By on May 9, 2013

Automortal Sins is an infrequent series about the true sins in the auto business. It won’t be the sins which some bloggers regard huge. Building the wrong car once in a while is a minor iniquity compared to the huge, most egregious, and definitely mortal sins committed by automakers, without the smallest amount of remorse.

Creating a new car brand is not a sin often committed anymore in the industry. People learn. Outsiders, from Fisker to Coda and Tesla however are still found munching from the forbidden tree. Some already roast in hell for their sins, others will. Creating a new car brand is one of the most mortal sins in the business. You probably won’t believe me, but I will bring a prominent witness.

Pebble Beach Concours d'Elegance Photos

There are few things in the world of cars that take as long and as much money as successfully establishing a car brand. It does not take a lot to be unsuccessful. I am not talking about “branding,” that little understood but nonetheless much debated black art. I am talking about the suicide mission of creating a new car brand.

The annals of automotive history are littered with dead or invalid brands. The dead ones are mostly forgotten. Invalid brands hobble along, carrying the smell of impending death. Unless you are blessed with being a storied carmaker, don’t try to become one.

 

“What most other brands have and Lexus lacks, is a story, a narrative, history.”

This did not come from a lone scribe. It was said yesterday by Toyota’s CEO Akio Toyoda, who also made himself chief of the Lexus Division. Asked why, Toyoda said:

I happened to be born with the company name. I may be able to make a contribution to our effort to build a brand. The lack of history may be the weakest point of Lexus. Building a brand is a time consuming endeavor. For Lexus to be perceived as a true brand will take a lot of time, starting here.”

These are frank words from the chief of a brand that already can look back at a quarter century of a successful past. What Toyoda tries is to transfer his grandfather’s and father’s DNA into a brand that lacks an important ingredient for a brand’s success: History. If Toyoda is troubled by a lack of history on the part of Lexus, imagine the trouble you are in if you have no history at all.

Two years ago, at the annual Chinese auto industry confab in Chengdu, executives of Chinese car companies lamented that they “compete against brands that sometimes are over 100 years old.” However, this did not keep them from stamping out brands as if they are steel pots. Then came the rude awakening. A year later, at the same conference, the CEO of Dongfeng, one of China’s largest automakers, said that the brand binge was misguided, “irrational, incompetent, and immature.” He was right.

A storied history alone does not guarantee success, but lack of lineage more or less assures a car brand’s premature passing, or worse, it can lead to the brand getting bogged down and nowhere after initial successes.

A textbook example of DNA deficiency are the luxury brands created by Japanese automakers as an answer to the allegedly voluntary import restraints. They initially thrived, ironically nurtured by regulations that were supposed to protect the U.S. auto industry. Lexus succeeded faster than the rest, because the brand did not simply say that the customer is king, Lexus actually did treat its customers as royalty, and sold its cars at a discount to other premium brands that exuded arrogance.

Outside of the artificial climate, the Japanese premium brands failed to blossom. I worked for a large European OEM when the arrival of Lexus on European shores was awaited with greater trepidation than the Americans at the beaches of Normandy. However, the onslaught fizzled. Some twenty years later, Lexus is yet to break out of its tiny European beachhead that resembles Dunkirk more than Omaha Beach. Lexus managed to sell 24,600 cars in all of 2012 in all of Europe, for a market share of 0.2 percent.

It is quite telling that all three Japanese premium brands are of little, or no consequence in Japan, in the land of their shallow roots. Lexus sold 43,657 units at home in Japan last year, similar to what Mercedes (41,911) and BMW (41,102) sold in an allegedly closed car market. Honda and Nissan did not even try to bring Acura and Infiniti home. It is quite telling that Dacia, a brand that harkens back to the bad old days of a Romanian dictator called Nicolae Ceaușescu, but at least it harkens, can be more successful than a Tata Nano. Nissan wisely dusts off its Datsun brand for its upcoming entry into the low cost market. Sure, there are many other factors that lead to victory or defeat, but if your history books are empty, your ledgers will most likely stay the same.

Letzter Horch endlich in Ingolstadt

I was there during Audi resuscitation in the 70s, and I was peripherally involved in the CPR. Executives of Japanese OEMs asked me a few times what “the secret of Audi” was. Each time, I answered, truthfully, that there is no secret. They looked at me as if they did not believe me, but now that their boss said it, maybe they will.

It took half a century from Audi’s takeover by Volkswagen in the mid 60s to where Audi is today, and most of its resurgence is recent. Often forgotten: Audi has a rich dose of that ingredient called history. Audi is Latin for Horch, another storied brand that went bust. Gottlieb Daimler’s four wheeler was a slider, built by NSU, a company that later merged into Audi. Daimler provided his engine. Most of this may not be readily present in the minds of most customers, but if you ask, it’s there.

