Sunday, May 31, 2009

Sunday thoughts about Automakers BK

As GM crawls towards what others describe as unavoidable bankruptcy I am drawn to the historic figures of US auto industry founders. How would Henry Ford or Billy Durant have handled this crisis.

The more I speculate the more sure I become of the answer. Their actions would be like that of the tech Mavens of today.  They boldly would stand up and demand more of every member of their team, their supply chain, and ultimately move the entire industry forward surfing the wake of crisis. They would have stepped forward welcoming competition, harsh medicine of the downturn, and would have cast their lot with the American consumers needs.  Their solution would be simple: Progress!

Progress in my definition is simple.  More for less.  Less cost, less impact, and in turn the creation of more value.  

What is the need of the American auto consumer. It is a simple three prong test: Stylish function, bottom of the market cost, and reliable utility.  

That is the secret formula used first by the Oldsmobile as it built market share at the dawn of the automobile.  Again it was the secret strategy of Henry Ford in his quest to displace the horse with his ever less expensive Model-T.  As well it was the come to market strategy of all other car makers gobbling up GM's lunch since Billy Durant launched his own come to market coup with the Chevrolet.  Again, ironically the comeback of Chrysler was marked by this same strategy in the 90's and is why Kia is still a safe bet for dealers who picked up the brand as they pursue it today.

Unbelievably the pundits blame it on fuel economy and the lack of demand for their cars. Though it isn't demand that's dried up in the world. Its credit, income, and of course crude oil's availability.   Who doesn't want a H2?  Only the social sensibilities and excess pull back this shinny toy of the wasteful urbanite.

I can't help but notice that Toyota, Honda, and Nissan manufacture huge SUV's and full size toy-hauling pick-ups.  The difference is their market share make up not their Environmental credentials.  Again we come back to affordable, stylish, and reliable.  

Look at the markets.  When you buy American and inexpensive your purchase reminds you of your income. Your options smack of cost cutting.  The upgrade also is substantially different as well.  Japanese designers on the other hand provide a consistency with value.  

The Japanese hold their consistent come-to-market units true to their roots.  They offer a middle ground to their consumers.  

No comments: