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Quite possibly; I do it myself from time to time. I'll type something out in a hurry - hit the "Post My Message" button and sit back all smug just KNOWING I'd made a really good point.
And then I'd go back a re-read what I'd just posted and realize it didn't read they way it should.
What's funny is that socala4 responded to what you DID post, and you accused him of misquoting you.......
....well, it was kinda funny to me anyway, but then I'm easily amused....
Let's face it -- Ford is doing it with Shelby, and you'd like to rationalize GM's failure to use the fleet market in a similar fashion by claiming that Avis would oppose it. Yet there's no logical reason to believe that Avis would oppose it, and a lot of reasons to see that they would participate, particularly if it didn't conflict with its other branding efforts or cost it much additional money. For example, if GM subsidized effective free upgrades to Avis customers (pay for an intermediate sedan, and get a hot or super-luxury version of a GM car for the same price), why on earth with Avis be against this?
Well, as Rorr points out, I am not always clear. I thought I was clear on this point, however: Objectively, Avis does not appear to do a lot of promotional renting. Avis has been independent for years. It has to make money or die.
Hertz was a wholly owned Ford subsidiary until last year's IPO. If it made money, fine. But just as fine if it made money for the parent company.
As a newly independent company, Hertz is doing some things differently from its long standing rival, Avis. I suppose if the Hertz model proves profitable, then Avis may strive to do the same.
Bottom line, Avis does what it does to make money for its share holders. The same with Hertz. We shall see if things like the Shelby promotion remain part of the Hertz model. Again, Hertz does offer in demand GM models such as the Slade, Hummer and Cadillacs as part of its special cars program that also features the Shelby. (the Z06 won't be featured because the lines of consumers would not like GM for that)
For example, if GM subsidized effective free upgrades to Avis customers (pay for an intermediate sedan, and get a hot or super-luxury version of a GM car for the same price), why on earth with Avis be against this?
Avis does do upgrades. I got a CTS after a certain number of rentals.
....well, it was kinda funny to me anyway, but then I'm easily amused....
You are right.
I messed up.
It is a good one on me. :P
Someone DOES have a sense of humor in here!
Okay - back on topic:
In 25 words or less, could someone explain why you guys are beating yourselves up over the various business models of the rental agencies?
I mean, I'm familiar with socala4's basic argument (after being exposed to it a few times
I guess I'm just lost on how Avis' business model (or Hertz for that matter) effects your support for GM?
Maybe I should just stop jumping into the middle of these discussions...... :surprise:
My point is that what the rental cars do is more a rental car issue.
Hertz is somewhat special because Hertz was wholly Ford owned until it was spun off last year. The Hertz Shelby thing is cool. But let us see what happens over time.
Avis is part of the Cedant Group, a concern that also owns hotels, reservation systems, and other, primarily corporate hospitality concerns. Avis acts like it is part of an organization looking for the corporate dollar.
For its part, GM's effort to modernize is taking it away from the volume at all cost model. This means reducing capacity and ultimately selling less to rentals (though I assume it will want to keep other corporate fleet business). I am certain the rental fleets see this as being something of a problem. Of course even as GM reduces its over capacity, other companies are creating more.
That is why Avis over the past seven years has gone from almost all GM product to GM along with a lot of Hyundai, Mitsubishi, Nissan, etc. Hertz has a lot of Ford, but also Subaru, Toyota, Hyundai. I believe the trend will continue.
Still, I am not sure how much any rental company's model has to say about the various manufacturers.
Maybe I should just stop jumping into the middle of these discussions......
As far as I am concerned, you, and everyone here, are just as welcome as everyone else to chime in.
Both of your point of views are well taken and you are doing a great job of debating this issue.
I have to side with Socala in that....why wouldn't Avis try to promote their business and gain new customers, by buying better vehicles, probably not losing too much as the trade in value will be greater, there are tax write-offs, might attract a new clientel (I'd even pay $5 or $10 a day extra for a bit of luxury)and if GM gave a bit on discount, it could be the best advertising they could do....people actually test driving a vehicle!
