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Autoextremist: the sun sets on the German car thing

3K views 34 replies 16 participants last post by  sdotjeezy 
#1 ·
Here PDL AE rant of the week www.autoextremist.com

THE SUN SETS ON THE GERMAN CAR THING.
DateTUESDAY, OCTOBER 15, 2019 AT 09:14AM
By Peter M. DeLorenzo

Detroit. There is a lot of hand-wringing going on in The Biz right now about German luxury cars and their falling residual values. Automotive News even mentioned it in this week’s issue. One entity quoted in the piece suggested that Tesla was the culprit, insisting that the success of the Model 3 has turned the market upside down. Hardly. That statement is wrong-headed and flat-out silly, and not worth going into.

What’s really going on is that the years of egregious behavior on part of the German automakers is finally taking its toll, and it’s going to get uglier. But before we get into that, let’s remember the halcyon days when the German automakers created their reputations almost solely based on their legacy of performance on the Autobahn, a nirvana-like dream state that driving enthusiasts over here could only imagine, unless they took a trip over to Germany to experience it for themselves.

Back then, German cars felt different, looked different and hell, they even smelled different than what we were used to over here, especially since our domestic auto industry at the time was churning out craptastic monuments to mediocrity at a furious rate.

Everything about German cars back then was damn-near mesmerizing - the fit, the finish, the details, the quality and most important, the driving difference they offered. It was a whole ‘nother country in terms of the automotive spectrum, and American driving enthusiasts were hungry to partake.

And the ad themes resonated too: “Engineered Like No Other Car in The World” (Mercedes-Benz). “The Ultimate Driving Machine” (BMW). “There Is No Substitute” (Porsche). The campaigns were filled with Autobahn runs and idyllic coastal drives that implied that you were really missing something and your life would be better if you drove one of these glittering German high-performance machines. People bought into the German Car Thing in droves, and the American market was transformed because of it.

Remember the hilarious scene in Lost in America, the brilliant Albert Brooks film where he was talking on the phone to “Hans” at the Mercedes-Benz dealer about buying a Mercedes and Hans was explaining the details of the car and the cost? It was a minor scene early-on in the movie and then Albert’s character gets blown out of his ad job and he never actually buys the Mercedes, but it spoke volumes. The German Car Thing was actually a thing.

The German Car Thing swept everything in its path, especially at the domestic automakers, as they scrambled to crack the German car code with “Euro-like” entries of their own. American cars sprouted numbers instead of names, vinyl tops and white walls were ditched in favor of black wall performance tires and aluminum wheels, and the designs were heavily influenced by “the German look.”

That didn’t mean, of course, that the American entries had the substance of the German cars, but they scrambled to ride the wave anyway. When I was working at Pontiac’s ad agency back in the day, I remember sitting through a lengthy presentation by Pontiac operatives about how the Pontiac 6000 STE would be The Answer to the German Car Thing. (I fell asleep in the meeting only to be elbowed by a co-worker to wake up; it was that inspiring.)

And who could forget the ill-fated Cadillac Cimarron, the hastily put together and shockingly offensive effort by GM to capture the European wave? Based on the forlorn GM “J” cars (Chevy Cavalier, etc.), the Cimarron was an unmitigated disaster of badge engineering and an absolute low point for GM (one of many, it turns out).

There were other entries, of course. Ford jump-started its “Euro” efforts by actually importing its Mercury Merkur models from Germany. This seemed like a savvy idea on paper, but Merkur was almost dead on arrival in this market, performing listlessly until the experiment was ended in less than five years. And there were countless other “Touring” and “Sport” models unleashed from the domestic manufacturers too.

But the largely reactionary efforts did little to stem the tide of the German onslaught on the American market. And slowly but surely the realization came over the American automakers that in order to really compete, they had to actually design and build better cars – what a concept - which we can thank the German manufacturers for.
 
#3 ·
I remember those days of the Cimarron, 6000 STE, and then the Euro things even in Chevy's. It seemed as though they thought the "flash" or "lipstick" would do the trick but offered little in substance compared to what you got out of the Mercedes or Bimmah in real driving experience.
 
#10 · (Edited)
No. They were better cars built to a higher standard. They drove exceptionally well and they charged a premium for it. It was a good reputation built slowly over a long period of time with real effort, not just a series of ad campaigns. Legends are built on pieces of reality.

But now even the Germans are flash over substance.
 
#6 ·
Ford jump-started its “Euro” efforts by actually importing its Mercury Merkur models from Germany. This seemed like a savvy idea on paper, but Merkur was almost dead on arrival in this market, performing listlessly until the experiment was ended in less than five years.
Hey, we got a mention!!

:bounce:
 
#8 · (Edited)
So many reasons the Germans are in decline, including:
* PITA to maintain
* The scramble to reach a bigger audience (i.e., go down market) is killing the appeal at higher price points. This is something some of us predicted long ago.
* Ridiculous (and, in some cases confusing) pricing structures
* The delta from generation to generation (stylistically, technologically, performance-wise) getting smaller
* Abandoning their brand identities

And, PDL is wrong: Tesla is also a big factor. Not so much in the absolute number of stolen sales, but in creating the mentality that electric is the future of premium vehicles, and that the Germans are no longer the technology leaders. Unlike other US/Asian manufacturers who were/are chasing the Germans, the tables are turned when it comes to Tesla. The narrative is clearly that of the Germans scrambling to catch up with Tesla in electrics. That shift in market mentality is a huge issue for manufacturers who sell on image over all else.
 
