MilePost Online ... Transcript of August 11, 2009 Luncheon Presentation

Automotive Shopping Trends

This luncheon presented three experts in tracking data about consumer trends: AutoPacific's George Peterson, Kelley Blue Book's Rick Wainschel, and GfK Custom Research's Donna Miller. The panel was moderated by James Bell, MPG board member and head of IntelliChoice.

photos by Morgan Segal, www.morgansegal.com

Speaker Chair Charlie Vogelheim briefly introduces moderator Bell.

James Bell: Wow. Now we know it’s a good day, because that was the least verbose I’ve ever seen Charlie, ever! So it’s already off to a roaring start.

Thank you, everybody. My name is James Bell. I’m the editor and publisher of IntelliChoice.com and I have the great honor of jumping in as moderator today and discussing some things that are near and dear to my heart, which is, of course, all about the auto industry and how people are actually going shopping with it, and if they are, and Cash for Clunkers and all the different issues that go on in people’s buying behaviors — which we’ve all been trying desperately to figure out for some time now.

As journalists and people in this business, I’m sure you experience what I do, which is often feeling like the old uncle down the street who’s in the car business, and before anybody wants to buy something they’ve gotta go talk to me first. Kinda get an idea of, “I’m thinking about this vehicle or that vehicle, or what’s going on with GM and what’s going on with this and that?”

And most of the opinions that we give are based on the driving that we do with the vehicle, which is all very legitimate, or it’s all just kind of circumstantial, just our own thoughts of, you know, our best guesses of things.

Well, that’s the beautiful thing about today. We’ve got a great panel of people who are going to bring some actual hard facts and figures, so when you’re asked those questions, hopefully you’ll have some solid replies.

Ok. First up, we’re going to ask George Peterson to join us. George, I’ve known George for about ten years, now. He’s the president of AutoPacific, and in many ways — he doesn’t know this — he was kind of a big inspiration for me getting into this business because, reading Automotive News and all different publications, I’d see his name and I thought, “I could do that too.” [Laughter.] But I’m not as good as he is. Ladies and gentlemen, George Peterson.

It wouldn’t be an MPG meeting if I didn’t have one quick thing to share. George and I actually have a project that we work on together with his company, AutoPacific, and mine, IntelliChoice, which is called the Motorist Choice Awards, and that actually was released today. There are releases over on the table, there. It’s a unique study, the only thing like it in the business, and I’m all done, thank you very much.

George Peterson, President & Publisher, AutoPacific, Inc: What we want to talk about is the market doldrums that we’re in today and that hopefully we’re going to be coming out of in the short-term future.

In my mind, the world ended about 11 months ago. I went into my local Ford dealer, Power Ford down in Tustin, California, on September 15, 2009, and I wanted to order a new Ford Flex. I had my X-Plan papers and all this good stuff and I was ready to go. They took my thousand bucks and I went away and I ordered exactly the vehicle I wanted. Eight weeks later it would have shown up.

Three days later they called up and said, “We’ve cancelled your order and we’re not going to order any more Fords, period.”

This is Power Ford. This is part of AutoNation, right? I said, “What the heck’s going on?”

Finally I did find one on the showroom floor, so I did get a Flex. But what was happening then, and actually earlier, probably back into the middle part of 2007, was the world was starting to spiral downwards. The market realized that financing was getting really tough to get. You’ve all heard the horror stories about people trying to get financing and going to three and four and five different financial institutions before they got any financing.

The housing crisis, people were upside-down on their houses. The economy absolutely stopped, and I’ll tell you a little bit more about that later. Consumer confidence crashed. All this is very good news, right? The market spiraled down and automotive bankruptcies were kind of a continuous discussion point for all of us.

Since then, and I know a lot of you in the room and a lot of you are my friends, and listening to everybody talk over the course of the last year, many more people are referring to themselves as freelancers. Salaries have been pared among the journalist groups, I’ve heard. Benefits have been pared, I’ve heard.

There’s been a rapid shift from print media to the Internet media, and that makes it a very, very different animal. This is an animal that has to be fed continuously. The deadlines are not next week or next month, the deadlines are five minutes from now. So this is something that has to be fed and fed and fed and fed, and the amount of time that we had to contemplate things and actually work on things, think about things, is really gone.

But that’s just about journalists. And what you guys are really doing is looking at the world as a whole.

So here’s what we’re finding is happening with consumers: People are scared shitless. Absolutely petrified.

What are they concerned about? They’re concerned, really, about their economic future. There’s the banking and credit crisis that we’re finally starting to come out of, but still, after a year, it’s still tough to get financing for a lot of people.

There’s still a housing crisis. A lot of people are still upside-down on the houses that they own. A lot of people are trying to take advantage of this to buy a new house, which is good for them but not so good for the people that are being foreclosed on.

There’s an equity and stock market crisis, that we’re not starting to come out of, so some of this is good news, some of this is bad news.

And rapidly increasing unemployment. Unemployment, last month it was only 240,000 jobs were lost, which was thought to be good news because it’s starting to stabilize the slide of all of the job losses.

Now all of this comes from us going out and actually talking to human beings. So this isn’t based on data, this is face to face, talking to people in focus groups and one on one interviews.

Give you one example. Fellow sitting at a focus group table. He’s probably in his early 30s. He says, “I’m a Los Angeles Unified School District teacher. I get a three percent salary increase every year come hell or high water. I have no fear for my job, I’m going to continue to get my salary increases, and I’m not buying a thing.”

I said, What?

He said, “It’s not the right thing for me to do to buy anything. I have stopped buying.”

And I could understand it from some of the other people at the table, who had some financial distress, but here was a guy who was very healthy from an economic standpoint, and he just stopped buying. That’s because he thought it wasn’t the right thing for him to do, to actually go out and buy something. He could afford it, and actually might want to do it, but he just didn’t think that he should do it at this point.

Then we had the auto industry trouble, and the sales in the auto industry collapsed, we all know that. Most people have been saying that the sales for this year should be about 9.5 to 10 million units. With Cash for Clunkers we think that might go up to 10.1 or 10.2, but still, these are sales that are so dismal that we haven’t seen anything like this for decades.

This was triggered by the spike in gasoline prices at the middle of last year. The consumers blamed the auto industry, because they didn’t react fast enough to get them small, fuel-efficient cars. Now they don’t want those small, fuel-efficient cars that they’re trying to produce for ‘em now.

