Daily Podcast: The Value of Value

Robert Farago
by Robert Farago

A friend of my father's taught me there are only three markets: price, value and quality. Price-driven consumers want the lowest possible purchase price, period. In car terms, they want to pay as little as possible for a vehicle. Everything else is secondary. If the car falls apart, if it loses them money in the long run, it doesn't matter. Manufacturers catering to these customers need not concern themselves with anything other than purchase price. At the other end, quality driven car customers want the best car, money no object. Manufacturers catering to quality-seekers have a [relatively] easy time. All they have to do is secure the world's best talent, give them the resources they need and not get in their way. Value-driven customers balance price against quality. Automobile-wise, they want as much of everything as they can get– economy, features, safety, ride, handling, resale, the whole schmeer– for as little money as possible. Manufacturers aiming for value-driven customers are fighting an endless war against everything: low-end carmakers aiming high, high-end carmakers aiming low, direct competitors, production costs, fashion trends, technological innovations, you name it, they've got to sort it. Like Icarus, the one thing they must never do is fly too high. Ford GT. Chevrolet Corvette. The new Saab Turbo X, Mitsubishi Evo and Toyota Land Cruiser. If a consumer says, wow, that's a lot of money for a —–, it's a clear sign that a value-oriented car brand is shooting itself in the foot. Short term, it can work. Long term, it's a big mistake.

Robert Farago
Robert Farago

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  • Steven Lang Steven Lang on Dec 15, 2007

    What's interesting to me, is the fact that certain online resources that start out quality based usually end up heavily price based in the end. When I started selling vehicles on Craigslist a few years ago, my average customer was usually an IT professional or university student/employee. They were interested in getting a specific type of brand and almost always, their budget was north of five grand. Fast forward three years later and Craigslist is absolutely deluged with price focused buyers who want very low end vehicles. About a third of the calls I get are from people who want me to finance them, and another third try to negotiate even before seeing the car. The $5000 and up car gets very little play now. To make matters worse, it seems like there is an amazing number of sleazeballs and scam artists online... on both sides of the proverbial fence. I've seen vehicles that I sold at auctions with salvage titles get put online with no mention of that title's history. For now I seem to be the only one in my market who actually provides a history on the vehicles. It's been a saving grace in terms of my side income. But for right now I'm seriously considering just having a few of the vehicles sold at buy here / pay here lots instead. The human elements that I'm experiencing just aren't worth the time or potential risks. Ebay didn't experience as severe a decline. But like Craigslist, the qualities of the buyers and sellers have declined over the years. On Ebay they will always do the deal. However you may end uup holding the car for months on end. The long turnover time and high price for posting have made many a long time 100% feedback seller like me pursue other pastures.

  • Carlisimo Carlisimo on Dec 16, 2007

    As a formerly poor shopper... even people looking at the basement of the car range have value in mind. It's just that they can't pay more for better values because they can't. But among the cars that do fit in their limiting budgets, they're looking for value.

  • Davey49 Davey49 on Dec 16, 2007

    Car Shark- All those Japanese GT cars from the 90s were over the top. I never understood the appeal of any of them. People who wanted a coupe would've been better off saving $10-$15K and bought a Nissan 240SX, Mitsubishi Eclipse or Acura Integra or just paid the $38K for an M3. The 90s Super GT cars were also pretty lousy. I don't know of any that lasted more than 5 years! Steven Lang- I wouldn't buy anything over $2000 from Craigslist- cash only Carlisimo- I think some buyers might be willing to spend a few extra dollars for a different car or extra features. When I bought my Saturn I went for price. It cost $12500 and only has antilock brakes. 5 spd tranny. No power windows,locks, cruise. I probably could have afforded a mid level Corolla or Civic automatic for around $14K but I wanted the smallest payment.

  • DearS DearS on Dec 16, 2007

    I've embraced all three genres of consumer at times. I realized I was in denial to some degree. Denial is doing anything other than what we rather do most. We all have unique preferences. As value Consumer me, I do not want to sacrifice what matters to me to get a lower price, I rather work hard and/or be grateful for what I can do. I swung to extremes, black and white thinking, and realized I was not happy. Same with quality or price consumer me. I'm looking to do to the best of my ability what will work best for me personally. What will work to make me happy. That means I need to know what I like, consequences and make as balanced a choice as I can, to do what will "truly" work to make me happy. Not buy into the ego ballooning hype or faux gods flung around. I accept what I have and do not have and look at it as part of my life adventure, not as a lack of money, time, etc. Many individuals are disfunctionally out of balance. Were possessions are determinative (like faux gods) of the value of an individual. Many of the car industry is as well. Its a destructive social crisis and one that saddens me. We have worth because we are magnificent spiritual beings, were part of this magnificent universe. Until that is embraced, society will continue to be dysfunctional, and it will be reflected in the choices individuals make.