Desirable Cars and why the American Automotive Companies are in dire straits
26 September 2006A year ago I bought my first car with my own money. I was looking for something sporty, with pretty good gas mileage since I’d be having a 30 mile commute each way, comfortable, good looking, nice interior, good features. Maybe a lot to ask for, but that’s what we should expect. Working for an automotive supplier that supplies to the Big 3 (a dubious name now that Toyota is second and one of the former Big 3 is more German than American), I had supplier discounts to American cars before GM launched their “Employee Discount for Everyone” promotion that pulled sales ahead and made their number look good for a few months, then disastrous the months after that. So with the supplier discount, I started looking at cars that I could use this discount with, and to my dismay (but not to my surprise) I didn’t find a single American car that I wanted. Nothing. They were either too big or too clumsy, too cheap or too slow. So I ended up getting a VW GTI 2-door hatchback, with 180 hp, sunroof, leather, good stereo system, and a lot of fun to drive.
My point is that the doldrums that GM and Ford find themselves in is a result of decades of catering to the wrong demographic. The demographic that matters right now in the automotive world is hands down our generation. For many reasons.
- Future Purchasing Power
- Growth for automobiles in the future will come from products that cater to the future generation of car purchasers. Getting a pulse on this market will inevitable help with the general prediction of the future. I will acknowledge that age is not the only market that predicts the future trends, there are areas (such as California and Urban areas in general) that have been historically very good predictors of the automotive trends. And the fact that the classic American companies are doing SO poorly in exactly these markets is not good news.
- Customer Trends
- Customer trends are determined by future purchasers on their way up, not by current purchasers on their way out. Think of this example, cars with masculine images sell better to females (and therefore overall) than cars with feminine images sell to males (how many guys do you know proudly driving a New Beetle or first generation SLK, versus women proud to be driving SUV’s and pickups). On this logic, a car (or more likely a brand) that is cool among young people will sell easier to older people (think Honda Element) than a car (or brand) with a stodgy image trying to sell to younger people (think Oldsmobile, Cadillac)
Being an American, I tend to root for American companies and the American economy on the whole. But I am also very hard on corporations that are missing the boat, whatever country they are from (I’ll also comment on Sony’s malaise and how I don’t have one ounce of empathy for them).
Ford and GM are in the position they are at right now from their own doing. It’s not the Japanese or the Koreans or the Chinese. It’s Ford and GM. I don’t feel bad for them one bit, and the fact that they’ve been missing the market so badly for so long has undoubtedly lowered consumer expectations and options for a while, so it’s all right that GM and Ford suffer a bit. And if and when they make a strong comeback, the will have hopefully learned the important lessons (like they did in the 80’s with Japan’s initial threat), and we’ll all be better off.
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