As Messrs. Studebaker, Packard, Nash, LaSalle & Co will concede, history is no guarantor of longevity. Victor Muller will probably deny that owning Saab doesn’t help much if you run out of money, time, and luck. Should one insist on creating a car brand out of nothing, it will take untold amounts of money, time, and luck to be successful.

What Toyoda said yesterday should be nailed to the wall or, if necessary, to the foreheads of all who think of creating a new car brand, or of buying stocks in one. If you want my advice, I can quickly come up with more entertaining ways to spend all that time and money.

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67 Comments on “The Mortal Sins Of The Auto Business: New Car Brands...”


  • avatar
    mike978

    Very insightful article. I look forward to more in this series.

    Mr Toyoda does show a degree of awareness that is unusual at that level! Lexus is no longer #1 in the US and will have to fight just to get to #2 in the future. I can see why BS is such a fan of Toyota management, through their statements (adding styling and dynamics to future models, the 10 million production statement and now the Lexus statement) they are sensibly conservative.

  • avatar
    Mitsu_fan

    I don’t think Lexus’ weakness is that it doesnt have a history, I think it more relates to their products. Early Lexus models were quite successful, but that was back when Lexus made it clear that it wanted to build refined luxury cars. Current Lexus is trying to chase after BMW with F-Sports and F-series cars and its really not helping them attract the customers. Lexus wants consumers to compare some of thier products with BMW models, the Lexus comes up short to the BMW, people buy the better BMW. Lexus needs to listen to the R&B group TLC… “Don’t go chasin’ waterfalls; just stick to the rivers and the lakes that you used to…”

    • 0 avatar
      tankinbeans

      Great! Now I’m going to have that song, and Weird Al’s parody stuck in my head for the rest of the day. I thought I’d been lucky enough to forget that song forever.

      Curse you, Red Baron!

    • 0 avatar
      Advance_92

      I’d be interested to hear some more about the original new brand success – Acura – rather than Lexus. And while it’s a tired cliche no mention of Edsel is interesting.

  • avatar
    gslippy

    You omit the fact that a brand doesn’t have to be successful everywhere to be successful. Different markets have different tastes.

    Lexus’ failure in Europe and Japan is odd, but they’ve done quite well in the US. Similarly, Suzuki just left the US market, but they do OK elsewhere. Mahindra can’t even get into the US, but they have a strong presence at home in India.

  • avatar
    probert

    It’s interesting that as Tesla reports better than expected earnings, better than expected sales and orders, it’s first profitable quarter (in the middle of a recession), and it’s stock up 23% (100% over 6 months) that your headline implies it’s in the same category as 2 failed companies.

    While history is nice – let’s not forget to celebrate the first car made on an assembly line: oldsmobile! Keep on trucking dudes – visionary thought combined with dogged determination and excellent execution are also important.

    Regarding Elon Musk: It strikes me that a CEO who actually did build a company, and actually did employ people, and actually manufactures a useful product would be celebrated. He might be an annoying loudmouth but he certainly puts his loud money where his loud mouth is.Ironically, even as he and his product are dismissed and disparaged in conservative circles, he fulfills conservative paradigms better than the usual crew of hucksters making monster salaries playing with other peoples’ money.

    • 0 avatar

      The history books are full of boutique builders who were and remained mildly successful while they were a boutique. Once you start mass production, it gets dangerous. You need to make huge investments into R&D, plants, equipment, channels etc. which will pay back only after many years and only if spread across many units. This is something that is usually ignored by wide-eyed hopefuls and their investors, who usually know very little about the business.

      Making an electric car is not rocket science. If the segment ever turns into something profitable, the biog boys can wipe you out in no time. You only don’t get wiped out because it is not a profitable business.

      • 0 avatar
        genuineleather

        Bertel: while your point makes sense, I think it undervalues the market-disrupting potential of a well-funded upstart like Tesla. If such companies were so easy to “wipe out”, I don’t think Daimler or Toyota would have taken equity stakes in something they could’ve done better themselves.

        Lexus, too, was a new creation, and while it may not sell well in Europe, it certainly had a tremendous effect on the way the Germans (and, eventually, domestic makes) designed and marketed their competing cars.

      • 0 avatar
        sitting@home

        The Toyota-Tesla tie-up is an very astute hedge by both firms. When Tesla hits hard times (all companies do, so I’m not disparaging their product) they may get access to the deep pockets of Toyota. If there really is a huge demand for EVs, expect a Model-S-shaped-Lexus to hit the market a long time before the other manufacturers are even hyping up outlandish pencil renderings.

      • 0 avatar
        E46M3_333

        Well said. Any of the major OEMs could have built a car like the Model S, if they felt the investment would pay off. And these are companies with established brands that buyers could count on to be around to service a unique EV platform. Tesla’s a long way away from re-couping the original investment and they’re a long way away from being called any sort of success story.

