Realizing the futility and silliness of having two blogs to cover two separate topics I've consolidated both "Horseless Age" and "Marketing 2.0" into a single blog called "Darryl Siry's Blog." No points for originality, I know.
If you currently subscribe to this blog or get an RSS feed, please mosey on down to http://darrylsiry.blogspot.com and re-subscribe to receive new posts. This blog will no longer be updated.
Thursday, December 04, 2008
Wednesday, December 03, 2008
Rethink State Franchise Laws in Bailout
In the discussion leading up to the congressional hearings this week, many are reporting on the structural problems and challenges faced by the automotive industry today. The essence of the discussion is "they'll never be profitable unless they fix..."
Most have focused on labor contract issues and being more competitive with the transplants in salary and benefits costs. The interesting thing here, well known by the automotive press, but totally missed by many of the mainstream media and blogs, is that this issue was largely addressed in the most recent round of contract negotiations with the unions. The announcement today by the UAW that they were willing to delay the VEBA contributions and give up the bizarre jobs bank benefit focuses on the right issues in my opinion. That's not to say that the union issues are addressed but they are receiving more than their fair share of attention in my opinion.
Many in the marketing media point to the proliferation of weak brands as one of the key problems. This is true, and it is a major problem for the automakers for several reasons. One is the costs associated with supporting all of these individual brands. The other is that the over-saturation of choices in each segment of the market and lack of differentiation between many of these brands (caused in part by badge engineering and in part by "me too" product development). This results in a lack of pricing power, large incentive payments, and reduced profitability.
So the Big 3 should kill some of their brands. That's fine, and it has already been suggested and considered. So what's the problem?
The problem lies with the state franchise laws. Because of these laws, killing a brand is a very expensive proposition. The most recent example being the elimination of Oldsmobile, which cost GM over $1B. The state franchise laws require the manufacturer to buy out each dealer because, it is reasoned, the dealer has invested a very large amount of time and money and care in building their business and must be compensated for this. Sounds like a great deal to me. If the manufacturer of a product is going out of business and can't afford to support the product anymore, the distributors of that product should bear their share of the unfortunate consequences.
There are a lot of other problems with the state franchise laws, which were set up to protect dealers (although under the guise of consumer protection in some cases) and are, to a large extent, out of date. For the most part, they don't make sense in today's marketplace and should be dismantled. They certainly are not needed for protection of consumers anymore, and may actually hurt consumers.
Now is the time to tackle this major structural problem, because only in this time of crisis can the political courage be mustered to tackle some very well entrenched interests. If the Big 3 are going to restructure, which involves reducing manufacturing capacity, the number of brands, and the number of dealers (among other things), the federal government should get involved in passing legislation that pre-empts some or all parts of the state franchise laws to better enable the restructuring of the distribution channels in a cost effective and quick manner.
Along the way, an optional federal charter should be established for new manufacturers or brands to better enable them to distribute cars across the country through company owned distribution. Current laws make it difficult to sell directly to consumers in some states and even prohibits the servicing of cars directly by the manufacturer.
Existing dealers obviously wouldn't support this, because it threatens their economic interests and disrupts the status quo. State governments will not support this for the same reasons. But the reality is that the the market conditions and the financial health of the manufacturers will put an extraordinary strain on the distribution channel anyway, driving many of them out of business. If this country is going to support the restructuring of the automobile industry using taxpayer money, we should make sure that we address all of the structural issues that prevent this industry from being healthy in the long term, and that requires that we rethink the state franchise laws.
Most have focused on labor contract issues and being more competitive with the transplants in salary and benefits costs. The interesting thing here, well known by the automotive press, but totally missed by many of the mainstream media and blogs, is that this issue was largely addressed in the most recent round of contract negotiations with the unions. The announcement today by the UAW that they were willing to delay the VEBA contributions and give up the bizarre jobs bank benefit focuses on the right issues in my opinion. That's not to say that the union issues are addressed but they are receiving more than their fair share of attention in my opinion.
