If you are Rich enough to afford a Merc, don't complain when it goes wrong...

[Birdman]

Television: I think he is an economist!

 

[hawk20]

I have been involved in manufacturing, the promotion side of things absorbs a massive 30% of profits without the R&D

Malcolm

Yes and the other thing that is sadly happening on a grand scale is that list prices are becoming meaningless. On another thread on another forum I have shown some dealers selling CL's before the new models arrive at up to 27k off list. Disastrous for residuals. Most cars from most makers now are going out of showrooms with discounts and often with subsidised finance packages. No car firm can borrow money at less than 5% but many of them are offering finance to customers at way below that. Is it Vauxhall who offer 4 years finance at 0%? Add up what the interest should have been and that is a big discount.

 

[stumpy]

Lets not forget pumping millions and millions into motorsport. Jaguar anyone?

 

[hawk20]

Lets not forget pumping millions and millions into motorsport. Jaguar anyone?

Absolutely right. And because customers will pay more for 'sport' versions and racing images help sell cars, it is not just Jaguar, of course, but Mercedes too and BMW and Audi and Renault and Honda and Toyota and uncle Tom Cobley and all. Millions. Because we are all daft. We buy faster and faster cars to sit in bigger and bigger traffic jams. As Clarkson has said, 'Motoring as we have known it is coming to an end'. Speed cameras round every corner, new ones to take our average speed from A to B and so on. Congestion charges and more and more penalties on large engines. The future does not look rosy for the motorist.

 

[turnipsock]

As Clarkson has said, 'Motoring as we have known it is coming to an end'. Speed cameras round every corner, new ones to take our average speed from A to B and so on. Congestion charges and more and more penalties on large engines. The future does not look rosy for the motorist.

In days gone by, you would buy a sports car to have some fun and fly past other cars. Now the trend is to get a motor bike to do the same thing. Low sports cars are useless at seeing past 4x4s so you are no better of than a normal car. There are to many cars on the road to get anywhere faster by having a better car.

Clarkson is correct and we spend all our time worring about getting caught to enjoy driving anymore.

 

[hawk20]

In days gone by, you would buy a sports car to have some fun and fly past other cars. Now the trend is to get a motor bike to do the same thing. Low sports cars are useless at seeing past 4x4s so you are no better of than a normal car. There are to many cars on the road to get anywhere faster by having a better car.

Clarkson is correct and we spend all our time worring about getting caught to enjoy driving anymore.

Yes it's a real shame. Drove 52 miles this evening for pleasure and to see friends. All but 4 miles of it was speed restricted and even that was trunk road and so 60mph officially. Read the trip meter when I got home: averaged 34 mph in a car with a topspeed of 150. My heart loves it but my head says what the heck are you doing? I suppose the high spot was passing a speed camera that was smoking, black and ashen. Not the IRA I don't think! But seriously bombed, bent, beggered and bewildered. Lots of hooting and waving going on. Sad to see motorists driven to the point where they are happy to cheer serious civil disobedience. Can't be right.

 

[stumpy]

Lets be honest - F1 is just a way of making rich men even richer. I can't believe any of the manufacturers or sponsors get value for money. Do Renault sell more cars because they are World Champions? No. They sell more cars because they are cheap and do 0% finance.

 

[hawk20]

Lets be honest - F1 is just a way of making rich men even richer. I can't believe any of the manufacturers or sponsors get value for money. Do Renault sell more cars because they are World Champions? No. They sell more cars because they are cheap and do 0% finance.

This goes back to one of the early bosses of Unilever who said, 'we all know half of all advertising and marketing expenditure is wasted; but nobody can tell me which half'.

I am in no doubt that the department putting forward the racing programme at Mercedes has to make a hard-nosed case that it will pay on a worldwide basis in terms of increased sales from the thoroughbred racy, pacy, sporty image. Why else would they do it? They are in business to make money not to make Hakkinen rich. And I think you probably could make a good case that the whole Jaguar image was built up on earlier racing successes. And Mercedes racing past is also the stuff of legend. It may not affect you but some small boys watch the racing and dream one day I'll own a Mercedes, a Ferrari or whatever. And some grown men are very like small boys when it comes to drooling over Formula 1. If this were not true, the incredibly boring spectacle of a dozen cars going round and round largely unable to overtake each other, would have withered and died long since.

