Looking into new and used cars and fond this article. i realized that a few companies had been bought and sold, but Holy Cow, i didn't realize it was this bad. The term orphan car company is ver fitting. It makes you think twice when looking at Volvo, Saab or Landrover.
From;http://www.thepanamanews.com/pn/v_16/issue_12/lifestyle_11.html
Lemon-Aid
Beware of Luxury Lemons
by Phil Edmonston
I remember the irony.
As I sat in Canada's Conservative Parliament during daily question period, opposition MPs would grill the Prime Minister and assorted ministers over government scandals, conflicts of interest, or anything else that might make the government fall. At the same time, Conservative Party members would often cross the floor and privately ask me car questions for themselves or their families.
Most of the questions concerned which luxury European cars were the best deal. Obviously, these smart, politicians didn't know beans about luxury cars, or imports, except that they wanted one (much like many of Panama's politicos).
No matter how much I stressed that purchase price is no guarantee of reliability or overall quality, I knew deep down in my little democratic socialist heart that many would put their cash on European flash.
I figured, what the heck. A few years fixing their Land Rover, Mercedes, Jaguar, Saab, or Volvo might teach them humility.
Now, 17 years later, I see that my harsh assessment of European cars and SUVs was not wrong. Four out of the five above-mentioned automakers have been sold to new owners, after skirting bankruptcy. Quality and reliability is subpar judging by company confidential service bulletins, NHTSA-posted safety failures reported by owners (www.safercar.gov), and Consumer Reports surveys.
Nevertheless, the two-year-old, worldwide economic recession may end up reinvigorating the European auto industry by opening up new markets.
After losing billions of dollars in sales, getting government handouts from France, Germany, Italy, and Spain, and wallowing in red ink, European automakers are returning to profitability thanks to cost-cutting and surging demand for German luxury vehicles. Audi, BMW and Mercedes-Benz have had substantial sales increases in addition to double-digit sales gains by Indian-owned Jaguar and Rover. Apparently, rich buyers in North America and China are fueling a flight to luxury cars and SUVs and are paying no heed to reports of quality problems or higher fuel costs.
In the meantime, econocar imports are taking it on the chin. Mercedes Smart cars sales in the United States are imploding, with sales down 41 percent from 2008 to 2009 and down a further 60 percent YTD 2010. This is probably because the Smart is significantly overpriced ($18,000) for the US and Canadian markets, especially when you can buy a base Hyundai Accent in Canada for $9,999.
Now we come to Porsche, and Volkswagen, a powerhouse of German engineering and creative design that has strongly rebounded from the recession. Volkswagen has done particularly well as fuel prices remain high. It has the most fuel-saving and high-performing vehicles, its North American marketing presence is relatively intact, with minimal dealer attrition, and the company is well positioned to ride the upcoming diesel craze to fatter future profits as hybrids and electric-car sales falter. On the other hand, increased small car competition from the Japanese and South Koreans importing more refined econocars and cheaper crossovers will probably erode VW and Mercedes small car and SUV sales. Already, the Mercedes Smart Car is rumoured to be in its last year and VW's 2011 base Jetta has such a wimpy 215-hp engine, it's called the Wolfsburg Evinrude.
VW has just purchased a substantial interest in Suzuki. "Just in case…."
European automakers hard hit by poor sales a year ago have taken many different routes to sustainability by going to two extremes, where they focus on entry-level econocars and on luxury high-performance vehicles. Key to this strategy is making joint production deals with competitors, no matter the quality of the product they produce. Fiat, for example, will replace many of Chrysler's cars and trucks with its own problem-plagued lineup, and Ford will bring to North America most of its European small product lineup, reliving the dismal history of its Cortina, Fiesta, and XR4Ti past. I predict Chrysler will lose millions with its Fiat affiliation and Ford will simply break even until Fiesta production starts on this side of the Atlantic.felines to financial stability.
Be wary of European "orphans"
Auto "orphans" are those vehicles that have been sold by their parent builder, or as with Jaguar, Land Rover, Saab, and Volvo, sold twice to different automobile manufacturers.
Usually, when this occurs, the bought companies sink into bankruptcy after a year or two. It happened with American Motors, Bricklin, Chrysler, and Delorean and will likely happen to Jaguar, Rover, Saab, and Volvo.
The problem with buying many orphan models is primarily the high cost of servicing, due to increased costs for parts that become rarer and rarer, the difficulty in finding mechanics who can spot the likely causes of some common failures because they work on those vehicles all the time and have current service bulletins to guide them, the absence of secret ("goodwill") warranties to pay for work outside of the warranty period, because the automaker has dropped the warranty extensions along with the models, and finally, a plummeting resale value for a car that nobody wants.
Bucking the trend, Tata-owned Jaguar and Land Rover are two orphan car companies that have begun a sales turnaround in Europe. Sales volumes rose 58 percent through June of 2010 for the two luxury brands, helping Tata post a consolidated net profit of $422 million (US) in the three-month period to June, following a net loss in the same period a year ago. Sales of the two prestige brands were severely hit by the global economic slowdown after Tata Motors bought the carmakers from Ford for $2.5 billion in 2008.
