teaching my prof about the M5?

so i am taking a marketing cours and am writing an analysis on my fav subject - the ///M5.

so in my SWOT analysis, in the threat section i did not include green issues, economy and regulations. but the prof doesnt understand anything about high performance cars and how the system actually works...

so this is what i am writing back...

Economy, green issues, and regulations are not considered direct threats to the M5, because even though the car manufacturers have to meet miles per gallon, or MPG, CO2 and other environmental regulations, the cars are not regulated individually, but rather each manufacturer is regulated as one unit. Car manufacturers must average x miles per gallon from all of its offerings. To meet these regulations, they make the economy models (models with smaller engines) more efficient, thus creating a buffer for their high-performance models to be competitive. For example, Aston Martin created a high MPG city car called the Cygna to raise the average of their offerings in order to meet the regulations. Ferrari, a subsidiary of FIAT, uses FIAT’s high MPG offerings to cushion its supercars to acceptable levels. Independent car manufacturers, such as Noble from the United Kingdom, sell to the US in “kit car”, or cars sold in LEGO like box of parts that the distributor/user must assemble upon arrival, that do not have to meet regulations.

Car manufacturers are less concerned with high-performance model being green or economical, because it is easier to increase MPG in low performance “econo-boxes” than to get good MPG from a motorsport-spec engine. High-performance cars face such fierce competition in terms of meeting track times and performance numbers, getting a realistic MPG increase becomes irrelevant. For example, the 2008-current BMW M3 actually gets less MPG than the previous generation M3 because of the significant jump in performance. (Going from straight-6 to an industry standard V8)

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does that explain why economy/mpg/regulations arent marketing threats to the m5

C-



sns23 said:

C-

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didnt really send it to the prof yet, but im just sharing the thought process of the counter-attack

actually BMW (and others) are trying to improve fuel efficiency

BMW using turbos : the new M5 is supposedly 20% more efficient than the last, yet more powerful
same for the Audi S8, went from a V10 to a twin turbo V8, faster/more power and better mileage

things like stop/start technology
cyclinder cut out
direct fuel inject with lean burn and higher compression ratios (even with turbos)

food for thought
but the gist of your position is correct: so few numbers are sold they have little impact on overall corporate mpg averages



Arthur PE said:

actually BMW (and others) are trying to improve fuel efficiency

BMW using turbos : the new M5 is supposedly 20% more efficient than the last, yet more powerful
same for the Audi S8, went from a V10 to a twin turbo V8, faster/more power and better mileage

things like stop/start technology
cyclinder cut out
direct fuel inject with lean burn and higher compression ratios (even with turbos)

food for thought
but the gist of your position is correct: so few numbers are sold they have little impact on overall corporate mpg averages

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yeah, i mentioned those in the Strength and Opportunity sections.

threats section i am only mentioning 1 topic - new offerings from competitors and the prof (without any automotive enthusiast knowledge) goes all berserk on me

you writing gave me aids.

junior varsity, good luck on the paper, but I have a feeling you won't get the grade you're expecting.

M5 is the ultimate computer

So, what you're saying is that:

• Environmental concerns will not threaten M5 sales in any way except direct regulation. In marketing, there is no risk that potential buyers will be concerned about environmental inefficiencies.
• A poor economy will not slow sales of a luxury sports car, ever.
• There is no risk of any future regulation affecting the market for luxury sports car.

Well. Hmmm.

Here's the thing: Your analysis is an enthusiast's, rather than an objective assessment of market risks. It's not that your professor doesn't understand sports cars. It's that you are approaching your assignment from the lens of a hobbyist, and so failing to see the forest for the trees. Step back and try to take a broader, more dispassionate view.



Luddite said:

So, what you're saying is that:

• Environmental concerns will not threaten M5 sales in any way except direct regulation. In marketing, there is no risk that potential buyers will be concerned about environmental inefficiencies.
• A poor economy will not slow sales of a luxury sports car, ever.
• There is no risk of any future regulation affecting the market for luxury sports car.

Well. Hmmm.
Here's the thing: Your analysis is an enthusiast's, rather than an objective assessment of market risks. It's not that your professor doesn't understand sports cars. It's that you are approaching your assignment from the lens of a hobbyist, and so failing to see the forest for the trees. Step back and try to take a broader, more dispassionate view.

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well realistically, if you buy an M5, E63AMG or Audi RS6, Porsche Panameras, Ferrari FF, Maserati Quattroporte...
you dont really give a **** about
1. money - you spent $100,000 or more on a daily driver
2. MPG/global warming - you are driving a 400-550hp daily driver that gets basically no miles per gallon (i just drove my old m5 around town earlier today - averaged 12mpg- **** you environment!)



basically the potential clients of the markets are rich men who arent affected by economy, dont give a **** about polar bears (probably they go out of their way to club baby seals), and probably own companies that actively destroy the earth..


also.. if you dont have big engine sports car, you kill off the highest gross margin products for every company...
porsche's cost per unit manufacturered is nearly the same on a boxster as a GT2RS... so the higher end the model, the more money the company makes.
legislation will never pass because you'll kill off an entire segment of the economy and society

thats what im saying

i think you missed the point of his post.

The number of people who can afford a $100,000+ daily vehicle depends on the strength of the economy, right? A continued economic downtown might lead to more people going "You know what? I just can't afford that Maserati I wanted...my budget really is closer to $60,000 because my investments are performing poorly now, and worse might be ahead." The number of people who can afford sports cars is not fixed. It varies with the economy.

You have also said that someone who buys one of these cars doesn't car about environmental issues. Quite possible. But say you have, in any given town, a pool of 100 people who are wealthy enough to afford these cars. And say 5% - so 5 - of them care about emissions. So they don't buy sports cars. Now, say an IPCC report comes out linking extreme weather with climate change, and a whole bunch of weather disasters happen, and some major paper reports on how right the IPCC is. Say another 5% of the potential buyers start looking into climate change, and get worried. So now you've cut your pool of possible buyers back to 90.

You're still looking at it like an enthusiast. Nothing will change your love for these cars, so you assume that nothing will change any of the buyers' minds. But that simply is not so. There's always the marginal buyer; the guy who can just afford the car this year, and maybe couldn't if things got worse. There's the guy who is a bit worried about the environment, drinks fair trade coffee with organic soy milk only, and somehow thinks that justifies the car (I mean, I've met vegans who drive 70s muscle cars; stranger things have happened), who might, with a bit of a push, admit that it doesn't fit his beliefs. So that's a threat to your market.



junior varsity said:

does that explain why economy/mpg/regulations arent marketing threats to the m5

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no, it doesn't, because those three things are threats to the M5. fuel economy is a concern for owners of M5's and other cars. maybe less so back when gas was cheap in the US, but it is a big concern now. the indifference of even the rich to rising fuel prices is not infinite.

also in terms of regulations, there are two issues you still need to address, the first is emissions, which is sudden death if a car cannot meet the requirements for the market. can the m5 continue to make more performance and still meet tightening regs? the second is import duties, which can add 100-300% to the M5's price depending on the market.

I agree with your argument regarding CAFE, though. but if BMW continues to refuse to sell its diesels in the US, then that will be a problem as well if the gas guzzlers sell well

I was reading an article about pedestrian safety regulation affecting the designs of cars (particularly Benz).



Joffrey said:

I was reading an article about pedestrian safety regulation affecting the designs of cars (particularly Benz).

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Summary of article?