      • 0 avatar
        gslippy

        “Making an electric car is not rocket science.”

        You could say making an ICE car isn’t rocket science, but the mfrs don’t do it equally well. I’d argue that making a good electric car is fairly difficult – charging, high-current power management, driveability, safety, and affordability are hard issues to address in a car. Just look at the difference between a Coda and a Model S.

        In either case, Elon Musk actually is doing rocket science at SpaceX.

        • 0 avatar
          E46M3_333

          Right. So Tesla decided to skip affordability in the Model S. Fine; that’s their choice, so now we know it costs nearly $100K to make a medium sized EV with reasonable range.

      • 0 avatar
        28-Cars-Later

        Such advice goes well for any company in any industry looking to move toward mass production.

    • 0 avatar
      gslippy

      @probert: Tesla and Elon Musk don’t get much love around here.

      Tucker lasted about a year and made 51 cars; DeLorean lasted 2 years and produced 9000 cars. Bricklin lasted a couple years and made 2800 cars. Aptera and Fisker are more short-lived examples.

      By contrast, Tesla’s already produced 2500 Roadsters and 7500 Model Ss over 6 years’ time, and production is accelerating, while the Model X is on the way.

      I think it’s pretty defeatist for TTAC to declare that producing a new car brand is an automotive mortal sin. Many have failed (also thinking of Saturn here), but at least give credit to someone making a go of it with a really good product.

      • 0 avatar
        hreardon

        I don’t think TTAC is rooting for the demise of Tesla, but a lot of people here, myself included, are cautiously optimistic about its chances.

        Yes, Tesla turned a small profit (thank you, tax credits), and yes they’re ramping production, but it’s very VERY early in their game.

        Yes, Tesla has the chance to really shake things up, from design to manufacturing and distribution, but if the big guys start really throwing resources at electric, Tesla could be in a major world of hurt.

      • 0 avatar
        tankinbeans

        Isn’t it more accurate to say that Saturn was euthanized? I thought their original products were pretty good, for what they were, when GM allowed them to have a semi-autonomous existance. Didn’t they really go downhill when they all turned into rebadged Opels?

        I’m too young to remember that far back, but my aunt raved about her 91 SL1 or whatever model it was.

        • 0 avatar
          gslippy

          Saturn died when GM went bankrupt. To my surprise at the time, Saturn never turned a profit – ever. Its continued existence couldn’t be justified given GM’s condition.

          One (like me) could argue that Opel should have been killed off too, but that’s much harder to do in Europe than the US.

          Yes, adoption of unionization and cross-pollination with the other brands took the shine off the brand.

        • 0 avatar
          ect

          Saturn was intended to show GM (already on the long slide to eventual banruptcy) a new way to build and sell cars. It was deliberately kept totally separate from the rest of GM, to avoid any contamination by whatever bad habits infected other GM divisions. This also gave it a very high launch cost and very high ongoing operating costs.

          The first model got good reviews, and seemed to sell reasonably well. But GM then starved the brand, so it was stuck with a single model until the L appeared almost 10 years later.

          The L was such an embarassment that Saturn put almost no badging on it. Both outside and (especially) inside, it was almost impossible to find a Saturn label on the car. I drove one as a rental for about a week, and came to understand why Saturn wanted to deny parentage. The kindest word I could use to describe it is “soporific”.

          GM failed to follow through on (i.e., they abandoned) the original strategy for Saturn, and never developed an alternate strategy, let alone one that made any sense. Saturn was put into a coma long before it was euthanized.

          • 0 avatar
            28-Cars-Later

            No disagreement but I’d like to add a few points:

            -L Series was an Opel Vectra, not a true Saturn and the first step in the direction of taking Saturn into “generic GM” mode.

            -L-Series for the most part used the terrible Opel 54 degree 3.0L V6, but evidently could be ordered with an early Ecotec 2.2L I presume for rental duties.

            -Saturn was originally founded in part to give laid off and displaced UAW workers jobs in a new environment.

            http://en.wikipedia.org/wiki/Saturn_L-Series

            http://en.wikipedia.org/wiki/GM_54-Degree_V6_engine#L81

      • 0 avatar
        WaftableTorque

        Model S is doing well, if stats for Q1/2013 on goodcarbadcar.net are correct. It’s outselling Panamera 3:1 and 6-series (in all it’s iterations) 2:1. I don’t agree with their classification with the full size flagships, but it’s even outselling the S-Class for April by 2:1. So far so good.

        Edit: in the US car market, that is.

  • avatar
    Zackman

    I only have one issue with Lexus – they are diluting the brand by tarting up Corollas and Prius’ and other smaller models that remind me of Cadillac’s Cimarron.

    Lexus and other luxury brands should be large cars.