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#20 ·
So many reasons the Germans are in decline, including:
* PITA to maintain
* The scramble to reach a bigger audience (i.e., go down market) is killing the appeal at higher price points. This is something some of us predicted long ago.
This is what Aaron Serveron of Ate Up with Motors also mentionned and worth to re-mention it. https://ateupwithmotor.com/model-histories/packard-one-twenty/
It’s a moot point now, of course, because Packard has been gone for decades, but the company’s trajectory is one the managers of BMW, Mercedes-Benz, and Audi would do well to study. In Europe, the “premium” German brands now dominate what used to be the midsize sedan segment and have more recently begun an aggressive push into smaller and cheaper C-segment. To date, the strength of those brands has yet to suffer significantly from that expansion, but as cars from formerly high-end brands displace mainstream marques like Ford and Opel, the Germans may eventually find that they’ve become the new mainstream rather than the upscale alternative.

Considering the Germans’ sales volumes and profit numbers in recent years, that may seem like the opposite of a problem, but if the roundel and three-pointed star no longer connote any particular snob appeal, those manufacturers, like Packard, may find themselves newly vulnerable from both above and below. Presently, they maintain their prestige through continued investment in the bigger, fancier, more expensive models, but with ever-escalating regulatory demands for better fuel economy and lower CO2, the senior cars may not be sustainable indefinitely — and there’s always the risk that some ambitious CEO will, like Max Gilman, eventually decide that the big cars are more expensive than they’re worth. At that point, history may repeat itself.

The upshot is that while any brand is as much about perception as substance, perception and substance are nonetheless inextricably linked. Of course, perception inevitably lags reality, but that can be both good and bad. A strong reputation can sustain a brand through some rough periods or serious missteps, but, as Packard discovered, once you lose that momentum, getting it back can be very difficult indeed.
Did the menagers of BMW, Mercedes and Aud studied the case of Packard?:rolleyes:
 
#11 ·
PDL's article reads like the opening monologue to the War of the Worlds

“No-one would have believed, in the last years of the twentieth century,
that US car markets were being watched from the timeless worlds of Germany.
No-one could have dreamed that we were being scrutinized, as someone with a
microscope studies creatures that swarm and multiply in a drop of water.
Few Detroit chiefs even considered the possibility of cars on other continents.
And yet, across the gulf of the Atlantic, minds immeasurably superior to ours
regarded this market with envious eyes, and slowly and surely, they drew their
plans against us…”
 
#12 ·
Nice story and all, but where is this decline? Are German vehicle sales tanking? No. Who is coming in to eat their lunch? Tesla is doing quite well volume-wise, but I don't recall seeing a big hit to the German volume. So where is the threat coming from? While things have changed since their ascendancy in the 1980's, no one is offering anything that substantially surpasses the Germans and even the diesel fiasco didn't dent their reputation, so there isn't a reason to get people out of their German makes. Just like the Japanese - in the 1980's their quality and fuel efficiency drove them to success and American brands to ruin. In 2019 the gap between the Japanese and American makes is gone, but the Japanese continue to do well.
 
#16 ·
Nice story and all, but where is this decline? Are German vehicle sales tanking? No. Who is coming in to eat their lunch? Tesla is doing quite well volume-wise, but I don't recall seeing a big hit to the German volume. So where is the threat coming from? While things have changed since their ascendancy in the 1980's, no one is offering anything that substantially surpasses the Germans and even the diesel fiasco didn't dent their reputation, so there isn't a reason to get people out of their German makes. Just like the Japanese - in the 1980's their quality and fuel efficiency drove them to success and American brands to ruin. In 2019 the gap between the Japanese and American makes is gone, but the Japanese continue to do well.
The decline is not huge but it's there. If you look at MB and BMW, their US sales peaked in 2015/2016 and were down about 5-10% from that peak last year, and this year is trending slightly worse. That may not seem like a big drop but taken in the context that MB never had a sales drop in the US in the 25 years leading up to 2016 except for a dip during the 2008/2009 downturn and BMW had only a single down year in that same 25 years (again, excluding the dip in 2008/2009), the recent 3-4 years of dropping sales is unprecedented in recent history. Time will tell if this is the start of a new trend or just a temporary breather.

Audi has seen a lot more ups and downs, so the story there is less clear.
 
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#15 ·
If you want to see what a German car was like in the past, look at a G-Wagen.
The things are tanks, not tech.
 
#19 ·
Look past the grille...if possible, and you'll see that the 7 is a pretty impressive car. I get why they did what they did, the 7 was becoming an "also ran" to the S...they needed to make a splash, but I wouldn't have gone about it that way.
 
#24 ·
Yeah. Maybe an Ultimate Cadillac Machine? This gets so confusing. :think:
 
#27 ·
I knew MB was going to be in trouble when they brought that crappy CLA250 over from Eastern Europe to compete with the A3 and stripped 320i (now X1/X2) for the coveted first time real estate agent market.

They're chasing volume and diluting the brand, all 3 of the luxo German makers. The market forces moving away from sedans, and the slow death of sports sedans ensures the ultimate driving machine will never again be so except rare cases like the M2. But even still you can't tell me its not harming brand equity to have 3/4s of the showroom traffic come in for a $329/mo lease on an X1 riding off a Mini platform, while you have a 100K+ X7 or M5 parked next to it.

Scary thing is I think had Cadillac stayed the course on elevating the brand they could have come up in image to the Germans who are on their way down.
 
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