Many in the marketing media point to the proliferation of weak brands as one of the key problems. This is true, and it is a major problem for the automakers for several reasons. One is the costs associated with supporting all of these individual brands. The other is that the over-saturation of choices in each segment of the market and lack of differentiation between many of these brands (caused in part by badge engineering and in part by "me too" product development). This results in a lack of pricing power, large incentive payments, and reduced profitability.
So the Big 3 should kill some of their brands. That's fine, and it has already been suggested and considered. So what's the problem?
The problem lies with the state franchise laws. Because of these laws, killing a brand is a very expensive proposition. The most recent example being the elimination of Oldsmobile, which cost GM over $1B. The state franchise laws require the manufacturer to buy out each dealer because, it is reasoned, the dealer has invested a very large amount of time and money and care in building their business and must be compensated for this. Sounds like a great deal to me. If the manufacturer of a product is going out of business and can't afford to support the product anymore, the distributors of that product should bear their share of the unfortunate consequences.
There are a lot of other problems with the state franchise laws, which were set up to protect dealers (although under the guise of consumer protection in some cases) and are, to a large extent, out of date. For the most part, they don't make sense in today's marketplace and should be dismantled. They certainly are not needed for protection of consumers anymore, and may actually hurt consumers.
Now is the time to tackle this major structural problem, because only in this time of crisis can the political courage be mustered to tackle some very well entrenched interests. If the Big 3 are going to restructure, which involves reducing manufacturing capacity, the number of brands, and the number of dealers (among other things), the federal government should get involved in passing legislation that pre-empts some or all parts of the state franchise laws to better enable the restructuring of the distribution channels in a cost effective and quick manner.
Along the way, an optional federal charter should be established for new manufacturers or brands to better enable them to distribute cars across the country through company owned distribution. Current laws make it difficult to sell directly to consumers in some states and even prohibits the servicing of cars directly by the manufacturer.
Existing dealers obviously wouldn't support this, because it threatens their economic interests and disrupts the status quo. State governments will not support this for the same reasons. But the reality is that the the market conditions and the financial health of the manufacturers will put an extraordinary strain on the distribution channel anyway, driving many of them out of business. If this country is going to support the restructuring of the automobile industry using taxpayer money, we should make sure that we address all of the structural issues that prevent this industry from being healthy in the long term, and that requires that we rethink the state franchise laws.
Monday, December 01, 2008
Switching Off
I have resigned my position with Tesla Motors due to some disagreements in strategy. I believe that in such a situation it’s best for a senior executive to part ways with the company so as to not get in the way.
I’ve stayed until now to help manage the transition, including recruiting a very strong successor to lead Sales, Marketing & Service going forward. I am sure he will do a great job.
Regardless of my personal decision, I think Tesla is an extraordinary company with extraordinary potential. There are a lot of great people there working hard to make a difference. I wish them all the best of luck and success in the future. They deserve it.
So what now?
I have no immediate plans but look forward to exploring various opportunities that I find out there. One thing I have been developing is a business idea in the media/technology space. I am very excited about it but we’ll see where that goes.
I also plan to start blogging occasionally again on my perspectives on the development of the alternative fuel vehicle industry (and cars in general) on this blog and my perspectives on media and marketing on my other blog.
Please feel free to drop me a line at djsiry at gmail dot com or connect with me on Linkedin or Facebook, or twitter.
Note: Comments for this post will be *heavily* moderated, no offense intended.
I’ve stayed until now to help manage the transition, including recruiting a very strong successor to lead Sales, Marketing & Service going forward. I am sure he will do a great job.
Regardless of my personal decision, I think Tesla is an extraordinary company with extraordinary potential. There are a lot of great people there working hard to make a difference. I wish them all the best of luck and success in the future. They deserve it.
So what now?