GM has sold Saab to Spyker, a tiny Dutch company that builds $1 million "supercars." The small automaker has never made a profit and will likely go bankrupt by year's end. Volvo is also on shaky ground now that it has been sold for $1.5 billion (US) to Geely, a Chinese truck manufacturer, with no experience in North America and limited experience in automobile manufacturing and marketing. Thirteen-year-old Geely will face the formidable task of integrating the two corporate cultures. It also has to make a profit with what has been a perennial money-loser for Ford, which originally paid $6.45 billion for Volvo in 1999. Having lost its quality edge after the Ford purchase over a decade ago, Volvo models will likely show a further decline in quality, plus poor parts supply, and spotty servicing support --- just before closing its doors.
European vehicles are generally a driver's delight and a frugal consumer's nightmare. They're noted for having a high level of performance combined with a full array of standard comfort and convenience features. They're fun to drive, well-appointed, and attractively styled. But they're also unreliable, overpriced, and a pain in the butt to service. And forget the myth that European luxury vehicles hold their value --- most don't.
DEPRECIATION
A EUROPEAN LUXURY CAR NIGHTMARE
MODEL NEW 2006-2008 USED 2006-2008
Audi A3 2.0T $32,950-32,300 $13,000-21,000
Audi A6 Quattro $62,510-63,600 $21,500-36,500
BMW 323i $35,200-35,900 $12,000-24,000
BMW 525i, 528i $58,600-59,900 $20,500-38,500
BMW X3 $44,900-45,300 $17,500-27,000
BMW X5 $59,500-61,900 $22,000-35,500
Jaguar S-Type $64,295-62,000 $15,000-28,500
Jaguar XJ $88,500-85,000 $19,000-36,000
Mercedes B-Class $30,950-29,900 $12,000-18,500
Mercedes E-Class $74,300-65,800 $20,000-35,000
Mercedes ML350 $55,750-59,900 $22,000-35,000
Land Rover LR3 $53,900-44.900 $18,000-26,000
Land Rover R. Rover $99,900-100,900 $29,000 -44,000
Porsche Boxster $64,100-58,100 $25,500-40,000
Porsche Cayenne $60,100-55,200 $23,500-34,500
VW Passat AWD $44,990-44,675 $16,500-20,500
Volvo S80 $54,995-54,995 $18,500-33,000
Volvo XC70 AWD $47,121-46,495 $18,000-30,500
Note: The low residual values get worse as time goes by. Also, notice how original sales prices declined over the three years studied as well. Prices are in Canadian dollars.
From;http://www.thepanamanews.com/pn/v_16/issue_12/lifestyle_11.html
Lemon-Aid
Beware of Luxury Lemons
by Phil Edmonston
I remember the irony.
As I sat in Canada's Conservative Parliament during daily question period, opposition MPs would grill the Prime Minister and assorted ministers over government scandals, conflicts of interest, or anything else that might make the government fall. At the same time, Conservative Party members would often cross the floor and privately ask me car questions for themselves or their families.
Most of the questions concerned which luxury European cars were the best deal. Obviously, these smart, politicians didn't know beans about luxury cars, or imports, except that they wanted one (much like many of Panama's politicos).
No matter how much I stressed that purchase price is no guarantee of reliability or overall quality, I knew deep down in my little democratic socialist heart that many would put their cash on European flash.
I figured, what the heck. A few years fixing their Land Rover, Mercedes, Jaguar, Saab, or Volvo might teach them humility.
Now, 17 years later, I see that my harsh assessment of European cars and SUVs was not wrong. Four out of the five above-mentioned automakers have been sold to new owners, after skirting bankruptcy. Quality and reliability is subpar judging by company confidential service bulletins, NHTSA-posted safety failures reported by owners (www.safercar.gov), and Consumer Reports surveys.
Nevertheless, the two-year-old, worldwide economic recession may end up reinvigorating the European auto industry by opening up new markets.
After losing billions of dollars in sales, getting government handouts from France, Germany, Italy, and Spain, and wallowing in red ink, European automakers are returning to profitability thanks to cost-cutting and surging demand for German luxury vehicles. Audi, BMW and Mercedes-Benz have had substantial sales increases in addition to double-digit sales gains by Indian-owned Jaguar and Rover. Apparently, rich buyers in North America and China are fueling a flight to luxury cars and SUVs and are paying no heed to reports of quality problems or higher fuel costs.
In the meantime, econocar imports are taking it on the chin. Mercedes Smart cars sales in the United States are imploding, with sales down 41 percent from 2008 to 2009 and down a further 60 percent YTD 2010. This is probably because the Smart is significantly overpriced ($18,000) for the US and Canadian markets, especially when you can buy a base Hyundai Accent in Canada for $9,999.
