RE: Small is Beautiful

Tuesday 9th July 2002

Small is Beautiful

What's the secret of survival for the cottage car industry?


Author
Discussion

grahambell

Original Poster:

2,718 posts

281 months

Tuesday 9th July 2002
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Quote: "It may be a piercing glimpse into the obvious, but you need more than a blasé attitude to qualify as a potential customer for "speciality" sports cars. You need money. Lots of money. In fact, you must have more money than sense."

In a word Robert, bollocks. The UK has a thriving kit car industry that gives a lot of people the chance to own and drive "speciality" sports cars for modest sums.

As for speciality sports car manufacturers struggling to survive - so what's new? That situation is hardly restricted to British sports car companies though.

How many car companies have gone under over the decades worldwide? Studebaker, Packard, Hudson - just a few American examples for you there. It's a long, long list.

Being a car manufacturer has always been a risky business, with even the big players struggling at times (Fiat and Daewoo for example) so don't try and make it out to be a peculiarly British problem because it isn't.

Personally I'm just thankful that there are people like Jensen, AC and - it has to be said - FBS who have the balls to take the risk to produce cars that make the world more interesting.

JMGS4

8,756 posts

276 months

Tuesday 9th July 2002
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Hear Hear Graham, otherwise we'd all be driving Mundaneos or Vextras... More individuality is the byeword and a kitcar/specialitycar is a thing I've always wanted, but couldn't afford due to driving m-ways on business all day......(NOT in a mundaneo!)

JonRB

75,769 posts

278 months

Tuesday 9th July 2002
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I hear what you're both saying, but there are a couple of points well made. Would I have bought a TVR if it was slower than the competition, cornered worse, was uncomfortable, cramped, leaked and cost twice as much? Of course not - I'd be barmy if I had.
Instead I bought it for its stunning performance and bang-for-buck.

Robert is right - if the only thing a car has to offer is that its different then that's not enough. It does have to be better in at least one respect - acceleration, cornering, looks, whatever.

>> Edited by JonRB on Tuesday 9th July 10:24

Roadrunner

2,690 posts

273 months

Tuesday 9th July 2002
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Well I enjoyed the article - pretty humorous. To be honest I don't think some of these companies are serious about trying to compete with the big boys - it's just a hobby. A hobby for a semi retired guy to set up a new design in his shed, and a hobby for a spanner yielding enthusiast with too much spare time.

smeagol

1,947 posts

290 months

Tuesday 9th July 2002
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I think the report is right graham when they talk about the specilist car market. Kit cars are different. The ultima, ascari, Noble are not kit cars they are either hand-built in factory or component cars.

I was lucky in that the kit car I built got traded for the same amount I bought the kit for, but it was only £2k. The only reasons my kit car was accepted as a trade in was a) I was spening 10x the amount, b) they knew a collector who came along and went "I'll buy it".

I got a lot of pleasure from the kit car BUT to say for the high performers you don't need money is wrong. The Ultima is a wonderful car get one built and it will set you back £65k+, build it yourself and its £40k now thats not as much as the big supercars but trading in might be impossible.

Certainly you will never see the money you've invested in the supercar come back. For example there is an Ultima for sale at £32.5k that is less than the parts and its only 2 years old. Most sales are private simply because dealers won't take it on. If you buy a specialist car like the Ultima you are litualy saying goodbye to the money you've spent, some people its worth it, but always go with your eyes open, its not a ferrari/Lambougihini which will be easy to sell.

I would love an Ultima, simply because it is so incredibly quick and there is nothing like it on the roads (I like the looks as well) BUT if it wasn't incredibly quick I wouldn't buy it simply cos it looks different (esp at £40k). A little known fact is that you can build an Ultima with a 2.0litre engine but as far as I know there hasn't been a single one built.

The kit car industry is full of cars that didn't make it the ones that have made it are the ones with something special be it price per bang, or part of a heratage (remember the majority are replicas), or something completely different.

pjg

46,643 posts

281 months

Tuesday 9th July 2002
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I'm with Mr Farago on this one (incidentially, a very well written article with a nice touch of wry humour).

The UK's kit car industry MAY be doing well, but the real minnows who want to aim big seem to be afflicted by the problem outlined in this arguement - that people will buy it because it's different.

Hats off to these companies, and I for one wish them all the success in the world, but where are they getting their marketing ideas from?

The FBS is undoutedly a great drivers car, but aesthetics seem to have been lost - so it probably won't do as well as it should.

As for the others... what happened to Paradine? Jenson did the same - aimed above the mark and got it wrong - becuase (as the article states) they are not aiming at a known customer base, are charging the earth and going on the principle that people will buy it for it's originality.

