A look into the affordable American Roadster market of 2011:
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Hyundai Trident - This is the car that is shaking up the landscape. It is $2,000 less than the base Solstice and with 30/36MPG and 205HP, offers more grunt and better fuel economy. Add to that, the sexy body work and this is the new car to beat. The car will be produced in Alabama and exported all over the world.
This is the one that may be the big seller. When I heard Hyundai was going to cut the top off of a Tiburon, I wsa tempted to wait and see it.
--Chemist (Hyundai makes nice cars.)
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Envious, ebony leather, loaded, DDM Stage II S/C, headers/cat/exhaust, 4-piston brakes/slotted rotors, Probeam, Backbone, Lil' Chromies, K-sphere pedals, Kazera KZ-L wheels, the TWEETY door unlock/lock button, High Note horn, Brushed Al door sills, etched/lighted WindRestrictor, white LED map/footwell lights, 3rd brake light pulser. --- She moves!
I bet the MX-5 will exist in some form. I also bet the S2000 will exist in some form, and a mid-engine or maybe a new platform from Toyota too.
The market is 100,000 NOW, but if the kappas expand or grow the market, there's still room for more.
Even if the market doubled in size to 200K units, pure roadsters like MX-5, S2K, SLK, Kappas, Boxster, Elise, and whatever Toyota or the Chinese might make would have to sell 30,000 units to be viable. There are just too many models when you add in the coupe/convertibles like Z4, Corvette, 350Z, Eclipse, 911, BMW 6, 4?, 2?, and others that might develop.
Even if the market doubled in size to 200K units, pure roadsters like MX-5, S2K, SLK, Kappas, Boxster, Elise, and whatever Toyota or the Chinese might make would have to sell 30,000 units to be viable.
Outside of the MX-5, I don't think any of those cars have sold more than 30,000 units in a year. They all apper to be pretty viable to me. The Boxter sells at about 20,000 units (world wide), and this car has been around for ten years. The Elise is more like 3,000 units. I don't know if the Solstice will ever sell at 30k units, but it doesn't need to.
Production doesn't need to hit a certain number to be viable. The company building them just has to build the appropriate sized production facility to properly meet demand. GM has alot of pressure to to expand the Solstice production facility. But if they are smart, they'll leave it alone. It's always better to make one less unit than there is demand for. Five years from now, I seriously doubt the Solstice will be selling as well as it is now. GM will be looking at the Nomad or some other fresh RWD car to help sustain Kappa production. If they dump big bucks into expanding production, they'll have to be able to pay for that in just a year or two of extra production. Even then, they'll loose those profits down the road with an overbuilt factory. It's just how the market has always worked.
Last edited by toddwcarpenter : 05-25-2006 at 10:26 AM.
Those incentives were to help winter sales. They worked. Mazda USA had their best month of MX-5 sales during February since 1998. Demand for the MX-5 is so strong, the factory line has scaled back RX-8 production by about half to make room (they share the same line). Worldwide, they've sold more than 40,000 MY2006 MX-5s and have reported record profits for the company.
Next month, at the London Auto Show, Mazda will unviel it's retractable hardtop option. Most of the rumours suggest that the $2000 powered top will lower in 12 seconds, weighs only 80 pounds more than the soft top, and takes up absolutely no trunk space. This car is in Mazda's ordering system for 2007, dealers can alread see the "RHT" option and cars will show up in the US by October.
I don't think the MX-5 is going anywhere.
As far as what cars will be around. I think there's just as good a chance that every roadster (and more) will be around in five years. With gas on the rise, many folks will be flocking to toys that sip less than their boats, campers, or SUV's. Just look at Europe, the small car maket is booming, not econo cars, but great small cars.
The MX-5 is certainly not going anywhere. Even if US sales were down (which they are not), the MX-5 has enough of a world following that lower US sales would not be the end of the vehicle. The kappa's, on the other hand, will have to sell well in the US to remain viable... assuming they really are viable in the first place.
I hate to be the naysayer, but I smell trouble for the kappa's down the road. GM has long had a low tolerance for low volume vehicles. They are often not profitable, and even when they are profitable, the profits are so small compared with the company's overall bottom line that they the beancounters just don't see value in updating them.
This combined with Kerkorian's high stake in GM and having York on the board of directors doesn't help either. York and Kerkorian want to remove anything that is a money loser, or not profitable enough. Niche market vehicles are certainly a target. York also has an axe to grind with Bob Lutz from back in their Chrysler days, which doesn't help kappa out a ton either.
Profitability could also be another problem. The kappa cars, it appears, will really only ever be able to be produced in volumes of around 40,000 per year. That is with a dedicated plant, 3 shifts, maybe some weekend overtime. That is a lot of overhead for 40,000 units per year. Especially at the relatively low price they are asking, and doesn't include the development costs for a dedicated platform. Yes, they did things like parts share, hydroformed bodies, etc to keep costs down, but I have serious doubts to the profitability of this platform. It may break even, it may even make some profit, but it is not going to look like a priority in 4 years to pour redesign money into. That also assumes they keep selling. If demand drops off as it usually does for a roadster, they may have to idle one shift at the plant, lay off workers, etc, which could get losses to mount.
This situation could also prompt GM to replace kappa with a new platform for the next generation which would allow more volume and or versions (4 seat cars, sport coupes, sedans, etc, anything is possible). However, that could also be a platform which compromises the roadster qualities. Something more along the lines of the 350Z, which is built on a modified sedan platform. It makes a decent sports car, but it is a bit big, and heavy to make an ideal roadster.