I have no immediate plans but look forward to exploring various opportunities that I find out there. One thing I have been developing is a business idea in the media/technology space. I am very excited about it but we’ll see where that goes.
I also plan to start blogging occasionally again on my perspectives on the development of the alternative fuel vehicle industry (and cars in general) on this blog and my perspectives on media and marketing on my other blog.
Please feel free to drop me a line at djsiry at gmail dot com or connect with me on Linkedin or Facebook, or twitter.
Note: Comments for this post will be *heavily* moderated, no offense intended.
Tuesday, March 25, 2008
Comment on CARB site
Lots of interested parties weighing in on the proposed changes to CARB's ZEV mandate. You can find Tesla's position here.
This gentleman certainly has a unique perspective:
First Name: Edwin
Last Name: P***
Email Address: [deleted]@yahoo.com
Affiliation:
Subject: vote NO to electric vehicles!
Comment:
Oil companies have done a lot to improve America. How DARE we turn
our backs on them now, at a point in history where we are about to
win the ENTIRE middle east and have all the oil we want - much
cheaper than electric and plug in hybrid vehicles can claim.
Electric power is not natural. It has to be made so it's not
environmentally friendly. God gave us energy sources like oil,
coal and natural gas that ARE natural. They are right there in the
ground. There is nothing to "make" because it's already there.
Political manipulation to promote electric and plug in hybrid
vehicles is a big mistake. As elected officials you should not be
playing political games to suit your own agenda. You should be
making laws that the PEOPLE want. And people work for
corporations. It's how we pay our bills. So, yes, corporations DO
have a say in how things should be managed.
Lastly, each time somebody buys an electric car or a plug in
hybrid, a soldier somewhere in Iraq is feeling a direct slap to
the face. Alternatives to oil are also like alternatives to
heterosexual relationships and both are bad. When we buy an
electric car we are really saying "soldiers, we don't need you".
When we practice homosexuality and abortion in an effort to reduce
populations we are saying "natural resources, we don't need you".
This is a fatal error.
We should never try to manipulate procreation, natural selection,
survival of the fittest just to "conserve resources". God gave us
all we need. When we run out, we will be forced to use space
exploration technology to look for a new planet - a new place to
colonize. That is how nature really works.
This gentleman certainly has a unique perspective:
First Name: Edwin
Last Name: P***
Email Address: [deleted]@yahoo.com
Affiliation:
Subject: vote NO to electric vehicles!
Comment:
Oil companies have done a lot to improve America. How DARE we turn
our backs on them now, at a point in history where we are about to
win the ENTIRE middle east and have all the oil we want - much
cheaper than electric and plug in hybrid vehicles can claim.
Electric power is not natural. It has to be made so it's not
environmentally friendly. God gave us energy sources like oil,
coal and natural gas that ARE natural. They are right there in the
ground. There is nothing to "make" because it's already there.
Political manipulation to promote electric and plug in hybrid
vehicles is a big mistake. As elected officials you should not be
playing political games to suit your own agenda. You should be
making laws that the PEOPLE want. And people work for
corporations. It's how we pay our bills. So, yes, corporations DO
have a say in how things should be managed.
Lastly, each time somebody buys an electric car or a plug in
hybrid, a soldier somewhere in Iraq is feeling a direct slap to
the face. Alternatives to oil are also like alternatives to
heterosexual relationships and both are bad. When we buy an
electric car we are really saying "soldiers, we don't need you".
When we practice homosexuality and abortion in an effort to reduce
populations we are saying "natural resources, we don't need you".
This is a fatal error.
We should never try to manipulate procreation, natural selection,
survival of the fittest just to "conserve resources". God gave us
all we need. When we run out, we will be forced to use space
exploration technology to look for a new planet - a new place to
colonize. That is how nature really works.
Monday, March 24, 2008
Wired expose on ZAP! - it's about time...