Financing was difficult and impossible to get, so they couldn’t get financing to sell the new cars. GM and Chrysler in bankruptcy meant that people weren’t buying cars from GM and Chrysler, they were staying away. There is a big stigma involved in buying a car from a bankrupt company.

So, but what they’re trying to do is wait for the industry to stabilize, and maybe we’ve found that so far. Maybe Cash for Clunkers is gonna help. But I think it’s too early for us to tell about the incrementality of the impact of Cash for Clunkers.

But over the course of time we have been doing an Internet study to kind of track what people think about the Big Three and some of the primary import manufacturers. We did this April, May, June and July. And looking at the people who are concerned about buying a car from each one of these brands.

In April, 52 percent of the people said that they were concerned about buying a car from GM. That went to 54 in may, 58 in June and then in July, after they came out of bankruptcy, went down to 42 percent.

Chrysler was 63 percent, 63 percent, 62 percent and 53 percent after they came out of bankruptcy.

So the concern about buying vehicles from the bankrupt companies has actually abated somewhat.

Ford has come out of this smiling. They have done an outstanding job of managing the press and managing PR. The concern about Ford has been 15 percent, 13 percent, 11 percent and 12 percent.

I was at a restaurant last Saturday — in my Flex — and there was a fellow sitting on a bench in front of me and he says, “I really like your car!”

I said, “Why?”

He said, “It’s made by Ford.”

“Yeah, well why do you think that way?”

He said, “They didn’t take my money.”

And this is the sort of thing you’re hearing more and more from people all around the country.

It’s kind of interesting here to see what the level of concern is from the Japanese Tier 1 and also the Hyundai; people are actually, some of them, concerned about buying vehicles from these…

Yes, Alysha.

Alysha Webb: Why would anyone be concerned about buying a car from Toyota or [inaudible — no mic]. Did you try to get at that at all?

Peterson: No. But you can kind of guess. Toyota sales have been down more than some of the others. If they’ve been following that, they can… And also there are some steady state of concern about any manufacturer. So, you know, even the top tier Japanese have some, you know, five to seven to ten percent level of concern.

Webb: [inaudible — no mic]

Peterson: Could be. So you maybe just put a baseline of concern of ten percent in there for everybody.

Ahm, the thing that’s also interesting is, I really hate to admit this, but I bought Ford at $1.50. So Ford went from 3 to 6 to 8, although it’s down to $7.79 today, but this is the first stock in my entire life that I ever made money on — only if I sell it now.

Also, let’s look at what consumer confidence has done. Consumer confidence has absolutely cratered over the course of the past few years. What we found is that auto euphoria; consumer confidence went up in June. We’re coming out of the doldrums. We’re gonna come up, everything is going to be skyrocketing again. The stock market’s now over 9000, rah-rah-rah. But then in July it went back down again. Not a long way, but it didn’t come up to the level that we really want it to.

So this is only a five to seven minute little pitch. Really, Cash for Clunkers has stimulated sales. We don’t know how much. Have we turned the corner? We don’t know. We certainly hope so. But the real key here is, how do we get consumers back into the showrooms spending their good money on new cars? And that’s going to be the challenge, is to find out how to do that, what’s going to stimulate them to come back into the dealerships to buy new cars and also how to get them out in the economy buying other things, going to Macy’s, going to Lowes, going to Costco, spending their good, hard-earned money and making this American economy be what it has been.

So, thank you very much.

Bell: Thank you, George. Our next speaker is from Kelley Blue Book and I met Rick under very strange circumstances. I’ll share with you briefly; it was about four or five in the morning, I think it was, and he was representing his company, I was representing mine, and we were thrown into a live debate on national TV against each other. Now I don’t know about you, Rick, but I didn’t know I was up against anybody else. I was still pretty new to the craft, and still am, I was very nervous when I was up against you on it. If I remember correctly, we were talking about new, hot models or something like that and you had all this great data and I had all this kind of circumstantial haute couture kind of stuff and he wiped the floor with me. So ladies and gentlemen, my friend Rick Wainschel.

Rick Wainschel, Senior VP, Marketing & Analytics, Kelley Blue Book: Actually, if you really want to know the truth about that TV appearance was, I don’t like to go on TV. James loves to go on TV and he wiped the floor with me. So I have to hand it to James here.

Before I tell ya what I have to say, I’ll just tell ya that I thought I was really smart because I bought Ford stock at $2 a share and I sold it at $2.50 a share… [Laughter] And I thought 20-some odd percent return, ya know? And look at it now. So every time I look at the stock price I want it to go down, but… Just to make me feel better.

We’re here, really, the three of us, AutoPacific is here to represent the attitudinals, sort of what are consumers thinking about, and I’m here to talk about what consumers are doing online. What are their behaviors that they’re exhibiting and what have we been seeing for the past year?

So kbb.com gets about, on average it’s historically gotten about 13 million visits a month coming to the site. In the latest few months we’ve actually been hitting record levels of traffic, about 15 million visits a month. Last month, in July, we hit an all-time record, 15.9 million visits. So people are very interested in finding out vehicle information.

I think Cash for Clunkers has really accelerated a lot of that interest and demand. As George said, whether that sustains itself remains to be seen, but certainly right now consumers are coming back in droves and looking at vehicle information.

So I thought it would be interesting to look at, as George said, what did he say, the world ended a year ago? September 15, that’s when the world ended. Well, where were we a year ago? I was looking at some of the press coverage of what was going on back one year ago, and here was something that appeared in CNN Money, and it said, overall, this was July 2008, so comparing auto sales to July 2007 and it said, overall U.S. auto sales plunged — plunged — 13 percent from year ago levels.

My comment was, if only the plunge had stayed at 13 percent we all probably would have been doing a little bit better than we are in the automotive industry.

So certainly there was a lot of interest even back then when this first started.

A month later, in August 2008, there was a lot of information in the press. Mark [surname unclear] was quoted here as saying, “The worst may be over,” and, you know, you can imagine obviously what happened after that.

Well, what happened after that, if you look at traffic on kbb.com as a reflection of the amount of shopper activity that was taking place at this time, so let me show you a little bit about this information and what we’ve seen in our trending in the past.

Right here, this represents by the way the last three and a half years or so of traffic coming to kbb’s new car section of our site. People looking at new car information on our site. And you can see that June, historically, has typically been a down month on our site. People are distracted, school’s ending, new vehicle introductions haven’t occurred yet, so June typically is a down month on the site.

But in July we typically see, July and August, we see a big increase in shopper activity. This represents what happened in 2006 and 2007. Well look what happened in 2008. For the first time ever, since we’ve been tracking our site, July traffic went down in July vs. June.

