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Originally Posted by Doc
If something is going to cannibalize one of your products, it had better be another one of your products. The Camaro is now no longer affordable for the entry-level buyer which means you no longer have a growing market base. That's not good.
The car you get when you design to be profitable at $20k is a pony car; not a sports GT which is what the Camaro has become. I honestly don't think there'd be that much cannibalization of the low end of the Camaro because the buyer who can just afford a $20k car cannot and will not buy a $30k+ car which is where the Camaro is now by the time you add tax, license and any kind of extra.
I'm not advocating an uber machine, a sports car to compete with Miata's or anything else. I'm talking about a basic, minimum frills sporty fun car like the original '67 Camaro (basically a re-issue of that style but with slightly modernized styling). The buyer who can afford that will mod it over time, and as they get older will become Camaro customers with fond memories of their first "pony" car. If Chevrolet doesn't cultivate a new base of customers that can grow the Camaro family beyond what they already have, they're facing diminishing returns like they did in the past until there's no longer a justifiable cost basis to keep making Camaros.
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The group formerly known as 'Entry Level Buyers' aren't buying new cars anymore. They're buying used. And its not because the new cars are too expensive. If there were hundreds of thousands of buyers interested in cheap, de-contented new cars then the Mitsubishi Mirage would be the #1 selling vehicle in America. Its not. That title belongs to the Ford F-series, with an average transaction price of $44,000 (more than triple the base MSRP of the Mirage).
And it can be worse to cannibalize your own sales than to lose a few to a competitor (and at the moment, there isn't anything in the segment you're describing for a new low cost RWD 4 seater so I fail to see who GM would be losing sales to). Investing a billion dollars into a new product to make a few thousand extra sales per year is a terrible idea -unless you can make an enormous amount of money off each of those sales. But since we're talking about cars in the low $20k price range, thats not going to happen.
Quote:
Originally Posted by Doc
So what makes more profit; 10,000 cars with a $2000 profit or 50,000 cars with a $1,000 profit? The share holders were certainly not very pleased when GM was filing bankruptcy in 2009 but fortunately the Camaro enthusiasts at GM were able to get the 5th gen Camaro out the door which did wonders for helping GM to recover financially. They have a superstar team there; they need to let them do more than just worry about being cautious and hope to feed the next quarterly report.
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That assumes that there is more demand for the cheaper car. And that the increase in profit is marginal as you go up in price.
GM, like most businesses, looks to see how they can get the most return on their investment. For the few that they might gain (because people generally
don't buy cheap, no option cars anymore) it will require a gigantic investment. For a much smaller investment, they could do a Super Sonic or a Cruze SS or a cheapo Camaro LS again, hit a similar price point and achieve similar sales.
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The new Camaro is priced higher because they really went for it and made it a fantastic sports GT. I think it's absolutely worth the price they're asking. In my opinion they need to also start on a genuine entry-level model that brings new customers into the Camaro family. Right now it looks like they're going to mostly sell to the customers they already have, and how far can that go in the next 5-10 years?
They have a REALLY good thing going with the Camaro; it's such a great car. Create an entry-level model at a price point new generations of customers can afford and get excited about. If they sell many times more of them than Camaros that's okay.
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What is preventing people from buying used Camaros, like generations of people before them? There are something like half a million 5th gens running around these days, waiting for a 2nd or 3rd buyer to enjoy them just as much as the original owner.