Remember what TVR did with the Griffith? Brought it out, at sensible money, with serious grunt and drivability for what you paid... and then moved on up from there. They built a customer base with an affordable sports car and are now shotting at the moon.

These people need to build the foundations, before they start building the house - and this is where they are going wrong, and TVR got it right.

grahambell

Original Poster:

2,718 posts

281 months

Tuesday 9th July 2002
quotequote all
Yes, the kit car industry is littered with companies that haven't made it, but as I said so is the mainstream industry. If it wasn't for the really big players would there still be Jaguar or Aston Martin (thanks Ford) or Alfa Romeo, Maserati or even Ferrari? (thanks Fiat - who in turn might soon be thanking General Motors).

Yes, you do lose a lot of money on the more expensive specialist cars - but then the depreciation on many of the more expensive mass produced cars is pretty frightening too.

I'd have to disagree about specialist car manufacture being a hobby though. Unless you treat it seriously as a business you'll never make it - and even if you do treat it seriously you can still lose a bundle. Just ask Martin Phaff of Ginetta or Norman Morris of Phantom. It can cost a grand a week just to keep even a small scale operation going.

But if it wasn't for people starting such small scale operations we wouldn't have TVR or Lotus or any of the other cars Pistonheads readers lust over.

And we'd all be reduced to driving round in those common German things.

ap_smith

1,997 posts

272 months

Tuesday 9th July 2002
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quote:
enthusiasts who are bored with Beemers and fed-up with Ferraris. These potential customers may well be the sort of people find the golf club parking lot a better place to measure their status than the locker room

Ahh, back on safe ground here 'cos I find Mr Farrago talking sh*te yet again.

I personally feel those who are bored with traditional Euro Boxes are the types who would walk their own way and not give a toss about the locker room. In fact, they'd probably prefer to be out driving the car instead of going anywhere near the precious golf club.

It is true that the small manufacturer has to have a unique selling point. (USP). But Robert, this isn't leading edge marketing, this isn't news.

I'm glad you keep putting articles up though... I like having a good bash

mhibbins

14,055 posts

285 months

Tuesday 9th July 2002
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quote:
I'm glad you keep putting articles up though... I like having a good bash
While reading?

ap_smith

1,997 posts

272 months

Tuesday 9th July 2002
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Yeah, Robert does things for me.



stig

11,822 posts

290 months

Thursday 11th July 2002
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Blimey, where do I start:

"I've spent a fair amount of time in English industrial estates, checking out the handiwork of low-volume sports car manufacturers like Noble, Ultima, Jensen and Ascari. I always make it a point to ask someone in authority why in God's name anyone would buy their car instead of a similarly priced model from one of the established players. A carbon-fibre AC Cobra with a 3.8 litre Lotus engine is a fast and dramatic car, but why would anyone choose it over a Porsche Carrera 4 Coupe?"

Because we're not all brainwashed into thinking that Porsches are the best thing since sliced bread.

"Our car is for people who want something different." This is the universal rallying cry for marketing mavens who find themselves plying their black arts in a department of one. They claim their buyers are "individuals" who like to "go their own way." The spin-doctors make it sound as if anyone who buys a Mercedes - any Mercedes - is a misguided ignoramus, while anyone who buys their product is a connoisseur with impeccable taste."

What the hell do you expect them to say? If the cars didn't have sufficient differentiation from mainstream models then where's the USP? You journo types are the first to moan when a car isn't 'different' enough!

"This sales rationale is a combination of the Field of Dreams Strategy - "If we build it, evo [magazine] will come"- and good old-fashioned English snobbery. Strangely, it's not entirely incredible."

If it's desireable enough then they're absolutely right though aren't they? The same is true of ANY manufacturer. Oh, and the UK aren't the only country with specialist manufacturers so snobbery doesn't really come into it does it.

"Despite the mainstreamers' best efforts to keep their performance customers amused, there are more than a few enthusiasts who are bored with Beemers and fed-up with Ferraris. These potential customers may well be the sort of people who find the golf club parking lot a better place to measure their status than the locker room. Even so, a short attention span and a fragile ego does not a Morgan customer make..."

And the car world is a better place for it! Or would you rather we all had 3-series BM's?

"It may be a piercing glimpse into the obvious, but you need more than a blasé attitude to qualify as a potential customer for "speciality" sports cars. You need money. Lots of money. In fact, you must have more money than sense."

This is hard to justify seeing that a BMW X5 costs more than an Ultima or a Noble and there's shed-loads of them on the roads!