And it continued on, and you can see just how big of a gap we were seeing vs. previous years. Well, that continued on into 2009. The first six months of our traffic trends compared to the first six months of 2008 continued in a very, very soft state.

But look what happened in July. For the first time, albeit at a lower level, we’re just now meeting where we were when the decline occurred. But for the first time in a year our traffic has reached year-ago levels.

So as George was saying, are we emerging? How is Cash for Clunkers doing? What’s going on with some of these things that consumers are coming back into the marketplace, is that going to sustain itself? Again, we’ll see how this goes.

By the way, August, our site is off to an extremely high level. We just set a record daily level of traffic on our site. Every Monday we’ve been beating our record week by week, so August is off to a very strong start as well.

I’ll also point out, who’s leading that increase is the domestic manufacturers. The import manufacturers are actually down five percent from year-ago levels.

So a funny thing happened on the way to the bankruptcy. All the stuff that was going on back in July, June, May, June, July to lead up to the actual occurrence of and the aftermath of that bankruptcy; well, what happened is, on site behavior within kbb.com? Well, here was immediately, on a daily basis, immediately following the GM bankruptcy, so you can see this is when they announced their bankruptcy right here, and we typically do see a dropoff as the week goes on. Monday is our highest traffic day on the site. You can see a little bit of dropoff as the week progresses.

But we’re right in line with where we were the prior week and the week before that and the week before that too.

So consumers, and George showed that number that said after bankruptcy the number of people that were concerned about buying from GM went from, what did you say, 58 to 42 or something of that sort. The reality of the bankruptcy actually was better than the leadup and the anticipation of the bankruptcy in the minds of consumers. They didn’t drop off the map. They were still looking at GM vehicles and Chrysler vehicles as well.

So there’s a lot of information on this chart. I won’t go through this. I’m sure you’re all happy that I won’t go through that in detail, but I will focus on this.

These are the top and bottom movers of share of market interest on kbb.com in our new car section. And this is looking at July 2009 vs. July 2008, so it’s the share of interest on our site that Ford got vs. where it was a year ago, for instance. And you can see that Ford has the largest increase in shopper activity share of market interest on our site. Ford’s been the big beneficiary, as George pointed out.

But right behind that is Chevy, and you can also see that Jeep is another upward mover on our site. In July you can see the number one decliner was Honda. When we were looking at this back in June, number one was Toyota and number two was Honda.

So the import manufacturers, being compared to the gas prices, you know, the artificially high gas prices from a year ago, were suffering in terms of share of market interest on our site.

But really, the big story here is, the domestics have been doing quite well ever since the bankruptcy occurred. They’re still very viable in the minds of consumers. Consumers are still looking at and flocking to these vehicles coming from those manufacturers.

The big beneficiary out of all of ‘em by far is Ford, and I won’t belabor this, but you can see, as I showed you, that you see for Ford, this is the economic situation that was going on where there was a big decline vs. the year before. 2008 traffic on our site for Ford was well below where it was the previous year, but look what’s happened in 2009: they’re actually well above where they were last year. It’s one of the few brands that that’s the case. They’re actually up 54 percent in traffic on our site in the month of July vs. previous year’s July.

So Ford’s been a huge beneficiary of all the troubles of the domestics, but also they have done a very stellar job of communicating to the public as well as via the media as far as how they’re emerging from all the troubles that the rest of the domestics are suffering through on the bankruptcy front.

You can see that Ford is the number two brand now considered on our site. It’s based on survey work that we do, whereas before, a year ago, they were actually number five. So they’ve moved up in the minds of consumers and in the ranks.

They have done so because, not only did they not take the government’s money, as George had said, there’s some backlash to that; but they also have some pretty nice product that they’ve introduced. Here’s the Fusion. You can see the 2010 Fusion has added a ton of incremental traffic and interest to that vehicle’s amount of traffic that we’re seeing on the site, and they’ve actually started to, ah, approach the level that we’re seeing for the Nissan Altima in the midsize sedan category. And so for the first time the Big Three imports, the Accord, Camry and Altima, now have a new domestic challenger, and that’s the Fusion.

So real quick on Cash for Clunkers and I’ll relinquish my little clicker here to Donna Miller from GfK. Ah, we did a little quick survey on Cash for Clunkers and yes, I do think that that’s an extremely successful program. But I do think that a lot of those buyers that are buying Cash for Clunkers vehicles would have bought anyway. And I think that there has been a lot of positive economic news that at least we’re seeing the bottom in a lot of different areas. I think Donna’s gonna talk about that in great detail. But we ran a little quick survey and in it we said, what percentage of people said that they were gonna participate in this program, and it was about a third of the folks.

But only a third of them said that they were planning to buy a vehicle sooner because of this program. Most people said, my purchase timeframe will remain the same. It didn’t move it up. Most of the people were planning on purchasing anyway, and I think it subsidized a lot of the purchases that did occur within that program.

So with that I will relinquish the microphone to Donna, and that’s just a real quick summary of what’s been going on in terms of the behaviors that we’re seeing on kbb.com.

Bell: Thank you, Rick. [Asides re stock purchases.] Next up is Donna Miller from GfK. I had mentioned I knew Rick and I knew George prior to today. I did not know Donna, but had the pleasure of reviewing her data last night and let me just tell ya, my head was swimming with all sorts of insights. I feel smarter for it and I’m sure you will as well. Ladies and gentlemen, Donna Miller from GfK.

Donna Miller, Senior VP, GfK Automotive, GfK Custom Research: I’m going to build on some of the things that George and Rick talked about. George talked specifically about consumers. Rick took it to a slightly different level, talking about manufacturers and what’s happening on the kbb side.

I’m going to be taking a much broader perspective. So with that, one of the things that I’d like to address specifically today is just the economy, because we all know the automotive industry is facing its most severe crisis in decades.

But was it just the economy?

Well, GfK Automotive tracks demand data. By demand, what we mean is intentions. That is, what do you intend to do? Do you intend to buy a new vehicle or not? What we actually saw was, we saw a demand drop earlier than 2008. We know in 2008 that certain externals went down that George has talked about and that Rick has touched on. But what we actually started to see was demand started to decline from 2001, and I’ll show you that data in just a second.

But was it just the economy? Was it just what we saw happen in 2008? So what I’m going to actually show you is, it was a combination of both the externals, the economy, as well as some of the automotive internals.

