Will A Custom Car Sell?

By Larry Dignan  |  Posted 2003-08-01 Email Print this article Print
 
 
 
 
 
 
 

Start-up Build-To-Order has grand plans on the technology and manufacturing front, but all that will be for naught if it can't buck the odds and sell a new brand.

Start-up Build-To-Order has grand plans on the technology and manufacturing front, but all that will be for naught if it can't buck the odds and sell a new brand.

New nameplates have taken billions of dollars to make a splash and recent examples such as Acura, Lexus and Saturn have come from giant auto manufacturers Honda, Toyota and General Motors, respectively.

BTO is hoping to make a splash with about $250 million, but Chairman Scott Painter says customization and a little marketing moxie can go along way.

According to Painter cars are a commodity and it's the unique features—Polo seats, khaki door panels and the like--that count. In effect, Painter is trying to replicate his own experience with buying a Ferrari, in cars that sell for as little as $35,000.

The driver's seat in Painter's Ferrari was ergonomically suited to him so his leg is at comfortable angle as he hits the gas. The seat also has a position to accommodate his wife when she takes the wheel. That example was just one of 40 customization choices Painter had for nearly every option, accessory and touch point.

When BMWs attack: Check out Baseline's article on appliances run amok.

"Everyone wants the Ferrari experience and customization, but it's a question of cost," says Painter. The tag on his Ferrari: $255,000.

Once BTO delivers on the technology and outsourcing model, it'll still have to make a splash with customers. The gullwing DeLorean was a notable flameout in the '70s and even brands like Saturn from General Motors have struggled.

To raise the chances of success, the Auburn will eschew complexity. Too much unproven software and electronics can be the bain of any car, even luxury ones such as the BMW 745i (see "When It Doesn't Wash," Baseline, Jan. 2003). So the Auburn, for instance, won't have on-board navigation systems and the like. "Why subject yourself to the technology risk?" says Painter.

But simplicity in the final product won't ensure sales. First there must be customers. And customers must be attracted to a brand to which they will trust their lives.

"What bothers me is that this company has no brand name capital," says George Hoffer, an economics professor at Virginia Commonwealth University. "Lexus came along long after Toyota was established. Acura rode the reputation of Honda."

Painter admits the branding is a challenge, but says he has no other choice. "If not a new brand, what will it be?" asks Painter, predicting it will take decades for large automakers to provide a truly customized car.

"Brand is the biggest risk in this business," he says. "If you're wrong about that you're wrong about everything. What keeps me up at night is that we build a car, market it and no one buys it. The only bright side to that scenario is that at least we won't build 100,000 of them."



 
 
 
 
Business Editor
ldignan@ziffdavisenterprise.com
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
 
 
 
 
 
 

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