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.

The Hyundai Assurance Program was a stroke of brilliance at a time when the economy and the auto industry were in a tailspin.  It basically gave consumers a no risk way to purchase a vehicle.  If you bought a Hyundai and subsequently lost your job, you could return the car, no questions asked.  Truly brilliant and it propelled Hyundai through the recession and out the other end.  Hyundai’s 2009 sales grew 8% and its share of market was up 1.1 points.  This performance earned it elite status as one of only three automobile brands (Kia & Subaru were the others) to increase volume in 2009, while the industry overall declined 21%*.

The Hyundai Assurance Program was an unqualified success in a tough marketing climate.  But now what?

Hyundai has a big challenge in front of it.  How do you take what was basically a tactic and turn it into a long-term brand equity.  The Hyundai Assurance Program gave consumers exactly what they needed when they felt threatened and vulnerable. As the the economy recovers and confidence returns, the Hyundai Assurance Program will lose some of its allure.  If you’re not worried about being fired, then you really don’t need the program.  Recognizing this, Hyundai extended the Assurance Program basically saying that we’re not out of the woods yet:

Pretty good job of recognizing that this “tactic” needs to be adjusted, but it’s still a just a tactic, a promotion.

Hyundai has done a great job designing, engineering and building quality products.  They also have priced them very competitively in the market place. Hyundai has been building a nice business based on terrific quality products at fair prices. Quality products and pricing are the foundation stones of a powerful automotive brand, but the folks at Hyundai are not quite there yet.  I think that what they do with the goodwill generated by the Hyundai Assurance Program will determine if they build Hyundai into a brand that occupies a special place in consumers’ minds.

This latest commercial hints at where the brand could go.  Imagine if Hyundai could be the automobile brand that “always has your back.” Great products at fair prices and a company that’s looking out for you. There’s a powerful brand promise.

The hard part will be keeping that promise and making delivery against it part of the fabric of the company and its dealers rather than just a promotional offer.  If they can do it, Hyundai will become an extraordinary automotive brand that has gone beyond product quality and price to forge an emotional connection with their customers.  This emotional connection will differentiate Hyundai and give it remarkable leverage versus Toyota and Nissan.  Getting the Assurance Program done was a critical first step, but what Hyundai does next will be telling.

* Sales figures sourced from Automotive News’ Data Center

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.