Recently, I have driven a Breeze, Taurus, Pontiac, Impala, Malibu, Olds, Buick Chrysler mini-van and I would have put me off buying one. Nothing much to like in these vehicles. I did get a Maxima and that I would consider buying. Maybe these cars lose their appeal because they are base models and once they are relegated to the car rental business...they become undesirable.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Hertz is more the tourist and weekend renter company. It uses pizzaz to keep people coming in.
It works. One of the reason I went over to Avis from Hertz is every time I got on the bus to the cars, the bus was full of old people on trips and families with kids.
Nothing against either, but one you have come and gone from two cities in one day, the last thing you want is a bunch of noisy kids or confused old tourists slowing things down.
But all of this goes back to Rorr's point. Avis is not GM. Avis is a wholly owned subsidiary of Cedant Corporation. The travel specialists. Cedant bought Avis about 12 years ago and has folded it into an overall corporate travel concern.
GM makes a car that competes with the Ford Shelby. It is called the Corvette Z06. If Avis wanted to rent a Z06 it probably could make an arrangement with GM. Avis quite obviously does not want to. Personally, I am glad. I don't want a bunch of seldom or first time renters at Avis, in my way, slowling me down when I just want to get out to see the property or home after lots of work.
An Avis promotion built around a Z06 would make me worry Avis is going Hertz. Avis doesn't want that. Neither do I or millions of other business travelers like me.
They can sell more than 40,000 of these (way more, if it were priced like the Ion). Even at higher-than-Ion prices, I'd buy it over a Rabbit/Golf any day of the week.
Your focus on the relative merits of the Avis frequent renter program seems to have caused you to lose the essential point, so let's revisit it: Instead of dumping second-rate product into the fleet market, GM might actually improve its reputation among retail car buyers if the rental cars were more pleasurable to drive.
The end result of this is that GM might have to sacrifice some margins on its fleet sales by investing more money into the quality of parts or assembly that can't be recouped through a higher fleet price. However, if an improved rental experience encouraged renters to become buyers, then the loss would be worthwhile.
Now, you can justify all day long this current strategy that involves selling uninspiring products to fleets, that then help to give buyers a low opinion of GM, but we can all look at the falling sales numbers to see where this fantastic strategy has led the company. That GM would take what could be a good marketing opportunity and turn it into a net negative shows you how poorly the company is run.
GM needs to do exactly that. What rental company will possibly balk at the same car with leather and all the goodies for the same price? If GM makes a sale from one of these extended "test drives", then they almost certainly will have a good shot at the person recommending their new car and/or becoming a repeat buyer.
Let's face it - the closest most young peolpe come to real cars besides their Kia or used Accord is when they rent. Getting those 20 and 30 year olds interested in GM by merely putting soe better option packages on the car - win-win situation.
Very true - especially from Enterprise. If I rent a car from them, I spend the day cleaning it to my standards before taking it on any trip. The car comes back MUCH nicer than when I got it. They certainly are impressed because most renters just trash them. What the heck do people do to trash a car so badly? I'm more careful with somebody else's car than my own.
I've dealt with all your points ad nauseum. Your refusal to acknowledge my argument does not give you the right to make disparaging remarks about me. Your going to have to learn to be more civil if you want to stay on at Edmunds.
Now, you can justify all day long this current strategy that involves selling uninspiring products to fleets, that then help to give buyers a low opinion of GM, but we can all look at the falling sales numbers to see where this fantastic strategy has led the company. That GM would take what could be a good marketing opportunity and turn it into a net negative shows you how poorly the company is run.
And you can say all day that GM controls Avis buying policy when in fact it does not. Avis simply does not have programs with wow cars like the Ford Shelby. At least not since Cedant bought it.
Avis does have pretty nice GM cars such as the VUE AWD I rented a few weeks ago, and, as previously mentioned, the Cadillac CTS. Avis charges the renters a pretty penny for these (though I get a frequent renter discount).
You ignore this point througout the debate. Rather you focus on one issue: Ford will sell 500 Shelby Mustangs to Hertz, and extrapolate from there that GM only sells base models to rentals. There is no factual support for the position.