And some of the automotive internals I’m going to be talking about was, unlike previous decades, the 2000s actually had focused on something slightly different. We saw escalating incentives. I think everyone’s very well aware of that. But also, in combination with the escalating incentives we also saw that the marketing that the automotive manufacturers were doing focused on the retailing, that is the messaging of these incentives.

But also, the other thing that we’ve also started to see is that there hasn’t been the innovation in product that we had seen in previous decades. While there was wonderful innovation in new models and engine technology, especially hybrids, we hadn’t seen a new segment that boosted sales in excess of a million since minivans in the 80s and SUVs in the 90s.

And so I’m not trying to make your head swim with all these charts and data, but I did want to show you some of the things that specifically George had talked about and that I think we’re all very well aware of in terms of some of the economics, in terms of the fundamentals.

So what were some of these specific negative economic factors? Gas prices peaked in July 2008, I think we all know that. That’s when oil hit $147 a barrel. So that was the peak, fortunately. It’s come down. It hit a bottom, a recent bottom, in December 2008.

And then, of course, we all know what happened to the Dow Jones Industrial Average. It had been going very strong, but then it started to decline from its highs in 2007, and I think most experts are now saying that we had hit a real bottom for the Dow Jones in March of 2009.

So we really are starting to see some positive economic trends there.

But then the other impact that we’ve been following, that a lot of other people have also been following as well, is that unemployment is now playing a much bigger role and the fear of unemployment is also playing a much bigger role in some of the data that GfK Automotive tracks, which is some of the intentions and shopping data. And so we’re seeing for the first time — and, yeah, we look at kind of the broad span of time — there normally isn’t a strong relationship between unemployment and automotive data. Unemployment kind of moves and automotive data kind of moves on its own.

But recently, in the past few years, we’ve started to see a strong and negative correlation between unemployment. So we’ve been tracking unemployment data very, very closely and we are starting to see some good news. Unemployment has stabilized for the last few months, and actually what we’re starting to see in our data is that demand is going up a little bit and Internet shopping is also going up in July.

Now that was definitely helped by Cash for Clunkers, but we’re also starting to see that the positive economic news that we’re starting to see now — it’s not to say that we’re going to go back to the heydays of 2007, I don’t think anyone certainly is saying that’s gonna happen, but with unemployment stabilizing, with the Dow being at higher levels and gas kind of much more stable than where it’s been in the last few years, we’re starting to see some recovery happening.

But was that the only thing that was going on? Well, one of the things that GfK Automotive tracks, as I said, we talk to intenders, and we talk to people who intend a new vehicle as well as don’t intend a new vehicle and what we see is that automotive demand has been on the decline since 2001. And we’ve actually been tracking the demand decline. It’s not a straight line, but it’s been a slow steady decline, and what we see is that today fewer than 50 percent of U.S. households say they intend to buy a new vehicle — ever. And it actually continues to remain below 50 percent.

The silver lining we see there is, with all the other positive economic news we’ve seen for July, it’s actually also starting to impact this broad group of people who intend to buy a new vehicle, and it’s gone back up to 46 percent. So it is starting to also be impacted by some of the broader economic trends.

But how did we get here? What happened to actually drive the automotive industry to this level of demand? Well, if you look at the sales data, and this is probably data that you’re all very familiar with, and that’s the grey bar, what we see is that sales tend to remain steady at about 16, just above 16 million for the last few years, since about 2000, 2001. But when you look at the GfK Automotive data you see that demand has actually been declining.

Well, how does demand decline but sales still stay high? What happens is, demand actually was starting to get pulled forward by incentives. The post-9/11, Get America Rolling campaign that GM kicked off started an incentive war in the automotive industry that you’re all very familiar with. And what happens is, as incentives escalate, you can see here that the level of incentives escalated very sharply from 2000, 2001, kind of peaking about 2004, 2005.

What happens when incentives are high is that people buy today instead of tomorrow. And so when you get to tomorrow you have to pull people from the next tomorrow. And so what’s happened is, this gap kept widening and then when 2008 happened, with all the economic news, one of the things that happened was the level of low demand was uncovered.

But was there anything else that the automotive companies did that contributed to the situation and was it just the escalating incentives? One of the things I mentioned earlier was that, with escalating incentives, what the manufacturers were doing was they were actually shifting their messaging from talking about product to talking about price. And as we saw more and more of that happen, we actually saw more and more shoppers say that they were remembering the price ads, but fewer and fewer intenders were saying that they were remembering the product ads. So intenders weren’t being messaged in a very emotional, product-driven way. And what we started to see was that shoppers were being targeted very effectively by the manufacturers, but intenders were less likely to see or hear advertising about the product, about the emotional elements of what makes an automotive a very special purchase for people.

But overall, what we start to see is that, as, again, we analyze the span of time we see that automotive recovery during prior recessions has been very profitable and actually speedier when there’s been significant product innovation.

So the story as we look at it, there’s certainly an economic story, there’s certainly a financial story, but at the conclusion, it’s actually significant product innovation that’s really going to help the automotive industry come out of this recession in a very healthy way. Not financial innovation. So we’re very excited about some of the products that actually are coming out this year and next from both the imports as well as the domestics.

But do automotive companies need to wait for better times? One of our sister companies did some analysis on recessions and products that launched in recessions. Does anyone remember when the iPod was introduced? [Interacts with audience.]

It was actually introduced right after September 11th, 2001.

Products can succeed when the product is strong, and manufacturers don’t need to wait for good economic times.

Thank you.

QUESTIONS?

Bell: I just have three brief questions, one for each, and then we’ll turn it to the audience and have some much more intelligent questions, I’m sure. Donna…projections that your company’s doing on oil prices and how that’s going to sit…please explain.

Miller: I never thought I’d be looking at oil as much as I have in the last 18 months, especially in the last 12. One of the things we’ve tracked is a very, very strong relationship between global consumption data that the Energy Information Agency puts out and the price of oil. Without going into too much detail…global consumption remains at a much higher level than it has in some of the lows that we saw with the global recession.

What we’re seeing is that the price of oil should be at about $70 a barrel if consumption stays at the place it’s at, so we’re not looking at some of the extreme forecasts, where some people have been saying it’s going to be at $20 a barrel [or others saying] it’s going to shoot up over $100 a barrel.

This data that we’ve been looking at from the EIA was enough that we were able last July, when oil was starting to trade over $100 a barrel, we were able to tell manufacturers that we were talking to that this was going to dissipate fairly quickly. We know that the consumption data is very nicely tied into prices and so when you look at the level of price that we’re going to be paying at the pump, it is tied nicely into consumption. I think we can be a little bit more confident in terms of where oil is going to be and there’s not another next shoe to drop.

