2014/2015 Volvo V60 for US market

I haven’t mentioned this as a definite yet as I wasn’t sure it was a definite yet till I saw the PDF. Even then I wanted to wait a while as I wasn’t sure how or when Volvo planned to release it but the PDF is dated from a meeting on the 20th of February and all of the refreshed 2014 Volvo models have already been previewed and released.

Image

Posted in Automotive, cars, diesel, hybrid, leasing, marketing, Sales, volvo | Tagged , , , , , , , , , | 1 Comment

The President, the Shotgun and the Hypotenuse

Image

I am actually writing this post to talk more about math then the presidential Skeet Photo or Skeetgate ,Skeeters or whatever manufactured crisis you want to call this. As I have written before I shot competition pistol during High School so I am family with pistols and firearms in general but my shotgun experience is limited. I could say that 100% of my experience shooting shotguns involved trap shooting and that would sound impressive. That experience amounts to eight rounds fired out of a 20 gauge during Boy Scout camp about twenty years ago. I did hit all eight pigeons without a single miss in that session but I liked shooting pistols or rifles more. Plus shotguns are so much more expensive then small caliber pistols or rifles. At the time it was 25 cents per shell to try out the shotguns at camp. I had a dollar so I got four shots but after I hit all four the scout master manning the range gave me four more as a freebie to see if I could repeat my performance.

I used hypotenuse in the title because I thought it sounded better and because of The Lion, the Witch and the Wardrobe reference. I did not actually calculate the hypotenuse but you could from the information in this picture some guesstimation and basic trigonometry. I always think it is interesting when you can insert math into popular culture or current events. Math is terrible important and it actually seems to frighten people. That being said do not assume I am some kind of math wiz. I left engineering and switched majors after I failed differential equations and an engineering specific statistics class. I hit a wall in math that I just could not seem to get past but I did do well in future non-engineering related statistics classes.

What got me thinking about trigonometry was the claim by some people when looking at the photo that the Obama is aiming the shotgun too low to hit a clay pigeon target in Skeet. It looks like he is aiming the shotgun at just about level ground. I cannot comment on his technique in regards to how he is holding the gun or stance because I do not know enough about shotgun shooting. He does look like he is holding the gun a little high and close to his cheek but then he is also a lefty which really screwed up the proportions to me when looking at shooting. I can shoot right or left handed with a pistol with near equal accuracy but I cannot shoot a rifle or shotgun from the left side at all. I just have no frame of reference. What I can comment on is the math.

On the low resolution pictures published in most news organizations the shotgun does appear to be nearly level. Go to the high resolution original though and you can see this is not the case. The angle is very small but it is there. It is less then ten degrees but more then zero. I decided to split the difference and estimated it at somewhere around five degrees before doing any calculations.

When shooting skeet typical ranges are around twenty-one yards or sixty- three feet but can be more or less depending on your shooting position and where you engage the target.

Image

Here is a handy diagram I found to help with visualization. There is a great description of the origins of Skeet and how the modern range is set up right here.

Notice the target cross point at twenty-one yards or 63 feet. That is important and what is also important is the low house fires clays three feet six inches above station seven. My initial estimation of the angle the shotgun is being held at from the picture is five degrees. I had to remember SOHCAHTOA but then it was easy. We know the distance across the ground, not the exact distance but an example potential distance, and we have an estimate of an angle.

h/63=tan(5)

Now just solve for the h or height.

h/63=.087488~

h= 5.51 feet rounded to the nearest hundredth of a foot.

Then add in the approximate height that Obama is shooting from. I do not know how tall Obama is so I had to look it up. He is six foot one which is taller then I thought. Anyway according to this mean segment length of an adult male head and neck is 10.75 percent which would put Obama shooting from 65.15 inches off the ground. Add that into the calculated height of our triangle and you have the theoretical point he was aiming at assuming a 63 foot length which is 10.94 feet off the ground. If he was aiming at a target that is farther away then the height would be more and conversely a target closer to him would be lower. You can calculate your own example distances using the above formula and if you wanted to get real fancy you could do something in excel and make a graph.

After doing this estimation I thought to try and calculate an angle by overlaying some triangles onto the picture itself.

Image

I measured a hypotenuse of 12.3 cm and a height of 1.5 cm for the triangle made up by the shotgun to roughly Obama’s eye line. By using the sin function you can calculate the angle of fire.

sinθ=1.5/12.3

sinθ=0.1295~

To calculate the angle we need to use the inverse sin function which gives you an angle of about seven degrees.

Going back to the tangent function an angle of seven degrees equals a height of 7.74 feet plus the height he was shooting from which we have already calculated so a total of 13.17 feet. Either of those aiming points are theoretically possible on the skeet range where the clays are required by regulation to cross each other at a height of 15 feet.

I could of course be off in my calculations or estimations by trying to go off a picture but it is obvious that he is not holding the shotgun perfectly level and it is also obvious that he is not holding the shotgun at an angle above ten degrees. I can only be off by so much.

A ten degree angle would equal a aiming point of 16.54 feet and a angle of one would be an aiming point of 6.53 feet. This is still assuming the target is 63 feet away horizontally. Neither of those angles sound very plausible based on eyeballing the photo or calculating the angle based off the photo.

Posted in current events, firearms, General, math, media, shooting, trigonometry | Tagged , , , , , , , | Leave a comment

Three reason we were always going to go over the Fiscal Cliff.

First watch this video.

It is from the 2012 Republican Primary Debate in Iowa.

Look at that standing O at the end when they all raised their hands. That is the Republican Primary voters that a Republican congressional candidate fears. They fear a primary challenge on the right more then anything else and rightly so.

Number two is redistricting that happened as the result of the 2010 Census. The Republicans won big in 2010 with many gubernatorial victories and the control of several state legislatures. They re-wrote the congressional districts in their favor and to be fair the Democrats would have done the same.