 

[stumpy]

It's not just the drivers I was referring to. My old employer sponsored a couple of football teams stating that it was value for money by way of exposure. But like you say, how can you measure this.

As for F1 dying a long time ago. For me it did.

 

[television]

As for F1 dying a long time ago. For me it did.

I think the Mansel days were good, but as you say it is not for me anymore

Malcolm

 

[Rory]

I have worked in the auto industry and the *build* cost of a car is typically just under 50% of its pre-tax list price. The price pressure on suppliers is immense - the car manufacturers tell their suppliers how much to charge for the components they supply!

That really is absolute nonsense. Most car makers LOSE money. You have to look at all the costs including R&D, design, tooling, testing for government safety and environmental and economy tests; as well as advertising and marketing, dealer discounts, salaries and wages and on and on and on.

Dear God man, I actually stressed *build* cost - the cost of the parts and assembling them. I know there are a lot of other costs.

 

[Rory]

Yes and the other thing that is sadly happening on a grand scale is that list prices are becoming meaningless. On another thread on another forum I have shown some dealers selling CL's before the new models arrive at up to 27k off list. Disastrous for residuals. Most cars from most makers now are going out of showrooms with discounts and often with subsidised finance packages. No car firm can borrow money at less than 5% but many of them are offering finance to customers at way below that. Is it Vauxhall who offer 4 years finance at 0%? Add up what the interest should have been and that is a big discount.

This goes back to my comment about build cost - the transfer price to the finance company is way lower than any price you'll ever see on the street. That way the finance arms can offer these deals but still be very profitable themselves. You'll be well aware that Ford has made more money on finance for many years than it does on making cars.
It links in to all the other costs that you mentioned simply by of it being better to keep volumes up in order to amortise those costs over as great a volume as possible.

 

[Blobcat]

It links in to all the other costs that you mentioned simply by of it being better to keep volumes up in order to amortise those costs over as great a volume as possible.

If we're not carefull we wil be talking EBITDA next :???: :? :|

 

[television]

If we're not carefull we wil be talking EBITDA next :???: :? :|

Is that a new model, I don't know that one

malcolm

 

[Blobcat]

Earnings Before Interest, Taxes, Depreciation and Amortization. Pls don't ask anymore as you really don't want to know.

 

[hawk20]

It links in to all the other costs that you mentioned simply by of it being better to keep volumes up in order to amortise those costs over as great a volume as possible.

Now this really is the crunch issue. Fords have long believed the way forward was to go for volume, sell at one price to retail customers and sell at huge discounts to companies, hire car people and the like. Always tempting to shift a few more and cut the price. Short term it looks fine. But now look ahead a bit.

I used to buy Granadas. Good cars in the early '80's. Then I disovered that where I was paying about £25k in those days for a Ghia model, in Leicester there was a bloke selling nearly new ones with 20 miles on the clock (YES TWENTY MILES ONLY) for £13,950. I was so outraged I still remember the price. When I wanted to trade mine in at 3 yrs old with 100k miles on the clock, they'd say 'nobody wants it'. So I bought my first Merc. No discount. No dealer dared or they would lose their dealership. Residuals rock solid. You could part ex with 100k on the clock. "No worries sir. Only 3 yrs old, we''ll give you half what you paid for it." It was cheaper to run a Merc than run a Ford. Numbers are my business and I proved it on paper and in practice.

So I, and loads of others stopped buying Granadas/Scorpios/Vauxhall Senators and because of their discounting and horrendous residuals they lost their whole market. Now they are not made at all.

I just don't want to see Mercedes going down the same disastrous route. It is so tempting. You have written off all the design, tooling, R&D and marketing costs. Model at an end. Chop out a few more. Get all your dealers to run demonstrators for a few months, managers, wives, girlfriends, then dump them as the new one comes out. A £75,000 CL500 is for sale in a Merc dealer with under 1000 miles for £48,000. It should be illegal. That is wrecking owners residuals. And it is short sighted because now -after 10 new Mercedes- I shall never buy new again. I got 30% off my present motor when it was four months old. A babe in arms. Madness.