Now, you can justify all day long this current strategy that involves selling uninspiring products to fleets, that then help to give buyers a low opinion of GM, but we can all look at the falling sales numbers to see where this fantastic strategy has led the company. That GM would take what could be a good marketing opportunity and turn it into a net negative shows you how poorly the company is run.
Ignoring for the moment - as you have throughout this string - that Avis is an independent company that does not see its purpose to promote GM or any car company consumer sales, there are three obvious flaws in your strategy:
1) Most obvious: Selling 10s of thousands of cars at a loss kills the bottom line;
2) GM does not maintain cars sold to rental companies. The rental companies do. And renters are notorious for mucking up the rides;
3) All the car companies sell base models to rental fleets. My problems with Toyota Corolla rentals is on record here. I've seen dumpy Nissan Sentras, stripped down Mazda3 Sedans, Mitsubishi whatevers, Chrysler Neons, etc. at rental companies. If GM is a poorly managed company for selling base models to rentals, so to must every other company that sells to rentals.
Your argument fails. All the personal insults you want to direct my way do nothing to fix the argument. Since Socrates, ad hominen arguments have always been recognized as the back door way out.
This is not true. Hertz has a clear marketing aim toward tourist and weekend drivers.
Tourists fly almost as much as business travellers in the US.
Enterprise started and stills aims at insurance loaners when losses are being adjusted.
Budget is a division of Cedant and basically is just a lower cost version of Avis. Before being sold in bankruptcy proceedings, Budget did franchise its brand in some markets. When last I looked, the Budget franchise in LA still did some unique promotions such as renting CTS-Vs and Rolls limos and the like.
National and Alamo are also rans that just try and do what they can to keep from liquidating.
Correction: The quantity is 500 per June issue of Automobile Magazine. Picture of car is also in mag.
Perhaps GM could get one of the fine big-name engine builders from NASCAR to add just a tad more (not too much) hp or torque to Lucerne. Perhaps tweak steering/susp a little. Then, add something classy to the interior and something very restrained/elegant on exterior (take off fake portholes for example) then have rental company/Buick do spots on TV (golf and otherwise) with Tiger. Have to get at least 1000 copies of this out there for upgraded business travellers. If this Buick is good, and word of mouth takes off, GM could add a model similar to this and offer in Buick showrooms.
Buick/GM has a fantastic resource in Tiger and is not fully utilizing his potential to help sell.
-Last year, Avis generated US revenues of $2.7 billion. Given the large amount of revenue and the long-standing affiliation between GM and Avis, you can bet that the number of renters was very high and that much of those customers' time was spent in GM cars.
-Now, I suppose that those cars could give those renters a good or bad experience. Over time, the time spent in rentals can make or break many a consumer's beliefs about whether or not a car is worthy of their consideration to buy or lease.
-We also know that fleet operators don't want to spend very much on cars. Therefore, you can't expect Avis to want to spend big bucks on better-equipped cars.
-Which leaves GM with a choice: Either pursue the current strategy of trying to earn low margins on rental cars that leave bad tastes in peoples' mouths, or else use better cars as a method to leave consumers with a better attitude about the products by giving them better cars for the same cost. Since Avis won't pick up any extra costs and the rental consumer is price sensitive, that means GM will have to eat any difference.
Now, when I go into a supermarket, if I am offered a food sample that isn't any good, it discourages me from buying that food, it actually hurts sales. So if I am a food maker, it is in my best interests to makes sure that my food isn't just cheap but actually tastes good, so that those who try it will want to buy it and recommend it to their friends.
Same with GM, except they decided to go with the cheap food that nobody likes. Is there any wonder why market share is falling and getting snapped up by the others who make more interesting products?
I wouldn't want to have a rollover accident in this car
That is especially true if you're not trying to go [non-permissible content removed] for tat like fraternity guys on proving who's bestest and mostest on details.
Although the discussion strays from the topic most of the _discussion_ is interesting; what' s not interesting is reading containual nitpicking. If someone disagrees with a detail just go on. We ain't gonna disprove or prove anything here.
As for styling, GM can sell anywhere it has a buyer and that's okay with me. I DON'T CARE about whether they are a fleet buyer or not...