Finally, all these realities are going on as GM is struggling for it's own survival. If GM doesn't see a major turnaround in it's bottom line in the next couple years with big profits, it will also deter them from spending money on a niche product as this... especially when the inevitable decline in demand starts taking place.
Other wild cards could be public perception, which could help or hurt demand. There is a building list of people dissatisfied with driveline clunks, differential leaks, water leaks, top operation, interior quality, etc. The longer it takes GM to rectify some of these issues, the more it hurts the image of the car. That consequently could hurt future sales if it gets a reputation of being unreliable, unrefined, etc.
I definately want to see Kappa for the long haul, and hope it will be around. However, there are way too many factors that could work against it right now to assume it is inevitable that it will be around.
I just do not trust GM based on track record. I have seen them kill off good ideas before. Heck, this is the company that nearly killed off the Corvette in the 90's.
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The MX-5 is certainly not going anywhere. Even if US sales were down (which they are not), the MX-5 has enough of a world following that lower US sales would not be the end of the vehicle.
Other wild cards could be public perception, which could help or hurt demand. There is a building list of people dissatisfied with driveline clunks, differential leaks, water leaks, top operation, interior quality, etc.
I just do not trust GM based on track record. I have seen them kill off good ideas before. Heck, this is the company that nearly killed off the Corvette in the 90's.
But GM didn't kill Corvette, did it. It's been in continuous production for more than 50 years in virtually the same format.
Public perception of Solstice should already be negative given the bad review Consumer Reports did. But even Geraldo has not slammed GM over Solstice. Given that Solstice & Sky are sold out despite CR and much other negative press, e.g., Edmund's, I don't see demand falling off in the future.
Foreign sales of MX-5 won't save it once Opel GT, Saab Sonnet, Daewoo and whatever other rebadges GM does all hit the foreign markets.
Foreign sales of MX-5 won't save it once Opel GT, Saab Sonnet, Daewoo and whatever other rebadges GM does all hit the foreign markets.
Mazda builds over 40K MX-5s a year right now. Demand could drop by 50% and even at those levels Mazda would still produce the car and make a profit on each one.
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Stupidity is the basic building block of the universe. -- Frank Zappa
People forget that Mazda is a small company and only produces about 1.2M cars and commercial vehicles a year. Small companies can produce low production number cars at a profit.
With several different cars all being built at the same time on the same line as the MX-5, it is very easy to make production demand adjustments. Mazda is not hindered by one plant, one line, one car constraints that many bigger companies are.
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Stupidity is the basic building block of the universe. -- Frank Zappa
I personally like the classics, like this Porsche 356 Speedster, and feel that this would never fade out even though it's just a replica. Hope to park it next to the sol some day.
I personally like the classics, like this Porsche 356 Speedster, and feel that this would never fade out even though it's just a replica. Hope to park it next to the sol some day.
Popularity of vehicle can be measured by its copies, including replicas. There are more kit Cobras sold in a year (maybe a month) than were sold new.
One car to add to the list that we always forget as being all-American is Panoz.
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So how much profit does Mazda actually make on each MX-5 sold? Why don't you quote us an exact number? What are your sources for this statement of fact? Have you personally examined Mazda's books?
I have no idea how much profit Mazda makes on an MX-5. Heck they may not make any at all. Here's what I do know. Mazda profits for fiscal year 2005 were up 49% over 2004, a record increase, and the 5th straight year of reported profit increases. They expect profits to grow another 12% in fiscal 2006. This is public information, if you trade stocks, you'll know how to find it.
Maybe they sell the car as a leader to get people in the door. Many have argued that this is the Solstice business model. I think the Solstice must have some profit in it. Otherwise, why would they be looking to increase production when the generated buzz is already been established? If you concede that Pontiac is building the Solstice at a profit, it certainly seems feasible that Mazda, a company that doesn't have to provide healthcare for it's Japanese workers, could surely build the car at a comparable price. Especially considering that they have three decades of experience in selling cheap, limited production, RWD, sports cars. I think as long as the MX-5 is selling above invoice, the car is making money for Mazda.
Concerning your claim that Mazda is selling the MX-5 at $3000 below MSRP, on average I don't buy it. I did a TMV on edmunds.com for zip codes in Miami, Baltimore, Boston, Detroit, Denver, Dallas, Los Angeles, and Seattle. I used a GT with PP1 and Sport Suspension (a $27K, well equipped model, with lots of room to bargain on). The average estimated price that "others were paying" varies between $800-$1400 off MSRP. That equates to ~$500-$1500 over invoice. It doesn't include dealer holdback. So, it looks like the dealers here in America are selling at a profit.
I have a hard time seeing how Mazda could be loosing money on this car.
Foreign sales of MX-5 won't save it once Opel GT, Saab Sonnet, Daewoo and whatever other rebadges GM does all hit the foreign markets.
Opel production is predicted to be less than 5000 units. That isn't even close to the number of annual delivered MX-5's in Europe. Think of it this way, in MY06, Mazda sold more MX-5's outside of America than all of GM's Kappa production combined. GM would almost have to double Kappa production to match Mazda's numbers for this year.
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This is the one that may be the big seller. When I heard Hyundai was going to cut the top off of a Tiburon, I wsa tempted to wait and see it.
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