,000 to the price. For 2007, Chevrolet says the 4WD LTZ starts at $48,455. Though the trim package components may have shifted a bit, both LTZs get the bigger engine and there is a price drop between the models.

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The reduced pricing strategy is supposed to help Chevrolet and GM reduce their dependence on rebates, incentives, a deal-of-a-lifetime sale periods, like last fall’s Employee Pricing for everyone and even the $5500 hundred sitting on the hoods of 2006 Suburbans through at least the end of February. Dropping the price by something in the neighborhood of $2500 can earn some goodwill as well as setting themselves up for potentially smaller rebates if they are needed down the road. Whether this really works with customers now conditioned to blow-out sales and large incentives remains to be seen.
Read on for the official Chevrolet 2007 Suburban pricing release.


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Pontiac Dropping GTO for 2007

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GTO Nameplate Returns to the Shelf. According to Automotive News, when Pontiac‘s 2007 model year lineup comes out, the GTO will not be included. Sources told Automotive News that the company decided to drop GTO rather than re-certify for 2007, an expensive process. At the moment, there are no specific plans for a replacement, though certainly there are those among Pontiac’s staff that will consider the possibility in the future and Pontiac will not comepletely rule out another sporty car down the road. If you want one, GM says they will bring another 10,000 to 12,000 units into the country.

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AutoPacific and VehicleVoice correspondents had the opportunity to drive both versions of the GTO over its short three-year lifecycle, the 350HP 2004 version and the 400HP 2005 model. The 2005 model won AutoPacific’s vaunted Vehicle Satisfaction Award edging out the Ford Mustang for top honors much to the consternation of Ford’s upper management.
The GTO is fun to drive and a solid overall package. In large part because of the GTO badge, the car suffered much criticism for bland and boring styling. Labeling it GTO raised expectations to a level that the styling did not meet. The lesson to be learned here is that bland is worse than ugly for a sporty car, particularly one that intended to play on nostalgia for a fondly remembered, aggressive car like the original GTO.
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Schembri and Killen – American Marketing Management Out at Mitsubishi

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Editors NOTE: Since this was written, Dave Schembri has landed at Roger Penski’s smart operations in the USA. Schembri had been head of smart at Mercedes-Benz USA prior to joining MMNA. Wayne Killen joined Hyundai Motor America as Director of Product Planning in early 2007.
Mitsubishi Motors North America announced on Friday, February 17, that Executive Vice President of Sales and Marketing David Schembri and Vice President of Marketing Wayne Killen had resigned from the Company. In a statement by Mitsubishi, “Both left to pursue other opportunities.”
The former Mitsubishi marketing duo joined Mitsubishi at a time when sales were off drastically from prior years and no rebound in sight. Just stabilizing losses and rebuilding from a lower base of sales may have been considered a success, but even after a year with Dave Schembri running Sales and Marketing the Titanic couldn’t be turned.
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Schembri joined Mitsubishi Motors North America in February 2005 after serving as the chief of the Maybach brand at Mercedes-Benz USA and then head of its still-born smart division. With the demise of smart’s efforts in the USA shortly following the 2005 North American International Auto Show in Detroit, Schembri moved westward to Mitsubishi headquarters in Cypress, California.
Wayne Killen, brand manager for the ill-advised Maybach brand at MBUSA joined Schembri at Mitsubishi in August 2005 as Vice President of Marketing. Working for Mitsubishi Motor Sales of America early in his career (1987 – 1989), Killen had most recently spent ten years at Mercedes-Benz USA. At MMNA, Killen was responsible for advertising, brand experience marketing, product and marketing public relations and product strategy.
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During their tenure at MMNA, Schembri and Killen launched the 2005 Mitsubishi Eclipse and Mitsubishi Raider pickup and had just completed the public introduction of the soon-on-sale Eclipse Spyder.
The duties of Schembri and Killen are beeing handled by Hiroshi Harunari. Harunari has bee co-Chief Operating Officer of Mitsubishi Motors North America since January 2006. Rich Gilligan, former head of Mitsubishi’s manufacturing operations in Normal Illinois continues as the other co-COO.
These moves at Mitsubishi demonstrate the level of exposure senior managers take at some import-brand distributors. Last Fall, Peter Butterfield was ousted from his position as head of Kia Motors of America. In January, after a very confident presentation at the 2006 North American Auto Show in Detroit, Bob Cosmai fell at Hyundai Motor America. While Schembri and Killen had not yet been able to stabilize MMNA’s fortunes in the USA, Butterfield and Cosmai were managing companies that have healthy growth and prospects.