Bell: You heard it here first. That’s good news. Mr. Peterson, in some of the data that your company’s been looking at, what has been the impact in lack of home equity for use in purchases and the dropoff in leasing?

Peterson: There are a good number of people who will lease. Generally that’s been up over 20, 25 percent, depending on what brand of vehicle you would be buying. Especially on the luxury end of the business, well over 50 percent of some of those vehicles were leased. When last summer, first Chrysler stopped leasing and then GM stopped leasing, that put a big crimp in the potential sort of vehicles they could place with their consumers.

Also, the fact that home equity loans, with the value of homes going down, home equity loans getting revalued or renegotiated, they may not have been as easy to use as they had been in the past. So once again, this takes more people out of the market who may have been using home equity loans for their purchases.

So both of those are real negatives that the industry’s had to deal with.

Bell: And Rick, I’ll put you on the spot a little bit: You had some good data there for Ford, obviously; how does that play out for Mercury? Lincoln is getting some new product, Ford’s got some new product…but Mercury has, as somebody who drives cars all the time, I don’t even really have a lot of interest in doing that these days. What’s Kelley Blue Book say about Mercury’s role?             

Wainschel: Well, I think Ford is the driving force behind what’s happening with that company, and Lincoln’s actually been doing quite well, too, I think, with some of the refreshes of the vehicles and so on. And I actually have a unique perspective on this, and actually didn’t even know that James was going to ask me this question, but I do have a unique perspective on this. I used to work for Young & Rubicam Advertising on the Lincoln Mercury account.

One of the struggles that I think Mercury’s always had is, you know, Ford has a foundation of equity underneath that brand that has to do with trucks. F150 is really the hallmark of that vehicle set, although they’re making inroads in non-traditional categories for that company, like the Fusion helping them with the midsize sedan category. Lincoln, obviously, always has the luxury of that foundation underneath it.

Mercury has always struggled with finding its DNA and its brand essence, and I think that Mercury is still struggling, and you can see, and we showed some of that data where we were showing the different year trends, where Ford is well above where they were a year ago, Lincoln is also above where they were a year ago, and Mercury is still suffering from the doldrums that other brands are dealing with.

So it’s not a equal-opportunity positive that’s spanning across the entire Ford Motor Company. Brands still mean something to consumers, and I think the brands that have a strong equity foundation underneath them are the ones that are going to take advantage of as this market comes back. Brand is still always in the minds of consumers and Mercury suffers to some extent as far as finding what it means to consumers.

I also just wanted to throw a comment in, though, on the oil thing that Donna was talking about, which was, you know, we look at our data all the time and one of the things that I didn’t note in showing that information was that trucks and SUVs, even though Cash for Clunkers is helping drive a lot of traffic on our site, therefore sedans are very well in favor, people are looking at a lot of sedans. Trucks and SUVs are actually getting a lot of traffic on our site as well, and consumers are somewhat fickle and they somewhat have a short memory as far as some of these happening in the last year, and we saw a big spike in, as last year went though into this year, we saw a big spike in hybrid activity, small sedan activity and so on, and a big dip in Trucks and SUVs, and now that gas prices are $3 a gallon again, or so, a little bit underneath, people are coming back and looking at those vehicles again.

I think that that gives the domestic manufacturers another point of strength, at least in the short term, another piece of a foundation-building kind of activity set that they can pursue too, because obviously they’re strong in the Trucks and SUV market.

Peterson: James, one more thing about your Mercury issue is, you can tell by looking at the cycle plan of what Ford has in the market for Mercury is, you know, all of a sudden there’s not a Sable there for them to sell. They never sold very many, but when the new Taurus comes out there’s not going to be a Mercury companion car. So what it appears that Ford is doing is they’re slowly starting to just starve Mercury of new products. It looked at one point that a lot of these new import type of products that Ford is bringing in are going to be manufactured here in the U.S. but based on European vehicles could be going to Mercury, and that would be their European ambience brand, but right now it looks like most of those are going to be going to the Ford division. So it looks like Mercury may continue to just shrink over the course of time.

Joe Neuberger: I had noticed how you were saying the lead-up in the bankruptcy was worse than the actual bankruptcy itself… How much of that do you think was from the government backing the warranties of the bankrupt companies?

Wainschel: We actually asked a lot of survey questions regarding bankruptcy, and one of the things that was a positive factor in the minds of consumers was exactly that, that the government, ah, we asked a question, which was, are you concerned about, similar to what AutoPacific had asked, are you concerned about buying from a company in bankruptcy? And the levels were very high. Then we also said, we compared that to, are you concerned if, with these things in place and one of them was government-backed warranties, and that was actually the thing that helped the most. So I do think that that played a big role.

I also think, just my opinion is, that after the bankruptcy occurred for Chrysler as well as for GM, that the day after they made that declaration they’re advertising, they’re still selling cars. The government did back up the warranties and so on. They’re still in business. I think consumers have a perception what bankruptcy means and it’s a very fuzzy one, and once they saw that those companies were still viable, still selling cars and so on, that it was less scary than what was anticipated.

Alysha Webb: How closely does what people look up on Kelley Blue Book correlate to what they actually buy? I mean, are they doing that at the point of wanting to purchase, because obviously the Detroit Three got a lot of press, albeit somewhat negative, in those months, and so maybe they’re hearing a lot and therefore looking but maybe they actually bought something else. That’s my first question.

My second question, though you can ignore this if other people want to ask questions, is, they, in terms of the Internet, I did a story a while back when I was with Automotive News on the dealership of the future, and we talked about, and I talked to people about whether or not people are gonna buy cars online. And of course at the time everyone was going, “No, no, eventually people are gonna want to kick tires and they’re not just gonna buy, do the whole transaction online.” And yet you just see GM did this deal with eBay, so perhaps there is more of a trend to buying cars completely online. So my second question is, what’s your thought on this?

Wainschel: Well, I’ll answer the first one and then I’ll defer so I don’t hog the comments on the second one. But as far as the correlation, it’s actually quite strong. We do a lot of that type of work to see what are people doing on the site and what do they actually end up buying? What’s happened over the course of the last year is, we at kbb.com typically saw about a 60- to a 120-day lag between what you looked at and what you bought. People are in the middle and then toward the end of their shopping process and they’re gonna buy within some short period of time in the future.

