Re: alfa-digest V7 #1373

[Pottree@domain.elided]

In a message dated 02/20/2000 10:53:11 PM Pacific Standard Time, 
owner-alfa-digest@domain.elided writes:

<< The American culture is 
 that cars (like computers) are just another commodity... as long as it 
 starts and runs, the average driver doesn't care whether it's Mazda, 
 Toyota, Ford or Dodge. >>

This leads, of course, to the thought that a car cum product in the USA 
becomes a commodity item, and consequently very often is bought on price.  
Taking that a step further, a huge percentage of new cars are leased 
(probably the majority, anyone know?), and that leads directly to the 
equation: the more someone at a lender guesses the car will be worth at the 
end of the lease, the more leasable the car becomes.  Do the math: when 
shopping for a new car in the early 90s, I found the per-month lease payment 
amount for a new 164, even with its terrific USA intro price of about US$ 
22,000, was close to twice as much as for a Honda Accord with a price about 
US$ 3000 less.  The Honda was deemed to be worth a substantial amount to the 
bank as a used vehicle when the lease was up.  The Alfa was deemed to be 
close to worthless.  This goes beyond anything about driving, feel, 
engineering, ets. and has to do with the cost of renting money for a few 
years.  That alone could be a death knell for a specialty European maker 
trying to sell cars in the USA.  Add to the mix the profitable fleet market 
(for cabs, rental cars, municipal vehicles, military vehicles, even police 
cars, which Alfa is successful at in Italy) being basically closed to a 
company like Alfa, and you have a nonstarter as a business proposition.  

The solution?  Well, I dunno.  But if you sell something like a Ferrari or 
Bentley and gross perhaps US$ 80,000 (or more) on each unit I bet it's less 
insulting than if you're selling something like an Alfa (and losing some 
bucks on each sold unit to avoid layoffs at home in order to get votes) or a 
Peugeot which was probably also a loss if not a break-even deal.

There is some kind of critical mass of volume v cost of sale in the USA that 
the French and Italians could never approach or could never quite understand; 
that in the USA it could very well be possible to spend more on advertising a 
mid-market car (yes, I was involved in making the Z car "awesome" in the US 
market) than it cost in materials.

Another way things are sold here is on exclusivity, more like Ferrari or 
Alfa's prewar basis, but this of course wasn't what Alfa or Fiat hoped for in 
the USA, they hoped for volume on mid-priced products.  In that way, they 
were like the little tailor who lost money on every suit he sold but hoped to 
make it up on the volume.

Imagine if Alfas were sold in the USA again, supported by an extensive and 
obsequious dealer network like Lexus, and advertised like BMWs (e.g., 
heavily).  Would the result be profitability?  That would be the one and only 
question, I think.

It would be a mighty hard sell, and it would take gigantic amounts of risk 
money to find out.  I think any exec making that decision would be held by 
Scarpia in the Castello S. Angelo, or worse.

We have our provincial side in the USA, too, I suppose, and though our market 
is big, it certainly has its own quirks and isn't for everybody no matter how 
tantalizingly "rich" we 'Mericans may seem to be from abroad. (And remember, 
if we get sick or can't work, all our riches can be drained away in the 
twinkling of an eye.)

Charlie
LA, CA, USA

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