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Entries in Auto Industry (92)


Cost Cutting

The other day it struck us. Yes we had an epiphany to the extent of cost cutting that is rampant in all areas of production, manufacturing, and retailing.

We have often made reference to Power Point pilots, and spreadsheet jockeys in the processes of saving money, and cutting costs.

In the auto industry, one supplier cuts costs, the component is subsequently sub par, and a myriad of manufacturers initiate recalls. Yes...they are all using the same component, from the same supplier.

Lets assemble vehicles "somewhere" (ideally with low labor costs), lets cooperate with a plant that builds components for a few manufacturers (to save money) while creating an optic that its all separate, and all independently trained. Agreed many of these initiatives are empowered by technology, and were a mere figments of the imagination a few years ago.

Go to any retailer, prices are either up, and/or quality is down to control costs. Lets not even talk about the service that is provided my a myriad of retailers.

The value equation is a constantly moving target. Understanding the value received for the funds that are used is increasingly challenging.

Do we have to say that the "brand value" is inexorably becoming a "ball of grey" as it constantly morphs from one cost cutting vector to another in the ongoing effort to bolster the bottom line.

Is it a surprise for the consumer to gravitate towards the lowest cost denominator since its all a complex ball of grey.

What do you think?





Oldsmobile Factory Tour

Saturday morning nostalgia, and a taste of the when the auto industry "ruled"...



The Pennies in the Business

The GM ignition switch issue, is a blunt reminder that although the product is thousands of dollars, often the pennies command the product.

We quickly forget or overlook that in the under belly of this business there is an unglamorous aspect that is driven by pennies.

For some reason the Pinto gas tank of a few decades ago comes to mind. Back then too it was probably pennies to solve the problem. Interesting how things have a tendency to come back and resurface. 

In an age of social media with an increased level of transparency, reinforced by e-mail strings which often show the apparent facts, can be treated as a "smoking gun" and in most cases get sucked in the "ether" of corporate e-mails that get lost on a server.

It boils down to "Who will make a decision to spend hundreds of thousands of dollars to solve a problem" lets go a step further "Who will put their ass on the line", lets go another step "Who will jeopardise the well being of their family, and mortgage payments to do the right thing".

On a wider scope, we are increasingly seeing common platforms, common components, global sourcing, slicing and dicing pennies; which can create problems and issues that cost millions.

Think about this in some meeting somewhere: "You know we saved half a penny here, a quarter penny there, and another quarter penny over there, for a total of one penny over 1.5 million units for a saving of $15,000 looked real good on the spreadsheet"...then we had to recall a million of them at a cost of $100. each".

In the business we always read about the manufacturer that found ways to save even more money, source from all over the planet, lower the price, and sell a model like crazy. That particular model that sells like crazy, has got "cost savings" plastered all over the vehicle, with parts coming from all over the planet where labor is cheap. It becomes an inexpensive globally sourced platform, that can be embellished with "touch point" features to increase the price and profitability.

Then with about 25,000 kms on the model the comment "This vehicle is pretty loose for only 25,000 kms...gotta wonder what will happen in another 25,000"...."Funny its showing accelerated wear and tear"..."Surely the life expectancy of the components has been finely calibrated to exceed the warranty time frame". 

Think about this 100 years ago, Henry Ford started a revolution by paying assembly line workers $5.00 a day (double the going rate).


Social Media Club

An informative fireside chat on social media and the auto industry, moderated by Chris Baccus (we have known Chris for a few years).



Social Selling > Part 2

Go back a few decades and reflect on the typical salesman (yes salesman back then) at a dealer. We all know the stereotypes of the time. 

This individual was paid on commission, had to posses extensive product knowledge, was expected to mingle in his social circle, was provided a "demo" to represent the product at all times.

Reflect on this for a moment....while fast forwarding to 2014.

The current sales consultant is paid in a myriad of ways, adheres to a process, turns over customers, and is provided with a "car allowance"...its all cool it works.

If 20 years ago the product knowledge embarked on a voyage of disintermediation, and moving out of the showroom. In 2014 the showroom process is moving out of the showroom...yes the entire sales process is migrating out of the showroom.

Reflect on this too...the sales process is migrating out of the showroom.

Lets take the stereotype salesman from a few decades ago, and drop him in 2014, lets see what happens.

  • Wow no need for product knowledge, its online, the customer/prospect is better informed than the salesman...great, no need to do an extensive walk around demonstration.
  • The manufacturers "nuke" the market on a monthly basis with an assortment of programs to generate sales, and capture opportunistic buyers...not so good...loyalty is eroding.
  • The salesman instead of manning the phone, can stay in touch with his customers with his business Facebook page, his business Twitter account, his business Pinterest account...Wow this is a lot easier than making a gazillion calls a day.
  • The salesman can communicate his experience with his "demo"...what a great way to do a "walk around".
  • The salesman is in constant contact with all his customers and prospects...Wow...this is easy all of a sudden.
  • The salesman connects with a customer/prospect in a meaningful fashion that resonates with the customer prior to visiting the showroom...pre qualifying before they walk in.
  • The salesman can do most of the paperwork prior to a customer arriving in the showroom...yes its getting there, from credit apps, to contracts.
  • The salesman can offer his trade in..."Just took in trade a great XYZ that I sold new..."
  • absolutely threatens the current centralized showroom management process.

This old school salesman (dinosaur) quickly understand that its easier, can sell more, and make more money.

The dealer quickly realises that he must revert to an older system where the salesman has dramatically more latitude, and his entrusted with constantly communicating with customers.

The customers/prospects love the salesman, love the dealer, appreciate the relevant conversations, and tell their friends of their experience. 

Yes...its all hiding in plain sight.

In a meeting among dealers, a comment from a peer "You mean, you are actually letting your sales consultants engage with customers and prospects?"..."Just like the good ole days".

Then a stranger in the back of the room comments "Like the good ole days, but empowered by technology...simple and brilliant."

We will continue...

In case you missed:

Social Selling>Part 1

Social Selling