TARIFFS OR NO, AFFORDABILITY REMAINS KEY.

Editor's Note: This week, the Autoextremist hammers home the point that affordability is still the name of the game in this chaotic market. In On The Table, we present the AE Quote of the Month - Peter's prescient comments on tariffs from just a few short weeks ago, along with some other comments about the devasting effects of the tariffs. Then, Peter revises his assessment of Cadillac's Opulent Velocity Concept, which GM Design presented last August. We also preview the new Vanquish Volante, which Aston Martin is calling "the world’s fastest, most powerful front-engine convertible." And we have a "classic" headline about Nissan from Automotive News. And our AE Song of the Week is "Cuts Like A Knife" by Bryan Adams. In Fumes, we have the next installment of Peter's riveting new series, The Great Races. And in The Line, we'll have results for MotoGP from the Circuit of The Americas in Austin, Texas. We're on it! -WG

 

By Peter M. DeLorenzo

 

Detroit. Seeing as the current administration in Washington, D.C., continues to use tariffs as a political, shit-disturbing cudgel aimed at disrupting and wreaking haphazard chaos depending on the capricious whims of the current occupant of the Oval Office, the auto industry has no choice but to deal with the things that it can control.

 

And no, that doesn’t mean building new assembly plants overnight, which the politicians in Washington seem to believe is just a matter of a “finger snap” to put into motion, even though that kind of retrenchment takes years and untold billions to accomplish.

 

What the collective auto manufacturers can do is focus on the affordability of its offerings in the current market. Last week, I mentioned the Escalade IQ BEV from Cadillac, a technical tour de force with a correspondingly elevated price tag (priced from $127,700 to $148,200). Are those prices a problem for that niche of the market? Not at all, because, as I said, the Escalade’s pricing strategy is consistent with its dominant position in that segment of the luxury market. But some took umbrage with my column, suggesting I was ignoring a vast swath of what passes for “affordable” in this market.

 

Fair point, but I was specifically talking about the King Kong Escalade IQ BEV. In GM’s case, they have a formidable product lineup that lands on the affordability side of the equation.

 

For instance, Buick has the Envista starting at $23,800, the Encore GX ($25,940) and the Envision ($36,500). GMC has the Terrain ($30,000) and the Canyon ($38,400).

 

Chevrolet, which is GM’s dominant player in the retail market, has a plethora of “affordable” vehicles on offer, including the Trax ($21,795), Trailblazer ($24,395), Equinox ($29,995), Equinox EV ($34,995), Blazer ($36,995), Colorado ($33,495) and Malibu, if you can find one, ($26,995).

 

And Ford is well-represented, too, with the Escape ($29,150), Escape Hybrid ($32,490), Bronco Sport ($29,995), Mustang ($31,920), Mustang Mach-E ($36,495), Bronco ($37,995), Maverick ($23,920) and Ranger ($33,080).

 

Dodge has the Hornet ($29,995), and Jeep has the Compass ($26,900), Wrangler ($32,690), Grand Cherokee ($36.495) and Gladiator ($38,695).

Yes, of course, all of these prices are starting MSRPs, and they jump up exponentially from there, but still, affordability is out there, should you choose to look. And that’s not even getting into the offerings from the Hyundai/Kia conglomerate, Honda or Subaru et al., because affordability is prevalent across those brands.

 

My point being this: I think the U.S. manufacturers in particular are guilty of dwelling on their “show pony,” big-ticket vehicles, which is understandable to a degree. After all, that’s where the big grosses and big profits are. But by overemphasizing these “show pony” vehicles, they do so at their peril, because the prevailing opinion “out there” in ConsumerVille is that everything from the U.S. automakers is too expensive, and that if you want a stronger deal you have to shop at Hyundai/Kia, Honda and the other imports in order to get a worthwhile transaction, and that opinion is not likely to change with a sea of countless advertisements for $70,000+ vehicles.

 

(This doesn’t apply to Cadillac, which is a luxury brand that must retain its elevated status in the market. If you’re price shopping that brand, you’re shopping up the wrong tree.)

 

“Show Pony” vehicles aside, that the average vehicle transaction price has been hovering at or near $50,000 is off-putting to a majority of car buyers in the U.S. market is no secret. As I’ve said previously, this is simply not palatable to a wide swath of the retail consumers in the market, especially with higher interest rates and payments that are, on average, $250-$350/month higher than most people were at with their previous auto-buying transactions. Add capriciously applied tariffs to this mix and you have a recipe for disaster. (Just how bad are these tariffs? Check out the chart in On The Table. -WG)

 

As I said in my recent columns, the current administration has the U.S.-based automakers by the balls. Doing a redirect of plants, supply chains and suppliers, etc., is simply not feasible. There is no quick turnaround on offer, no quick fixes, no knee-jerk solutions due to the knee-jerk politicians currently wreaking havoc in Washington.

And now that the Stumblebum-in-Chief has gone ahead with his arbitrary and capricious tariffs, and in true dictator fashion has threatened the automakers with hell to pay if they have the temerity to raise prices because of those tariffs, the automakers find themselves immersed in a Shit Storm of gigantic proportions with no relief in sight. Oh, wait a minute, now he says "he couldn't care less" if the manufacturers raise prices. Good luck with trying to plan anything with this guy. (See our AE Quote of the Month in On The Table-WG) And while I'm at it, hats off to the painfully short-term thinkers in the hierarchy of the UAW, who actually believe that these tariffs will benefit them somehow. As if. Wait until these automakers and their suppliers start cutting jobs and stopping production left and right. And then watch UAW operatives scream bloody murder when all of this turns to shit. Predictable and pathetic.

 

What these manufacturers must do is to hammer home the palatable pricing that they can put into play. And that doesn’t mean flaunting “starting” MSRPs in their ads, while letting the savvy consumers know that it’s just the starting point, and from there it gets ugly. What these manufacturers need to do is offer high-value content packages across the board, with alluring interior and styling options included. And then they need to advertise and promote the hell out of them.

 

This idea of offering “special” marketing/content packages is nothing new. In fact, it has been done masterfully in the past, but I think Detroit marketers have gotten away from it or forgotten about it altogether. It requires the creation of highly desirable packages at truly noteworthy prices. These vehicles must have the exterior “look” and the interior content that consumers gravitate toward, and the sooner this happens, the better.

 

Affordability is and should be the name of the game for these manufacturers from now on. And the companies that seize on this approach and run hard with it will survive and maybe even thrive.

 

And that’s the High-Octane Truth for this week.

Editor's Note: You can access previous issues of AE by clicking on "Next 1 Entries" below. - WG