Adam's question addressed

[Pottree@domain.elided]

In a message dated 10/22/2002 8:49:39 AM Pacific Daylight Time, 
owner-alfa-digest@domain.elided writes:


> 1: I don't understand how it is profitable/makes sense for them to sell 
> Alfas in Australia, Japan, Britain, SOuth America for the following reasons
>     A: They are just as far if not farther than the US, plus it has 
>     to cost more to ship to these areas b/c of the lesser gross volumes 
>     shipped. Also, in many cases the dealer networks/spatial problems are 
> the 
>     same as in the US.

I don't know if it is profitable for them in those markets or not, but one 
thing is sure: they are not full of American buyers.  Each marketplace if 
different, with different requirements and qualities.  This is something Alfa 
never really figured out for the USA at least, hence their disastrous sales 
experience in this market.

> 
>     B: You have to re-engineer a car and produce duplicate/mirror 
>     image of whole systems to sell cars in Britain.
> 

Well, I don't know about that either.  They also sell RH drivers in Japan, 
and I guess in Australia and New Zealand (help me out Downunderers).  But, it 
is easy to get fixed on something that is small in the scheme of things and 
miss the real big picture: a little engineering change, such as taking a 
mundane sedan and tarting it up for sale to the USA market as a superpremium 
car, a la Mercedes or Volvo, is nothing if you are already in the car-making 
business.  Certainly it is (comparatively) nothing if you are in a position 
to sell them in numbers and hence make it a profitable exercise.  To do this, 
you have to invest in USA paid media advertising.  THAT is a big deal; it is 
not steel and wires, but it costs a lot of money, an incredible amount of 
money.  And it is easy to get it wrong and waste all that money, and it isn't 
something like a tooling you can get right and keep producing for a long 
time; you have to constantly reinvent the message, too.

> 2: How can a company like Daewoo etc come in like a la-kazaam and still 
> be around--that is, solve many of the problems people here are noting 
> (dealer network, image probs (Korean car????), warranty etc; but a larger 
> corporate group such as Fiat of GM is a non-starter.
> 

I think they have their own USA maret distaster stories to tell, but again, 
it seems it's all about money and I think Daewoo makes cars only 
incidentally, perhaps as a way to builkd demand for the ships, refineries, 
radios, brakes, etc. they also make.  I am no expert on Korean business 
practices, but from what I understand, their major industrial combines would 
not be legal in the USA, and are centered around some kind of crony 
financing, owing banks and lending to other board members' conglomerates and 
skimming a commission and things like that.  I truly believe that when large 
amounts of money are involved, it becomes mostly about the money and moving 
it, and you have to look long and hard to have a hope of seeing what's really 
going on.  Short story: probably it's not all about Daewoo cars.


> 3: If sales volume is going to be too small for GM (if someone wants to 
> discuss this off digest there are some other points concerning this I 
> have), why do they mess with Saab? Moreover, why would, or better yet 
> then, does it make most sense for brand viability etc to spin Alfa off as 
> a stand-alone? That is, if it doesn't make sense as part of a large 
> conglomerate (GM), and Fiat is a drain on it, is Alfa best sent on its 
> own way? Please don't harken back to post WW2 govt nationalization of 
> Alfa--that isn't analogous here.
> 

Yes, GM really wants to deal with cars with mass appeal, that sell in giant, 
economic numbers.  There are all sorts of reasons, and my POV that it is very 
largely about advertising them is only one aspect, I'm sure.  But, they also 
have to overcome a lot of tired baggage that is impeding them now, and that I 
think they can see will only get worse as their current customers age and die 
like dinosaurs and aren't being replaced by fresh young blood.  Look, the 
purpose of paying a TV actor a million dollars an episode is so people will 
watch the show, and the reason for that is so that you can sell them in lots 
of 1000 to ad agencies for their clients.  The purpose of the show on 
commercial TV is only to build an audience for the commercials, and the 
purpose of having a more exciting or prestigious brand on the floor is to 
build your audience for your bread-and-butter products because that's what 
you're really in the business of selling.  IOW, it could be a loss leader.  
Or, they could have delusions of grandeur and believe they can build 
something like Alfa into a BMW competitor.

Guess what?  They probably could!  But, would it be worth the cost?  That is 
the question.  And, could they do it before they go out of the mass car 
business because they have alienated the affections of their future customers 
to such an amazing degree due to short sightedness?  Tune in for the next 
exciting adventure of...

Trying to sell ice cream to Eskimos!

Charlie
LA, CA, USA
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