Back in the Eighties, when Chrysler had an equity position in the infamous Italian sports car maker, CEO Lee Iacocca announced his plan to jointly produce a new convertible with Maserati. The idea behind making such a brash announcement, like that behind putting Chrysler and Maserati together, was to make the perennially third-place Auburn Hills car company seem sexy. After all, Chrysler had not only redeemed itself with its famed minivan of 1984, but it had also paid off its government-cosigned loans seven years early and was flush with cash. Like an alcoholic who has just won a Mega-Lottery, Iacocca couldn’t wait to flush some of Chrysler’s big bucks down the hole with his new Italian love machine.
The problem was, well, everything. The deal was signed in 1984 and was announced shortly thereafter, although the car itself would not come to market until the 1989 model year. As someone wrote at the time, it was the most introduced car in American history. I know; I went to one of the private Chrysler parties in Dallas when it was on its second round of nationwide introductions, even saw Mr. Iacocca up close. But I couldn’t help but notice that this incredible new “Italian sports convertible” looked suspiciously like a LeBaron convertible with nicer leather.
That was in 1985. There was no word on when this vehicle would come to market, though they kept promising it was on the cusp of production. Only it wasn’t.
General Motors had its own Italian joint venture up and running, most days, with its Mercedes SL fighter, the Cadillac Allante, in 1986. In this case GM cut a deal with famed design studio Pininfarina to design and build the body for this new convertible, which would then be loaded onto special 747 jumbo jets and flown from the Turin airport to the Coleman Young International Airport, just a few miles from GM’s Hamtramck assembly plant.
There the body would be placed on a GM chassis and shipped out to Cadillac dealers everywhere, its base price in line with the most desirable Mercedes convertible. Almost immediately after it arrived at dealerships across the country, make-ready personnel knew that if you ran the Allante through a carwash, the vehicle’s interior would be washed along with the exterior. Then too, it was hard to determine the sound system’s quality since squeaks, rattles, and wind noise were standard equipment. So it wasn’t just Chrysler trying to look cool by joining up with the Italians, although both would learn the same expensive lessons.
Someone once wrote of the Chrysler TC by Maserati that, by combining a Chrysler body and chassis with a Maserati production build and a 2.2-liter engine with Cosworth heads, the maker had taken literally the worst of each contributor’s capabilities. The public would not know this until years after its failure, but the engineers Chrysler dispatched to Maserati to fix production runs had to throw away most of this vehicle’s early builds, increasing the cost of the remaining TCs until the model was one of the all-time great money losers in auto industry history.
And the Eighties were known for huge losses on some models. Buick brought out its 1988 Reatta as a direct competitor to the first generation of the Acura Legend Coupe, with an identical price but none of the Acura’s style, finesse or quality. Although the Buick listed for around $27,700, production runs were so low that Buick lost roughly the window sticker price on every Reatta sold.
By the time the Chrysler TC by Maserati finally made its appearance in the late Eighties, its base price was $33,000 without options. And by now the public noticed what I had years earlier, that it looked like a LeBaron convertible with better leather — and for only fifteen grand more. In the end only 21,000 copies of the Buick Reatta sold in four years. Believe it or not, the Cadillac Allante sold 21,430 copies, although that took seven model years to accomplish. Chrysler’s TC only managed to produce around 7,300 sales over a three-year period.
A Real Dustbuster of a Vehicle: www.star-telegram.com/cars/ed-wallace
The one other vehicle promoted far in advance of its introduction to the public was the Chevrolet Lumina APV, which most referred to as a minivan. As I recall, the first ads showing the vehicle, which honestly looked extremely high tech and cool for the time, came out around 1986 or early 1987. Like Chrysler with its TC, the Lumina’s entire campaign was designed not to sell cars — because, after all, you couldn’t buy one at the time — but to show everyone how hip and cool General Motors was about to be in the near future.
Turned out the near future was really the far future; and the cool-looking minivan in those early ads didn’t look the same in real life when the models that arrived at dealerships for the 1990 model year. Come to think of it, automotive writers referred to the Lumina minivan as a design stolen from electric hand vacuums; its similarity to a Dustbuster was unmistakable.