Number three is just how gerrymandered the current congressional districts are. From @redistrict’s twitter stream is the grand total of all the House races. It looks like the final results are all in now and the Democrats won a total of 1,362,351 more votes then the Republicans or about 1.12 percent more votes. The Republicans though control 234 seats in the house compared to 201 Democratic seats a margin of 6.6 percentage points in the Republicans favor. Now because of the way the house is set up as a representational body the vote percentages do not typically equal the seat percentages. Usually when their is a blow out by one party or the other then that blowout is exaggerated in the house. When the election is relatively close, and 1.12 percent is close historically, then the distribution of the seats is close plus or minus a little wiggle room.

The full speadsheet is here.

This is not the case at all in 2012 and that is because of how badly gerrymander the districts are. The Republicans should have more seats then the democrats but not at the margins they hold now.  The way districts are proportioned for the House favor a party with a strong rural base. The democrats run up big margins in their urban districts but that still only lets them when that one district. Those facts will always favor the rural party which right now is the Republicans but it should not favor them at nearly SIX FOLD their vote percentages. The gerrymandering does that.

Also just as an aside every state has now certified their results but Hawaii so it looks like the final vote total in the presidentidal race are 65,899,557 (51.06%) of the votes for Obama and 60,931,959 (47.21%) for Romney giving Obama a 3.85 percent margin of Victory. Not the blowout that 2008 was but almost 1.5 points better then the Margin of Bush over Kerry in 2004.

Posted in elections, Party, politics, realignment, theory, Uncategorized | Tagged , , , , , , , | Leave a comment

Tax Ammunition to Pay for a National Mental Health Program

I have been thinking about this a lot over the past few days but I am not going to try and parse things too much. I am probably barely going to edit this. I am just going to blow through a stream of thought and see what comes out. Just keep that in mind because for a tax policy proposal this is going to be light on math. I will throw some numbers out there but they are pulled out of memory and thin air excluding plus a couple of links I had bookmarked earlier.

I live about 30 or so minutes from Newtown. I have sold a couple of cars to people who live in the town including one to a teacher at the High School. I also went to Virginia Tech. I had classes in Norris Hall. My roommate for all but Freshman year spent his Freshman year in Ambler Johnston West. I had met both professors that died at Virginia Tech though I did not know any of the students as it happened four years after I left.

I grew up around guns. They were always locked up and I actually did not even know where my dad kept his guns but they were around. My dad didn’t hunt anymore after a close call deer hunting. Too many hunters and not enough deer. That doesn’t seem to be as much a problem anymore as the opposite is more the case. Uncles, grandfathers and cousins had guns though but they were always secured. I started shooting at 7, air rifles of course, a BB gun first then pellet rifles and pistols. I enjoyed shooting and I was good. Better then 20/20 vision and quick reflexes help. I sucked at baseball though so go figure.

I earned my Rifle merit badge in Boy Scouts but I never finished the Shotgun merit badge.

I started shooting pistols as a teenager and did some competition shooting. Mainly timed events with limited rounds. Fastest time to shoot five targets with six rounds for example. I was good at that to regularly beating grown men 20, 30 or 40 years my senior. I enjoy guns and I do not have a problem with them. I have a problem with how irresponsible as individuals and as a society we have become with guns. They need to be secured.  Other common sense restrictions need to be enacted. Unstable individuals should have as close to zero access or opportunity as possible to obtain guns. There needs to be a way to identify these individuals ahead of time and there needs to be a treatment available for them. All of that will take money. Probably lots of money but there is a way to get that money.

This is my proposal. Tax ammunition to fund some sort of national mental health program. I want to tax guns too but ammunition should be included as well. Freedom Group alone,  which is the largest small arms manufacturer in the US, sells some two billion rounds of ammunition a year so tax it and point the revenue stream at a problem that we are not addressing.

Go read this post I am Adam Lanza’s Mother and tell me we do not have a problem with mental health. Like the writer says no one wants to put a teenager in jail and that is not a solution to the problem. The status quo is not working and just enacting gun legislation that restricts certain types of firearms and their accessories is not going to be enough. You need a revenue stream to try and deal with mental health issues in disturbed children and young adults.

I have not thought out the details yet and as I said I am not going to through all the math right now but just roughing up some numbers I see something like this. Making things too complicated is bad but I think there should be a couple of different levels instead of just a flat percentage of the sale price.

Rim-fire ammunition is taxed at the lowest rate. This is almost exclusively .22 caliber rifle and pistol ammunition. Something like ten cents per 100 rounds seems right. Ammunition and firearms are currently taxed by the feds and that revenue is directed into wildlife conservation.

Higher calibers would be taxed at a higher rate and it would be a straight percentage of the sale price. Maybe there is a distinction between rifle rounds and pistol rounds but I am not sure. I would separate all shotgun ammunition at a slightly lower rate then rifle or pistol ammo.  Add a separate tax on loose gun powder for handloaders.

I would also add in a mental health tax surcharge to all firearms purchases. Straight flat percentage of the sale price all pistols, rifles and shotguns.  These do not need to be huge percentages to make a difference. If you read gun blogs or see crazy stuff posted by the NRA and its affiliates then there is stuff about  increasing the tax on ammunition by 500 percent, 10,000 percent or some other astronomical percent and other such nonsense. Taxing anything at that rate would destroy the market for the product and dry up your revenue stream.

Freedom group alone has sales totaling over 670 million dollars just through September of this year. They will easily crack a billion dollars this year and that is just one company even if it is the largest one. Five percent of a billion dollars is $50 million. What sort of mental health program could you set up with that? The total dollar amount spent on firearms and ammunition is more then one billion dollars annually. Currently pistols and revolvers are taxed at 10 percent of the sale price will all other firearms and ammunition at 11 percent.

