Jack Taylors

For my informational interview, I talked to Jack Taylors from Toyota of Bowie. I called him on a monday and he was happy to discuss the automotive industry. He gave me a lot of information and lengthy answers but I chose these three bullets as my take aways: 

• One really interesting trend is the number of vehicles originally sold in Canada that exist in the U.S. market. More than 2.5 million “Canadian Only” vehicles now reside in the U.S.; and not just in states bordering Canada, but all across the country. 

• While new vehicles are the focus for parts manufacturers and retailers, there’s still a strong market for older cars. There are more than 1.1 million registered vehicles from model years 1967 to 1973 on the road in the U.S. today. 

• The “green” trend is increasing it’s impact on the automotive industry. Though hybrid vehicles and alternative fueled vehicles are still a small part of the automotive industry, this segment is seeing some growth and will no doubt continue to carve out a firm niche in the market. 

I learned valuable lessons and information from conducting this interview and I was extremely surprised how people are great resources.  

Luxury Brand

In an attempt to compete in the auto industry sales, Cadillac has decided to create a new model that is focused primarily on the Urban Luxury Concept (ULC). Ordinarily, luxury buyers would focus on the size of the vehicle before making a purchase, but now the bigger cars can be "replaced by something more compact but equally luxurious." Cadillac has created a diminutive sized vehicle that offers the same luxurious aspects as some of their other models. This ULC model has "become very popular in places such as Europe and Japan." Although it doesn't look like the typical Cadillac, it shares similar features and "shares the [same] comfortable and high tech elements." Along with many great features, the ULC contains an engine that "uses electric assists to boost both performance and fuel-economy." This new model will not be "shown in the Cadillac showcase room anytime soon," until they know that it will make an impact on their buyers.

Cadillac is not the only automaker making strides to create smaller hyrbid vehicles. Companies such as BMW, Audi, Mercedes-Benz, and Lexus have all been taking steps to launch hybrid vehicles. They know that the more compact vehicles are being bought more frequently due to conservation of fuel, and don not wish to be left behind in the production process. I feel as though this is a good idea for all automakers. In order to compete you must give the buyers what they want. By adding the same if not better luxury parts, the companies will have a better chance of selling their product. As for Cadillac, even though it is mostly known for its' large and comfortable automobiles, it should consider showcasing this new product while emphasizing its' luxurious aspects. It may turn out to be a bigger sale than the company imagined.

http://www.thedetroitbureau.com/2010/11/First-look-cadillac-urban-luxury-concept/
By: Paul A. Eisenstein

GM IPO Looks Good

General Motors has announced that it will increase its initial public offering of common stock from $32 to $33 per share. This is a result of increased demand for GM stock because it has had significant profits after the 2009 bankruptcy bailout. The government’s bailout money, which has caused it to own approximately 61% of GM, will now be lessened after this generates $8.6 billion of revenue. After the IPO, the government will own only 35% of GM.

At the beginning of the month, GM claimed that it would issue 365 million shares of IPO stock. However, the strong demand from investors has increased the amount of shares offered by another 54.8 million according to the banks. The U.S. government wants to add another 84 million shares to this. Steven Rattner, the Obama administration’s leader for the bailout of the U.S. auto industry said, “Investors who have long shunned automotive stocks are giving the sector a fresh look as GM, Ford Motor Co., and Chrysler LLC deliver impressive financial results” (The Wall Street Journal). This has led SAIC Motor Corp., China’s largest auto maker, to buy approximately $500 million of GM stock.

During a continuing economic crisis, the Big Three have performed very well. All of their financial reports have amounted to astonishing numbers. This has increased their rankings as top investment choices. The Big Three have sought new production methods, have new management, and are producing innovative cars to remain competitive. These practices will continue because of GM’s obligation to pay back the funds that the government bailed them out with, and to assure that they remain in good stead. As we have seen, these automakers employ many Americans and have a huge effect on the economy.

Source: http://online.wsj.com/article/SB10001424052748703326204575616633069634188.html?mod=WSJ_auto_IndustryCollection

Social Media Stars as Ads

Auto companies used to have celebrities drive their cars around to raise publicity. Cash strapped car companies now turn to young people who have strong online presence. Toyota recently hired youngsters who have many followers on Twitter to advertise its Lexus brand. The online ads show actress Whitney Cummings interviewing those who don’t fit the typical celebrity label. The roster includes the Web editor of the Onion, an expert on social-media, and a disc jockey. From a marketing perspective, ads that show social-media stars are more effective than ads showing celebrities to get the attention of younger drivers. They conclude this because of the tendency for people to trust others who are like them. The stars quickly tweet, comment, and post their experiences with the cars online. Ford will select a hundred people with many online followers to test drive its 2012 Focus as part of its advertising campaign. BMW is also planning a similar promotion for its electric vehicle called ActiveE, which comes out in 2011.

