What will it take for a successful future in the Auto Industry and which manufacturers are getting it right with necessary changes in their business strategy?
The future of the auto industry is dim as increasing government regulations strain the creative energy of auto manufacturers. Established brands such as Pontiac, Hummer, Saab, Saturn and Mercury bit the dust after the 2008-09 industry slump. With legitimate concerns about the environment and vehicle safety, Industry leaders are having a harder time than ever ensuring brand loyalty and future sales. The biggest names are barely surviving by once great reputations, but who will bring to market efficient, reliable, and exciting vehicles American consumers crave right now and in the future?
Of the troubled brands: GM, Chrysler, Dodge, Acura, Jaguar, etc., what is keeping them from regaining consumer confidence? Before analyzing GM, I do see signs of recovery with the Cadillac CTS-V Coupe/Wagon/Sedan and Chevy Malibu. They are fantastic cars brimming with great features. Additionally, the Chevy Volt could be a great car if the price tag was lowered a bit (currently set at ~$40k, minus some government rebates). However, GM is still lacking a strong lineup. GM has become given car enthusiasts outdated machines and calls them America’s finest. Cadillac is trying to grab the attention of a younger audience with performance busting offerings like the CTS-V. But it’s hard to overlook (and drive behind) the wrinkled, early-bird-special drivers who have always made up the company’s consumer base. GM should produce more internet advertisements with state-of-the-art visuals, sound, and motion that connects with younger audiences who rule the web. The Chevrolet Corvette and Malibu stand out as good cars, but not great. The Corvette is a great performer for the money, but its interior is crap and when the customer base is mostly middle-aged men or soccer moms out for a ride with the top down, it is no longer a desirable sports car. If Chevy ran ad campaigns with muscular, adrenaline-pumping visuals and roaring engine crescendos for this beastly machine, a surge of testosterone-driven men will flock to it. The Malibu looks decent, but why can’t it compete with the Toyota Camry or Honda Accord? It covers all the bases; it’s not too expensive, it looks good and it rides well. However, who identifies with this car? Is it for the middle-income man or woman, or is it trying to reach after the slightly more expensive luxury car owners who normally buy BMW, Mercedes or Audi? GMC is just a blob of a brand, producing cars and trucks with no soul, lost in an ocean of bad ideas and overlooked for good reason. GMC, too, needs a fresh face and current marketing focused on why owners prefer the brand, because only they can tell you (I hope).
Chrysler, Dodge, and Jeep haven’t faired much better than GM due mainly to poor ride quality and interiors that are more boring than a chess tournament. Anyone who has ever test driven one of these brands will tell you they look great on the exterior with pristine engines under the hood, but with interiors of plastic panoramas and overdone chrome accents; not a fun place to spend your commute time. Dodge should commandeer a couple of BMW’s designers for its interiors. But that won’t help much with the way they roll down the street. Poor ride quality stems from weak chasses. It will cost the consumer extra for better chasses, but the benefits in customer satisfaction and increased sales will outweigh the sticker price bump. Fixing these flaws is only half the battle. With current expectations so low it will take bold and creative marketing to capture the imagination and draw back into the fold consumers who deserve better from a company that brought us Hemi engines and Viper thrills. Innovation and brand identity are keys to the ignition of a rallying future, but if your brand conjures lackluster response, then pitch the old, inspire with the newest and best, giving consumers and the company a future under the once muscular Dodge badge.
Acura really pushed to modernize its car’s styling. Not a bad idea, but now only the TSX is an attractive car. The others may appeal to the glass and metal homeowners, but that’s seriously limiting sales potential. Keep the modern look, but go to consumers and see what about the new look is off-putting. Embrace Honda’s reliability plus Acura’s refinement to embody a new identity.
Now for Jaguar, the British pride with a history of elegance, comfort, and crumpets between seat cushions. Under the owner Tata of India, the company has tried to pull themselves from the rubble of the 2000’s models: XJ, s-type, etc. The XF is a stunning car with great features inside and out. The new XJ is like a yacht on wheels (and may drive like one). Great new entries, but their sales are still weak. This means Tata has to get the good curry out and promote the brand. Like Acura, they have gone with the technical/modern trend as an identity, which is fine IF they can make ads that reflect the tech-geek within, while incorporating the posh history. Unite the concepts in a market campaign and watch the population (of Jaguars) grow.
So that was some of the Industry’s failures; now for some of the success stories and what aspects most contributed to the upper crust brands.