    “Luxury” doesn’t mean anything to me, as my car has lots of luxury accessories unknown to run-of-the-mill cars not so long ago. For example, my 2012 Impala LTZ has leather, 300 hp, 6-speed tranny, paddle-shifting, heated front seats, read-outs for various functions plus compass built in to the speedometer area, auto-dim rear view mirror – well, you get the idea, and the new Imp will have even more, just like the Fusions, Accords, Camrys, Malibus, Altimas, 300s and you-name-it.

    A friend drives a 2008 Lexus LS350 and it is quite nice, I just don’t see one as a small car, nor a compelling reason to buy one of my own, real wood notwithstanding, when my current ride is already quite nice, however outdated it may be.

    • 0 avatar
      sportyaccordy

      The world is changing

      Luxury as we think of it is not what it is becoming. The Western world is generally poorer than it was 10, 20 years ago. The only way for luxury brands to stay afloat is by going down market. Cars like the LS and S Class are relevant to a shrinking pool of people. The declining sales numbers of these cars (last year Lexus sold about 9,000 LSs vs ~32K 10 years ago) is proof of that.

      • 0 avatar
        28-Cars-Later

        Very insightful, although you could make the argument the automakers do not want to invest in expensive platforms (like LS) when they realized they can either share platforms among luxury/plebeian brands (in previous generations Camry = Avalon = ES300/350 = RX300/350) or simply sell tarted up cheaper models as “luxury” (Zephyr, Verano, XTS, ILX) and consumers still buy them and feel aloof.

      • 0 avatar
        juicy sushi

        Premium brands have done exceptionally well since the recession however. Average wages and living standards are down, but I think that reflects a bifurcation, not a general decline. Those doing well will continue to do very well. Everyone else will be make do with less. It’s not the top end that will suffer, it’s the middle ground which is no longer affordable that will lose out most.

      • 0 avatar
        genuineleather

        The drop in LS sales has more to do with its inflation in size and price. The first-gen cost as much as an E-Class and was roughly the same size; less than a decade ago, a loaded LS still only cost $65k.

        Today, they easily blow past $80k, with loaded long-wheelbase V8 models tickling the six-digit mark. In size, performance, and market placement, the current ES is far closer to the original LS than the contemporary LS.

      • 0 avatar
        hreardon

        While I agree with the general argument, the example needs some more context. I would ask: if Lexus sold 20,000 FEWER LSes last year – is it because sales are down in general, or because those buyers went elsewhere?

        As the Germans have improved their overall reliability against the Japanese there may simply be a shift back across the Atlantic.

        • 0 avatar
          genuineleather

          The biggest reason for lower sales is simply that the market for $85k+ vehicles is substantially smaller than that for $60k vehicles. Mercedes struggles to top 20k S-Classes in a good year, and even that is significantly higher than the figures for the 7-series and especially the A8/XJ.

          People question (not without reason) if flagships are worth the 50% premium over their midsize sisters.

        • 0 avatar
          corntrollio

          German flagship sales aren’t that impressive compared to years past either. The prices have climbed a bit too high, and the car market isn’t the same as pre-financial crisis.

          Look at the S-Class — it hit 31K sales in 2006, and now hovers around 11-13K:
          www dot goodcarbadcar dot net/2011/01/mercedes-benz-s-class-sales-figures dot html

          www dot goodcarbadcar dot net/2011/01/audi-a8-sales-figures dot html

          The A8 is doing better relative to pre-financial crisis, but it’s lower than its competitors. It almost hit 6000 sales in 2004, and topped 6000 in 2012, but was at about 1500 for 2009-2010.

          www dot goodcarbadcar dot net/2011/01/bmw-7-series-sales-figures dot html

          The 7-series was above 20,000 in 2002-2003, is now 11-12K, hitting 9K in 2009.

          www dot goodcarbadcar dot net/2011/01/lexus-ls-sales-figures dot html

          Lexus LS was at 32K in 2004 and 35K in 2007, but dropped to 11-12K for 2009-2010, 9500 for 2011, and 8K for 2012

      • 0 avatar
        George B

        I disagree strongly. Real luxury cars from BMW, etc. have become fashion. Lexus built the LS as a better Mercedes for a time when people bought Mercedes. Lexus had an advantage in reliability and long-term cost of ownership. BMW, Mercedes, and Audi reacted by making cars that are leased, not owned. If you return the car after 3 years, long-term reliability becomes someone else’s problem. What matters is the image that goes with the car.

        I drove past Classic BMW here in Plano, TX on Wednesday and they had simply parked a BMW 5 series on the grass in front of the dealership. No signs. No price. No hard sell. Just an attractive sedan with proper RWD proportions that sells itself.

        A friend owns a Corolla-sized Lexus hybrid that lacks the relatively long hood and fender real estate behind the front wheels associated with luxury cars. The big “L” on the front looks out of place because the car lacks the proportions of a luxury car. It looks like a $16,000 car with a badge upgrade.

