After an incredibly tough 2009, consumers seem to be coming back.  For the first time in recent memory, Americans’ perception of domestic automobiles seems to be on the mend (Business Week 4/23).  Ford’s bet that Americans will buy smaller, fully featured automobiles looks like it may pay off.  GM’s product plan created by soon-to-retire Bob Lutz is leading a resurgence for the General.  Hyundai and Kia, supported my excellent product quality, have taken advantage of recessionary sensibilities and grown share of market.  Audi , Subaru and Mini have come out of the recession on a tear.

On the other side of the ledger, Toyota continues to struggle with recalls and concerns about quality.  This has led to unprecedented incentives by Toyota and the predictable response by competitors to match them.  So a good number of consumers who had been sitting on sidelines during the recession have come back to dealerships looking to for a good deal.  After 2009, it’s a relief to see traffic in the stores but at the same time if the incentives continue that will not be good for the industry long term.  In 2009, some progress had been made at reducing the use of incentives, but the moment Toyota jumped in to defend its franchise, that opened the floodgates again.

So the good news is that customers are returning to the stores, but are they coming back for the right reasons?

Coming out of a deep recession, it makes sense that price point will be critical.  But eventually, consumer confidence will return and what, other than price, do we want consumers to consider?  What will create preference and support higher margins?  This seems a good time to step back and evaluate the current state of our automotive brands and evaluate them against a new generation of potential prospects.   Our industry’s brands are not what they once were.

Many once great automotive brands have been allowed to slip into an amorphous state.  In the 90’s as manufacturers chased volume and sought a bigger share of the then expanding pie, it was no longer enough to stand for one thing, they needed to be more things to more people.  This led to communications that were less clear, less defined and the process of weakening great brands began.

If you doubt the veracity of this statement, look at the luxury segment of the category, Volvo, Mercedes Benz, BMW, Jaguar, SAAB were once clearly positioned brands that stood for something.  Many among us can still rattle off these brands’ core values.

• Volvo—safety
• Mercedes Benz—engineering
• BMW—performance
• Jaguar—design and performance
• SAAB—individuality
• Porsche—performance sports cars

For a long time the majority of consumers gave these brands credit for these values despite product and communications that seemed to go in other directions.  But now the problem has come to roost, there’s a whole generation of prospective customers that don’t know what these brands stand for, they weren’t alive when the seminal advertising that positioned these brands was running.

What to do?  Here’s a suggestion, form a small team of senior level marketing folks (independent consultants, agency partners) who are talented, understand brand building and the automobile business.  Make sure they are willing to commit themselves to genuinely understanding your brand in all its glorious detail and let them loose.  Tell them you want ideas that will clearly position your brand to a new generation of car purchasers who are a blank canvas.  Ask them to execute the idea across all media channels.  Ask for ways to use social media to create communities around your brand that take advantage of the enthusiasts who understand your brand so that their knowledge can educate the new generation.

Consumers are coming back into the stores, but most are coming back to get a good deal.  Manufacturers and their agencies need to re-build their brands.  With younger customers, they need to build them for the first time.  Incentives train people to buy based on the deal and consider the products commodity-like.

In a category where it is now difficult to buy a “bad” vehicle, the threat of commoditization is very real.  A strong desirable brand is the only thing standing between a manufacturer of differentiated products and a supplier of generic transportation.

Please let me know what you think.

In New York last week I saw the new Mini crossover, the Countryman, for the first time in person.  All the Mini design cues are present in the Countryman and I think you’d be hard pressed to say that it wasn’t part of the Mini family.  But I was struck by how “big” it seemed, it didn’t seem small and taut the way all the other models do.  Part of the difference was that the Countryman’s ground clearance is higher, so its stance is really quite different than the other Minis.

This got me thinking, at what point does a marque go too far and begin to lose its essential character?  Has Mini gone too far with the Countryman?

I suspect this is a little like losing your hair.  Little by little your hair recedes, almost imperceptibly, you make little adjustments as you go, thinking no one will notice, until one day you end up with comb-over and people are snickering behind your back. Little by little automotive brands seem to lose their way.

I suppose this is the ultimate judgment call in the automotive branding business.  All manufacturers feel the relentless pressure to grow their business and increase volume.  One way to do that is to create products that enable you to enter new segments.  Sometimes companies get this right and other times not.

Porsche, the archetypal sports car company, introduces the Cayenne to howls of protest from the “purists,” sells a ton of them and for a number of years could claim to be the most profitable manufacturer in the world.  Clearly a good business decision and it seems not to have diminished the brand.  One of the reasons that I think the Cayenne did not hurt the Porsche brand is because at the time it was introduced, no one was making a high performance SUV.  With the Cayenne, Porsche filled an unmet need…some folks wanted an SUV that offered real performance creds and Porsche led the industry from its traditional strength.

