Tiered hide prices to maintain exclusivity

The Ron Sauer blog
Published:  15 December, 2014
Ron Sauer

I see that the mainstream media has discovered that more leather is now appearing in cars. They have also noticed that leather comes from cows and that there might not be enough animals in future to avoid a shortage. Leather could become very expensive as a result. They are a bit late but they got it right.

Is this a good or bad thing? Personally, I do not think it is that bad at all. Leather is becoming a more normal every day item in car interiors, whereas in the past it was seen as a great luxury.

In the recent past, automotive leather maker, Connolly from England was the only one (or one of the very few) making it. Some of my own cars in the past had Connolly leather and it was seen as very sophisticated. And expensive! Now you can even buy a Renault Twingo with some leather inside. So where is the luxury and exclusivity nowadays?

We are marketing and selling leather as a luxury product. But luxury is inevitably connected to high prices and thus to exclusivity. Car leather is in danger of no longer being that. So let us turn things around and say it must be expensive if it wants to be luxury and exclusive.

I am sure that your typical Chinese, Russian or American flashy, rich person will be less happy if they notice that having a leather interior is nothing special in his or her car. Especially when they stand at a red traffic light with that damn Twingo next to them with a leather interior.

No doubt the richer person would feel better if most others can no longer afford to buy a car with leather. If to achieve this they have to pay a couple of times more for the leather in their car, which cost a fortune anyway, they might not care at all and would gladly pay up. Leather, even lower grade leather, could become too costly an option when related to the total price of a cheap car. 

We all know that there is not enough top quality hides in the world to satisfy demand. Not now and not in the future. So why not make them really expensive and exclusive?

Every now and then I feel compelled to write about this and about the need to create different markets for raw hides. The best ones should cost much more so that we can make the lower grades cheaper.

Really good car leather may be very expensive on the condition that even a fool can see it is not the same quality of leather seen in more affordable models such as the Twingo. The additional price of those very best hides should be no problem here. If lower grades, which are now so very hard to sell as everybody says, can then operate on their own lower priced market we could maybe solve that problem as well. Split them up at the abattoirs and sell them separately at different prices to different market segments.

A natural product

Take timber as an example. Like leather, a natural product. However, wood has many different grades, end-uses with its own markets and prices. Nobody buys just wood as one generic material. There are other natural materials, which come across the same problem, I am sure. The problem in the hide business is that at the abattoirs you very often have to take all of them at the same price and later figure out yourself how to sell the good ones (no problem) and how to sell what is left after that (a big problem). 

I know that people will say I am dreaming and that I am crazy. But being provocative never frightened me. I don’t know if it can be done. I only want people to think about it. Until somebody finds a solution. 

Feel free to comment about this blog.

Ron Sauer

Ron@theSauerReport.com

www.thesauerreport.com