Hundreds of millions of dollars in taxes are collected from those sales.

http://www.ttb.gov/statistics/final11.pdf

Tack a few more percent, plus the flat cents per XXX round on rim-fire ammunition, on to generate another hundred or so million and set up some innovative mental health care programs. Use some of the revenue stream for dedicated therapists in schools who would be trained to identify at risk students. I do not know much about mental health so I am not sure what the best types of programs would be but other there are people who can figure that out.

Posted in health care, policy, politics, taxes | Tagged , , , , , | 1 Comment

Romney’s March to 47 Percent

As more and more states move voting to the mail with less in person voting on election day it takes longer to count all of the votes. Washington state for example only votes by mail. There is no in person voting anymore and as long as the ballot is post marked by election day it counts. There also seem to be more provisional ballots in recent elections then past ones though I do not have documentation of that. It just seems like a trend to me.

Not only do these votes take longer to count but absentee/mailed ballots, provisional and early voting lean more towards Democrats. The states pushing more early and vote by mail ballots are also more blue states. That means that Obama’s margin of Victory has increased substantially since the day after election day. On the morning of November 7th there was about two percent separating Obama from Romney in the popular vote. Just over 59 million for Obama and just under 57 million for Romney.

http://washington.cbslocal.com/2012/11/07/slim-popular-vote-leans-obama-numbers-lag-behind-2008-win/

http://www7.politicalbetting.com/index.php/archives/2012/11/28/obamas-winning-popular-vote-margin-edging-upwards-by-the-day-and-now-stands-at-3-45-percent/

Dave Wasserman of Cook Political Report is doing a great job updating the popular vote count. You can follow him on Twitter @Redistrict.

He is updating his Google spreadsheet multiple times per day at…

https://docs.google.com/spreadsheet/lv?key=0AjYj9mXElO_QdHpla01oWE1jOFZRbnhJZkZpVFNKeVE&toomany=true#gid=19

As of this morning it stands that Obama has 50.88 percent of the Vote to Romney’s 47.40 percent. I just think it would be highly ironic of Romney ends up around 47% overall which might happen as there are still close to two million votes to be counted.

The spreadsheet also keeps track of turnout which is down over 2008 but not as much as everyone thought initially. Currently it is down by 2.76 percent nationally but actually up slightly, currently 0.08 percent, in the twelve swing states. A lot of this looks to be the aftermath of Sandy with New York and New Jersey seeing huge drops in turnout. New York along is showing a seventeen plus percent drop off from 2008 or more then 1.3 million votes. New Jersey is also down by a large amount currently at just over seven and a half points.

It looks like the true post script to Sandy will not be that it cost Romney the election. Romney’s momentum was slowing well before Sandy hit. The pools in the two weeks before Sandy show that progression down in the key swing states very clearly though less clear on a national level. No the real post script is that Sandy drove turnout down so much that the election looks closer then it really was. Higher turnout in the states hit hardest by Sandy would probably have tacked another million or so votes onto Obama’s total. 2012 wouldn’t have been as big a margin as the 2008 election but it would have trounced the 2004 totals instead just beating them.

Just for reference the 2004 totals were

George W. Bush
62,040,610 50.7%
John F. Kerry
59,028,444 48.3

Obama will probably end up 3.5 to 4 million short of his popular vote total in 2012. Image

Posted in elections, politics | Tagged , , , , , , | Leave a comment

Volvo V40 bring it the US proposal

Any time there is news about the Volvo V40 there are always a wave of comments demanding that Volvo bring the V40 here and complaining that they will not. Instead of complaining about it lets look at some data and try to build a case for it. To do this first we have to make a series of assumptions. Some of these assumptions are probably pretty accurate and some of them are Wild Ass Guesses. It is the nature of estimating that you have some of both and there is nothing much to be done about that.

I took all sales data from http://www.goodcarbadcar.net/

The first assumption is that Volvo can bring the V40 into the USDM and make a profit. I do not know what Volvo’s margins on the car are but my guess is that they cannot bring it into the US and make a profit at their current cost structure. In order to have a shot at bringing the V40 in the XC40 has to come to as I think that is where most of the volume and more importantly the higher margin volume will come from. They will be able to charge more the the XC40 then the V40 and the segment that the XC40 will enter is growing.

This goes into the second assumption. There is a growing market for small, as in under mid-sized to compact, premium SUVs. We can see that happening in the market. BMW has launched the X1 in the US and while it is has only been on sale for a couple of months it seems to be doing well. It has been on sale longer in Canada and has out sold the X3 in some months there. Audi brought the Allroad back based on the A4 and there will probably be another more SUV like Audi coming in under the Q5 in size. Porsche will bring something under the Cayenne in size soon as well. The Land Rover Evoque is another model to consider. That is a very expensive but very small crossover and sales have been strong considering what a tiny slice of the market Land Rover has.Already on the market is the VW Tiquan, Nissan Rogue and Nissan Juke. What you say the Tiguan, Rogue and Juke are not premium nameplates? No, they are not but they have some premium features and can be priced out into the high $20k to low $30k range.

Volvo is not typically considered a Luxury brand and that is usually seen as a weakness but I think here is where a weakness can be used as a strength. Volvo is still seen as a premium brand if not a luxury brand and it can use that to reach a little lower into the automotive food chain. This is really the third assumption. That Volvo can pluck a hand full of sales off the top end of those lower level models. Someone who is looking at a $30,000 plus Tiquan or Rogue or a $26,000 Juke will bump themselves a couple of thousand dollars or more for a Volvo. With the right mix of unique features and a good branding  that can happen. The same will have to happen with the V40 to pick a few sales from the top of the Focus, Mazda 3, Golf/GTI and Jetta Sportwagen among other models. BMW and Mercedes have had trouble doing this but I think Volvo can pull it off. Call it the snob factor.

