Can the Supercar market be disrupted? I believe so.

The term Supercar conjures up images of success, riches, and cars that have the looks of a rocket ship and deliver mind-numbing performance with top speeds in excess of 300kph, and 0-100kph times in the 3 second range or even less. Synonymous with the Supercar image are brands such as Lamborghini, Ferrari, Maserati, and more recent entrants to the market including Pagani and Koenigsegg to name a few. The common threads amongst all these marques are extreme performance, stunning looks, and bank busting price tags! But what is it that actually motives the average buyer to purchase a Supercar?

The broad attributes that motivate a buyer to purchase a car in general are its utilitarian functions and its hedonistic appeal. The first motivation is for the purely functional aspects of the car, for example one may purchase a 7-seater car owing to having a large family, or a four wheel drive due to its ability to go off-road and reach good camping or surfing spots down dirt roads inaccessible to two wheel drive cars. When looking at Supercars their utilitarian functions are the ability to go 250kph plus, to corner at G-forces that make you feel like vomiting, and to pull up from light speed to a stand still in an inhumanely short distance. This is all fine and dandy if you have the racecar driver skill set to capitalise on these utilitarian functions and the appropriate track or Autobahn to wring the neck of your Supercar. So the average Supercar owner is a trained racecar driver that has ready access to a racetrack and speed limitless roads right? Wrong. The average buyer of a high-performance sports car is generally a university educated male, aged between 30-50yrs old, without kids, working in a professional role, and living in a capital city (RoyMorganResearch 2015). Naturally there will be exceptions to this rule, but it is safe to say that the trained racecar driver who can capitalise on the utilitarian functions of a Supercar are the minority of owners, and the majority of Supercars will never see a racetrack in anger, nor a speed reading above the 200kph mark. Most will be stuck doing 10kph in peak hour traffic in a large city whilst hipsters on fixed wheel bikes fly past them at twice the speed.

Supercars in their natural habitat (photo credit: www.ExoticSpotter.com)

 

So why do people buy Supercars? For hedonistic reasons – Because they are exclusive, they get attention, and they look very, very cool parked out the front of the local café.

It is known that cars are seen by many as status symbols (Baltas 2013; Steg 2005; Vriens 2000) with expensive sports and luxury cars associated with higher social status (Baltas 2013; Choo 2004). Further studies suggest that for certain cohorts of car buyers the symbolic and affective functions of a car outweigh the instrumental functions (Baltas 2013; Steg 2005). Several psychological theories explain the rationale behind the hedonistic appeal of luxury items such as Supercars. Firstly, Social Comparison Theory is at play, where people compare their possessions and strive to be better than others (Steg 2005), and secondly Self-Presentation Theory, in which people attempt to present themselves in a way congruent to their self-image (Steg 2005). A third social theory, Aspiration Theory, is the one that interests me and makes me feel that the Supercar market can be disrupted. Aspiration Theory, as the name suggests, explains the desire that many have to aspire to higher levels of social status, and when combined with Social Comparison Theory, creates a market for a car that has the hedonistic appeal of a Supercar, without the blistering utilitarian functions of true Supercars that push their prices into the hundreds of thousands. This would allow the aspiring car owner to be perceived as belonging to a higher social stratum by virtue of their car, without the expense of all the utilitarian capabilities of a Supercar, which as described above are seldom used anyway. I know what you’re all thinking – buy a replica Kit-Car. The problem with Kit Cars in this situation is that they’re trying to be something that they are not, and as soon as the cover is broken, all credibility is lost. For instance, Imagine the perfectly executed Lamborghini replica mounted on top of a stretched Volkswagen or Pontiac Fiero, they look fantastic sitting still out the front of the Coffee Club, however fail epically in the engine sound and performance departments when the owner gets in and kicks them over (if they start at all!). Once again all credibility goes out the window when you line up at the lights next to a Mitsubishi Lancer and get beaten in the drag race.

My theory is that a market exists for a car with the hedonistic appeals of a Supercar whilst keeping the build materials and process simple and cost effective, and utilising donor parts from high quality, readily available cars to minimise production costs of componentry. The car needs to be unique looking, hence not a replica, needs to sound like a high-performance car, and perform well enough so that average owner can scare themselves now and then and drag the average punter in their hotted up Japanese import from 0-60kph. The car needs to be expensive enough to maintain exclusivity without pushing the price of the build up into the Supercar range. This will be achieved by avoiding the temptation to overemploy technology in the build in areas that the average buyer is unlikely to utilise, or perceive the value of, and which creates what I term “performance redundancy”. I argue that the average Supercar owner would not be able to perceive the difference between the rigidity of a carbon chassis over a steel one, the difference in a car that accelerates from 0-100 in 3.5 seconds versus 5.5 seconds, a carbon body versus a fiberglass one, or carbon ceramic brakes over regular discs. I’m sure that some can, but for the average Supercar owner driving in city traffic these features that they have paid hundreds of thousands of dollars for are completely redundant.