Now we come to Porsche, and Volkswagen, a powerhouse of German engineering and creative design that has strongly rebounded from the recession. Volkswagen has done particularly well as fuel prices remain high. It has the most fuel-saving and high-performing vehicles, its North American marketing presence is relatively intact, with minimal dealer attrition, and the company is well positioned to ride the upcoming diesel craze to fatter future profits as hybrids and electric-car sales falter. On the other hand, increased small car competition from the Japanese and South Koreans importing more refined econocars and cheaper crossovers will probably erode VW and Mercedes small car and SUV sales. Already, the Mercedes Smart Car is rumoured to be in its last year and VW's 2011 base Jetta has such a wimpy 215-hp engine, it's called the Wolfsburg Evinrude.
VW has just purchased a substantial interest in Suzuki. "Just in case…."
European automakers hard hit by poor sales a year ago have taken many different routes to sustainability by going to two extremes, where they focus on entry-level econocars and on luxury high-performance vehicles. Key to this strategy is making joint production deals with competitors, no matter the quality of the product they produce. Fiat, for example, will replace many of Chrysler's cars and trucks with its own problem-plagued lineup, and Ford will bring to North America most of its European small product lineup, reliving the dismal history of its Cortina, Fiesta, and XR4Ti past. I predict Chrysler will lose millions with its Fiat affiliation and Ford will simply break even until Fiesta production starts on this side of the Atlantic.felines to financial stability.
Be wary of European "orphans"
Auto "orphans" are those vehicles that have been sold by their parent builder, or as with Jaguar, Land Rover, Saab, and Volvo, sold twice to different automobile manufacturers.
Usually, when this occurs, the bought companies sink into bankruptcy after a year or two. It happened with American Motors, Bricklin, Chrysler, and Delorean and will likely happen to Jaguar, Rover, Saab, and Volvo.
The problem with buying many orphan models is primarily the high cost of servicing, due to increased costs for parts that become rarer and rarer, the difficulty in finding mechanics who can spot the likely causes of some common failures because they work on those vehicles all the time and have current service bulletins to guide them, the absence of secret ("goodwill") warranties to pay for work outside of the warranty period, because the automaker has dropped the warranty extensions along with the models, and finally, a plummeting resale value for a car that nobody wants.
Bucking the trend, Tata-owned Jaguar and Land Rover are two orphan car companies that have begun a sales turnaround in Europe. Sales volumes rose 58 percent through June of 2010 for the two luxury brands, helping Tata post a consolidated net profit of $422 million (US) in the three-month period to June, following a net loss in the same period a year ago. Sales of the two prestige brands were severely hit by the global economic slowdown after Tata Motors bought the carmakers from Ford for $2.5 billion in 2008.
GM has sold Saab to Spyker, a tiny Dutch company that builds $1 million "supercars." The small automaker has never made a profit and will likely go bankrupt by year's end. Volvo is also on shaky ground now that it has been sold for $1.5 billion (US) to Geely, a Chinese truck manufacturer, with no experience in North America and limited experience in automobile manufacturing and marketing. Thirteen-year-old Geely will face the formidable task of integrating the two corporate cultures. It also has to make a profit with what has been a perennial money-loser for Ford, which originally paid $6.45 billion for Volvo in 1999. Having lost its quality edge after the Ford purchase over a decade ago, Volvo models will likely show a further decline in quality, plus poor parts supply, and spotty servicing support --- just before closing its doors.
European vehicles are generally a driver's delight and a frugal consumer's nightmare. They're noted for having a high level of performance combined with a full array of standard comfort and convenience features. They're fun to drive, well-appointed, and attractively styled. But they're also unreliable, overpriced, and a pain in the butt to service. And forget the myth that European luxury vehicles hold their value --- most don't.
DEPRECIATION
A EUROPEAN LUXURY CAR NIGHTMARE
MODEL NEW 2006-2008 USED 2006-2008
Audi A3 2.0T $32,950-32,300 $13,000-21,000
Audi A6 Quattro $62,510-63,600 $21,500-36,500
BMW 323i $35,200-35,900 $12,000-24,000
BMW 525i, 528i $58,600-59,900 $20,500-38,500
BMW X3 $44,900-45,300 $17,500-27,000
BMW X5 $59,500-61,900 $22,000-35,500
Jaguar S-Type $64,295-62,000 $15,000-28,500
Jaguar XJ $88,500-85,000 $19,000-36,000
Mercedes B-Class $30,950-29,900 $12,000-18,500
Mercedes E-Class $74,300-65,800 $20,000-35,000
Mercedes ML350 $55,750-59,900 $22,000-35,000
Land Rover LR3 $53,900-44.900 $18,000-26,000
Land Rover R. Rover $99,900-100,900 $29,000 -44,000
Porsche Boxster $64,100-58,100 $25,500-40,000
Porsche Cayenne $60,100-55,200 $23,500-34,500
VW Passat AWD $44,990-44,675 $16,500-20,500
Volvo S80 $54,995-54,995 $18,500-33,000
Volvo XC70 AWD $47,121-46,495 $18,000-30,500
Note: The low residual values get worse as time goes by. Also, notice how original sales prices declined over the three years studied as well. Prices are in Canadian dollars.