"As a way to lose money, an obscure hand-built English sports car ranks right up there with divorce and speedboats. Buy a fully built, fully specced £65,000 Ultima Can Am, and you'll get staggering, monumental, unbeatable bang for your buck. You'll also own a car that will sport dozens of barge pole marks at what's ironically called "trade in time"."

Over 90% of Ultima's sales are for self-build cars which come in at about 40k. They sell at 50+ so that's a bit wide of the mark isn't it? And who in their right mind would try and trade on in? Private resale is the way to go.

"Of course, there are people who can lose £100k down the back of the sofa and not notice. The problem is that they're not like you and me. For these financially secure individuals, it's not about money. It's about hassle. Specifically, avoiding hassle. Which puts their decision to buy a handmade exotic straight back into the realm of the inexplicable."

Hang on, where did 100k come from? With the exception of the Ascari, the cars are half that amount and the depreciation is LESS than mainstream models anyway.

"Few things can generate stress and aggro as easily as a car that can only be serviced by a company whose entire workforce is unavailable whenever the kettle boils. You think I'm kidding? On Monday at 2:15pm, I tried to speak with a representative of one of the companies named above. A pleasant voice told me "no one's here but me." You could hear the echo."

No different to you average main dealer service department is it. However, when you need help advice at 9pm on a bank holiday and you can speak directly to the owner of said car company you're in far better shape than the Ford Focus driver.

"Can you imagine the response you'd get when (not if) your exotic car breaks down? "Hello RAC? Can you fix a Noble M12 GTO? Yes, it's a car." And what of spares? How long do you think it would take to replace a suspension component for an Ascari Ecosse? Where are you going to find someone to service and repair your Ariel Atom, other than the factory, which probably closes for a summer holiday?"

Well, seeing as the drivetrain is sourced from major manufacturers the answer is - anywhere. Bespoke components can be harder to find I'll grant you, but no more so than trying to get a handbrake self-adjuster for a MKII Escort. Given the handmade nature of the cars most parts are easily fabricated with simple equipment anyway.

"OK, sure, when you get right down to it, owning one of these handmade cars is a love thing, no different from the peculiar relationship enjoyed by owners of automobiles made by long dead car companies. And if you have two or three or four backup cars in the stable, you can minimise the hassle. But it's still hard to understand where all these small English manufacturers find buyers who are bored, wealthy, patient, suitably car-ed up and, most importantly, smitten."

Well, Ultima's biggest market is the States so you tell me?

"The answer is they don't. Not most of them, anyway. It's no surprise that AC and Jensen are back on the ropes, battling for survival. And for every Morgan or Caterham that somehow make the transition from a one shed operation to a multi-shed factory, there are a dozen small English car companies who have simply withered away. I think that's down to the fundamentally flawed view of the marketing men."

Hang on. AC are on the ropes because you can build one from umpteen thriving kit manufacturers for a fraction of the cost. Why you'd want a yank barge like the Cobra is beyond me anyway. And Jensen haven't even GOT a product to sell yet.

"People don't buy handmade sports cars because they're "different". They buy them because they're "better". To survive, a low volume manufacturer must create a car that does at least one thing better than anyone else, at any price. For Noble, it's cornering. For Ultima, it's balls-out acceleration. For Ascari, it's looks. If a handmade car can beat the big boys at even one thing, it stands a chance of liberating enthusiasts from their money. If it can beat them at more than one, its maker can thrive. To believe a car will sell simply because it is rare puts a small automobile manufacturer in good company. On the road to oblivion."

Congratulations on stating the startlingly obvious! Some redemption at the end but I don't think that your comparisons are fair at all.

>> Edited by stig on Friday 12th July 11:29

Podie

46,643 posts

281 months

Thursday 11th July 2002
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Some interesting points there stig...

smeagol

1,947 posts

290 months

Thursday 11th July 2002
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quote:

Over 90% of Ultima's sales are for self-build cars which come in at about 40k. They sell at 50+ so that's a crock too isn't it.


Problem is Stig they don't! The Ultima is a fantastic car but you try and trade it in and you wont get £50k. One for sale recently from a dealer £32.5k. The ultimas you see for sale are private slaes only which always have people putting the value of their cars up, this doesn't mean they actually sell them at that value. The reason 90% are self build is also for the hobby side (ie I built this car myself).

There used to be people that believd they could make a business out of building kitcars, the general advice was don't. There was a link to built Ultimas recently their price £85k and factory built will cost £65k so selling at £50k is not exactly a profit is it?

stevenrt

141 posts

276 months

Friday 12th July 2002
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I agree with the article, however, I want to know, what is the one single thing Morgan does better than anyone else?

