What Does the Future Hold for Automakers?

It was deja vu all over again this past weekend, as I sat reading the local newspaper.  The frontpage headline read, “Car Dealers Say Small Car is Way of the Future.” It seems that with gas prices hell-bent for leather racing toward $100 a barrel, people are ditching their trucks, SUV’s and other large vehicles for more economical transportation.

For those of you old enough to remember tie dye and bell bottoms, that headline should sound familiar... harkening back to about 30 years ago and our first gasoline crisis.  (Yes, Virginia, there really were lines around the block, and filling up on “even or odd” days, depending on the last number of your license plate).  At the time, American automakers scrambled to introduce economy models they hoped would compete with that new kid in town, the Honda Civic... the Chevette, the Pacer and the Vega to name a few.  Ah yes, history does repeat itself.

So fortuitous the time was, then, that I also received a note from Sandra Kinsler, editor-in-chief of WomanMotorist.com.  Apparently she’d been doing some Googling and found my blog post from last year, commenting on her taking GM to task for ignoring the needs of the consumer, especially female consumers.  She writes:

"In 2002 (maybe '03) I spoke to Gary Cowger -- then heading GM in the US -- at the New York Auto Show and told him how badly his company was doing with both women car shoppers and the women's media. I explained, that as an economist -- my degree is from UCLA -- that any company not effectively marketing to the majority of the buyers of a product type spells disaster for a company. Low and behold GM is experiencing financial free-fall. A significant contribution to this is GM's inability to sell to women, maintain their loyalty and build products they want to own. GM is targeting women with their Pontiac product line, and what they sell are ugly, outdated and poorly constructed products that women should not take the risk to own. The competitive products from Toyota and Honda are much better and safer choices.

GM is not the only culprit. Ford and Chrysler have done abysmal jobs marketing to women and attracting the attention of automotive journalists targeting the women's market. Their earnings reflect this. Moreover Ford is now targeting women with their Lincoln and Mercury products. Lincolns are big, gas guzzling, expensive vehicles that look cool but don't serve any purpose in a modern American home. No one should be buying huge SUVs at this time, unless they REALLY need them. Neither the Lincoln nor the Mercury products have good reliability ratings and both miss the mark on design to meet women's needs and desire for forward-thinking design. The 2007 Mercury Milan -- which I have just test driven -- is a poor attempt to apply European styling to an American design. The interior is sloppy and cumbersome. After all this time there is no reason, whatsoever, for Ford's inability to design competitors to the Honda Accord and Toyota Camry. No reason at all.

The bottom line for me, is that most of the automakers do a dismal job of marketing to women. They are smug, believe their own PR, and blame their failure on the competition and the medical insurance they have to pay for their works. That's hooey, if you ask me.

If they built great cars women that wanted to own, at plants in the US, like many of their competitors, they would be equally as successful."

 

Back in the 1970’s, American automakers were pretty quick on the draw when it came to finding a solution to what had been until then the American “give me that Lincoln Continental” way of life.  There must have been fewer managerial layers back then, allowing engineers to design and create exactly what the public needed.  What I wonder now is... do they have the fast turnaround time required to reinvent themselves?  Can management get out of the way and let the engineers do what they do best?  My fear is the answer is no. 

Surely there should be one American car manufacturer out there that has the cojones to step up to the plate and swing for the fences.  Toyota is doing it with the Prius and the newly-introduced Yaris.  Hummer is even doing it, with an ad campaign that speaks to the motivations of young mothers and engines capable of running on ecologically friendly biodiesel.  And that new Acura RL I just purchased?  Gets even better mileage than my old CL... and a gold standard warranty to die for.

Sandra added a P.S. to her letter:

P.S. Anyone want to start a discussion about how women will be the early adopters and purchasing leaders in the hybrid-fuel vehicle market? Women alone can solve the foreign-oil dependence issue.

What do you think?  All comments welcome.

Comments

[Joe Ely]

Great post, Michelle.

This is a wonderful example of a problem crying for a large, integrated solution. A car requires huge levels of engineering, supply-chain and operational expertise to produce, not merely good intentions and some general ideas. Toyota and Honda seem to have this capability in much better hand than any of the US producers. And turning the massive inertia of any US automaker is, at best, daunting.

As a pragmating manufacturing manager, a central element to any possible turnaround is hiring and promoting women in engineering/operations positions. I've seen this work and it is impossible to overstate how key this is. These are matters that women just tend to "get" faster/better than male engineers. I know, an overstatement, but it is generally true. Which also speaks to the continued encouragement of women to excel in math and science in schools, the prerequisites for engineering excellence.

This tends to create a more positive manufacturing environment and a more responsive organization to marketing cars, for example, that fill needs for such a huge market.

Sorry for the length...but a pretty strongly held opinon on my part. I welcome others comments.

[Joe Ely]

Michelle, you and Tom Peters are on the same wavelength today.

He just posted about how men and women sell/buy jewlery:

http://www.tompeters.com/entries.php?note=008840.php

Somewhat akin to my earlier comment today about female engineers, he makes the strong point about female business owners in the gem business.

Automakers would do well to listen.

OK, now I have to get back to work :-)

[Steve Mertz]

It's too late for Detroit-stick a fork in that Pig! PS. Susan, Detroit doesn't seem to listen to men or women on these issues!