The last big assumption is not really an assumption per say but that Volvo needs to do this to keep sales up. Volvo canceled the S40/V50 in 2011 and the C30 was just officially canceled. The C70 will go away sometime next year too. Those four models combined would represent some 14,000 sales in 2013 using the numbers from the last full years the S40 and V50 were on sale. The elimination of all these models is the reason Volvo’s sales are off about one percent for CY 2012 through September and over two percent through October. The big gains in XC60 and S60 sales cannot make up for losing the S40/V50 and the slowdown in the S80 and XC90 as they are aging out. Volvo needs a redesigned XC90 badly but they also need a lower priced model to bookend the whole range.

Remember the S40 alone accounted for over 24,000 sales a year from 2004 to 2006. As Volvo’s relationship with Ford Credit ended and leasing got tougher those sales dropped off to just over 18,000 in 2007 and then dropped off a cliff to just over 9,500 in 2008 when the recession was fully in swing. The V50 never got above 6,000 sales per year even in the good years but it was never really pushed hard in the US. It suffered from the assumption that lots of euro companies make that small wagons or hatches will not sell in the US. By the time things started getting better in 2011 the S40/V50 were no longer competitive cars and leasing was still shot. A competitive product in that price and size range with the right marketing support could reclaim much of those sales back. The last part of the puzzle is competitive leases that will hopefully start coming back in 2013. In the premium segment you have to have a strong lease. It doesn’t have to be ridiculous like the BMW leases, $40,000 plus cars leasing for less than 5000 a month, but it has to at least be competitive in the segment.

http://www.goodcarbadcar.net/2011/01/volvo-s40-sales-figures.html

http://www.goodcarbadcar.net/2011/01/volvo-v50-sales-figures.html

Now with all those assumptions out of the way can Volvo get to 14,000 or more sales with the V40/XC40 in say 2013? Yes, I think they can if they brought the car over in the the second quarter of 2013 they could hit an annual sales rate of over 14,000. With the right timing and marketing/incentive push I think they could hit a total of 14,000 sales in 2013 even with that late introduction. Is that going to happen? No, I doubt it but an introduction later in the year could happen or possibly something for Q4 2013 or Q1 2014.

I started by taking the September YTD sales total of a variety of vehicles that I thought would be direct segment competitors for the V40 and XC40. Then I looked at vehicles that would be more indirect competitors. Just for example the A3 is an obvious direct competitor to the V40. They are both small wagons/hatchbacks, they are in the premium segment with similar front wheel drive or all wheel drive setups and they could be perceived as sporty. That ticks off enough boxes to be direct competitors. The VW Sportswagen works as well as does the Golf or GTI.

What about an indirect competitor?

A Ford Focus is an obvious indirect competitor. It is not really in the premium segment though it can have some premium features. The body style and drive type are similar enough that people will cross shop a Focus with a V40 at least at the top end of the Focus price range. A less obvious competitor would be a Prius. If Volvo brings the V40 with some type of alternative power train then the Prius ticks enough boxes. Without that alternative power train I think the Prius drops off the list. People can and do look at a variety of cars across multiple segments when looking at a vehicle but not at the rate the rate that you can use that for sales volume projections. The handful of people who cross shop a Mustang with a V40 or a CTS wagon with a XC40 because they are both sporty and in the same price range is not going to get you many sales. These less obvious indirect competitors is why I am using such a low top end percentage for this segment. I am only figuring a one percent top end and half percent bottom end market share for the non-premium small wagon/hatch segment.

All of this of course exists on a spectrum. Some cars are more direct competitors than others but in trying to estimate the potential first year market you have to cut out some vehicles. The volume of light duty pickups sold in the US every year is huge but I do not see those sales volumes effecting the sales of a V40 or XC40 by even the tiniest percentage. This is why I am using a top line seven percent figure for the compact premium crossover segment. I think the best Volvo can hope for is a seven percent share in that segment with a properly priced XC40. Volvo’s current share of the small to midsized premium SUV segment is about 6.3 percent with the XC60. Sales are up some 35% this year versus last year which is a greater YTD percent change than any other model except for the Acura RDX and the Evoque. The Evoque was not on sale for all of 2011 and RDX sales were soft last year as Acura got rid of the turbo engine for a six cylinder. Market share will be up slightly year over year for the XC60 compared to 2011 CY. The XC40 will be a class size smaller as it is roughly 10 inches shorter than the XC60 at 173 inches.

http://www.goodcarbadcar.net/2012/10/september-2012-usa-luxury-suv-sales-figures.html

I am going to include links to the spreadsheets I worked on for this article. Feel free to change assumptions or subtract and add various competitors. The formulas will still work to change the volume projections for the V40/XC40.

These are the tables for Crossovers/SUVs. The compact segment first.

make/model price max segment 2012 YTD Sales 2013 WAG
MINI Countryman $27,000 compact Prem 15,345 17,000
BMW X1 $38,000 compact prem 2,146 20,000
Land Rover Evoque $45,000 compact Prem 6,235 8,750
Land Rover LR2 $35,000 compact Prem 2,417 3,000
VW Tiquan $37,000 compact Prem 22,854 28,000
total 48,997 76,750
7% of Total 3,430 5,373
3.5% of total 1,715 2,686

Then the smaller midsized models.

Infiniti EX $40,050 midsize prem 2,480 7,500
BMW X3 $43,600 midsize prem 22,591 32,000
Acura RDX $35,720 midsize prem 19,801 22,000
Audi Q5 $43,900 midsize prem 18,987 28,000
Caddy SRX $50,000 midsize prem 40,224 58,000
Merc GLK $39,000 midsize prem 20,141 30,000
Volvo XC60 $45,000 midsize prem 13,750 16,000
Lexus RX $45,000 midsize prem 67,048 88,000
Audi A4 Allroad $40,000 midsize prem 2,243 5,500
total 207,265 287,000
1.5% of total 3,109 4,305
0.75% of total 1,554 2,153

Lastly we have the non-premium segment and over all projection totals for all crossovers and SUVs.