This cheaper alternative to hiring celebrities is a hit. Ford proclaimed the strategy’s success when such videos and tweets essentially became viral hits; the YouTube videos got over seven million views, and Ford’s Fiesta was mentioned on Twitter four million times. Ford said 130,000 customers went to their website as a result and a massive 83% weren’t Ford owners. However, auto companies aren’t guaranteed that the social media stars will rate their cars positively. Guidelines set force these stars to mention if they received compensation for the review.

I think auto companies are on the ball with their approach to targeting younger drivers. I would say younger people are much more likely to pay attention to a subtle ad online than watching T.V. When you see that the user you’re subscribed to on YouTube or the person you’re following on Twitter likes something, you’re more likely to check it out. This trend is likely to continue as people are increasingly spending time on social networks. While the car companies are taking risks when they let social media stars say what they want about the cars, the danger of the marketing tactic to backfire is small. The companies know what’s on the line, so they would only let them test drive cars that are tested to be of the highest quality.

http://online.wsj.com/article/SB10001424052748704658204575610593926104822.html?mod=WSJ_auto_IndustryCollection

Don't Overlook Lexus

When it comes to advances in gas reduction for the automotive industry, the expensive brands are often overlooked. People often focus on vehicles such as the Nissan LEAF, the Toyota Hybrid Prius, the Hybrid Ford Escape, and more, while brands such as Mercedes, Porshe, and Lexus fall under the radar. Sometimes the market thinks that their high prices hinder them from truly reaching their market potential in things such as the green movement, but I disagree. They have invented new technology that will continue helping the economy progress in the green movement, and soon enough they will not be overlooked.

Most recently, Lexus came up with something called the "Artificial Intelligence Shift Control System" which can be found in their RX Hybrid 11. It is an advanced mechanism placed in the front of the car which detects when the car drives uphill or downhill and it signals when the energy shouldn't be used (like when going downhill) so it shuts off the engine.

Another indicator that Lexus is moving in the right direction is that they already meet Obama's fuel efficiency standards, which require all vehicles to get 35 mpg by 2016. Also, Lexus is made by Toyota, and they already have two electric cares due to hit the market in 2012. Therefore, improvements and innovations for Lexus are not distant.

Due to the fact that Lexus has innovations that other companies have yet to implement, that they already meet fuel efficiency standards which should be enforced by 2016, and that their makers are definitely headed in the right direction show me that they will not be overlooked in this green movement for long. Once people realize how innovative they are, they will be flooding their dealership.


Angelilli/Lexus, Brandi. "Lexus vs. the Future." Telephone interview. 10 Nov. 2010.

New leaders, but don't give up on the others.

 General motors Co. overtook Toyota Motors Co. as the more profitable automaker this year, while Ford Motors Co. held its lead as the world's top-earning manufacturer amid rising global sales for the industry. GM reported third-quarter net income of $2.16 billion today, bringing the automaker's earnings this year to $4.77 billion. That tops the $4.46 billion profit by Toyota in the nine months ended Sept. 30, according to data compiled by Bloomberg. Those numbers are understandable because after all of controversy surrounding Toyota, no consumer who wants to buy and reliable, safe car will want to purchase a Toyota.

    However Toyota is not out of luck. There is still hope for them to rise to the top of the automotive industry again. “I'm a believer in the auto cycle,” said Alan Tarver, a fund manager Frost Investment Advisors in San Antonio, Texas, which holds shares in Toyota and Volkswagen. You've been through “the bottom, and you're coming out of it. Sales units are stronger, and everyone's nudging up their production assumptions.” So for those who have stocks in Toyota should hold on to them and ride out the industry cycle. 
http://www.autonews.com/article/201010/OEM/101119981/1401

Unrealistic Car Expectations?

CEO of Daimler Company, the makers of Mercedes Benz, Smart Cars, Fuso and more, is claiming that the auto industry won't be able to keep up with the strict regulations being placed on fuel efficiency. He claims that the over-optimistic expectations are just causing car makers to give up because they can't keep up with the rules so they don't even feel the need to try anymore. The CEO, Mr. Zetsche, claims that "In 10 years' time, the overall market share of electric cars is likely to be still in the single-digit percentage range."

Mr. Zetsche did however add that in 10 years the fuel efficiency around the world will be at such a high standard that the competitiveness that is beginning to be spurred now is necessary, just a little unrealistic. Regardless, Zetsche says that Daimler is "full on track" to have a completely electric car on the market in 2012, because of their 5 diget production rate. They have already presented an electric version of their A-Class in Paris this past October.

Despite all of the problems that have become relevant in the past year about electric cars, such as battery life, old gas storage, charging stations and more, I still feel that the auto industry as a whole needs to continue working hard towards perfecting all of their problems. In the near future, the whole auto industry will be electric and if America doesn't start to comply with the Obama regulations then we will fall behind and lose money. If we attempt to reach the standards and fall a little short, as long as the companies are close the auto industry as a whole will be fine and on the right track towards becoming the strong industry that it needs to be.


http://online.wsj.com/article/SB10001424052748703848204575608230602308648.html?mod=WSJ_auto_IndustryCollection