What we saw over the course of the last year was the purchase timeframes lengthened considerably. We did a survey starting in September of last year and we said, “Are you delaying your purchase because of the economic situation?” And when we first started asking that question, this was back when this all started, and you think about a site like kbb.com where it’s really kind of a shopper’s site, back in September 38 percent of people said they were delaying their purchase. March, which was the inflection point that Donna mentioned, where we hit the bottom in all of those different measurements, that 38 percent had become 63 percent. Sixty-three percent of people on our site saying they were going to delay a purchase. And something like 89 percent of them said they were going to delay it six months or more.

So the correlation started to get a little stretched-out, if you will. But that’s now actually come back down to 41 percent, so kind of back to where we started. So it’s another indicator that the confidence level of consumers has rebounded. It’s actually a very strong correlation.

Miller: And actually I was gonna add, on some of the data that we look at shows that, you know, for people who shop only online the closing rate is still low. But it increases of the person shops online as well as goes to the dealership. And then, of course, it’s much higher if they go just to the dealership. But part of that is structural, and it is going to be interesting to see how the GM eBay partnership works out. Because we do see, you know, as people more and more use the Internet for shopping and trying to narrow down which vehicle they’re gonna get, and finally decide which vehicle to buy, that it is an evolving platform for purchase.

Don Fuller: I have a couple of comments for Donna, here. You had some interesting information there which kind of proved common sense and one of them was, product innovation’s more important than financial innovation, which is sort of a long-term view, but another one you had was the business of incentives pulling sales forward and I’ve been around a lot of sales guys, and they will tell you that big incentives basically vacuum customers out of the future and then you end up down the road and you’ve given up all your inventory, you’ve given up all your customers, and then you’re going to get to the next few months with nothing to do. And it looks to me like Cash for Clunkers is simply an incentive that the manufacturer didn’t have to pay for, but guess what: I paid for it and a lot of the other folks paid for it, but there’s no new car in my driveway. So my question for you is, based on this information you have or maybe for the other two of you, what do you see required or would have to happen to get the manufacturers out of the drug business of incentives?

Miller: Well, like kbb we did a survey on Cash for Clunkers, and when we talked to the early purchasers — and we expect this to change as more and more people come into the program — but when we talked to the huge influx of people that came into the program so early and used up the first billion, a fair number of them actually said they had delayed their purchase, waiting for the program. So yeah, there is definitely a pull-forward, because just like what Rick was showing in his data, we certainly are tracking some people who are being pulled forward. But Cash for Clunkers was different because it had gotten so much early press time, if you will, and people waited for the program. So because of that it’s slightly different. I’m gonna answer it that way first.

But in terms of how do manufacturers get back to, to innovation, I think Ford is actually a good example: building products that get consumers excited. Fusion, just like what Rick was talking about and George has been talking about, how great Ford is doing, Fusion looks terrific in our data right now. Ford is really starting to pick up some real momentum and really talk about the product. And the more manufacturers focus on the product, and it looks like that’s what GM is doing with Lutz, or the marketing and the product, the more consumers are going to get excited about it. There’s no magic bullet, but the more manufacturers can balance back towards product the healthier the industry is gonna be faster.

Fuller: But can’t you say, that sounds like “duh…” How hard to you have to hit people in the head before they get that message?

Peterson: But I think one thing also right now is the domestic manufacturers, at least Ford and GM, are pretty close to product parity, even product superiority, over some of the Japanese. And so you go, well, ok, they’ve had 20 years of negative perceptions, or even longer, 30 years of negative perceptions about building crap. Now their products are pretty good. Well, it’s just like you think of Hyundai. Hyundai didn’t really start building good products until 1998 — well, maybe 2001, but they had a 100,000-mile warranty in 1998. But it’s gonna take Hyundai another ten years to get over the perceptions that they sold junk cars.

We can’t sell a diesel engine in the U.S. because General Motors sold crap diesel engines back in the early 1980s.

So it’s a big issue of perception, and I think right now so many customers or so many prospective customers have gotten this deal-deal-deal instilled in their minds that it’s going to be really tough for the manufacturers to get away from that. I agree with Donna that product is going to be a huge part of that equation, but we’re going to have to convince the people that it really is still a product game — which we all think it is, all of us in the room know it’s a product game — but it’s how to get the humans out there to really embrace it again and say, “I really want to buy a good car.”

We’re finding Generation Y saying, “Well, I don’t really care about the car. I care about the interface. I care about the Sync system. I care about being able to plug in my iPod. And I guess if the car drives ok, that’s just alright.” But this passion that a lot of us in this room have about automobiles doesn’t seem to be there with the younger people today. So that’s another challenge that the industry has.

Wainschel: I too think that — I like the way you put that, that the industry’s on this drug, because I think the sales in the industry was artificially high for a long time and it was really since 2001, according to Donna’s information, and it’s been propped up by the pull-forward sort of mentality. I think that the industry’s sort of paid the price for that and this has been the outcome, where the industry’s in such turmoil but you’ve got a couple bellweather companies in bankruptcy. You never would have thought that would happen even if you looked a couple, three years ago.

So I think there’s been a wakeup call. I think that GM shedding some of their brands that don’t make sense for them or don’t make sense for consumers any more is another thing. And I do think that there is both a continued threat, because memories are short even in the industry, that there’s a huge opportunity too and that is actually to get back to the business of selling cars that people want to buy. If you look at what’s driving Ford, as I showed it’s the Fusion. I showed you that Chevrolet is the number 2 share of market interest over on our site. You can probably guess what vehicle is driving that interest, and that’s Camaro. So it’s probably not going to be a big seller for them, but it’s a big image vehicle for them. That’s a signal to the consumer that maybe GM can still build good cars.

So I think that there’s been such a shakeout and whether that shakeout remains and is truly gonna sort of sweep out the underbelly of the industry, if you will, and end up with the industry in a better place, I think there’s a foundation for them to build upon now and they’d better take advantage of it.

Fuller: Camaro’s not exactly the kind of car you think Barney Frank wants us to buy, so I don’t know what the length of that…

Miller: Well, I’m sure Rick also has data that shows that Camaro is the [word unintelligible], but the foundation has been the Malibu. So the Camaro is the new hot story for Chevrolet at the moment, but Malibu looks really good.

Wainschel: And that’s similar to what Nissan did. You know, 350Z, but they were selling Altimas. I think the Camaro is Chevy’s opportunity to act in that regard, to say Chevrolet can build good cars. Camaro is not very practical for most people, but if the Camaro’s a good car, then by association then the Malibu’s really a good car too.

