I’ve just ordered a new Honda Civic coupe. I had my heart set on a leather interior, but when I went to the dealership I found out you can only get leather on the high-end package, which includes navigation, Bluetooth and all the other bells and whistles that I don’t know if I’d use. I was okay with making the decision to order the car because it’s such a great value, especially now that they’ve dropped the price from last year. But why do the auto makers force us to take equipment that we don’t necessarily want or need? – Sandy in Victoria
When it comes to automotive options, you can’t always get the combination you want. Why?
Think about buying a suit or dress off the rack, versus one that’s tailor-made. The more options, the more personalization and customization – the higher the price of production. A couture Chanel suit or Dior gown will cost you a pretty penny more than a frock from Zara.
To understand how the garment world relates to automobiles, let’s drift back to the 1970s, when the importing of Japanese vehicles to this continent was in its infancy. “A large part of their success was based around a business model that was very different than North American companies. In North America at the time, you always bought a base car and added individual options to basically make the car ‘yours,’ ” says Ken Wong, professor of marketing at Queen’s University School of Business.
“This was a reflection of North American auto makers’ belief that a car was really an extension of your personality, and so on. The problem was, this meant every car was custom made, and as a consequence every car took longer to make; that’s why you used to order it and then wait 8, 10, or 12 weeks.
“And because each car was being individually customized, the cars were more expensive. So the Japanese came in and said, ‘Gee, if we make every car fully loaded, we can give you a car within days if not hours of you requesting it because the only thing you’ll be able to specify is colour. And with the money we save on production costs we’ll give you a lower price – or the same price and a free AM/FM radio.’ That’s how Japanese cars came to be recognized as being these really low-cost, good-value, high-quality cars,” says Wong.
With the Civic coupe, you’ve chosen a car with a solid reputation and excellent resale value, which is now manufactured in North America. So, why the continued limitation on option packages?
“It turned out that what was a matter of necessity back when they were importing from Japan, people came to realize it simplified things so much that even when you were doing production closer to where the cars were needed, the problem of producing so many different combinations of options and then delivering them to the right place was too complicated, and resulted in quality reductions. Producing the smaller set of models made it easier for them to do quality control,” says Michael Salinger, professor of economics at the Boston University School of Management.
What was good for foreign auto makers also led to improvements for domestic manufacturers. “If you go back to the time when American car companies were providing options a la carte, the general quality of the cars was not nearly as good as the quality of the Japanese cars. Simplifying their offerings turned out to be an essential part of improving their quality,” says Salinger.
Honda Canada provided comment on your query: “We appreciate the customer’s comments and concern in this matter. By limiting the overall number of packages offered to Canadian customers, Honda is able to keep production costs down and ultimately transfer those savings back to the customer. Also, the more complexity within the product lineup means there are more possible combinations available and this decreases the likelihood the ‘right car’ being on dealer lots to meet the needs of the majority of customers.”
Luxury brands are known for maintaining long lists of a la carte options, but they also have premium price tags. Bundled options on vehicles that are renowned for solid value, such as your Civic, are put together in the hope that they represent the most commonly grouped options desired by consumers.
“The problem is you have to buy the bundle, and that does create some irritability. The bottom line is it’s an efficiency thing on the part of the car companies, it’s just a much cheaper way of manufacturing and selling cars and therefore results in better prices to the average consumer,” says Wong.
If you were to individually add up the bundled options, the price would be higher than by simply ordering the whole package.
According to Honda Canada, by combining added standard equipment with a price reduction for the new Civic, it has created an exceptional value package. “In the case for the EX-L trim, the customer effectively receives the Satellite-Linked Navigation System with bilingual voice recognition at no charge, as pricing is comparable to the 2011 non-navigation model.”
If it’s any consolation, the Civic EX-L trim package also includes heated front seats: essential equipment if you’re going to ride on leather in a Canadian winter.
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