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The Cost of Zero

By the time you read this, the General Motors “Zero to Sixty” marketing program will be over.

By the time you read this, the General Motors “Zero to Sixty” marketing program will be over. When it was announced on March 31, it was to run from April 1 (a.k.a., April Fool’s Day) to April 30 (a.k.a., Walpurgisnacht, which may ring some bells for those of you who are familiar with Faust). Or, the “Zero to Sixty” marketing program may not be over. It may have been extended. Or modified. A lot of credit has to be given to GM for what it has been doing to keep people buying cars. But at the same time, I can’t help thinking that there’s a little something that falls in the space between the notions of April Fool’s Day and Walpurgisnacht about the programs. Don’t get me wrong. If I was in the market for a new car right now, I’d be as happy with 0% interest for 60 months (or the “customer cash”) as anyone else would be. It’s a hell of a deal. And that might be the problem. It might be too hellish a deal. And lest anyone think that this is merely about GM, it is worth noting that the cross-town rivals responded with their variants. (Arguably, Mitsubishi started the commotion long ago with its 0/0/0.)

What GM has been doing since its laudable “Keep America Rolling” program following September 11, 2001, is using its marketing muscle to maintain, or ideally gain, market share. If it has more in its bank than the other guys that it can use to get people into its cars and trucks with, then it is going to use it. If it can get people into its cars and trucks with this encouragement, and if they find that what they once thought a Chevy or a Buick was isn’t at all the case, if they find that they like it, then this will be money well spent, because a happy customer is likely to be a customer that returns. That’s key for vehicle manufacturers in a world that’s being filled with an increasing number of assembly plants providing capacity that isn’t needed. But the whole notion of providing cash may ultimately prove to be a case of “foolish if you don’t; damned if you do.” A no-win case.

No-win, perhaps, because of the repercussions, especially in the supply base. Plenty of suppliers are finding it difficult to make a go of it financially. Not that I think that OEMs have some sort of responsibility to underwrite suppliers, but there is going to be an issue if more and more of these small shops that provide everything from dies to tooling to incidental parts suddenly cease to exist as the OEMs look to take more and more out of their costs in order to pay for these programs. The OEMs are going to find it difficult to build products without those things, and they’re going to find it difficult to quickly find sources that can fill the gaps. And to the degree that these comparatively smaller suppliers cease to exist, there is going to be a number of unemployed people who are not going to be in a position to buy a new car regardless of how many smackers are stacked on the sheet metal.

Columns like this are supposed to supply a solution. There is no simple one. No easy one. But I do believe this: People—you, me—are willing to pay a premium for what they want. A premium for quality. A premium for things that fit their needs. Better product—higher quality, reliability, durability, safety, economy, whatever—will be bought.

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