Fords ruined Jaguars residuals in America by selling cheaply to hire car firms. And if Mercedes are not careful they'll wreck what they've inherited. Toyota and many Japanese companies have learned to make just a few less than the market wants and avoid much discounting. Mercedes are getting in the habit of making a few too many (a few????) and having to discount big time. Bad news for new car buyers and that means -long term- bad news for Mercedes.IMO.

 

[Rory]

.A £75,000 CL500 is for sale in a Merc dealer with under 1000 miles for £48,000. It should be illegal.

No - but buy the £48K car, not the £75K one.

I got 30% off my present motor when it was four months old. A babe in arms. Madness.

Me too! I paid £23K for a car that would have listed at £33K 5 mths earlier - to all intents and purposes it was brand new.

Mercedes are getting in the habit of making a few too many (a few????) and having to discount big time.

MB are striving for volume. The oft quoted statistic is that BMW 3 Series now outsells Mondeo across Europe. MB would like the C Class to sell just as well and they keep introducing cars to fill other segments (sometimes even creating segments of their own!).

 

[hawk20]

No - but buy the £48K car, not the £75K one.

Me too! I paid £23K for a car that would have listed at £33K 5 mths earlier - to all intents and purposes it was brand new.

MB are striving for volume. The oft quoted statistic is that BMW 3 Series now outsells Mondeo across Europe. MB would like the C Class to sell just as well and they keep introducing cars to fill other segments (sometimes even creating segments of their own!).

Now follow it through. They've lost you and me as new car customers, and lots of others too. How silly. And next they will need even more discounts to sell the new ones. Because more and more people will see the lousy residuals. The fleet buyers will do their sums. What Car will change the predicted residuals. The lousy residuals will stop sensible people buying new unless you offer an arm and a leg off. Just the same disasterous route that Ford followed.

Yes the BMW is more common than a Mondeo now. And will you want a Mercedes if and when it is more common than a Ford, a Toyota or a VW and will you pay a fat premium for one? I shan't. I shall sadly shift to Lexus who restrict the supply to the UK and have said they are not intending to increase it, so as to remain exclusive and so that dealers have time to give a first rate service. Wow. Sounds like Merc used to be.

 

[jberks]

Now follow it through. They've lost you and me as new car customers, and lots of others too. How silly. And next they will need even more discounts to sell the new ones. Because more and more people will see the lousy residuals. The fleet buyers will do their sums. What Car will change the predicted residuals. The lousy residuals will stop sensible people buying new unless you offer an arm and a leg off. Just the same disasterous route that Ford followed.

Yes, long term, if the fools start being more careful with their money there may be less newsed motors for us to choose from, but then prices will simply creep up.

In the mean time, those of us in the know, don't buy new. 30% is a rather nice discount if you don't care about not having this months registration.

The complexity, especially on German stuff, is the cost of the extras. It's easy to run up £1,000's in bits and bobs, with Leather, parktronic, command, alloys, phones etc and in terms of the book price, these don't even figure. That means that your £45k E320 is being compared on the used market against a basic spec E320 that cost £32k. Sure, you can ask a bit more, but only a fraction of what you've spent. As I've said before, my car depreciated by only 10-12% over it's first year but only if you write off the extras entirely. People simply won't pay for the extras on the used market. They'll pay maybe another £1k if it's loaded, but that loading probably cost the original buyer ten times as much.
I too used to run a Granada, but for the same reason. They were fantastic value 2nd hand, as are Omegas now. Good spec, space, performance and comfort for the price of a focus. It will be interesting to see what takes over from them.

 

[johnmc]

Keep those minds open folks. Does a Jaguar X-type cost more to make that a Mondeo, given that it is one? Does the Jaguar S-type have the same class of cabin materials and engines etc as a Merc, even though it borrows from the parts bins of Ford? Volvos are now Ford based too. The S40 is a Focus underneath.

The fancy technology rarely differentiates Marques anymore, and soon finds it's way into cheaper cars. They all go through the same qualification processes to be legal on the roads. I can't wear the argument that somehow Merc's are exclusive, even the wheel on my old Seat is head stitched leather, no doubt from the same sweat shop Merc get theirs. A few planks of wood or a widget here and there doesn't have a great impact on the cost. From 15 years in production I know that's a fact. The differentiator is perceived value to the buyer. Image.

John