Competitive Connection

June 4, 2007

What others are saying . . .
Prior customers help new models
The new Saturn Aura sedan is the type of vehicle that Saturn and General Motors need in order to compete against the likes of Toyota and Honda. The car is stylish, with good mechanicals, including a six-speed automatic transmission, and the availability of a hybrid model. Saturn dealers have a reputation for treating customers right; there is even a $1,000 rebate on the Aura.
The only problem? Customers are not rushing to their nearby Saturn dealers to buy the new Aura. Here is an explanation of the Aura trouble that makes sense: There is no layer of old customers to come in and buy the new model, no established reputation. By contrast, when Toyota releases an updated Camry, the company already has millions of Toyota owners who respect the new product, sight unseen.
A brand-new vehicle needs heavy advertising and marketing, but General Motors does not have the money it once had to promote its new entries.
GM wants to make money off Saturn by building better vehicles and charging more. When you do that, you need new customers--richer customers--or you need to do a lot of work to get your prior customers to spend more money.  Increasing price is dangerous, but it can succeed. Just look at the Japanese. However, it takes a lot of effort and time, and a willingness to take the risk. –Source: Forbes, May 29, 2007
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A look at the competition
Toyota Tundra has problems
Toyota faces a costly setback in the biggest U.S. vehicle launch in its history after owners of its new Tundra pickup reported engine failures. The Japanese automaker may recall Tundras equipped with 5.7-liter V-8s to replace the engines, a company spokesman said.

The trouble with the Tundra's 5.7-liter engines, the most powerful engine available on the new pickup, is the latest in a series of recalls and problems that have dented Toyota's reputation.

Toyota officials characterize the Tundra launch as the most important introduction in the company's history in the United States. However, the rollout has suffered delays and disappointments.

In contrast to their performance in the car market, where they have been pushed back by Japanese nameplates, American manufacturers account for more than 90 percent of full-size pickup sales.—Source: The Detroit News, May 31, 2007
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A look at the competition
Nissan testing facility
The assembly lines at Nissan's new Global Production Engineering Center are there for testing purposes only.  The nearly baseball-stadium-size building is part of Nissan's effort to work out possible kinks in production for the 30 new model launches Japan's No. 3 automaker is planning for this fiscal year  through March 2008.

The new models are critical to Nissan's attempt to reverse its sliding sales, and the center's tests will be applied to all future global production.

And the new $42 million center is meant to ensure quality regardless of where the vehicles are being produced whether that's in India, Russia or the United States.

"We are about to go on a major offensive," said Senior Vice President Toshiharu Sakai.  "It is important that Nissan maintains the high levels of quality that our customers expect," he said. –Source: The Associated Press, May 29, 2007
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What others are saying . . .
GM goes green
GM has assigned hundreds of engineers and millions of dollars to an effort to become the greenest company in the auto industry.

Engineering teams at GM's technical center in Warren, Mich., are scrambling to turn a recently unveiled electric concept car into a production vehicle within three to four years. This month, GM kicked off a drive to hire 400 technical experts to work on fuel-saving technology and other innovations, and became the first auto maker to sign up for a cap-and-trade system for carbon emissions, which are blamed for global warming.

This year, GM's research labs are scheduled to turn its hydrogen fuel-cell technology over to an engineering group that prepares new powertrains for commercial launch, a sign of increased determination to put hydrogen-powered vehicles on the road.

"We have to have people think we are part of the solution, not part of the problem," said Lawrence Burns, GM's vice president for research and development and global planning. The rush to produce its electric vehicle, known as the Chevrolet Volt, is in large part an effort to show consumers that "we get it" on climate change, Mr. Burns said. "It's not just words. It's deeds."

GM declined to disclose its spending on these new technologies, but people inside and outside the company said it appears to be devoting significant resources to the effort.

To differentiate its strategy, GM decided to develop vehicles and technologies that don't require petroleum-based fuels. Some of GM's toughest environmental critics found themselves cheering for the company.

GM is working with three battery suppliers in hopes of developing the Volt's most crucial component. Even though it has no guarantee the batteries will be available, GM decided to have its engineers start designing the other parts of the car and the manufacturing processes to produce them -- a big risk for a company that is coming off a $2 billion loss in 2006.—Source: Wall Street Journal, May 29, 2007
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