        • 0 avatar
          corntrollio

          I’m not really sure exactly what point you were trying to make, but your leasing talk is somewhat bogus. Lexus lease rates are about identical to Audi’s per the stats TTAC gave us:

          http://www.thetruthaboutcars.com/2011/08/shocker-premium-buyers-actually-lease/

          Mercedes and BMW subsidize leases, so that’s why their lease rates are higher.

          Incidentally, Land Rover’s lease rates are the lowest of all, according to that chart.

    • 0 avatar
      juicy sushi

      Size is no longer an effective measure of luxury when anyone can provide it. Nor are gizmos. Your point about the merits of mainstream family sedans is very valid. Their technology content is virtually equal to that of the “luxury” brands. They are also roughly the same size. So if a $30k family sedan is the same size and packs the same gadgets at a “premium” car, what makes something truly luxurious or premium?

      I don’t think anyone has an answer to that question at the moment. I think though that the Tesla points to a possible answer. Future premium cars will be considered luxurious because they contain technology that isn’t economically viable in the mass-market, but which is aspired to by the mass market.

      That’s what Tesla does well right now. It provides something which the average person thinks is great and something they would love to have themselves, but is beyond their reach. It makes a dual statement about the owner. It implies both wealth and support for ideas which are perceived to improve the world we live in.

      Whether the statement is true or not is irrelevant. It is desirable because it represents something others would want to do if they could. That is the nature of premium brands. They must provide significant non-material emotional content for the buyer in order to justify the premium. The branding is the story-telling that creates that emotional content for the owner and others.

    • 0 avatar
      corntrollio

      Did you mean an IS 350? Or an ES 350?

      The LS would be a 460 or a 600 (I think — whatever they call the 5.0V8 hybrid).

    • 0 avatar
      corntrollio

      Speaking of which, I saw a Cimarron for the first time yesterday. It looked like the guy lived in it (I don’t mean traveling salesman, I mean homeless). It didn’t make any weird sounds while he was pulling into the parallel parking space.

      I also saw a Vehicross today. Two weird car sightings in two days!

      I haven’t seen any Allantes or Reattas since seeing 2 of each within a week or so.

  • avatar
    stevelovescars

    So is the problem a lack of history or that brands with history were started at a time when barriers to entry and the cost of “branding” were just much lower? All of these brands had to start at some point.

    I suspect few Americans know the history of Horch, DKW, Auto Union, or even Audi and their ad campaigns in the US have never mentioned them. Perhaps some history is best left buried?

    Hyundai has succeeded in the US despite abysmal products for much of their time and a name few Americans could even pronounce. Was their success only due to cutrate prices?

    The ultimate fate of Scion still hasn’t been decided… But the goal of infusing excitement (and younger buyers) into Toyota showrooms seems hampered when you then tell those customers that the products they want aren’t actually “Toyotas” after all.

  • avatar

    Bertel,

    LaSalle belongs in the list of failed new car brands, not the one of failed brands with actual histories. In many ways it proves your point about the problems inherent in starting up a new car brand. Studebaker dated to the 1850s making horse drawn vehicles, Packard was started in 1899, Nash was relatively young, being founded in 1916 after Charles Nash left Buick, but he based in on the Jeffery company which had been making Ramblers since 1902. LaSalle was the only one of the companies you mentioned that didn’t have a history, and Nash, Packard and Studebaker were around for years after GM killed the LaSalle brand.

    LaSalle was one of a number of failed “companion” brands at GM, that Alfred Sloan thought would increase GM’s market share by filling in the price gaps between their existing marques. It was hoped they would be ladder brands to people moving up to the full priced companion. So Cadillac got LaSalle, Buick got Marquette, Oldsmobile got Viking, and Oakland got Pontiac. Chevrolet didn’t need a companion brand because they were already competing with Ford (and later Plymouth after 1928) at the low price end of the market. Of the new companion brands, only Pontiac survived.

    If I’m not mistaken, Pontiac was the last successful new brand that GM started. It certainly lasted longer than Saturn and Hummer. Come to think of it, Chevrolet is the only surviving “new” car brand at GM. Billy Durant bought Buick and Cadillac as he was making General Motors. Chevrolet was a new brand he started after he lost control of GM the first time.

    • 0 avatar
      28-Cars-Later

      So GM set up sister brands to compete with itself?

      • 0 avatar

        You have to understand, the market segments were sliced thinner back when a dollar was a dollar. What appears to us to be an insignificant amount of money was a big step between a Chevrolet and and Oakland, an Oakland and an Oldsmobile etc. The companion brands were an expansion of Sloans “a car for every price and purpose” business model. Obviously that was a step too far for that model to work.