Wired Magazine finally wrote an article on ZAP that lays everything out in all its ugliness. ZAP inspired one of my first blogs for Tesla where I accused the media of being too soft on EV companies. I took a lot of heat for that blog because it just wasn't cool to dis another EV company. I hope people can see now what I came to believe then - that what ZAP was doing to the EV space was very damaging and someone had to expose it. To this day ZAP continues to get a significant amount of positive press from people who want to believe in them but who do not realize that it is precisely this blind support that ZAP has taken advantage of for years to their benefit and at many others' expense.
Let me guess - press release by ZAP! tomorrow...maybe they'll even sue Wired. Who knows, maybe they'll sue me for posting this.
The article can be found here.
Let me guess - press release by ZAP! tomorrow...maybe they'll even sue Wired. Who knows, maybe they'll sue me for posting this.
The article can be found here.
Monday, March 03, 2008
USA Today article
Tesla article in USA today. I will no doubt hear from all my consulting and banking friends who are always on the road and will see this at their hotels and airports.
other blogs to read
I've written a couple of blogs on the Tesla blog aimed at debunking some common myths about Tesla. The latest is here.
The first mythbusters was about the myth that the Roadster doesn't have airbags, which I wrote about on this blog weeks ago. In hindsight I should have posted it on the Tesla blog much sooner.
I also wrote a piece on my marketing blog about recent statements by Bob Lutz on global warming. You can read that here. Peter Brown from Automotive News wrote a piece today that is similar, but a subscription is required.
The first mythbusters was about the myth that the Roadster doesn't have airbags, which I wrote about on this blog weeks ago. In hindsight I should have posted it on the Tesla blog much sooner.
I also wrote a piece on my marketing blog about recent statements by Bob Lutz on global warming. You can read that here. Peter Brown from Automotive News wrote a piece today that is similar, but a subscription is required.
Tuesday, February 19, 2008
Sunday, February 17, 2008
Thursday, February 07, 2008
authenticity
This might be one for the marketing blog but since it relates to EVs I'll post it here.
ZAP! announced today that they are going to brand their new joint venture to create electric vehicles "Detroit-Electric", after an old and storied electric car company from the early 1900s.
Rebranding away from ZAP is a good idea because their brand has many negative associations, from the Smart debacle to a history of claims about vehicles that never materialize even in prototype form. The one vehicle they do distribute, the Xebra, is not something that defines a strong brand.
I can see the logic of cloaking yourself in an historical brand to try to lend yourself a sense of historical significance that you don't have, and perhaps to create a type of retro nostalgia.
The problem here, and it is a big one, is that they are not basing the company in Detroit. What is the point of adopting the "Detroit-Electric" brand, with all of the the strong historical associations, and not basing the company in Detroit? Alternatively, they should have picked an old electric car brand that was not geographically specific.
From the get-go, this brand will lack what little authenticity it might have hoped to create because of that little fact. Never mind that the cars behind the brand are unlikely to materialize if past is prologue.
ZAP! announced today that they are going to brand their new joint venture to create electric vehicles "Detroit-Electric", after an old and storied electric car company from the early 1900s.
Rebranding away from ZAP is a good idea because their brand has many negative associations, from the Smart debacle to a history of claims about vehicles that never materialize even in prototype form. The one vehicle they do distribute, the Xebra, is not something that defines a strong brand.
I can see the logic of cloaking yourself in an historical brand to try to lend yourself a sense of historical significance that you don't have, and perhaps to create a type of retro nostalgia.
The problem here, and it is a big one, is that they are not basing the company in Detroit. What is the point of adopting the "Detroit-Electric" brand, with all of the the strong historical associations, and not basing the company in Detroit? Alternatively, they should have picked an old electric car brand that was not geographically specific.
From the get-go, this brand will lack what little authenticity it might have hoped to create because of that little fact. Never mind that the cars behind the brand are unlikely to materialize if past is prologue.
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