I think the Panamera will be a different story.  I don’t think the world is waiting for a Porsche 4-door sedan.  There are already terrific high performance sedans,  Audi RS6 & S8, Mercedes-Benz AMG models, BMW’s M5 & Alpina B7.  Porsche is following a well-worn path with the Panamera and it will be just another performance sedan.

VW and its much-maligned Routan is a good example of a product that stretched a brand the wrong way.  VW wanted to add a people mover to its line-up.  The wonderful VW Microbus Concept proved too expensive to produce so VW struck a deal with Chrysler and the Routan is the result.  A perfectly serviceable vehicle I’m sure, but very little VW character:

Had VW been able to produce the Microbus it would have been more distinctive and reflective of the Volkswagen brand.  Instead the Routan competes with every other plain vanilla Japanese entrant and is struggling.

BMW, inarguably the best-defined brand in the automobile business has just announced that it will develop a front wheel drive platform and market front wheel drive cars.  Again, howls of protest from the enthusiast circles that rightly point out that the Ultimate Driving Machine has been based on several principles not the least of which was rear wheel driven handling and perfect 50/50 weight distribution front to back.  But there are good reasons to have a FWD in your product portfolio, particularly when you need to develop smaller more fuel-efficient models to meet CAFE standards.

Here’s the tough thing about having a well-developed brand, you can’t be all things to all people.  Some things fit and others don’t. When you do things that conflict with your brand’s core values or principles it diminishes your brand.

Is the Mini Countryman going to weaken the Mini brand?  Probably not, but what about the next variant?

Porsche Cayenne OK?  What about Panamera?  Feels like the Porsche brand doesn’t have that much elasticity.

Volkswagen Routan?  VW’s stated company goal is to become more “mainstream”  and increase US volumes dramatically. I guess Routan is mainstream, but I’m not sure that “mainstream” and strong brand go together.  It will be fascinating to see the new sedan built in the Chattanooga factory, will it still have essential VW character or will it be “mainstream?”

BMW and front wheel drive?  Maybe most people won’t know or care that the car is front wheel drive, but the legions of people who bought into BMW’s rear wheel drive rationale will be wondering what it means for the Ultimate Driving Machine.

It seems like growth is the enemy of automotive brands.  Little by little, the never-ending pursuit of volume forces companies into segments and compromises that make their brands less distinct, less clear.  Without question you can sell a few more cars, but is it worth it?  Would you be better off creating a new brand?  It’s a good question to ask as you consider each new segment and new product. If you take the question seriously and really consider the strength of the brand an important consideration then you can avoid becoming a comb-over brand.  A brand that has rationale for what’s doing…but it isn’t fooling anybody.

Please comment, I’d be interested in your thoughts.

It was ironic that virtually every manufacturer was talking about EVs in one form or another, yet the much less fashionable technology…diesel…took home the Green Car of the Year prize.

Don’t get me wrong, I think some of the electric cars and concepts are fascinating.

Chevrolet showed us a production version of the Volt and spoke about the fact that there would be no “range anxiety” because of the small motor that would generate electricity to charge the batteries. Audi showed the E-tron, an electric version of the R8 with an electric motor poweringeach wheel and delivering supercar performance. BMW’s “Vision” concept demonstrated where “Efficient Dynamics” might take the brand. Mini has been testing electric cars on America’s roads and had an example at their stand.

EVs are being talked about as if they will solve global warming, reduce our fossil fuel consumption to zero and generally save the planet. EVs are the messiah of automotive technologies.

Here’s the problem, electric cars are expected to represent maybe 10% of sales by 2020. At that sales rate it’s hard to imagine the technology as a game changer from a fuel consumption or global warming perspective.

At least we have the folks responsible for selecting the “Green Car of the Year” to provide a reality check. For the second consecutive year, a diesel-powered vehicle was selected as green car of the year. Why? Clean diesel is a practical and “green” approach to transportation. It offers 25-30% better mileage, it emits less CO2 and particulate emission is now comparable to gasoline-powered technology. Today’s clean diesels meet the most stringent pollution standards and are sold in all fifty states.

The Audi A3 TDI is a terrific example of the modern clean diesel and a worthy “Green Car of the Year.”

Modern clean diesels are readily available, offer the possibility of reducing fuel consumption by a third and emit less C02 than gasoline engines. Maybe after we’re done talking about technology that won’t make a difference for another 20 years, we’ll start to talk about one that can make a difference tomorrow.

I know it’s not fashionable, but we need to change Americans’ perception of diesel because it makes sense.

It seems the automotive industry does a better job of “talking the talk” of branding than it does of “walking the walk.”  Of course there are exceptions, and Mini is a great example.  When introduced a few years ago the creative work for Mini was widely lauded (see link below) and it set the marque on a path that led to the events of last couple of weeks.

First, on June 22nd, JD Power announced the results of its 2009 IQS study and Mini was at the very bottom indicating that it has the most defects per 100 vehicles of any manufacturer.