It too failed to find the volume of buyers that General Motors had overhyped for years. Although this minivan was designed to seat only six people comfortably, it came with 18 cup holders. Overkill at best, this feature became truly humorous when a salesperson was doing an exceptional walk-around of the vehicle.
Great Ads Need a Great Product — NOW
There is a point to this story besides a silly walk through the automotive hall of fame from 30 years ago. Here it is: Every last overhyped car designed solely to make a car company appear hip to the public thoroughly failed in the market in that period. That’s because the car companies have never understood the new car buyer, not then and not now. What’s true, however, is that there are only two types of car buyers: want and need.
For decades we referred to the want buyers as impulse buyers. Today they are referred to as “early adopters,” but they’re really impulse buyers. They have money, they love to be trendsetters, and they have a passion for being the first on their block to have the latest greatest whatever, including cars. They know they are paying top dollar to be the first to own something, but they don’t care; to them, the excitement of others’ seeing them as the real trendsetters outweighs any extra cost.
In the auto industry’s best years, impulse buyers may form 20 – 25 percent of the market. When the economy goes south, however, most impulse buyers disappear and only the need buyers are left. What GM was hoping for with the Cadillac Allante, Buick Reatta, and even the Chevy Lumina was to capture the hearts and pocketbooks of that impulse audience; others’ seeing trendsetters in these vehicles would have helped long-term sales. Similarly, Chrysler believed impulse buyers would flock to its TC convertible, and the halo effect from that vehicle would help all of Chrysler’s models sell.
Here’s where they made their mistake. Because they were transitioning to calling impulse buyers “early adopters,” they forgot they really were impulse buyers. Meaning, they see something they really, really like and they either want it tomorrow or, better yet, would like to drive it home tonight. But they are not fond of waiting: If that car they love passionately today doesn’t come out for years, the impulse buyer has moved on. It’s no longer the latest must-have vehicle, it was just something that looked cool in a magazine ad years ago.
And the auto industry is changing. Once, if someone brought out a truly exceptional and must have vehicle, it might sell at list for a few years before cooling off. Think of the 1998 Honda Odyssey minivan, or the 2001 Acura TL, the first Mazda Miata, or the Tesla Model S — or, if you’re old enough, the black Pontiac Trans Am after the movie Smokey and the Bandit came out. But Robert Pattison drove the ultra-cool Volvo C30 in the “Twilight” franchise, and that exceptional Swedish coupe did little to nothing at retail.
Lessons Earned but Not Learned
Even so, car companies still want you to think they are ultra-hip and about to bring products to market that will thrill and delight the most discriminating buyers — meaning impulse buyers who still have strong credit scores. And yet few of these automakers have internalized the lessons they earned the hard way decades ago.
For example, GM didn’t need to reveal and hype the Chevrolet Volt for three years before introducing it; it would have been best served by simply being sprung on the public as a total surprise. But no. That car was hyped for so long that the proposed price went from maybe $25,000 to $40,000, its range went down, and from having the truly edgy design shown at auto shows, the first body looked like an update to an old Dodge Stratus. In contrast, Toyota announced that it had perfected a hybrid electric just before it introduced the Prius in the Japanese market.
And then there’s Volkswagen, currently hyping the return of its famed Sixties hippie van, this time as a long-range all-electric vehicle. That’s great, if it’s coming out in six months; loads of people thinking about buying a car would put it off, waiting to get their hands on this one. But VW says the new all-electric Microbus will come to market in 2022. Really?
By then Americans will have purchased another 76 million new vehicles, none of which will be this new electric VW bus. And, because 76 million new vehicles will be sold over the next five years, that’s probably 76 million people who won’t be in the car market when the new VW comes out.
Today everyone in the auto industry makes exceptional vehicles. There’s actually no need to hype anything anymore, because great vehicles that are real values can be found at every dealership in America. And many sell in reasonable volumes because of the value-over-cost equation. That being said, beware the overly hyped cars. For whatever reason, their life expectancy doesn’t tend to pan out very well.
If you doubt that, go visit a few salvage yards.
© Ed Wallace 2017
Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, “Wheels,” 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: firstname.lastname@example.org