Nissan Juke $26,700 compact 28,096 35,000
Nissan Roque $30,000 compact 109,000 120,000
Mazda CX-5 $29,000 compact 29,372 37,000
Ford Escape $33,000 compact 200,000 265,000
Toyota RAV4 $29,000 compact 134,167 160,000
Honda CR-V $29,000 compact 213,381 225,000
Subaru Forester $30,000 compact 56,571 80,000
total 770,587 922,000
.05% of total 3,853 4,610
.025% of total 1,926 2,305
high total total 14,288
low total total 7,144

As you can see the compact non-premium SUV segment is huge. Volvo only needs to capture a small portion of this segment to generate big volume for them. Volvo’s September YTD sales are only at 57,635 so even getting an extra 10,000 sales from the XC40 alone would be a seventeen percent increase.

Sales will approach one million units in 2013 even using just this particular sampling of models. The models I left off could have similar prices to a XC40 but I just did not see them as similar cross competitors to a potential XC40. I could be wrong about that but seventeen years in the auto business lead me away from them. Vehicles like the Dodge Journey or Chevy Equinox might have similar pricing and size but just do not line up with Volvo demographics for customers. People may still cross shop them but the probabilities of them doing that are low. These models represent huge volumes so they can throw off the projections easily even with low penetration of 0.05 and .0.25 percent. I left the Escape on there as it was just redesigned and seems to have a much more premium feel like much of the Ford line. Also it does have the hybrid version and Volvo really does need to bring some type of alternative power train to the US. The V40/XC40 would be a good model to introduce using some type of hybrid or diesel power train.

The next two tables are for the small wagon and hatchback vehicles.

Premium models

Make/model price max segment 2012 YTD Sales 2013 WAG
Audi A3 $32,000 premium 5,750 9,000
Lexus CT200h $33,000 premium 13,612 17,000
VW Sportwagen $27,000 premium 16,882 23,000
Volvo C30 $31,000 premium 2,173 2,000
38,417 51,000
7% of total 2,689 3,570
3% of total 1,153 1,530

non-premium

Ford Focus $25,000 standard 186,686 250,000
Toyota Prius $30,000 hybrid 120,000 200,000
Mazda 3 $25,000 standard 79,185 130,000
Hyundai Veloceter $23,000 standard 28,388 39,000
Toyota Prius V $31,000 hybrid 25,000 35,000
Subaru Impreza $30,000 standard 63,651 85,000
Ford C-Max $34,000 hybrid 969 9,000
VW Golf/GTI/R $24,000 standard 32,408 37,000
536,287 785,000
1% of total 5,363 7,850
.5% of total 2,681 3,925
high total total 11,420
low total total 5,455

I left the Veloster in there as even though it is at the low end of the price spectrum it does have a sort of funky sporty vibe that I can see appealing to potential V40 buyers. Cars can be added or subtracted from this list as well. I picked these vehicles based on my years selling cars and what I have seen as common trends from buyers in my area. The northeast is an important market for Volvo but it is not the whole country so different regions might see different trends. In the Northeast Subaru is a very important competitor to Volvo. In other parts of the country this might not be the case.

There are a couple of cars I left off my spreadsheet that I may add in later to reshuffle the details though I do not think they will change the overall projections. After working the Hartford auto show on Saturday I would probably drop the RAV4 from the crossover list and add the Kia Sportage and Hyundai Tucson. Even the RAV4 Limited seems downmarket and dated compared to those two models. Compared to the new Escape the RAV4 seems at least two if not three generations behind. The Subaru XV Crosstek is another model that could be added to the list but it has only been on sale two months so there is not enough data. September was not even a full month of sales so I would have to revisit it after a couple of more months to try and work up a projection. I started working on this in the middle of October but was not able to finish it till tonight so I have left out October sales data for right now. I do not anticipate that to change the final numbers that much. The final totals are in the following table. I started by inputting the sales totals from the C30, C70, S40 and V50 in 2012 and 2011. The 2011 CY was the last full year that the S40 and V50 were on sale. Assuming these totals held roughly the same then Volvo could have expected sales of just over 14,000 units if all four models had continued into 2013. The S40 and V50 would have been outdated but an improving car market and economy should have helped to keep sales at least even and hopefully the C30 and C70 would improve over their 2012 and 2011 totals.

model 2012 YTD 2011
C30 2,173 3,471
C70 3,741 4,933
S40 51 2,984
V50 0 555
total 5,965 13,954
A shortfall over over 14,000 units in CY 2013
V40/XC40
Platform Total high 25,708
Platform Total low 12,599

In the platform totals I added in the high and low projections for both the V40 and XC40 to come up with a top line figure of 25,708 and a bottom line figure of 12,599. A V40 and XC40 properly priced and marketed should be able to better that 14,000 annual unit figure in an improving economy going forward in 2013 to 2014. An annual sales rate in the 20,000 range would be enough to offset Volvo’s drop off in the XC90 and XC70 at least till the XC90 can be redesigned. The key is launching the V40 and XC40 in the right price range.

A V40 base model with front wheel drive and a non-turbo engine needs to start in the low $20,000 range before destination. A $21,995 starting price without leather and a sunroof would be a good entry level price. The stop end V40 could approach the mid $30,000 range with leather, moonroof, Navigation plus other premium features. A manual transmission would be good to offer on the front wheel drive models. Hopefully Volvo would offer AWD on both the V40 and XC40. The XC40 could start higher at $25,995 to $26,995 with more standard features. The top end line on the XC40 should just surpass the bottom end price range of an AWD XC60. A fully loaded XC40 should come in just under $40,000. I think these are good top end prices for a normal V40 or XC40. If Volvo wants to do some type of R-Design sports model then you can inch that top end number up a few percent but not more than three or four percent in my opinion. While pricing is important in  order to be competitive with the other premium and luxury brands a strong lease will be necessary. A base V40 with automatic needs to have a low mileage lease in the $229 range with minimal out of pocket. Some kind of introductory sign and drive program at around the $250 mark would be perfect. The XC40 can be slightly higher but $400 plus a month leases like Volvo has for the S60 are not going to be competitive in the market.

