Competitive Connection

December 3, 2007

A look at the competition
Scion xD Leaves Bad Taste in Reviewer’s Mouth
Built on the same platform as the Toyota Yaris, the xD subcompact is the cheapest Scion in the brand's three vehicle lineup. Compared to the Honda Fit, Chevy Aveo and Nissan Versa, the xD costs more, offers less utility, and is one of the ugliest vehicles on the road. Starting at just over $15,000, the four-door xD tops the Fit by $500 and a similar Aveo by nearly $5,000.

Scion calls the flat-edged exterior "aggressive styling," but it comes across more Elephant Man than Man About Town. The headlamps bulging on each side of the xD make the car look like a mutant bug, not a frugal urban hipster's ride. The tall body planted on 16-inch wheels adds to the car's gangly stance. While the narrow shape is typical of cars designed for Japanese customers, it resembles a refrigerator box on training wheels. The xD doesn't make sense. It's as if different designers drew different pieces in separate rooms and then someone else pieced them all together.

The new car smell in my $16,500 test vehicle was tin and plastic. The interior materials felt like rejects from Chinese toy manufacturers. There is nothing inspiring or even interesting inside the xD. The entire interior looks like whoever assembled it was in a hurry to leave work.

Driving the xD didn't make me feel any better about the vehicle. Despite having the most powerful engine out of the small car group, its ride is coarse and extremely loud. The car's gas mileage, one of the main reasons to buy it, is on par with the other small cars.
The one area where the xD excels is parking. With its size, it's easy to move into the smallest spots. Plus, when you're parking, you know the driving experience is nearly over and you've arrived at your destination. --Source: Scott Burgess, Detroit News, Nov. 28, 2007
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What Others Are Saying . . .
Resale Values Going Up for Domestic Automakers
After big cuts in how many vehicles they're building, the three Detroit automakers are starting to see increases in estimates of how much their new models will be worth as used cars.

Buyers are willing to pay more for a new car if they believe it will have retained more of its value when it comes time to trade it in or resell it in three or five years. Plus, if an automaker knows a car will be worth more when it's traded in after the lease expires, it can offer a lower monthly rate.

Ford and Nissan show particularly strong growth in estimated three-year residual values of 2008 models, analyst Jairam Nathan says in a new report. Nathan's figures, based on Auto Leasing Guide data, also show used car values up at GM and Chrysler.
But while they are showing improvement, domestic brands haven't caught up with most import brands on resale values, say Kelley Blue Book and ALG. Import automakers had the top 10 brands for retaining value over a five-year period in the 2008 model-year, Kelley Blue Book says. Volkswagen was best. Seven of the 10 worst brands were domestic nameplates.
When Detroit automakers announced production cuts over the past two years, they predicted that their models would begin to better retain their value. By closing factories, they would have less of the overproduction that has eventually flooded used car lots.
"I don't think one year or two or three will make a big change in what has taken … decades to get to now," says Jack Nerad, Kelley Blue Book's editorial director. --Source: USA Today, Nov. 28, 2007
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A look at the competition
Toyota Plans Product Push for 2008
Toyota will launch 16 new or “refined” models in the U.S. in 2008. “If you look at summer of 2007 to the spring of 2008, we will have launched 10 major new models in 10 months,” says Jim Lentz, president-TMSUSA. “In 2008, there are 16 new or significantly refined models coming to Toyota/Lexus/Scion.” -- Source: wardsauto.com, Nov. 27, 2007
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A look at the competition
Chrysler Needs a Smart Plan
New owners had taken over a Detroit automaker with 12% of the U.S. market. The company was struggling, the product lineup was confused and some of the vehicles were uncompetitive.

This sounds a lot like Chrysler LLC, the newly independent U.S. automaker--but I am talking about 1921 and General Motors. To deal with its crisis in the 1920s, GM set up a special committee to study product polices, headed by Alfred P. Sloan Jr. Sloan set up a product direction and an organizational system that led GM to the top of the automotive world before the decade was over.

The most crucial issue facing Chrysler today is that many of its leading sellers are in troubled markets. Minivans helped save the company in the 1980s and 1990s, but this market is now shrinking. Rising gasoline prices and the housing slump may have the opposite effect on Chrysler's other high-volume vehicle, the Dodge Ram pickup. This market is getting fiercely competitive with Toyota's new Tundra and the sales war between GM and Ford. As if this wasn't bad enough, spy photos of the future Ram pickup indicate the stylists want to feminize Ram, destroying the tough look that made the pickup so popular.

Chrysler's other big challenge is making sense out of an irrational dealer plan. A few years ago, the company decided to push its dealers together so that single dealers sell Chrysler, Dodge and Jeep vehicles. This three-brands-under-one-roof is an idea that has never worked. The best system--proved over 100 years of car selling--is one showroom selling one brand.

Chrysler has already announced it would discontinue the Chrysler Crossfire two-seater, the Pacifica, PT Cruiser convertible and Dodge Magnum. The risk in phasing out vehicles and closing factories is that it just continues a downward spiral. On top of this is the imbalance in the Chrysler lineup--heavy on Jeeps and other SUVs, pickup trucks and minivans. Let's not forget the complaints about quality, design and interiors. Somewhere at Chrysler, there must be a man with a plan.--  Source: Jerry Flint, Forbes, Nov. 27, 2007
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What Others are Saying . . .
GM's Plug-In Push
GM is developing a plug-in hybrid technology for its Chevy Volt that is miles ahead of Toyota and Honda. And GM is spending loads of money to make sure it comes to market on time in 2010 in the hopes of changing the marketing nightmare the company faces.

"No question, it is our intent to leapfrog Toyota in this technology," said Larry Burns, GM’s VP of R&D.

What nightmare? GM has been unleashing the best vehicles it has ever produced. Quality is better than ever. Designs are being lauded. But overall, GM sales are down almost 6% this year, compared with a drop of 2.5% for the industry through the first 10 months of the year.

GM's brands have an awful time resonating on the East and West coasts. A survey cited by Burns showed that 70 percent of respondents think of GM as "part of the problem" when it comes to climate change and pollution, while 70 percent view Toyota as part of the solution. Moreover, consumers believe GM's brands have much lower quality scores than they really do, because of how poorly GM has marketed its brands over the years. "It's a huge hole to dig out of," says Burns.

But GM is showing signs of life in the arena of "green" image making. As GM and Toyota battle, many analysts and engineers say GM may, for a change, have the advantage over Toyota. "GM has quietly closed the technology gap with Toyota and looks like it is pulling ahead in plug-ins," says Brett Smith, director of forecasting at the Center for Automotive Research.

When Toyota launched its first hybrids, it lost money for a few years on each one until the cost of the technology came down as sales volume went up. But the halo effect of the hybrid more than made up for it. The same internal study at GM that indicates consumers see the automaker as "part of the problem" also showed that the image of the Prius led car buyers to believe that Toyota's trucks and SUVs were about 25% more fuel efficient than they really are. Says GM's Burns: "We didn't understand the marketing benefit to the whole company that a hybrid would have, but Toyota schooled us on that." --Source: Business Week, Nov. 20, 2007
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