The U.S. Auto Industry: Marketing or Production Failure?
News of GM’s impeding collapse dominated headlines yesterday. The question for me is: Is this a failure to market or a failure to create a quality product?
My solution, from a marketing standpoint, is to focus on one thing: price. Like I wrote last week, consumers are concerned primarily with value in our stumbling economy.
While viewing a CNN piece on the state of GM, I found it interesting that during a commercial break a 30 second GM spot aired. It was typical of American car commercials: electric guitar in the background, an over-excited voice bragging about dealer financing. Do these advertisers really think Americans are interested in taking out another credit line?
I say U.S. automakers should take the bailout money, hope to sell more units at lower prices, cut production costs, and attempt to operate back in the green before worrying about the future again.
From a production standpoint, a very good friend of mine works in the manufacturing sector and offers this advice:
The American auto-industry has two problems:
1. Their core competency is manufacturing…and they’re not very good at it.
2. The most important piece of their ROI calculation for new vehicles is development time, which takes an average of 3-5 years from design to production.
How can they address these issues? They should extract as much value as possible from existing BRANDS. Quit operating as huge companies w/ 20 different vehicle models. Be a small company that does 3 models really well.
Focus more on the front-end processes. Quality is determined in the design phase. You can design quality into products before a part ever exists via simulation and predict common defect areas. Finally, shorten the development time. This will be the key tipping point for automobile manufacturing and there will be significant advances in the design cycle and timing going forward.
I started to think ahead with my friend’s plan. We all know the biggest problem facing U.S. automakers is that their products are viewed as highly unreliable. As marketers, we’d love to prove to the consumer this fact is untrue.
But how many of us actually believe that? If you won a free car, and had the choice of a Nissan Maxima or a Chevy Malibu, which would you choose?
Say the big three actually adopted my friend’s model. Say they put fewer vehicles out there in favor of three high-quality, reliable cars. As marketers our primary concern would be convincing the American consumer our three models possess the highest quality and dependability. Through a combination of marketing, publicity, and advertising, I believe this could be done.
Until the production/development teams at the big three can pump out these types of cars, no amount of marketing will solve the U.S. auto industry’s problems.
Nissan should serve as the business model. They successfully re-branded their image by scaling back vehicle types and producing only a few high quality models.
Written by Roland Cailles - Visit Website
Your guide to advancing a career in integrated marketing communications. Subscribe by RSS 
November 13th, 2008 at 6:32 pm
We, as taxpayers, have no choice but bail out the car industry. They represent too large a loss in terms of a strategic manufacturing sector as well as the loss of jobs/consumer buying power. What really yanks my chain
is, if we believe in capitalism, Darwin’s Law would have consigned them to the scrap heap long ago.
I will not point fingers at specific management, just at results. They appear to have the highest cost of manufacture, the weakest array of successful model lines and a blind eye to the Green Revolution.
November 22nd, 2008 at 10:24 pm
I would love to Columbia Business School to do a case study on how the auto industry did everything wrong.
On coming to America (sorry, Eddy Murphy) in 1989 to get my Columbia MBA, I invited ALL THREE Detroit car makers to let me BUY and sell their cars in Pakistan (with investors I had lined up). Only Chrysler even had serious discussions but all three said, NO INTEREST.
Now, Japanese companies OWN that exploding (well, sometimes literally, unfortunately) car market and we can’t seem to keep our auto industry off life support.
They made bad (and ugly) cars, greedy management, lazy and incompetent unionized people (my girlfriend worked there after her Columbia MBA and quit as soon as she could) who couldn’t hold McDonald’s jobs pulling 100K and advertising that makes you want to switch to crazy eddie type ads. Now, to show up in DC on separate corporate jets – I mean, even Sarah Palin would say, what were they thinking. LOL
They also stumbled from one error to the other in PR and marketing. My (somewhat racy) comment on one such issue will be of interest:
http://www.imran.com/media/blo.....-racy.html
Sincerely
Imran
http://IMRAN.TV
http://neternity.org
December 12th, 2008 at 5:35 pm
Great post Roland. I completely agree that GM needs to make and design fewer models and do it better. And I am sure that better design upfront would make the marketing job easier. I suspect that designers at GM are often limited in their designs to parts already produced (cheaply) by GM suppliers. That might explain, for example, why GM kept cranking out those huge dashboards that extended over the driver and passenger long after they fell out of style.
December 12th, 2008 at 8:15 pm
@ Imran I just caught your “exploding Pakistani cars joke.” Ha, it’s funny, and not funny at the same time. A friend of mine was in Pakistan when Bhutto was killed. He had to pay the taxi driver an extra $100 just to drive him back to his hotel in Islamabad. We gotta resolve issues in that side of the world.
@ David Yes sir, it’s a failure from the top down. Is that why my first car was that piece of crap Cavalier with the cheap plastic dashboard?