Earlier point: LaCrosse and Lucerne both tightened up their suspension. Different drivers want different suspensions. One person may want their's to ride like a, well, BMW X3 that I rode in; others may want a 1994 Deville ride. So criticizing Buick for having a tolerable ride for 10 hours on a trip or a ride through rough city streets is subjective.
I used to have Mustangs that would crunch any bump and were uncomfortable on rough interstates. Now I don't want that ride.
Have a good day all.
2014 Malibu 2LT, 2015 Cruze 2LT,
Exactly right on point. When the products are cheap, the brand to which they are attached becomes degraded.
That's precisely way this entrenchment in the second-rate rental car market has been so harmful to GM's long-term prospects. The whole purpose of a brand is to increase consumer confidence and maintain relatively high prices, and these badges have gotten to the point that they achieve neither.
It's a marketing disaster, I'm sure that Sloan would be rolling in his grave if he could see what has happened to his progressive marketing concept. The whole purpose of the early GM marketing system was to create a ladder of succession that helped the consumer to believe that he had arrived by moving up the ladder, and creating cars with enough differentiation that the consumer wanted to make the move.
Now, GM makes cars that it can dump in massive quantities, which only ensures that the future is more of the same. It's hard to make profits when your primary buyers don't pay much for what you have to sell.
Here is where our understanding seems to be on permanent disconnect.
Supermarkets sell the food they allow you to sample. Their retail profit model is based on selling as much of their supplier's merchandise at as high a price the market will bear.
Avis and Hertz and the other rental car companies make money renting cars to the public. They are not in the business of selling cars. They make profit by paying as little for the rental car as possible, then renting it to the public as often and for as high a price as the market will bear.
You are arguing that GM alone among the manufacturers should sell loaded models for base prices.
As it is, loaded and higher end GM models are available at Avis and some of the other rentals. You either have to pay an extra price or be the beneficiary of an upgrade to rent one. I do not see why GM alone among the manufacturers should have to sacrafice profit to turn Avis into some sort of marketing company.
You have ignored completely lax rental company maintenance and cleanliness standards. And also that, for instance, a rental would not want to have a manual on the lot, or a car with bolstered performance bucket seats, for fear the system might give it to a customer who does not want that.
Now, GM makes cars that it can dump in massive quantities, which only ensures that the future is more of the same. It's hard to make profits when your primary buyers don't pay much for what you have to sell.
With GM selling increasingly less of the rentals total fleets, and the competition selling more - all base cars as well - What does that say about these company's strategy?
Yet your argument is to fix that GM should sell the same number of cars to the rentals but loaded, and thus at a loss.
Seems to me the better strategy is what GM is doing with its new cars such as the Lucerne and CTS: make as few of them cheaply available to the rental companies as possible.
I think this is a fantastic move because generation X, Y and beyond don't identify with Buick. So, the better thing to do (IMO) would be to eventually axe Buick if it never quite makes a comeback, and position Saturn to take it's place for current generations that believe Buick is far too old for them.
This could explain why the cost of the vehicle would increase so much over the ION.
That was a fantastic car, and if I could have afforded it, I would have bought one based on the rental experience.
When I rent a stripped down Impala, Malibu, Stratus or Buick it makes me say, "Why would anyone in their right mind blow $20,000 on this?"
I think when you become the low price supplier you have a problem. Your market becomes the low price buyer and your product is based on putting together a product with the lowest priced suppliers.....quality and engineering are not important any more.
Business people do want to get to their car and they want the process simplified. But, most business people do appreciate a better car and they might be likely candidates to actually buy a car they like.
In my opinion GM and Avis (even if Avis operates separate from GM in buying decisions which I find hard to believe)would have a lot to gain if they offered better rental cars.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Being that GM has effectively killed its brand equity in the car market, it has to do something to help rescue itself.
The Lucerne with its antiquated motor and mediocre positioning is not going to save GM. I've already noted on the thread that Buick sales are in decline, and that the Lucerne is selling in largely the same volumes as the cars that it replaced.