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The Perfect Gen Y Car – A Used Car?

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The horrific parade of cars “designed to meet the youthful needs of Generation Y” seems to have taken its proper course. I pray the trend is dead. (No, Dan, as VehicleVoice correspondent and AutoPacific president George Peterson found at a recent Dodge Caliber press event, cars targeted at GenY are alive and well. At least Dodge admitted they would not be embarrassed when the Caliber sells to older folks.)
I remember watching Trevor Creed, head of Chrysler Group design, unveil the Dodge Razor designed for “millenials” at the 2002 Detroit Auto Show. The typical Chrysler todo included boom boxes and kids on Razors, those small-wheeled scooters that pre-adolescents use for terrorizing shopping mall parking lots. “What are they thinking?” was my first thought. “Did Trevor get into a terrible Razor accident?”

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Used 2004 Civic Coupe – Perfect GenY Car


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Is NASCAR Going Global, or Toyota Going Native?

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Toyota Joins NASCAR NEXTEL Cup and Busch Racing Series in 2007
Back in 2004 when Toyota announced its participation in the NASCAR Craftsman Truck Series with the Tundra, speculation started about whether the company would go for the NASCAR NEXTEL Cup. As of January 2006, three teams have signed up to race Camry sedans in the 2007 NEXTEL Cup series (Bill Davis Racing, Michael Waltrip Racing, and newcomer-to-NASCAR Team Red Bull). Busch teams have not been announced. Toyota’s website for NASCAR_2007 says “This Year Will go Very Fast.”
The Camry has held the best-selling car slot for the past four years (and eight of the past nine). It has long stood for dependable, reliable transportation, but not inspired emotion or passion. Racing the Camry on Sunday is more about generating excitement for Camry and Toyota brands than about direct increases in sales on Monday. Toyota’s involvement in NASCAR will not convert a deeply pro-American buyer into a Camry owner. Nothing will do that. But it can give Camry owners something to be proud of on NASCAR race days and may attract some with less-idealistic reasons for not having considered a Camry.


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Ford's Nancy Gioia – Hybrid Queen

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Nancy Gioia replaced Mary Ann Wright as Director of Sustainable Mobility Technologies and Hybrids for Ford Motor Company in Fall 2005. Mary Ann nurtured the launch of the Ford Escape Hybrid and contributed to the understanding of hybrids different from Toyota’s Hybrid Synergy Drive.
We first met Nancy Gioia at the launch of the Thunderbird Roadster where she was the chief program engineer. She was open, friendly, conversational and a solid representative for Ford’s product development activities. She wouldn’t even rise to the bait that the T’Bird would not meet its sales potential because you couldn’t see out of it and because it didn’t have a retractable hardtop. Oh, well. The engineers can only implement the vision of others, right? (WRONG!)
Here is Ford’s blurb on Nancy Gioia…

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In its drive to become leader in “green” technology, Ford Motor Company has turned to one of its long-time engineers to lead the charge into a sustainable future. Nancy Gioia, Ford’s Director of Sustainable Mobility Technologies and Hybrids, is committed not only to further development of the company’s hybrid vehicle portfolio, but also to raising the technology’s profile.
“The hybrids should be our generation’s Model T,” Gioia recently told The Detroit News, quoting her Uncle Harry, who continues to be a source of inspiration for her.
“He said the Model T became part of your life,” Gioia added. “They were more than just cars. You drilled wells with them. You drove them across your fields. Hybrids need to become part of people’s lives today.”
Gioia first became seriously interested in engineering as a high school student interning at Ford Motor Company. She changed her college plans from pre-law to electrical engineering, and upon graduation from University of Michigan selected Ford Motor Company over 14 other job offers.
“I don’t regret it one iota,” said Gioia, who is a native of southeast Michigan.
Gioia started her career at Ford in 1982 in its Electronics Division. “During the ’80s, vehicles went from having $200 worth of electronic components to having $1,200 worth,” Gioia recalled. “We’re seeing similarly rapid technology growth today with hybrid technology. It’s an opportunity to enhance vehicle performance and function while allowing us to get higher quality and reducing cost.”
Nancy’s career at Ford eventually led her to heading up the engineering team for the 2002 Ford Thunderbird and then as lead engineer for the company’s “lifestyle vehicle” group that includes the iconic Mustang.
“As a director I’m very participative and hands-on when my team needs me to be,” Gioia said, adding that she believes in including her team in decision making. “Ford’s hybrid team has some of best and brightest minds around. I have complete confidence in their technical breadth and depth.”
The only thing more important to Gioia than her work is her family. She is married to Tom Gioia, whom she met at Ford. They have a 13-year-old daughter, Samantha, in addition to a dog (Chloe) and two horses.