There you have it how I think Volvo can expand their brand and recapture some of that lost sales volume from years past. The premium compact SUV market is going to be an expanding segment in the coming years and Volvo needs to have an entry there. I already see baby boomers moving out of their larger SUVs into smaller SUVs. They want that higher driving position and an easier time getting in and out that a SUV offers. They do not want and large vehicle anymore and with no kids they do not need one. Right now Volvo only has the XC70 or XC60 to offer empty nesters moving out of the XC90. Some of these customers are choosing the XC60 but somewhat something a little smaller with better mileage. The XC70 is lower to the ground which some customers like but it does not get better mileage. The XC70 also unfortunately still carries some of that wagon stigma that turns a few people off. A XC40 priced right would be a perfect fit for customers who want something a bit smaller. Offer it with some alternative power trains, that do not necessarily have to be a hybrid, and you will satisfy both the gas mileage and image conscious.

Here is the link to the spreadsheets I used to calculate volume projections.

Google Drive Spreadsheets

Posted in Automotive, cars, diesel, hybrid, leasing, marketing, Sales, volvo | Tagged , , , , , , , | 3 Comments

Volvo ends C30 production

What I figured would happen for a while was official announced today.

The last C30 orders have been placed and all production will cease by December.

So if you really want that custom C30 you better tell someone now, all five of you anyway, we can only amend ordered cars for another couple of weeks.

I have a hard copy of the bulletin in front of me but no PDF to print as my password is acting up for VRC2(Volvo’s internal dealers site)

Here is what the bulletin says.

After 6 successful model years, and sales of over 26,000 units in North America, the C30 will end production in December 2012. The C30 successfully achieved its goal to attract new customers to the Volvo brand, pulling a high percentage of customers from brands like Mini, Mazda and Volkswagen. (They cite a strategic vision study from 2008 and in my experience you did get people from those brands who would not have previously considered a Volvo to at least look at a C30)

This is a necessary step under our new business strategy and as part of our ongoing efforts to transition both financial and human resources to the development of high volume products to better sustain our brand health and network viability moving forward.

The last of the C30 production orders have been placed with the factory, the ability to modify these orders will start to close over the next several weeks. Please contact your Market Manager for any questions about this final production allocation including information about the C30 Polestar Limited edition previously communicated under separate cover.

Translation.

The C30s are not profitable because we cannot build them cheap enough to sell in the volumes necessary to continue production.

They were barely selling 4,000 units a year in the North America and without the S40/V50 to spread out costs for North American distribution the C30 made no sense anymore.

The C30 could have been a good niche product for Volvo but it was marketed all wrong and priced badly. The pricing problem was partially explained by content, there needed to be a lower horsepower version of the C30, and partially by geography, Sweden is an expensive place to build cars.

There was never going to be a $16,000 C30 built in Sweden under any circumstances but they could have marketed a sub $20,000 car to build volume and help spread cost. Build a C30 with no turbo and a five speed manual instead of a Six speed for starters. Instead we only ever got the 227 hp T5 model here that was too expensive and got relatively poor gas mileage for its class.

Posted in cars, volvo | Tagged , , , , , | 1 Comment

How The Affordable Care act or Obamacare will create jobs

This is going to be long sorry but I promise if you read all the way through to the end you will learn something and you should learn something new everyday.

Telling insurance companies what to do is not going to cost jobs in fact it will be a net creator of jobs over time.

In fact there are three ways it will be a net creator of jobs.

The insurance companies love the Affordable care Act or Obamacare because it is going to give them millions of new paying customers and consequently billions of dollars in revenue. Many of these customers will be young and healthy so low risk customers as far as the health insurance companies are concerned. Some of these people do not have health insurance now because they figure they can risk it as they are young and healthy. Others do not have health insurance because they cannot afford it. That is where subsidies will come in to cover the short fall for low income individuals.

Just look at how the stocks of the big health insurance companies have performed since The Act was passed in 2010. The S&P 500 is up just over 28% from March, 12th 2010 to today’s date the 4th of October 2012. Humana(HUM) is up almost 57% from that date, Aetna(AET) is up almost 36% and United Health Care(UNH) is up over 71%!!! To outperform the over all market by over 250 percent is huge. If you had bought a S&P 500 index fund for $500 in March of 2010 it would be worth $642 before fees and commissions today. If you had bought UNH for the same $500 it would be worth $858. Picking an individual stock is risky though so even buying a Health Insurance ETF would have netted a gain over the S&P 500 just not as much of one. Four of the five big health related ETFs outperformed the S&P500 over the same time frame

Image

The individual and small group market is badly broken in the US. The people in these types of plans do not have the economies of scale to drive down premium costs. Everyone knows buying in bulk saves money over the long term and the same is true with health insurance. Big companies, big groups or big governments can get better rates because they are buying so much. The Health Insurance Exchanges that will be set up under the Affordable Care Act make this bulk buying possible.

All these millions of new paying customers that are relatively low risk make it possible for insurance companies to cover higher risk individuals. This includes older people, people with pre-existing conditions and/or chronic conditions that need long term care. Insurance is all about spreading the risk out over a larger group to minimize individual losses.

Think of it like a three legged stool. You need three points in a plane for a stable platform. Those three points will always create a stable stool because they are all in the same plane. I have already talked about the last two points as they are the incentives but there is a cost component as well. There has to be a cost component as at the end of the day the insurance has to be paid for.