        There’s probably a sweet spot in between Henry Ford’s model of selling the same car to everyone and GM of the late 1920s, so you can give your customers a way to stay in the fold while buying more expensive products without ending up competing with yourself.

        Walter Chrysler did a similar thing, launching DeSoto and Plymouth, that gave him a price leader below the mass market Dodges and a step up from the Dodges before getting into the Chrysler brand.

        • 0 avatar
          Syke

          Also keep in mind that Viking and Marquette were fatally hurt by bad timing. If my memory is still working well, both marques came out in 1929, about six months before the Wall Street Crash. LaSalle began in 1927 (1928?) and Pontiac in 1926, so they at least got a couple of model years in before everything went tits-up. And LaSalle was scheduled for dissolution at the end of the 1933 model year, until Harley Earl showed his proposed design, which was as dramatic as anything GM had ever done – before or since. They dropped the V-8, stuffed an Oldsmobile straight-8 into it, dropped the price, and it kept going until 1940. By which time the low end of Cadillac was stepping on the marque. And LaSalle sales weren’t as good as the Packard 120 or Lincoln Zephyr, because they were badged LaSalle, not Cadillac.

        • 0 avatar
          28-Cars-Later

          Thanks for the clarification.

      • 0 avatar
        geeber

        In addition to what Ronnie said, in the 1920s and 1930s, there were no “special lease deals” to get you into a Buick instead of a Chevrolet, and loan terms were much shorter in duration. Buyers were also expected to bring a fairly hefty downpayment on the new car (having a car to trade did help).

        In that kind of environment, you had to have some real finanical resources to move up from a Chevrolet to an Oldsmobile or a Buick.

        LaSalle was created because GM saw that Packard was making hay with its less expensive sixes, which were priced right between a Buick and a Cadillac. Packard’s more expensive straight eights upheld the marque’s prestige reputation, while most buyers drove out with a six-cylinder model. The LaSalle was designed and priced to capture a share of this market for GM.

  • avatar
    NoGoYo

    I wonder if it would even be possible to purchase the rights to a long defunct name from the corporation that currently owns it.

    Surely Chrysler has the rights to Hudson and Nash still, they came with AMC.

    • 0 avatar

      The status of the Pontiac brand is something that I haven’t been able to determine. Supposedly all of Pontiac’s assets went with Motors Liquidation, but I suspect that the “new” GM retained ownership of the intellectual property. There’s still money to be made licensing repro Firebird parts.

      The Packard club owns the Packard logo and rights to the name. The Studebaker museum in South Bend likewise owns the Studebaker logo. Most of those old brands are owned by someone, if only the name.

    • 0 avatar
      geeber

      I believe that Chrysler Corporation has retained the ownership of all AMC-related names, including the individual names of various AMC vehicles.

      • 0 avatar
        NoGoYo

        I tell you what, if I won a few hundred mil in the lottery, I’d probably try to buy Hudson from Chrysler and get into Hornet repro stuff.

        As far as I know, despite their popularity, there still isn’t much in the way of repro stuff for Hudsons, Nashes, AMCs, Studebakers, etc.

  • avatar
    Toshi

    The relative lack of Lexus sales in Japan is in part due to Toyota selling the same US-badged-as-Lexus vehicles under the Toyota nameplate. See Toyota Harrier, to name but one example.

    • 0 avatar
      marc

      That’s ancient history. In Japan, Lexuses are Lexuses and Toyotas are Toyotas. As I post later in this thread, Lexus has not been as unsuccessful in Japan as internet memes would have us believe.

    • 0 avatar

      I agree with Toshi.

      If you want to buy a big Japanese car in Japan, you buy a Crown. The new Crown sells very well, currently #5 on Japan’s hit list, behind Prius, Prius C (Aqua), Note and Fit ….

      Akio’s remark about a lack of roots was made to mostly Japanese journalists.

      • 0 avatar
        marc

        But that is not what Toshi said. Toshi said “Toyota selling the same US-badged-as-Lexus vehicles under the Toyota nameplate,” which is simply not true, so definitely is not the reason for Lexus supposedly not selling well.

        But your own reported figures show that Lexuses are selling quite well in a country that just doesn’t seem to buy a lot of luxury branded cars. But then why should they when domestic manufacturers of mainstream cars have great products-Crown, GT-R, etc. But again, that’s not what Toshi was saying.

  • avatar
    WaftableTorque

    The allure of pedigree must be frustrating to Asian manufacturers trying to crack the Giffen goods code. Other than Mikimoto (which helped bring quality pearls to the masses), I can’t think of a prestige Japanese brand that has broad aspirational appeal in international markets. It’s as if Lexus, Grand Seiko, Regal Shoes, or Yoshida and Co. all have the same problem: the luxury market demands pedigree in addition to having a great product. In other words, the theme of luxury marketing seems to be the narrative, not the words.