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Traditional Premium Mid-Size SUVs: Do They Still Have LIfe?

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VehicleVoice (http://www.vehiclevoice.comhttp://www.autopacific.com) pay close attention to the the dynamics in one of the largest and most dynamic product segments in the North American auto market – the Premium Mid-Size SUV market. This VehicleVoice blog (http:/.vehiclevoice.com) delves into the dynamics between Traditional SUVs and Post-Modern SUV entries.
Are Traditional SUVs Based on Trucks on Their Way Out?
Some say traditional SUVs are on their way out, but their implied death is exaggerated at best or at worst will come only after a lengthy illness that has just begun to take root. That the playing field is changing there is no doubt, but traditional SUV entries will be an important part of the mix well into the next decade, despite the amount of chatter that Post Modern SUVs (some refer to them as crossovers) are generating and the speculation that the product configuration will take over the world. Though segmentation is subjective and a constantly moving target, but a close look at the Premium Mid-Size SUV segment as currently defined indicates that it is not quite time to write off traditional SUVs.

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Ford Explorer Versus Toyota Highlander: Which is the Way of the Future?
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Crossover SUVs to Outsell Traditional SUVs in 2006

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Crossover SUVs will outsell Traditional truck-based SUVs beginning in 2006. This forecast comes from George Pipas, Ford’s Manager of Sales Analysis and Reporting in a presentation in Long Beach, CA on December 12, 2005. Refer to the VehicleVoice Blog on December 8 citing a USA Today article on similar observations.

A Few Comments on What a Crossover SUV Is

Pipas’ analysis charts the meteoric rise of Traditional SUVs during the 1990s and the similarly meteoric rise of Crossover SUVs since 1996 when the first crossovers – the Honda CR-V and Toyota RAV4 – were introduced. Of course, defining SUV categories is getting murkier and murkier. VehicleVoice (http://www.vehiclevoice.com) and AutoPacific (http://www.autopacific.com) have used the “at-a-glance” rule to define SUVs. If you can, at-a-glance, tell that a vehicle is an SUV, then by golly it is an SUV. In this way you are not confused about whether it is car-based or truck-based. (Pipas contends that only about 70% of Crossover SUVs meet this at-a-glance requirement with 30% easily confused as cars, hatchbacks, or wagons.)
Escalade Blog.jpg Traditional SUV 2007 Cadillac Escalade – Category Expected to Decline as a Percentage of Overall SUV Universe
The auto industry thinks differently and often gets caught up in definition problems. They have variously called car-based SUVs “hybrids” (a term since adopted by gasoline-electric ‘hybrid’ powerplants) or “crossovers”. In our research, we have found that folks really have not yet adopted the crossover term and still like to refer to SUVs as SUVs. But enough about splitting hairs about what is a crossover and what is not.


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Bugatti Veyron – 253 MPH and Still a Little Late

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For those of you who do not live in the Los Angeles Times sphere of influence, you may miss the writing of Dan Neil their Pulitizer Prize winning auto journalist. You can catch up on his reviews, Highway 1 editorials and podcasts at the LA Times website (http://www.latimes.com). This article on the upcoming launch of the Bugatti Veyron supercar is just one example of Neil’s writing.
By Dan Neil, Times Staff Writer, Los Angeles Times, December 10, 2005
PALERMO, Sicily — At 200 mph, the Bugatti Veyron pounds a beautiful, howling hole in the sweltering haze hanging over the motorway.
This, the fastest production car in the world, is broad and low, an enameled ellipse in a spiffy two-tone paint scheme. By comparison, its now-vanquished supercar rivals, such as the Ferrari Enzo and McLaren F1, are all edges and blades and angles, like F-16 fighter planes or Japanese stunt kites.
The Veyron is not, strictly speaking, the fastest car I’ve ever driven, but the one that’s faster had a jet engine and a parachute. The guardrail to my right is blurred into a dirty stream of quicksilver. Houses fly by before my brain has time to register the word “house.”

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About nine seconds ago, I was dawdling at 100 mph. Then I squeezed the throttle. The seven-speed dual-clutch gearbox clicked twice, the engine took a huge lung-busting toke of atmosphere through its twin roof snorkels — and then things got interesting. Something slammed me from behind and I realize it was the seat. Captain, it appears we have fallen nose-first into a wormhole.
Two-hundred mph. And I’m not even in top gear.
… house….


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