Archive for November, 2009

Opportunity knocks for well-articulated automotive brands

Monday, November 9th, 2009

The automobile industry is entering new territory as the recession wanes and consumers, who have been emotionally scarred by the last 18 months, remain cautious.  Many believe that consumers have been forever changed by this recession and that they will be more conservative with their money for years to come.

No one expects that the automotive industry will achieve the heady sales levels of the early part of this decade.

“By 2013, car and truck sales in North America will rebound to the new normal rate of 15 million to 16 million units”  Automotive News 8/5/09

At best, we will attain a “new normal” of 15-16MM units in 2013.

That means that competition for customers is going to be tougher than ever and no one’s business is going to grow just hanging on to the industry coattails.  Historically the manufacturers have reacted to these types of circumstances by using incentives.  These tactics artificially inflated sales earlier in the decade, pulling sales forward and contributed to the most recent “correction” that has pummeled the industry.  Using short-term incentives to steal share is not the answer to long-term prosperity, it’s merely a tactic that gives a franchise a quick shot in the arm.  Establishing a brand’s immutable points of difference and creating consumer affinity for it, is what creates value over the long term.

Last week, BusinessWeek published a piece by Ed Wallace about GM making the same mistakes; in it he made the case for branding:

“True, people want a “deal” when they buy a new car. But more important, they want to buy something exceptional….The automotive selling process, done right, has little to do with negotiation: It has everything to do with building value in the vehicle.”

It’s about time the industry took “branding” seriously.

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A resurgence for Cadillac?

Sunday, November 8th, 2009

Last year when I was considering what new luxury segment vehicle to purchase I had an experience that I think bodes well for Cadillac.

Keep in mind that my family has a long history with European imports.  In fact the last domestic product we bought was a 1986 Jeep Cherokee, just before the SUV craze really took hold.

Since that time we have had Volvos, a SAAB, a Mercedes Benz, half a dozen Audis and a couple of VWs.  For the last fifteen years my family has been happily ensconced in a series of Audis. As great as our experience has been with our Audis (we still have 2 in our household fleet) I thought it might be time for something new.

Growing up in my household, my sons could not help but pay attention to the automotive industry and both of them love cars.  So as I went through my deliberations concerning a new car, two conversations with my sons illustrated the change that is about to take place in the luxury segment.  The first with my then 22 year old, who when told I was thinking about a Mercedes-Benz, dismissively said “don’t buy a Mercedes-Benz, that’s an old man’s car.”

The second conversation, this one with my 25 year old, didn’t demean the possibility of a Mercedes-Benz, but concluded with “Dad, you should take a look at the Cadillac CTS, I think they’re cool.”

Now it was my turn to be surprised.  I admit that I have impressed by the design direction of Cadillac and I certainly recognize that the product is greatly improved but  “cool” from a twenty five year old’s point of view?

For 30+ years we have watched the Europeans and Japanese recreate the luxury segment as the domestics lost favor.  Very few baby boomers thought of Cadillac or Lincoln as marques they wanted in their garage.  Mercedes-Benz, BMW and Lexus have been their first tier luxury brands of choice.   However, the preeminence of these brands is being challenged.

There are three reasons why the “Tier 1″ luxury brands are under fire:

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The Buick brand and the 2010 Lacrosse

Wednesday, November 4th, 2009

Last weekend, I did something I haven’t done in recent memory…I went to my local Buick dealership. I’ve read good things about the new Lacrosse and I wanted to see it for myself.

The dealership had one car. It looked terrific. The salesman said that it was “more European in its styling” and I agree with him. No land yacht here. My one gripe was the “portholes” on the hood, if that is a Buick styling cue, it’s one they should let go (one man’s opinion).

Regardless of the “portholes,” it was hard not to be impressed by the car. If the 2010 Lacrosse is indicative of where they are taking the Buick product line then I’m already thinking about the brand a little differently.

As impressive as the product was, that was not the most interesting part of the dealer visit. I asked if I could drive the car and was politely told, I’d have to “wait my turn.” People were lined up to drive the new Lacrosse! The best news…they weren’t all 65 and older, quite a few were 10-15 years younger.

Based on one dealer visit and the crowd around the 2010 Lacrosse, perhaps the Buick brand is going to surprise us.