    IMHO, the way out for Lexus is to launch a 2 prong advertising attack: the usual aspirational/emotional advertising drivel that all luxury cars engage in, and a grassroots how-I-bought-European-luxury-and-I-have-the-repair-bills-to-show-for-it-but-I-want-them-to-screw-me-again-because-I’m-a-European-luxury-car-supplicant website and viral videos. It worked for Zeiss-Ikon over the technically inferior Leica of that era, it should work for Lexus too.

    • 0 avatar
      ellomdian

      Seiko’s problem is simple – timepiece market is now LOADED with new-money conspicuous consumers who believe the more gauche the better. It’s a perception of brand history problem, most definitely not actual heritage (with them recently celebrating their centennial.)

      But your point is valid – outside of high end electronics, the brands just don’t have cachet with uninformed consumers.

      • 0 avatar
        juicy sushi

        I think that comes down to the perceived need for luxury to mean stuff desired by rich, dead Europeans. If you can’t conjure the image of pre-war European upper-crust authenticity then for many you don’t have “heritage.” (Facts notwithstanding)

  • avatar
    willbodine

    Love the Studebaker in front of that B-17G. Many of those Forts had Wright Cyclone turbocharged 9 cylinder radial engines license-built, by, you guessed it, Studebaker!

  • avatar
    marc

    “Lexus sold 43,657 units at home in Japan last year, similar to what Mercedes (41,911) and BMW (41,102) sold in an allegedly closed car market.”

    I actually think that’s pretty damn good for Lexus. I’ve asked repeatedly on posts about Japan sales how Lexus was doing. No one ever wants to say, perhaps because to say would be to admit that in their home market, they have actually succeeded. As they have in the US. Which all the naysayers and Japan bashers predicted could never happen.

    Lexus will never be huge in Europe. That’s the really closed market. But they are currently selling only half(?) of their cars in the US. They have long since past being the “Luxury Exports US” that they were so derisively called in the beginning.

    A final point about the “allegedly closed car market.” Bertel, as the word alleged indicates, and as you have said repeatedly that the market is not really closed, this statement only makes Lexus’s successes even more pronounced.

    • 0 avatar

      From a tariff standpoint, Japan is more open than the EU:
      The EU charges 10%
      Japan charges zero %

      From a regulatory standpoint, both are about even:
      Both require homologation and adherence to standards. The standards are quite similar (and often the same), but re-certification must be sought.
      Both have relaxed rules for low volume imports.

      From a consumer acceptance standpoint, both are similarly difficult to penetrate, albeit to varying degrees.
      In the EU, there is a strong preference for the domestic brands of the country, and in countries with no domestic manufacturer for European brands. Asian “imports” historically have hovered around the 15% mark and have a hard time getting to the next level.
      In Japan, customer preference for domestic makes is even higher. Driving an “import” is seen as a display of individualism, and there is a limited market for individualism.

      Japanese retail channels are byzantine and hard to grasp for an outsider. Due to the high price of real estate, the establishment of dealer networks is a costly proposition.

      As for the success of Lexus in Japan, in past discussions, Lexus executives voiced their unhappiness about the levels of their Japanese sales.

      • 0 avatar
        marc

        What would make them happy? Lexus doesn’t chase volume at anywhere near the levels of the Germans. If they want volume, they need to do more than express unhappiness. How about more engine choices, more niches. That’s what the Germans do. Yet in Japan, Lexus is beating them anyway.

        Your premise of lumping Lexus in with the start up brands that haven’t succeeded just doesn’t fly. Akio is a smart dude, saying what the folks on the automotive internets want to hear so that more of the Euro snobs will give Lexus a second look. But the truth of their success is that they don’t need history behind them to be successful. They were successful out of the gate and have only grown moreso.

    • 0 avatar

      The sales of all brands in Japan (excl imports) are reported monthly at TTAC, last at http://www.thetruthaboutcars.com/2013/05/486969/#more-486969 – One look, and you see the monthly and YTD sales for Lexus and all others.

      More detailed data at jada.or.jp – there is nothing secret about it ….

      • 0 avatar
        marc

        Maybe I should have clarified. I actually anticipate and appreciate your monthly posts of sales in Japan. But as you just said, they don’t include sales of exports, so it is not possible to actually tell how well Lexus is doing, as there is nothing to compare them to. I might have agreed “Lexus can’t even sell at home” based on those charts, but your own figures above (thank you!) are contradictory to that. This is the first time I have seen the actual comparison to BMW and MBZ, and it sure looks like they have succeeded after all! I don’t know why that makes me happy. But it does. :)

  • avatar
    gslippy

    This is a little like saying that everyone who breathes air will die.

    The list of dead car companies is much longer than the list of living ones.

    What’s unclear here is how long you have to be in business to be declared a success, and whether every dead car brand is a failure.