The cost component is the individual mandate. Everyone has to have insurance so there is not a free-rider problem. Everyone needs to pay into the system in order for the insurance companies to cover older more expensive individuals and people with pre-existing and/or chronic problems. Without the mandate you cannot have the other two legs of the stool and it will fall over. There will not be a way for insurance companies to pay for the costs incurred by offering insurance to sick people at reasonable premiums. They will not be able to cover pre-existing conditions without the premiums from younger healthier people.

That is why Romney’s, “lets leave it up to the states plan,” will not work.

Not all states are going to set up plans that use all three legs. Most of the objections form the states that sued about the Affordable Care Act were in response to the Individual Mandate. The coverage for pre-existing conditions and older/sicker people only works if everyone buys in. No individual mandate then no coverage for these people. Romney cannot say that he will keep coverage for people with pre-existing conditions if there is not also near universal coverage. The universal coverage provided by the individual mandate also makes possible things like eliminating lifetime limits, eliminating rescission(when a health insurance company drops a customer because they are too sick and costing too much money) and offering better preventive care.

Now the individual mandate can be bypassed by the states if they can find a way to get to universal coverage without it. I think the individual mandate is the easiest and most logical way to do it but according to the law the states do not have to use it. Find a way to get to universal coverage without an individual mandate and the intent of the law is satisfied.

Romney knows all of this because remember Obamacare is modeled after Romneycare from Massachusetts. Before Romney got it passed in Massachusetts the idea of an individual mandate to promote universal coverage and get sick people onto the health insurance rolls was a Republican idea from the early 1990s. It was the Republicans market response to the Clinton’s health care overhaul.

Better preventive care is what is going to help us bend the cost curve down and actually reduce our health care costs over the long term. Everyone knows when it costs more to fix something after it is broken then it costs just to maintain it in the first place. All of these people on health insurance now are going to be getting preventive care that will hopefully catch minor problems before they end up as a more serious problem, an Emergency room visit or worst case a death. The Emergency room is the most expensive place to get health care. The more we can reduce Emergency room visits the more we can drive down health care costs. Diabetes, high blood pressure, high cholesterol, heart disease, obesity plus many more medical conditions are preventable diseases that more frequent care and wellness visits will reduce.

Catch the guy with high cholesterol and high blood pressure before he has a heart attack or a stroke that requires an emergency room visit. Get him the drugs he needs to help bring his blood pressure and cholesterol down before a cardiac surgeon has to crack open his chest and try and repair a damaged heart. The stock market agrees with this approach too. The market as a whole things it is a winning strategy and that it will make Pharmaceutical companies more money. How do I know that? Of the five big health care ETFs that I mentioned earlier the one that is up the most since March of 2010 is the pharmaceutical one ticker symbol PJP. It is up 79.73% as I am writing this versus the S&P 500’s 28.14%.

Image

So there you have it one way that the Affordable Care Act will create jobs in the health care sector by bringing in millions of paying customers for health insurance companies and drug companies.

The second way is the obvious way. All of these people are going to need more doctors and nurses. I think that goes without saying and does not require almost two pages of explanation.

The last way the Affordable Care act will be a net creator of jobs is a little more subtle.

Right now if you have a good paying job that provides good health insurance from a large company and you want to leave that company to start your own small business you have a hard choice to make.

Take the risk of starting a small business and follow the American Dream of being your own boss. Be an entrepreneur make your own way in the world then compound that risk with either not having health insurance or paying enormous premiums for individual coverage. Remember the individual and small group market is broken because there are no economies of scale. You have to buy in bulk to save money and as an individual or small group you simply cannot do that.

With the Affordable Care Act you would be able to get affordable individual coverage because of the economies of scale that will come aboutwith the Health Insurance Exchanges. Leave your big company with good health insurance to start that business and while there are still lots of risks the cost of health insurance will not be one of them.

I know this is the case because I work with people who in the past had their own small businesses. One of the reasons they cite for not going back into business for themselves is the enormous cost of individual health insurance plans. A small business is risky enough without the chance that your already expensive health insurances costs might go up by 30 plus percent the next year. In the past the premiums for small group and individual health insurance plans have increased by that much or more in a single year.

Someone who wants to go back to school to better themselves would be in a similar situation. If they have a pre-existing condition now and they leave their current job to go to graduate school that have two choices unless the university offers group insurance to their students. Some universities offer a group plan insurance to their students but not all universities do. Pay an enormous amount of money for individual insurance or go without health care coverage and risk a financial calamity. Take the risk going without health insurance and even if nothing catastrophic happens if you have a pre-existing condition getting that condition covered again when you have health insurance in the future might be impossible or much more expensive.

I am not the only person saying this.

None of that works without the three legs of the stool I mentioned before.

Everyone has to have coverage and in order for everyone to have coverage you have to set up these Health Insurance exchanges to offer affordable coverage to individuals plus enact subsidies to bring the cost down for those that cannot afford insurance.

The low risk individuals make it possible for health insurance to be offered to higher risk individuals and for pre-existing conditions to be covered.

Without those two things, low risk people in the pool and universal coverage you cannot cover higher risk people or coverage for pre-existing conditions.

There you have it. Three ways the Affordable care act will create jobs not cost jobs.

First, more customers for health insurance, pharmaceutical and other health related companies. The movement on the stocks shows that the marketplace thinks these companies will make more money with the law in place.

Second, more health care professionals at all levels will be needed. Not just doctors and nurses but support staff as well. Expensive ER visits will hopefully go down while less expensive primary care visits should go up.

Third, increased flexibility for workers to start their own business, go back to school or take another job with a smaller company that might not have the buying power of a large company.

I am sure not everyone will agree with all that but I hope you at least learned something because right now overall the general public is chronically misinformed on issues like this.

Posted in politics | Tagged , , , , , , , | 2 Comments

More reasons a viable third party is needed in US

This election just offers up more proof of why a viable third party is needed in the US.

Just by looking at the exit polling data it is very clear.