Ford is a perfect example of a classic American car-company who has kept to its guns, but sees the potential for a Hollywood level face-lift. The models that have become huge revenue drivers are: the Flex, the Fusion, and the Fiesta. In 2009, Ford announced they would have a “One Ford” plan, meaning all the models they would produce would be available anywhere in the world. So the party in Europe, the Fiesta, would come stateside. Ford utilized a unique promotion technique to garner enthusiasm for the Fiesta: free test cars, and what American doesn’t love FREE (I bet you even got excited seeing the word). Anyway, in 2009, Ford gave hundreds of Fiestas to certain test consumers for a few months and sat patiently, eager for their feedback. All good report cards plus a boost of social media ads meant the Fiesta would graduate to American dealers, class of 2010. The Flex is a crossover that was unexpected. The vehicle did not fit neatly into Ford’s lineup and didn’t have an exact target audience, but its potential for seating, cargo, stellar design and personalization covered all the right areas. Finally, the Fusion has been a big seller for the company due to its style and hybrid technology. The features and creative “Drive One” ads helped make the slogan a command more than a suggestion. One last, but huge improvement for the Ford vehicles has been the addition of Microsoft’s Sync system as an option in all the vehicles. The system is intuitive and brings the cars to a higher standard. The use of social media and traditional ads has marked Ford as a reworked, trendy brand that retains the quality Americans trust.
Porsche is another great example of a timeless auto brand. However, they have found success in entirely different ways than Ford. Porsche has kept the classic models pure and added select models to capture certain demographics. The 911 is an icon in the sports car world. If you live in civilization, you’ve heard of the 911. Porsche has kept all the best parts about the car, its shape, design, and quality while modernizing the performance, chassis, and handling to maintain the model’s leadership. Each consecutive 911 remodel is better than the last in some way, yet none deviates from the heritage…or some poor German engineer bids farewell to his schnitzel. The Cheyenne was added a few years ago and some (no Germans) have remarked it is an ugly SUV, but it brought Porsche performance to a demographic that lacked grunt (until the Jeep Grand Cherokee Srt-8). Good move by Porsche. Another effort has been made to bring the brand to lower-income consumers through the Cayman and Boxster. Women tended to buy the Boxster, so after the threats to male pride were tallied, Porsche added the Cayman for the disgruntled husbands. Both cars are examples of Porsche’s heritage and performance, while noting attention to the necessary trends. The Panamera is a hard call. Porsche IS opening the sedan demographic to a new level of performance, but with a hefty price point (and rear-end), it almost seems trivial. Porsche’s latest strides for Hybrid cars could be great for the brand, as long as it puts the purist performance heritage first.
Toyota has been an interesting topic for the past year for obvious reasons, but even after all the poor media encompassing safety woes, the brand is selling. The man or woman who came up with the slogan “ask someone who drives one” deserves a cookie, because those words are rich. Toyota knew it made lovable cars, so the only way it could possibly clear its name from the wall of shame was to cling to owners. Correctly, Toyota has assumed word-of-mouth from trusted individuals and gossipers would always overshadow bad media. So encouraging consumers to ask neighbors and friends about their Toyotas was brilliant. Owners can tell other consumers about his or her long and enjoyable histories with the brand and slowly bring sales back to the manufacturer. Other manufacturers take note: Toyota’s Crisis management is the best safety system the brand makes.
These are just some examples of auto manufacturers who have seen the light and knew their consumers, but what do they have in common that defines a good business model?
Ford found its Identity as a quality-meets-trendy industry leader. The modern ads and creative promotions have written them into the next chapter of the Auto Industry book. Porsche has held onto its iconic model and branded itself as symbolic of perfect engineering and shape…or else. Toyota has become the endurance brand. Its models last decades, but not its rebound. Knowing this, Toyota has given its loyal owners an assignment: show-and-tell. If Auto brands can find Identity, they find a niche to fill, bringing them prolific sales. Honda’s reliability is on the right track and Audi’s sexy styling is also promising, but the brands straining to target EVERY consumer, like Mercedes-Benz’s 3 billion models, are headed for chaos. Apply this concept to emerging brands as well: Fisker, Tesla, etc. can go for the hybrid/electric/environmental-conscious audience, but they must also make something unique and desirable (like a Mexican party).
Here’s some ad advice: Innovation is the message the image of your brand must project (ex. Ford is trendy, so it does innovative promotions and social media ads that a hipster or “cool mom” would love).
Identity in the auto industry will be good for individualizing brands within the industry; helping consumers remember why cars will always be part of our past, present, and future.
Henry Ford once said, “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”
His company implements this message, now the other brands need to listen and act.