So, and I will say too that the perception is of the brands. We do a lot of brand perception tracking work at kbb. The perception of the domestic manufacturers has actually been on the rise for the past year, which is amazing when you think about what’s gone on for the past year. So, you know, there is some signs of hope here and I do think that with the elimination of Saab and Hummer and Saturn from the GM portfolio, those are really laggers and draggers-down of that company, and as I said, if they do take that opportunity to shed those brands that were being sort of anchors on their feet. I think that brands like Chevy and GMC and Cadillac can really help them sell, get back to the business of selling good cars again.

Miller: Actually, just one last point on the, you know, what’s it gonna take for the automotive manufacturers to stop thinking about the financial innovation. It has to do with vocabulary and I don’t know if you’ve heard this, inside the automotive manufacturers about variable vs. fixed costs. Incentive is a variable cost and much more accounting-efficient. And that’s one of the key drivers. So there is actually a structural reason why incentives have become the innovation, because there’s been such incredible innovation in the financial world, outside of automotive as well.

Mike McHale: I want to make a couple of self-serving points about Subaru while I’m here. The first one is to George: you were talking about the teacher that … had the equity to buy, but didn’t. We’re sitting on our record month ever in July, we’re 34 percent up on the year before. So maybe some teachers somewhere are buying …

The second point is Donna’s point about emotional advertising. We’ve really resisted the urge to go down the big-incentive, big-sale route this year with our advertising. By the way, our sales are primarily product sales, they’re not Clunker- nor incentive-based. And we’ve really tried to stay on that emotional message. And for those that have vacated that space, thank you, because it’s enabled us to do something a little more different.

And I think that, you know, I read that you can begin or end any joke at the moment with “in this current economy,” and when it makes it into the sitcoms too it’s time for all of us to take a look back and say, let’s stop talking about this thing, let’s stop worrying so much, and that’s what we’ve tried to do at Subaru. We’ve really tried to focus on the feel good factor of buying a car, that it can be a nice thing. You don’t have to worry, and don’t worry that $1500 or $2000 incentive is the right thing to get you to the showroom when it might be $2500 next week. So that’s really my self-serving point. Thank you.

Mike Obradovich: A couple of points that I want to address. The first one is, I think there is a new car group that you can track. I think the hybrid vehicle certainly is, the hybrid sedan, is probably a new vehicle. And I would also add the multi-media car seems to be the new vehicle type to track, and I’d be curious to see any data on that.

The second thing, I’d like to make an observation about Ford. Everyone says they’re doing great, and I concur with everything you said, but Ford is being financed by debt. They’ve got a $10 billion loan out there. I don’t know when it comes due, but I think it comes up in the next six months. So how is that going to play out, when the lenders start making comments in the media about calling that debt in?

Peterson: Well, that’s certainly a disadvantage for Ford at the present time compared with GM and Chrysler, because they have their financing well in line at 2 and 3 percent. Ford’s at 8 percent. Apparently Ford does have their loan recall handled at this point, they have the plans in place, so there shouldn’t be a risk on them getting the refinance done. But Ford is at a financial disadvantage, given their debt structure compared to GM and Chrysler.

Wainschel: But I do think, though, that the consumer perception — and you’re absolutely right, I think that Ford was in many ways smart and in some ways lucky that they got their financing when they did. But I think that that decision that they made, or that timing that they pursued, has paid dividends very handsomely for them, because I think that the value that that’s brought is really coming to bear in the minds of consumers. Their perceptions of that company were that they didn’t have to go into bankruptcy. They were just as hurting, financially, as GM or Chrysler, but where they got their money didn’t have the stigma of, you know, I think this gentleman here was saying, “We’re paying paying for some of these cars or some of the subsidies and so on.” There’s that mentality that consumers bring to the party that gets painted onto GM and Chrysler.

That is not the case for Ford, and I think that consumers are seeing Ford as a viable domestic alternative and they have benefited greatly from that. I think that they’d gladly pay the higher rate of the loan that they got from where they got the money vs. the government. I think they’re making that money back in spades.

Miller: And the other thing we’ve been tracking is, you know, not only is Ford doing well in terms of engendering demand, but their incentive costs have actually been able to drive down their incent-expense significantly in the past six months. So they’re definitely paving their own road to profitability.

Wainschel: Every metric that we track for Ford, whether it’s traffic on the site, consideration via our survey work, perceptions in our brand traffic work, are all up to the point where Ford is the new powerhouse brand in this new industry, and they’re challenging Honda and Toyota on things that a year or two ago you would have never thought they would be.

Joni Gray: I want to know what’s going on with brand marketing, because all three of you mentioned both retail marketing, that it has been done and it’s always detrimental if it’s just heavied-up, you know, and then there’s product marketing. But what about the philosophy of brand marketing? It’s almost as though it’s disappearing, and my insider, I’m thinking is it because all of a sudden, now in the new era of, oh my God, you know, panic, these brands don’t even know how to communicate — I appreciate Subaru, yeah, you do — what they should be to people from a brand standpoint. Are we seeing the end of brand marketing? Are we just in a transition? Or is it too much of a luxury? And when will it end? Do you guys think it’s worthwhile and should be brought back?

Peterson: Well, the one thing, Joni, is just think about the, we have, whoever counts these things, we do, is 280-odd nameplates out there today, so that’s products, individual products on sale in the marketplace today. When you had a market of 16 million units, you’re selling about 50,000 vehicles on an average nameplate. That means that some nameplates, because, you know, that some sell, the top ten vehicles in the marketplace account for 25 percent of the volume, so you have another 260-odd to split that 75 percent of the market. So you have all of these models competing for share of voice. And so you have, and no one on this planet can afford to market those things effectively. And there’s so much clutter out there that you really can’t focus in very well. So it’s really become a marketing game, and all of us have heard of good cars that have been launched and left. Let’s take the poor, lamented, previous generation Ford Taurus, which was an outstanding car, believe it or not, but Ford gave up on it after about three months and didn’t advertise it at all for a long time, or forever. And there are other examples of that out there as well.

So the key’s going to be, you have all these products to market and maybe in some ways it’s more efficient to market the brand. So let’s take an example of two people who have marketed brands: Acura and Lincoln. Acura decided to change all their names to alpha-numerics; that, by their own internal calculations, it cost them $1.4 billion in lost sales to go from the Acura Legend to the Acura RL.