Then on June 24, the Wall Street Journal published a piece headlined: “Sticker Shock: Cars that Sell for Full Price.”  Here’s what they had to say:

“Yet there are few more-modestly-priced models from less-ostentatious brands. Cars from BMW’s Mini brand, which start at just under $20,000, are selling for close to sticker price, according to Edmunds”

Finally, the New York Times published an article today headlined “Mini Conundrum:  Does Quality Matter?”  Illustrating the conundrum:

“In the latest J.D. Power & Associates Initial Quality Survey, Mini ranked 37th in initial quality — out of 37 brands — with 165 problems per 100 vehicles (which is the metric J.D. Power uses). In other words, Mini was dead last…..At the same time, Mini has been a much-beloved brand with strong sales.”

These three data points make a nice case for the power of an automotive brand.  Strong sales at almost full whack in the worst recession in generations despite the worst IQS scores in the industry.  BMW has created a desirable consumer brand that is positioned uniquely in the the marketplace.  They have a group of customers for whom owning a Mini is more than just having a vehicle, they are part of a tribe.  A tribe that pays full price to be a member, knowing full well the experience won’t be perfect…but it will be special.

Mini is doing well in a terrible market in great part because it’s marketing has been smart and consistent from day one.  Certainly the product is a big part of the success (even if it isn’t perfect), as is the way they have limited inventories to keep demand high.  That said, recession plagued consumers won’t pay full price for “transportation” in a market where everyone is getting a deal, they pay to be part of brand idea that is bigger than the product and bigger than themselves.  They pay full price for something special, a brand that stands for something.  They want to be the “Us” in “Let’s Motor.”

By the way, even when Mini management is answering questions from the media about the company’s poor IQS score, they answer from the brand’s platform:

“Mini has some idiosyncrasies that we engineer into our cars,” Jim McDowell, vice president of Mini USA, told The Associated Press (via MSNBC). As examples, Mr. McDowell cited the Mini’s unusual ambient interior lighting and windshield-wiper control, which is a button instead of a knob.

It turns out that one of the reasons Mini gets low IQS scores is that it takes a while for the owners to get used to the fact that the cars they bought because they were different, are actually different…brilliant.

Links:

Introductory Mini TV commercial:

JD Power IQS press release:

http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2009108

Wall Street Journal “Sticker Shock: Cars that Sell at full priice”:

http://online.wsj.com/article/SB10001424052970203937504574245923560446880.html

New York Times “Mini Conundrum:  Does Quality Matter?”:

http://wheels.blogs.nytimes.com/2009/07/02/mini-conundrum-does-quality-matter/

]]> http://autoperspectives.com/blog/2009/07/06/mini-shows-us-the-power-of-brand/feed/ 2 http://autoperspectives.com/blog/2009/04/20/subaru-mini/ http://autoperspectives.com/blog/2009/04/20/subaru-mini/#comments Tue, 21 Apr 2009 01:51:27 +0000 Cameron http://autoperspectives.com/blog/?p=120

In a market that is seeing unprecedented declines in sales in all segments, across all product types, in all parts of the country, two marques defy the slump; Subaru and Mini.

At first blush, you might say to yourself, that makes sense both are smaller more fuel efficient cars, both are far from symbols of conspicuous consumption, both are relatively reasonably priced.  But there are tons of brands and models offering fuel efficiency, are reasonably priced and not symbols of conspicuous consumption.  This logic doesn’t explain why Subaru and Mini have dodged the recession.

I would submit that these companies have gone through the recession relatively unscathed because they have a loyal base of customers and brands that consumers understand clearly.  These brands enjoy an almost fanatical devotion by their customers and these customers are advocates for the brands to virtually every person who happens to ask and probably some who don’t.

Subaru has been in this country since the seventies and took over in college towns as the professor’s car when Volvos got a little pricy for the academics.   Good engineering, good quality and all wheel drive.  Eventually, Subaru made a commitment to all wheel drive as a point of difference and have been consistently hammering away at it.  Consumers get that Subarus have all wheel drive, are built like the proverbial brick s_ _ _ house and give years of service.  Owners wax poetic about the virtues of their “Subies.”

Mini, in it’s current BMW engineered form is a newcomer to the US market.  But the “Mini” brand has been here since the sixties…small, utilitarian, cute in an odd way.  The original Mini Morris has had a small but loyal cadre of fans for decades and those folks were excited about the prospect of the “new” Mini.  BMW engineering and build quality, some really smart marketing encapsulated by “Let’s Motor” and virtually overnight we had a “new” automotive brand with a legion of loyal owners.

What we have in Subaru and Mini are automotive brands unafraid to be who they are, a little different, maybe even quirky.  Brands that are clearly understood by the people who own and love them.  So far, these brands have been managed by people who understand the core values of their brands and recognize that they’re not for everybody and shouldn’t be.  Brands that are selling cars profitably for both manufacturer and dealer in the worst recession in generations.

There’s some good strategy going on at Subaru and Mini, the rest of the automotive world should pay attention.  Perhaps the company selling the most cars is really not the winner.