CarZee

13,382 posts

273 months

Friday 12th July 2002
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Experts in bankruptcy and receivership laws?

stig

11,822 posts

290 months

Friday 12th July 2002
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quote:

quote:

Over 90% of Ultima's sales are for self-build cars which come in at about 40k. They sell at 50+ so that's a crock too isn't it.


Problem is Stig they don't! The Ultima is a fantastic car but you try and trade it in and you wont get £50k. One for sale recently from a dealer £32.5k. The ultimas you see for sale are private slaes only which always have people putting the value of their cars up, this doesn't mean they actually sell them at that value. The reason 90% are self build is also for the hobby side (ie I built this car myself).

There used to be people that believd they could make a business out of building kitcars, the general advice was don't. There was a link to built Ultimas recently their price £85k and factory built will cost £65k so selling at £50k is not exactly a profit is it?



Oh yeah, the famous 32.5k car at Beaulieu. Couple of points there Smeagol.

1. I wasn't talking about 'trade-in' I was talking about resale. You'd be a mug to try and trade any self build car in.
2. It's a Sport not a GTR on which my prices were based.
3. If you look at the spec. of said Sport, you'll see that it's clearly been built to a budget. Mild steel exhausts, non-Ultima wheels etc.

You can build an Ultima GTR for 25k if you want and sure enough, it would have a relative worth. However, most of them are build to the factory spec (allowing for various engine specs) so command a higher price.

smeagol

1,947 posts

290 months

Friday 12th July 2002
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So we're agreed then the Ultima is a car where you are effectively throwing money away as you could have problems selling it (ie it has to be private). Using your example you wouldn't buy it at £32.5k so that person has made a loss (even with the parts you mention I suspect he's paid more than £35k for it)

BTW you can't build a GTR for £25k unless you downgrade engine a lot and use 2nd hand parts (not recommended) I suggest you look at the parts list I calculated that the 'basic kit' is £18k + Vat = £21000 (look in the accessories list some of those aren't accessories IMHO) then you need engine (£6k), gearbox (£2k), seats... etc. I looked into it as I was considering building one. To build one that is a good performer (and lets face it like you're not going to) you need £40k+.

The problem with private sales is that the figure advertised isn't the figure people actually pay. Lets be honest the ones that are trying to sell at £65k haven't been driven or have extremely low millages. refer to www.ultimaclub.com/index-site.htm to see my point.

BTW the £32.5k hasn't been the only Ultima I've seen at that price I saw a at £38.5k for a spyder and quite a while ago another spyder for even less (which I believd was a factory built example)

If you build an Ultima and use it, you won't see the prices returned. I suppose thats true for all cars.

dandarez

13,407 posts

289 months

Saturday 13th July 2002
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CarZee just touched a raw nerve not touched on (pun intentional!) in this discussion.
Jensen has allegedly taken deposits on 300 cars - how many of those will lose their money? I said after the 98 Motor Show after watching a TV programme on the 'so-called' new Jensen it would go bust. It could have been anyone in a garage lock up - they actually had to bump start the thing to get it to fire up for gawd's sake. It's not a Jensen - they just bought the name. I blame the mot press like Autocar who have listed these forthcoming (joke!) Jensens weekly ever since 1998 Motor Show (this week's issue even has them listing it for 2003 so that some other mug [more money than...] will send his deposit to a company that will shortly (VERY shortly) disappear.
Back to main subject - if you want to know how to survive in this minefield of specialist cars there is one family name that stands shoulders above the rest - WALKLETT. Sold 31 year business, never went to the wall. Continued with new venture in 1991, still in business - never gone bust. Publicity given by motoring press? Virtually nil.

dandarez

13,407 posts

289 months

Saturday 13th July 2002
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Who the heck is Robert Farago anyway! Went to his site and all I got was an exhibitionist Sam and her motors... BOOOORING

dubbs

1,590 posts

290 months

Sunday 14th July 2002
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Don't post here very often but I have to say the whole thing is completely off the rails i.e, this very subject.

How can you compare a mainstream manufacturer with a specialist? They cater for 2 VERY different sorts of people and they are 2 very different types of product.
You can't compare... we're not talking vaccuum cleaners "oo, my electrolux hasn't broken down in 3 years" "yeah but my Dyson looks better and has 8 cyclones" - You can't do it!
I think the whole comparison is daft. Compare mainstream with mainstream but even trying to compare something akin to an Ultima with anything like a porsche just doesn't work. The variables are too variable, the pluses and minuses are not definable - they change depending on who you are, how much you spend, what you want for your money, whether you like looking at the engine, What is it going to be used for... the list goes on..

Those that buy either enjoy them for their relative merits and get on with it. It's only when people try to compare chalk and cheese because they think their clever enought to do so, that the rows and comments start flying.