Now I don’t have any idea of what Lincoln has cost to go from MKT to MKZ to MKY to MKQ and all those MKs, but I guarantee you that when the president of Ford North American Operations gets up at an auto show and mispronounces the name of the car that he’s introducing, you know that they’re in trouble and they’re trying to launch a brand.

And so I think really it has to become more of a product marketing challenge than it is a brand marketing challenge, but it’s hard to afford it. So that’s going to be the challenge. It’s really, instead of having 280 nameplates, maybe we need 200. But boy, getting rid of a nameplate is so tough. Just see how General Motors is challenged with that.

Wainschel: I might have a somewhat different opinion. I’ll go back to the first question James asked me, which was what’s going on with Mercury. I think Mercury suffered. They could advertise their individual models ‘til the cows come home, but until they have a brand that sort of means something to people and has an equity, you know, essence to it, I think it’s swimming upstream. There are brands that I think do both at the same time.

If you look, for instance, at what Lexus is doing right now, they’ve got a campaign where they’re showing people driving their various cars and they look over and, I don’t know if you’ve seen this, but the car next to ‘em is balloons with “sale” on ‘em or flags with “sale” on ‘em or something; they’re selling the Lexus brand as “don’t compromise, don’t settle, don’t just buy the $2000, $5000 off kind of deal. Buy the car you really want.” And it’s not really a model-by-model message, it’s a brand message that’s applied to all of their models and it carries across.

I think it’s a real interesting play right now, given where the economy is, but I also think it’s a smart one. I’m a huge believer in brands and I’ve worked on them my whole career. I think without it, you have nothing. I think it’s the underpinning of everything that all the product stuff sits on top of. To me there’s sort of the hierarchy: there’s the brand message, there’s the product message that sits on top of that brand foundation, and then there’s the deal message that’s sort of the …

[Inaudible interruption from audience.]

Wainschel: I don’t think they are. I mean, I think that it’s gotten more subtle than it used to be and I think that it’s, ah, I don’t think that you see commercials that are strictly brand messages and then other ones that are product messages and other ones that are deal messages. I think that the product and the brand oftentimes go together, like that Lexus example that I cited. I actually think Subaru does a really good job of that, too. They have a really strong essence when we do our brand tracking. Subaru’s a bit of a niche brand, I think you’d probably agree, but they’ve got a really strong following among those people who appreciate Subaru for what it stands for to them as a brand, and that carries across all of the various vehicles that they sell. So the Forester and the Legacy, where a lot of the equity extends across the entire brand and is similar from one vehicle to the next, even though they compete in different segments. So that, I think, is a great example of a brand message that’s been very effectively communicated and interpreted by consumers and applied to the products that sit within that brand. And so I personally think that those companies that are moving away from that are making a mistake and they will eventually get back to it, because without the brand I think the products suffer from the context of what that brand means to those products, if that makes sense.

Miller: And adding to the point here, and this isn’t meant to be a joke in terms of “in these economic times,” but in these economic times a lot of the manufacturers have just stepped back from a brand-only message. But to what Rick was saying, the most successful brand campaigns that we’ve seen are the brands that build it through product stories. Because what you’re doing is, with a brand promise, you need something behind it. And so if you can connect your brand promise to the product story, you have a really compelling emotional set of messages you can communicate. And so some of the strongest brands that we see out there today, you know, Lexus was mentioned, BMW, Honda, Toyota, they built their brand promise based off of successions of a very successful product and having the marketing communication that really reinforced that product message.

So what we’re seeing is, we’re seeing evolution of the brand marketing story, but, yeah, I think just for the moment we’re seeing a lull in brand-only marketing.

Bell: Ok, last question, we promise.

Rich [no surname given]: George, this actually comes from a press release or a results release that I saw of your organization a week or so ago about the Chinese brands coming into the U.S. Since we’re talking trends in consumer responses here, what are your opinions on how that’s going to affect things?

Peterson: Alright, to just set the stage and tell people what they might not know, what the results of our research were, we asked people whether they’d consider buying a Chinese or an Indian brand of vehicle. And to our surprise, 15 percent said they would consider a Chinese brand and 11 said they’d consider an Indian brand, while 16 percent said they would consider a Korean brand. Which in talking to our friends at Kia, they said, “Holy shit!”

That’s a quote, by the way. [Amid laughter.]

So we find that when you dive into the data and you find out who these people are that are considering the Chinese brands, or the Indian brands, they are about ten years younger than the normal person in the market, they are more likely to be female, they are much more likely to have a college education, they are equally affluent to the normal marketplace. So they are affluent at an earlier stage of their life.

Now all of us know that no Chinese manufacturer has actually announced launching in the country. In fact, the only one of these that has announced launching is Mahindra, which is going to be launched probably in next February — maybe. But the Chinese are certainly looking at the United States. We’ve worked with several of them looking at entering this marketplace, and all of them have a huge challenge. ‘Cause they really don’t understand this marketplace right now.

If you go onto ChinaCarForums.com, if you ever looked at this site, they have a thing called Analysis. And you go down in this Analysis site and it says, “Chinese Copy Cars.” And it says, “We looked at only 30 Chinese Copy Cars.” And so this is a Chinese car that is a copy of a Lexus LS430. Or a Chinese car that’s a copy of a Toyota Corolla. Or a Chinese car that’s a copy of a Hummer. And it’s fascinating. But what they say in the preamble to this is, they say that the Chinese manufacturers aren’t ready yet to compete in the world, so what they’re doing is, for the foreseeable future they’re gonna be copying other world cars.

We found that in working with the Chinese clients that we’ve worked with is that their eye is a lot different than ours in terms of how they perceive what the styling of a car should be. Certainly their materials choices are, ah, not quite there yet. The adhesives they use make the cars have an unsatisfactory aroma. And so there are a lot of things about their cars that just aren’t right. But they’re gonna get it right eventually. Where it’s taken Hyundai maybe 20 years to really get it right, it’ll probably take the Chinese ten after they get here.

And so certainly there’ll be a Chinese manufacturer coming into the country, probably within the next five years, maybe earlier than that. But a lot of them made this move and then backed off. So you hear of Geely and Great Wall and Chery and all of these guys, ah, “Rovay,” I guess part of SAIC, the old Rover people out of Britain. So a lot of ‘em could be ready to come, but they just haven’t gotten their act together yet.

Charlie Vogelheim: [Asks how long funding will last for since-expired Clunkers program; consensus of panel is “by September first;” their shots fell a week long.]

Bell: Thank you all very much.