What I find stunning is the degree to which the GM stalwarts refuse to see that the company is in an extreme crisis. The bread-and-butter cars are still dominating the fleet business, rather than repositioning the company for better mainstream sales, while the cash cows such as GMAC have been sold off, leaving GM wholly dependent on the automaking business that it has spent decades running into the ground.
Here's the basic point -- doing things with your brand that hurts that brand's image is simply stupid and antithetical to the entire branding concept. If you sell bad products using a brand name that you want to build, then that brand is going to get killed.
Every time that you sell another mediocre G6 or Malibu to a rental fleet, you put that car into the hands of dozens of people, many of whom will be turned off and away from your product. No amount of advertising is going to negate that negative impact, and the margin earned from that sale is being lost on the retail side of the business.
When you want to see why GM generates about $5,000 less per US sale than does Toyota, and why Toyota generates more revenue worldwide, even though it sells fewer cars, this is why. It's not the yen, the workers or Asians that are killing GM, it's the products and the accountants who dictate their design.
Sigh!
"Will Rentals Save GM" :P
As it is, loaded and higher end GM models are available at Avis and some of the other rentals. You either have to pay an extra price or be the beneficiary of an upgrade to rent one. I do not see why GM alone among the manufacturers should have to sacrafice profit to turn Avis into some sort of marketing company.
This is because GM sells the cars for a lot more money. If every last Buick came with leather and the GPS system and so on, and GM lost, say, $3000 on each one by selling it at the base stripped-down model's price, Avis would charge the same money as it does for the basic car. GM would get tons of free advertizing.
Sure, other companies could also do it - and might be forced to. Considering that GM is loosing money on each car, and they can spend tens of millions on advertizing that apparently isn't working, they need to engage in some guerilla marketing. Get the plush models with the good suspension and engines out there into the hands of millions of renters. I guarantee if GM spent 10 million a year subsidizing this so that there would be no extra cost to the customer/renter, they'd do more to fix their image than anything else.
That, and making stripped-down models practically something you have to order. Honda does this - they have an Accord value package edition. Stickshift, A/C, and a CD player. Nothing else. It can easily be had for $17K. This is simmilar to GMs midsize rental cars, in fact. But you practically have to special-order it like a Civic GX. 95% of what's delieverd to dealers are LX and EX models. And 95% of what is sold and creates an impression ar the better optioned out models.
This requires both the dealers and GMs fleet sales department to work together. The Lucerne is probably the best example right now, and a perfect case of what not to do. The CXS drives like a DTS. The other models drive like a Park Avenue of old. Every person that I have recommended the CXS to - to take a test drive - has come back with the same befuddled look on their faces. It's a look of their decades old image of Buick being warped a little bit. This thing's got some teeth in it. And it takes a few hours to sink in, because it's not the Buick they remember.
Side note - the Grand National did the same thing in the 80s. One was bland and horrible, and the other - whole other car. GM could change the CSX to a special edition or other name alone - to make it clearer.
GM makes a few great cars. That nobody knows about. But that's easy to change.
My company sells a product to retail stores. We have been very successful and our motto is "The better our customer does, the better we will do!" I think this is important in todays market.
So, using this principle with GM, GM would say (It doesn't cost a whole lot more to give AVIS a better model - cost of better parts is minimal and we have to slap the car together anyway so labor isn't going to cost much more) but AVIS's customers will be happier and they will do more business, and we are going to gain because more people will like driving our cars. It is a win, win situation.
On the other hand if AVIS says we want the cheapest cars we can buy, and GM is building cars to meet that need, than why would we, the consumer, want to buy that same car?
Also, this is a lose, lose situation, AVIS customers aren't too happy and GM will not be selling any additional cars (in a profitable market).
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
What better way to show your product’s attributes (and hopefully superiority) if you are an American brand (say Lucerne) then having business travelers sampling. Maybe GM/Buick could do some fine tuning/upgrading on the Lucerne top model and put on a special badge and offer it initially to rentals with good Tiger publicity. Remember Arnold Palmer and Hertz. And, that Lucerne upgrade had better be a notch above their best model right now.
