THE MYTH OF THE “CHEAP CAR”

[Get the latest "Truth With Speedzzter” here]

Here we go again.

Someone in a poverty-wage second or third world country builds a stripped-down, underpowered, barely legal, tin-box, probable death-trap of a “car,” markets it for a used car price, and the automotive press starts spinning out all of the “lessons” Detroit could learn from it.

BusinessWeek has such a story on the Tata Nano.

They say Detroit could learn about engineering-up from a price point (rather than de-contenting), engaging suppliers earlier in the design process, and creating a “less capital-intensive, less integrated, more flexible model.”

They pay people to write stuff like that?

Engineering up from a price point tends to produce dangerous messes like the Ford Pinto.

Price is merely one component of developing a product.

Most certainly, product planners have to identify underserved markets and viable price points. And successful designers and engineers never lose sight of technological meta-trends of miniaturization, simplification, benchmarking, and mainstreaming as they strive to hit the chosen segment or niche with the best bang-for-the-buck. And it’s important to tune into the target niche with relentless focus.

All of the cool features, breakthrough styling, technological innovation, and aftermarket parts support in the world is virtually useless if nobody can afford that big payment book.

On the other hand, cutting performance, functionality, durability, modifiability, serviceability, parts interchangeability and the “a-ha” factor out to hit a cheap price point is a proven loser strategy.

Team Japan was initially successful in the U.S. market through balancing these factors, not just targeting a low price point. For example, instead of building the cheapest, smallest engine they could get by with, Toyota marketed its 1970s Corolla with a higher-performing hemi-head engine. The Toyota SR-5 Corolla also featured “boy racer” styling and performance upgrades, such as “riveted” fender flares, low-profile performance tires, and a five-speed transmission. Mazda’s early 1970s cars were equipped with up-market “a-ha” features unavailable in domestic competitors, such as a power retractable radio antenna. For a couple of decades, Honda has mostly focused on high power density four-valve DOHC engines (even as Ford was still trying to sell obsolete 2-valve SOHCs and Falcon 6-derived 2.3 liter HSCs)

Of course, the genius of the Ford Model T was that it blended performance, functionality, durability, modifiability, serviceability, and parts interchangeability at a price America’s farmers and ranchers could afford. And it lost marketshare when the technology, performance and “a-ha” factor of cars built by Ford-trained competitors made the T look and feel out-of-date.

Even most appliance motorists are value-price sensitive, rather than just price sensitive. Relevance, simplicity, differentiation, believability, credibility and defensiability are all intangible brand attributes which are mostly price insensitive.

Building a vehicle of off-shelf components or with heavy supplier involvement is hardly unknown to Detroit. As the white collar staffs decline, reliance on suppliers and component standardization will undoubtedly increase. (And now that some of them are going to be getting a $5 billion bailout from the Treasury, maybe some of them will still be around . . . .)

Certainly a “less capital-intensive, less integrated, more flexible model” is a hard goal in this hyper-regulated, unionized era. Unitized body construction also reduces model flexibility and increases costs.

It was easier back in the days of Henry Ford, when designs, production techniques, and labor supplies were easier to change rapidly. However, plants such as AutoAlliance’s Flat Rock, Michigan facility demonstrate that Detroit has made progress in lean production systems, quality control, and flexible assembly.

Truth With Speedzzter suspects the real harsh lessons of the Tata Nano are yet to come. But there’s little new to learn from it at present.

TA, TA, MANGY KITTEN AND DOG.

[GET MORE "TRUTH WITH SPEEDZZTER" HERE]

It's official.

Ford Motor Company (R) has finally unloaded Jaguar and Land Rover on India's Tata Motors, Ltd. for $2.3 Billion.

Reportedly FoMoCo netted only about a third of what it blew in acquiring them.

(Of course, considering that the entirety of Ford itself is apparently only worth less than a third of what it once was, the "bargain" price is not altogether surprising)

But that's insignificant compared to the huge sums of intellectual and monetary capital that FoMoCo wasted on its "English Patients."

FoMoCo's "big cat and dog" adventure resulted in the abandonment and collapse of Ford's proud Formula One tradition.

It caused the alleged product planners in the Glass House and elsewhere to deprive Lincoln-Mercury of the resources to compete with Cadillac.

It resulted in millions spent attempting to remake a Ford Contour/Mondeo into an abortion of a "Jaguar."

It yielded odd mechanical alliances as Ford sold vehicles powered by derivatives of the antique Buick/Rover/MCT pushrod V8 and a BMW V8.

It failed to yield much in the way of volume or platform synergies or new technologies.

The largest failure of FoMoCo's foray into upscale British motoring is that it abjectly bombed in insulating Ford against poaching from the German and Japanese luxury marques and from market downturns. FoMoCo never achieved the necessary sales quantities of high-profit "quality" models to hedge them from downturns in the broader "quantity" market.

Certainly, FoMoCo should be commended for saving Jaguar from almost certain extinction. When Ford took over, Jaguar quality was legendarily awful and its product line almost entirely obsolete. Ford shepherded the development of the Jaguar AJ-V8, which for a time was considered one of Ward's 10 Best Engines. While Ford never achieved parity for Jaguar with BMW, Audi, Mercedes or even Lexus, it did manage to update Jaguar's model lines and reconnect them somewhat with the brand's historic D.N.A.

However, after Ford's disastrous Jaguar Formula One program, Ford mostly neglected the motorsports involvement that is essential to Jaguar's luxury sporting brand image. And Ford was never able to turn Jaguar into the next destination for FoMoCo customers who had graduated to pure luxury.

Ford's stewardship of Land Rover (the "Dog") was even more uncertain.

BMW had done a lot of the renewal work necessary to rehabilitate the brand from the neglect of the failed British Leyland years. Yet BMW's willingness to hand Land Rover over to Ford ought to have been a warning sign.

Range Rover's uber-luxury niche seemed to decline with the bloat of the luxury-badged SUVs and CUVs (including from competing products of other FoMoCo divisions) as well as Ford's mixed attempts to broaden the Land Rover line. Land Rover advertising always seemed to keep its distance from any identification with Ford. And Land Rover, for all of its storied history, always seemed to run behind legendary brands like Jeep and even upstarts such as Hummer.

Moreover, Land Rover seems ill-positioned to fend off growing Japanese power and increased pressures on fuel economy.

Both Jaguar and Land Rover undoubtedly held down FoMoCo's "import" Corporate Average Fuel Economy numbers in the U.S.A. and would have been an increased drag as the draconian 35 M.P.G. CAFE standard is crammed down on all participants in the U.S. market.

Unlike Ford's unnecessary fire sale of Aston Martin, it was past time for FoMoCo to spin off the Mangy Cat and its aging off-road Dog. It's just too bad that FoMoCo had to spend so many precious development dollars to learn of and extricate themselves from the mistake.