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“Experience the Brand”

New York City is probably the least car-friendly place in the United States. Its streets are perpetually gridlocked and garage fees cost more than rent in other parts of the country. Most people who live in the city don’t even own cars and regard them as an occasionally necessary nuisance. Mostly, they hail a cab. Or they walk or take the subway.

So it makes perfect sense for a major car company to relocate the headquarters of its luxury division there.

Right?

Well, yes – in a way. The new way.

GM’s way.

Which is not to sell you a car. Nor for you to own one. Instead you will “experience the brand” – these are the words of Cadillac’s new honcho, Johan de Nysschen. You will experience Cadillacs in the same way that you experience a stay at a fancy hotel:

Buy Gold at Discounted Prices

Briefly.

Occasionally.

And, of course, expensively.

You will sign up for a subscription – a monthly/yearly fee, like a membership at a health club. This will allow you to use the facilities; to access different GM vehicles – in order to “experience” them.

De Nysschen does not seek buyers. He seeks consumers – his word. “We wanted to see luxury consumption through the eyes of our consumers,” he said about the move to NYC.

Consumption.

In other words, short-term rentals of various models in the GM inventory rather than owning or even leasing one the single car. Use by the hour/day/weekend – and so on. The car is never yours. The payments never end. Consume, consume, consume.

Such a deal!

Well, it is – for GM.

And for any other car company that follows this new consumption-based business model. Which – if GM’s admittedly bold attempt to “disrupt” the way the car business works succeeds – they will follow.

In which case, our transition to a modern-era company town model in which debt is perpetual and the serfs’ consumption is in proportion to their debt and no one except the latter-day equivalent of our feudal overlords owns anything will have taken another great leap forward.

But first, the money – which is why they’ll follow it, probably.

The margins on a new car sale are pretty thin. And new cars are becoming so expensive that fewer marks are stepping up. A crunch is inevitable.

But imagine how much more money a car company could make if, rather than extract a single monthly payment of say $500 from a single individual who is making those payments toward the purchase of the car – and who stands as the legal owner of the car the moment he takes possession of it and is therefore entitled to all the usufructs of ownership, so long as he continues to make those payments – the owner of the car (GM) could rent that same car to multiple people each month, each of them making an individually smaller but collectively much larger total payment.

Instead of $500 a month generated, perhaps several times that sum. That is very good business.

For GM.

For the marks, not so much.

The analogy – to an extent – would be a house that you pay a fee to use occasionally – i.e., a timeshare – along with many other people who also pay to use it occasionally. It is a hugely profitable arrangement for the owner of the property, who is collecting the payments. And there is certainly an element of convenience and even savings for the occasional users, who are not burdened with having to maintain the place and who would otherwise have been facing a much larger monthly rental or mortgage payment.

But they will never have any equity in the house. The accumulated value goes to the owner, along with your rental check.

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