If a business traveler owns American brand cars he/she could very well be enticed to trade-in/buy a model similar to rental when ready for purchase. If the traveler is a foreign brand car owner, this is probably the only way that he/she will ever drive the Lucerne. And, if the Lucerne rental is an excellent drive, has the fit/finish/interior/etc, and exceeds expectations, then an added benefit besides consideration for a dealer visit is “word of mouth”. Business travelers network a lot and readily offer opinions on hotels, restaurants and other. They would certainly do the same with a rental car. I know I did on one model in particular back in about 92 – 93, that was the Camry. Told everyone about it and how significantly better it was then the Taurus rentals at the time.
An updated/refined Lucerne in rentals could do a lot for Buick if offered later at dealers. But, what could be done with Chevy/Pontiac?
Here's the irony -- most companies would pay big money to get their products into the hands of consumers for extended periods, getting them to try them out and a chance to gain a favorable impression. Yet GM takes this very same opportunity that others would kill for, and turns it into a liability that probably helps it to lose sales, and ensure that its margins remain low and dependent upon fleets. A great way to snatch defeat from the jaws of victory.
I do question your theory that the current crop of cars is good enough to win over customers, so my plan would mandate that a few great cars be created so that such a strategy wouldn't backfire. (If the cars aren't appealing, the up-the-fleet marketing model would fall flat on its face.) But if there are a few gems, they need to accentuated and emphasized so that buyers not only desire the nameplate, but also the badge.
You say that like it's a good thing! Putting a GM car into a Hertz fleet was one of the things that further soured me on their cars - I absolutely HATED that Grand Prix, and would never look at another Pontiac because of it, G6 or otherwise........
Advertising Crap won't necessarily endear it to the buying public. Now, not everything GM makes is garbage, but putting their worst models into dumping fleets may backfire on them, Ford or anybody else. You should put your best there, which I suppose was your point to begin with.
"GM Death Watch '06". As we talked b4 socal, it seems that this whole fiasco is going to make for great HBS case studies.
"GM: What Not To Do"
----------
There already is a 'GM Death Watch'. Just go to:
http://www.thetruthaboutcars.com/index.php
:shades:
My faith and support left when Miller came into the picture
I hope they can do that without Saturn having the same fate as Oldsmobile.
The countdown has begun
http://msnbc.msn.com/id/12721804/from/RS.4/
In fact, “should I buy a vehicle from a wounded company” is more like “why the Hell should I buy a vehicle from a wounded company?” I reckon the media buzz about GM’s bankruptcy is already taking its toll on a company that can not afford to lose a single sale. The smallest bit of bad news could be the sound of butterfly wings beating, drumming up the chaos that spells GM’s doom.
While The General’s flackmeisters will scream bloody murder about self-fulfilling prophesies, current events are the fulfillment of a prophesy made over thirty-five years ago, when GM and its fellow domestics responded to higher quality foreign imports with arrogance, derision and scorn. They had their chance to change by their own free will. Now change will be thrust upon them. The Death Watch continues
Will people even buy a GM if they sense the company is doomed?
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
To be fair, it need not be this way. Just as United kept flying and serving passengers during its bankruptcy, so GM could do the same if it has a good exit plan, a skilled PR department and great cars for sale. Over the long run, a BK could actually strengthen the company if it helped to cut the dead weight.
Problem is, I'm just not seeing the cars. While it's nice to see that the full-size SUV's have improved, how long will it be before genuinely outstanding sedans and economy cars hit the market? The Cobalt, Malibu, G6 and Impala are all too recent to be changed out in next 24-36 months, so my guess is that we'll be stuck with these for quite some time to come, which is not a good sign.
Back on the rental car bit, the funny thing is that this wouldn't really cost GM much at all if the cars were up to the challenge. In effect, the vast majority of these rental cars are leased, which would simply require GM to effectively subsidize the lease, an already common practice for the retail luxury market. So GM will be taking these cars back within roughly 9 months of their placement into service, with a need for GM to sell the car thereafter. If these cars improve, so should the residuals improve, which would allow GM to recoup more money on the back end. Still, I don't see cars that are strong enough to support such as effort.