    Was Pontiac a failure after 84 years of business, or Saturn after almost 20? If Tesla dies at 10, will the naysayers call it a failure? How long should a car company be expected to last?

    • 0 avatar
      marc

      You hit the nail on the head. I’ve kind of cherry picked my one example of how this thread isn’t working-Lexus being quite successful despite a “history.” (and as you pointed out, you don’t need to be successful everywhere to be successful.) You have brought the picture to its biggest scope. This whole thread just doesn’t make any sense, trying to tie a supposed lack of history (Lexus) to a concern that a start-up can’t succeed (Tesla) to shuttering decades old brands (Pontiac) to reasonably accurate failures (DeLorean) to Chinese consolidation of way too many brands. They’re simply not cnnected in any other way than yes, I am sure we can agree, selling cars is hard work.

  • avatar

    I think the problem is sometimes just crap product. Looking back to, let’s say, the 80′s and America.

    Daihatsu: overpriced for the segment, reliable and well engineered but not right for the market, doomed to fail.
    Sterling (subsidiary of Rover): sell crap, and people catch on quick. COOL crap but still.
    Infiniti: LITERALLY up until the G35 in 03, the only really great car they had was the original Q45, which was expensive, weird, and not as reliable as the more tuned-to-US-interests LS400. I’m surprised they’re still around.
    Acura: strong out of the gates in 86 when Honda was leaps and bounds ahead of everyone else mechanically. As the bell curve steepened, and they stopped building cars for enthusiasts in that “just right” part of the price curve, sales dried up.
    Lexus: a surprising success story that speaks to the new money environment that is America. Look, if Jay Z raps about your car, SOMEONE is going to buy it.
    Scion: Misguided, aimed at a market that doesn’t exist, and probably dead soon.
    Fisker: Beautiful crap, bad business plan, relying on fed funds is never a good idea.
    Tesla: Hey, the model S is a great sign.
    Mahindra: a good example of how hard it is to break into our market.
    Mazda Amati: a good example of the 90′s Japanese boom/bust economy. Hey, that titanium W12 engined 929 would’ve been cool though.

    That’s just what comes to mind, but regularly the problem seems to be crap product.

  • avatar
    skor

    The picture at the top bring back memories. When I was a kid, there was a guy who lived in our neighborhood that drove a beat to hell 1964 Impala. He had USAF roundels painted on the doors. Why yes, he was a tool. How did you know?

  • avatar
    wumpus

    I know it’s a mortal sin here, but Captain Obvious is standing behind me threatening me…

    The way to build a brand is to sell good cars (and don’t try to sell [too many] bad cars). Lexis did that. Telsa is doing that. If the Chinese were willing to make good cars, they will have strong brands. Detroit screwed the pooch from 1970-1990 or so, and still don’t have the brands they think they have.

    Scion started with a strong brand, but then realized they were selling to old farts (who they assumed Toyota owned) instead of gen-Y. So they made the cars worse until the old farts wouldn’t buy the cars. Can’t say scion is a strong brand now.

  • avatar
    chicagoland

    Lexus has fallen into same trap as Acura, a ‘nicer Toyota’.

    Mainly now known for the RX SUV, popular with parents at school drop offs, fast food drive throughs, and outlet malls.

    And, since 10 year old RX’s look like new ones, they are all too common site. Working class buyers now drive these once ‘high end’ cars, and have cost Lexus any cache’ on Rodeo Drive or South Beach.

    The Audi commercial with all the biege RX’s lined up, and tag ‘identity theft is a crime’ were spot on.

    At least in Cadillac’s hey day, they would update the styles. Not ‘cookie cutter’ biege bland mobiles for “Jen Anniston wanna-bes”.

  • avatar
    redav

    While I agree that the lack of history is a huge hurdle for any brand to overcome, I am more interested in the psychology of why it is a hurdle in the first place, because when that is well understood, then a plan can be crafted to overcome it.

    While there may not be any ‘secrets’ to success, like with Audi, there certainly are more effective and less effective actions. Some people are just good at doing certain things, and it is because they do those things in good ways. They may not even know what they do works, but they keep doing it. If it not generally known (and if others don’t have similar success, then it’s reasonable to assume that they aren’t), then those practices can rightly be called “secrets.”

    Lexus has been around long enough that many people don’t remember a time without it. That’s probably enough history. What I think is more critical is the reputation they built from the get-go. When people think “Lexus,” they don’t think ancient history–they think what are they known for. This is where they differ from Infiniti, IMO. I remember when both brands were launched, and Infiniti’s commercials were so dumb, snotty, and out-of-touch that we have forever since called the brand “Absurditi.” Tesla doesn’t have a history, but boy do they have a story. I expect that will pay significant dividends for them, and I actually expect them to be one of the few successful new brands.


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