If you look around the industry, a lot of important things are taking place. Congress is about to create a new set of fuel economy standards. The domestic automakers and the UAW are about to enter negotiations that will have a long and lasting effect on the health of the domestic industry. Chrysler is about to unhook itself from Daimler and go private, while Ford fights for profitability—and against its entrenched culture. In fact, the list could go on and on with subdirectory after subdirectory of important programs, projects, and decisions all over the industry. Too bad nobody really cares.
I say this not because the folks in Washington D.C. have turned a blind eye to the auto industry, or that the health of this industry still has a profound effect on the national economy. It comes to mind because most car buyers—heck, most citizens—really don’t think about the cars and trucks they drive, or the companies that make them. For those of us who make our livings off these vehicles and for whom they are an integral part of our lives, this is tough to grasp. Who couldn’t love cars, or want to drive the latest versions, or drool over all of the technology housed within? Truthfully, the answer to that question is: most people.
I am reminded of the time when I visited the young lady who grew up across from my parents’ house after she moved to Chicago. There to get my first passport, I dropped into the department store where she worked as a buyer, and spent some time talking to her boss. I found myself thunderstruck when—after asking what I did for a living (I was an associate editor at a consumer car book at the time)—she said: “People read about cars? Why, other than to find out which one to buy?” When I started to explain that cars were more than transportation devices meant to get you from Point A to Point B with the least fuss and bother, she just rolled her eyes.
Nearly 20 years later, while driving with George Petersen, president of automotive consulting firm AutoPacific, we were talking about whether or not which wheels are driven was important to the American car buying public. “Not in the least,” he replied. “Most people can’t tell you which end of the car is driven, or why one might be better than the other in certain vehicles on any survey we’ve ever done. In fact, if you ask them which they prefer —two-wheel drive or all-wheel drive—they’ll pick the all-wheel drive because four is more than two, and for most car buyers more is better.” In other words, if you want to score with the buyer, you have to offer him more for less, just as though you were selling them bread—or toilet tissue.
Couple that with high quality, decent service, and handsomely inoffensive styling and you will have a solid footing in the market. The Japanese used this formula, as have the Koreans, and so, too, will the Chinese. If you are an established automaker, this isn’t enough to be successful as it now is the price of entry. So, how do you reach all of those untold millions of buyers infatuated with the idea of getting the most car or truck for the money, and not loyal to any one brand? Give them what they don’t know they want: substance and character.
Shoving technology and accessories into a vehicle is a no-win situation as there will always be someone else who can do it better, cheaper, or faster, and he becomes the segment leader in the buyer’s mind. Had I been completely open before, you would have known that the woman in Chicago also made mention of the brand and model of car she and her husband drove on the weekends, and how its image fit into their vision of themselves. Or that George Petersen mentioned that—while all-wheel drive would grow in the luxury market—rear-drive still was the benchmark of a “real” upscale brand in the mind of most consumers. Or that a clear, consistent image meant more than how much stuff you got for the money. Buyers want each vehicle to have what they expect it should based on its segment, size, price, and brand. That’s understandable. However, they also want the brand to say the right thing about them as well. When was the last time the domestic OEMs paid continued, consistent attention to this strategic benchmark, including the way each brand’s vehicles are designed, developed, marketed, and sold?
Exactly. We soon shall see if private equity ownership will allow Chrysler the luxury of clearly restating its brands, and what effect it might have on its fortunes. You can bet Ford and GM will be watching what happens.