ABC Exit Polling

Another result further underscores general public discontent and sounds a cautionary note for the Republicans in the midst of their victory. Just 43 percent of voters expressed a favorable opinion of the in-power Democratic Party, vs. 52 percent who saw it negatively. But on the Republican Party, it was essentially the same — 41 percent favorable, 53 percent unfavorable.

CNN Exit poll data

Link to Full Exit Poll Data

So as you can see from the exit polling data the voters do not approve of the Democrats but they don’t approve of the Republicans either. So in this tsunami of a historic election where the Republicans won in numbers that haven’t been since around 1930, when it was the Democrats who crushed the Republicans, the voters really don’t care for the Republicans either. The Republicans just aren’t the Democrats and that is just fine with the average voter right now.

If there was a viable third party in this country then people would have someone to vote for besides just the other guy that they hate just as much as the third guy.

http://www.cjr.org/campaign_desk/six_nuggets_from_the_2010_exit.php

Posted in elections, politics | 1 Comment

Party Realignment in the United States

I have always been a big fan of the Theory of Political Party Realignment. The American political system is set up to keep change from happening too quickly. The whole check and balance system is set up so that no one part of the federal gov’t can overpower the other and that slows down change.

That natural inertia in the political system has a tendency to build up tension in the system. Much like in plate tectonics when tension builds between two continental plates it much be eventually released in some type of seismic event.  The longer the tension builds up the more powerful the quake.

We have had a realignment of the political parties in the US in a long time.

Depending on which theory you buy into the last realignment happened during the civil rights era and continued into 70s with Nixon’s Southern Strategy.  At that point the south, for the most part, started voting for Republicans at least in federal offices. This makes sense as the GOP really represented the values and principles of the south and the Democrats did not. The only reason the South voted democratic was because the GOP was the Party of Lincoln. There were still a handful of Dixiecrats or very conservative Democrats, Zell Miller comes to mind as an example, but for the most part the South switched to Republicans by the end of the 70s.

The other date for the last Realignment in American Political parties is 1994 and the Republican’s rout of the Democrats to gain control of Congress for the first time in decades. In response to this Clinton tacked the Democrats more to the right, a good thing in my opinion, got welfare reform done as one example of that. The Republicans completed their takeover of the South and fully consolidated their base with the Evangelicals.
That evangelical base allowed the GOP to come back from spending too much time trying to stick it to Clinton and win back the executive branch while also holding onto Congress. The Democrats being pussies and not using Clinton’s popularity to help campaign helped. The Democrats being pussies help the Republicans win elections a lot.

So either of those you pick it has been a while since a realignment when you consider we have had one about once ever generation or so.  You could even consider those two periods of time the start of the realignment and the end of it. It started with the Civil rights act of 1964 and finished with Welfare Reform act of 1996. That is if you want to put more specific dates on it. I don’t know if I would use those exact dates but in that general time period works.

Now we are entering what I think is the start of the next Part Realignment in the US. It started with Obama’s election which was truly historic. That was the epicenter of this upcoming political earthquake that will be the next realignment. That event spawned the Tea Party crowing about deficits and wasteful spending. Keep in mind these were things that they didn’t to seem to be that concerned about as long as it was a Republican in the White House.  A Republican Administration that ran up a larger deficit through tax cuts, unfunded prescription drug mandates, two wars and a huge expansion of private contractors for all parts of the federal gov’t.

Lets just ignore that for now.

The Tea Party is at least partially in control of the GOP now.  They have won a lot of primaries, though I think they will lose many of those general elections on Tuesday, and they have defeated establishment backed candidates in some of those primaries.

Jim DeMint will head some type of Tea Party Caucus in the Senate and Michelle Bachmann is already heading up a Tea Party Caucus in the House. Those freshman and senators and congresspeople who won with Tea Party support will have real power and will have at least a portion of the more senior GOP people backing them with even more power. They wont’ have control over the entire GOP though.

There is still that Evangelical base with real power in the GOP. The Tea Party has so far stayed away from the social issues that drove the Evangelicals’ power and fervor.  I think that social issue conservatism is just right under the surface at the Tea Party however, and will come out eventually. At that point what happens?

Do the more libertarian members of the tea party break up the coalition?  Or do they hold their noses like the social conservatives did in the past? I don’t know but I think we will find out in the next two to three election cycles.

My thought is that the Tea Party will eventually implode the Republican Party from the inside. The drive for ideological purity, which seems to stem from the Tea Party based on how they challenged so many incumbents in primaries, will finally drive out the final few GOP moderates.

Those GOP moderates will see the Blue Dog Democrats as close cousins. There won’t be many of Blue Dogs left in Congress most likely as I think the majority of them are going to be replaced by Republicans in the next two election cycles. That is going to create a Democratic party that is more liberal and a Republican party that is much, much more conservative.  Nothing will get done as a result and there will be gridlock in congress that will make the gov’t shut down of 1994 look like a long snow weekend in DC.

Out of the ashes comes the exiled moderates form the two parties.  The Republicans implode first as they started losing their moderates earlier and most of their moderates were driven out by the party internally not voted out in a general election.

The Democrats don’t last much longer though and also collapse though not as quickly as they still have the big tent party philosophy that the Republicans lost.

Third parties can’t survive long in the US system though so I don’t really see a third-party developing completely. It would be nice if it did I just don’t think it is likely. More likely I think is a situation where the moderates cool down the tempers of the far right and left and let some things get done for a few years. Maybe two election cycles but probably not more than that.

If the moderates can hold out long enough they should spin-off some of the extremists from both parties and hopefully two more reasonable major parties from the ashes. The parties are realigned and we can get some stuff done.

As I said I would love a strong viable third-party to be born out of this I just don’t see it happening for more than a brief amount of time.

Posted in Party, politics, realignment, theory | Tagged , , , , , | 1 Comment