[Vince Bodiford]

This simply is not an issue of domestic carmakers not marketing well to women. They all (imports included) do just an average job of marketing in general, but they are well aware of the importance of marketing and positing their products to appeal to women... and men, and Hispanics, and African Americans, and every other segment of the population. They want to sell cars.

You wrote "What I wonder now is... do they have the fast turnaround time required to reinvent themselves? Can management get out of the way and let the engineers do what they do best? My fear is the answer is no."

The real answer to that question is one that makes everyone squirm. It's why we're quick to blame management or a thousand other reasons why Detroit is facing its problems today.

The answer, and the real blame, belongs on the shoulders of the United Auto Workers.

Yes, the UAW.

UAW contracts for decades have the management and engineers we so eloquently blame for everything wrong with the US car business bound up in chains that makes it impossible today to build a car in the US that can compete with the likes of Toyota.

Did you know that UAW contracts dictate and restrict how much robotics and automation can be used in a US assembly plant?

Not a problem for the imports... which is why their build quality is the best on the planet. Robotics and automation is simply better. And its cost effective. It allows a carmaker to afford things like better materials and content. All the stuff you take for granted in an import.

Did you know that UAW contracts force domestic carmakers to keep plants open that don’t build anything; to keep idle workers on the payroll to stay home (called the Jobs Bank); and to pay wages and benefits so high that the largest percentage of a new domestic vehicle cost is labor, entitlements, healthcare, etc, etc.

In comparison, the largest percentage of an imported vehicle cost is content (including the quality of materials and finish). That's because the imports can run their businesses the way they should be... to be competitive globally.

That's why everyone... men, women, children; of every race, color and creed choose non-US made vehicles over US vehicles.

Vince Bodiford
Automotive Journalist & Industry Analyst

[Aneta]

I would love to buy a hybrid car, but not for over $400 a month.. It does not look like a lot of incentive to be environment friendly..

[Vince Bodiford]

A $400 per month hybrid?

I'd suggest shopping more aggressively - there are deals out there. And, with a decent trade-in and down payment (typical in any car purchase), with reasonable credit and low factory-financing interest, you should be able to get that payment within reason.

Even with the payment, whatever it adds up to, with any hybrid its important to wiegh in some other very important factors;

** You'll be paying less for fuel -- the average savings is 30% or more over what you now burn in fuel. You can take that right off the top of the monthly car payment;

** Lower insurance costs;

** A tax incentive (in some states) and possible Federal Tax incentive, of at least $2,000 the year you buy the car; and more in some cases. That's more money in your pocket;

** Time savings -- the DOT and NHTSA have mandated that highways that have an HOV (High Occupancy Vehicle) or "Carpool" lane must also allow a hybrid to use that lane without limitation. In Los Angeles for example, you get a specia sticker that allows you to use that lane any time, with only one occupant (driver). That is a huge savings of time!

** Other incentives are cropping up everywhere... from free parking at meters, to rebates on State fuel tax, and more.

The message... inform yourself completely and you will wreak all sorts of benefits in owning and driving a hybrid.

Not to mention the benefits that Mother Earth will get.

Vince Bodiford
Automotive Editor & Industry Analyst
www.theweekenddrive.com

[Vince Bodiford]

A $400 per month hybrid?

I'd suggest shopping more aggressively - there are deals out there. And, with a decent trade-in and down payment (typical in any car purchase), with reasonable credit and low factory-financing interest, you should be able to get that payment within reason.

Even with the payment, whatever it adds up to, with any hybrid its important to wiegh in some other very important factors;

** You'll be paying less for fuel -- the average savings is 30% or more over what you now burn in fuel. You can take that right off the top of the monthly car payment;

** Lower insurance costs;

** A tax incentive (in some states) and possible Federal Tax incentive, of at least $2,000 the year you buy the car; and more in some cases. That's more money in your pocket;

** Time savings -- the DOT and NHTSA have mandated that highways that have an HOV (High Occupancy Vehicle) or "Carpool" lane must also allow a hybrid to use that lane without limitation. In Los Angeles for example, you get a specia sticker that allows you to use that lane any time, with only one occupant (driver). That is a huge savings of time!

** Other incentives are cropping up everywhere... from free parking at meters, to rebates on State fuel tax, and more.

The message... inform yourself completely and you will wreak all sorts of benefits in owning and driving a hybrid.

Not to mention the benefits that Mother Earth will get.

Vince Bodiford
Automotive Editor & Industry Analyst
www.theweekenddrive.com

[Gerry Myers]

While I agree with a lot of the statements in both the article and the other posts, women are still a hugh market, that while acknowledging, US automotive manufacturers are not adequately addressing. I have been working with major corporations since the early nineties on cost-effective, but results-oriented ways to attract and win the women's market, which also speaks to ethnic minorities. My company, Advisory Link, has found a unique, cutting-edge way to help corporations by creating Women's Advisory Boards for them. The women we carefully select are external, rather than internal, to the corporation. This is a key ingredient to their success. To gain back their market share, domestic automakers need to rethink their marketing and design stategies as they relate to women, and potential women consumers have to be the ones they listen to if they are going to succeed.

[AskPatty - Automotive Advice for Women]

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