Enter my entrepreneurial venture Delta Automotive industries and their prototype under development the Ligero. The Delta Ligero design is a two-seater, mid-engine, rear wheel drive configuration, with a wide and low profile consistent with that of a modern day European Supercar. Through the use of steel and fibreglass for construction of the chassis and body, and a reliance on donor cars for key mechanical componentry, it is anticipated that the Delta Ligero will achieve the looks and aura of a Supercar, and the performance of a high-end sports car, whilst keeping the price significantly below that of a modern-day Supercar. Whilst this seems paradoxical for an entrepreneurial venture, it has been observed that higher technology and innovation can be negatively associated with startup success (Hyytinen 2015). Crucial also to the success of the Delta concept will be the application the Systems Engineering principle of whole of system optimisation, as opposed to optimising sub-systems or individual components (Faulconbridge 2014). Basically every component needs to be carefully tailored to match the other components in the car in both cost and performance to avoid expensive over engineering of one component or sub-system without the other subsystems to match. For example there’s no sense having a 1000hp engine in the car when the transmission is only rated to 500hp, you’ll simply shred the teeth off the thing. To utilise such an engine money would need to be invested in an appropriate transmission, not to mention uprated brakes, cooling systems, and the list goes on. Before you know it the build cost is such that the price tag has been driven into the Supercar range and out of Delta’s proposed market niche. To the niche market segment aspiring to, but not yet able to comfortably afford, Supercar ownership the Delta Ligero will meet customer need by providing a high perceived value product (Spinelli 2016).

Price versus Performance graph demonstrating region of Performance Redundancy

Cost effective steel space frame chassis of the Delta Ligero prototype

 

Fibreglass body panels for the Delta Ligero under design and being removed from the moulds

 

 

Progress shots of the Delta Ligero prototype under development with mock ups of air intakes and rear wing.

Do I think the Supercar market can be disrupted? Yes I do, and I’m willing to bet a few hundred thousand dollars in prototype development to test my theory. I’m certainly not looking to go head to head with the Lamborghinis and Ferraris of the world, and I appreciate that there is no competing with the heritage of such established marques, or some buyer’s perceived value of putting one of those badges in their garage. Delta’s goal is to provide a unique value proposition to the market for car buyers who aspire to the bottom end of the used contemporary Supercar market and are buying their cars more for their hedonistic properties rather than their utilitarian functions.

I’m certainly aware that pretty much every fledgling car company with similar aspirations has fallen in an expensive heap, however as an observation I feel that the common thread that lead to failure was the tendency to put too much expensive technology into the cars rather than focusing on what the buyer perceives as value. I’m very receptive to the potential that this venture might fail and if nothing else I will walk away with one very unique car and a whole lot of lessons learned, not to mention a lifetime of “I told you so” from my wife! Like they say however, if you’re going to fail you might as well fail big.

Anyone interested in learning more about the project or following the build can find a stack more details, photos and videos at Delta’s social media pages linked below:

 

Delta Automotive Website

Delta Automotive Facebook

Delta Automotive Instagram

Delta Automotive Youtube Channel

Delta Automotive Linkedin

 

Thanks for reading and wish me luck! Cheers, dan.

 

References 

Baltas, G, Saridakis, C 2013, ‘An empirical investigation of the impact of behavioural and psychographic consumer characteristics on car preferences: An integrated model of car type choice’, Transportation Research Part A, vol. 54, pp. 92-110.

 

Choo, S, Mokhtarian, PL 2004, ‘What type of vehicle do people drive? The role of attitude and lifestyle in influencing vehicle type choice’, Transportation Research Part A, vol. 38, pp. 201-222.

 

Faulconbridge, I, Ryan, MJ 2014, Systems Engineering Practice, Argos Press, Canberra, Australia.

 

Hyytinen, A, Pajarinenb, M, Rouvinen, P 2015, ‘Does innovativeness reduce startup survival rates?’, Journal of Business Venturing, vol. 30, no. 4, pp. 564-581.

 

RoyMorganResearch 2015, ‘High income households plan to spend almost $50,000 on the next new car—a third above the norm’, viewed 19 October 2016,<http://www.roymorgan.com/findings/6476-how-much-australians-plan-to-spend-on-next-new-car-june-2015-201509282307>.

 

Spinelli, S, Adams, R 2016, New venture creation: entrepreneurship for the 21st century, McGraw-Hill/Irwin, New York, NY.

 

Steg, L 2005, ‘Car use: lust and must. Instrumental, symbolic and affective motives for car use’, Transportation Research Part A, vol. 39, no. 2, pp. 147-162.

 

Vriens, M, Holfstede, FT 2000, ‘Linking attributes, benefits, and consumer values’, Marketing Research, vol. 12, no. 3, pp. 4-10.