17 August 2007

What's The Next 'Killer App' For Cars?

Short of cars that drive themselves (and really, who's looking forward to that?), it would seem that we're quickly approaching the limits of usable features and luxury in cars today. Even some of the cheapest economy sedans are now available with Bluetooth, navigation and push button starting, and it's become the bare minimum for midsize sedans to offer such things. That doesn't even begin to scratch the surface of the true luxury cars, which have literally run out of things to offer and are now moving into the aforementioned 'computer running everything for you' side of luxury (automatic parking, lane departure warning systems, etc.). Essentially, the divide between luxury cars and regular cars is no longer one of luxury- it's quickly becoming one of safety.

To further muddle the issue, even power is no longer the sole domain of the big rig flagship luxury models. Not when you've got midsize sedans creeping up to 300 HP, and entry level luxury cars approaching 500 and 600 HP.

So if you're an automaker in search of an identity, and you're facing an options list that is basically a list of commodities nowadays, what's the next step?

I'll focus on the the midsize segment simply because I think this is where the 'revolution' needs to happen, as opposed to other times in automotive history where advancements were made up top and trickled down, the time is ripe for the reverse- the mass market dictating to the upper crust.

Here's the idea- take your normal run of the mill midsize sedan. It will cost anywhere between 17k to 27k depending on options and engines. Now drop all the options and make them all standard. All of them. The only option available to the consumer would be to pick an engine. Do base prices go up in this scenario? Yes. Do they go up appreciably? Not if the automaker fights the urge to ride the gravy train. The fact is, there is a LOT of profit made on $1500 navigation units and $2000 sunroofs by car companies- so there is also a considerable amount of wiggle room to play with here. Bring that base price up by 3k to $20,000, and bring your top level down to $24,000, and you've got two vehicles with different engines/performance levels that are bristling with technology, all at a manageable price. And at that point, you don't even have to worry about fleet sales. Because if somebody is walking up to a rental counter and getting your 'base' $20k version, they're getting a hell of a vehicle.

What's most amusing is that there is a company out there with the available dealer volume, engine lineups, and production capacity to do this right now. The company? General Motors. Yup, you heard right.

Imagine the GM midsize segment right now, but with the above scenario played out. Engine options and suspension settings would differentiate Pontiac, Chevrolet and Saturn. That's it. And really, doing it that way would really force the brands out of the 'rebadge' mentality- just think- if you're a Pontiac designer/engineer and you don't make your car drive differently (more to the point, like a Pontiac), Customer A will just walk on down the street to Saturn or Chevy and take a look at another version.

Is this a 'killer app'? Some would say no. My contention is that it can be labelled as such because very few companies could operate this way- only automakers with large economies of scale would have a chance with this. And since that's the case, it would be a fairly hard thing for a smaller manufacturer to duplicate effectively.

Is it at all doable? Is it realistic? I have no idea. But this a blog. We don't deal in doable or realistic. We deal in utopia.

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