Entries in Auto Industry (101)
By now you have probably read that Sergio Marchionne of FCA has been knocking on a few auto industry CEO doors seeking at minimum collaboration deals.
Below is the presentation that is spurring the door knocking.
If you have an interest in the auto industry the presentation provides insight on the platforms that all manufacturers use in their quest to save costs.
If you are conducting business in Canada its a must read.
This annual landmark report explores how the prevailing trends in in web usage, multi-platform engagement, online video, and digital advertising are shaping the Canadian marketplace and what these trends mean for the year ahead.
Back in the golden days of the auto business when personalities and egos were expected, and often delivered. Do we really need to mention names?
These guys back then, right or wrong had an innate understanding and knowledge base of the auto industry and business. Compared to today there was a minuscule media bubble around the auto industry. At the time the social autosphere did not exist.
Fast forward to today, the individuals in the auto business have subdued public personas, while the social autosphere is constantly expanding and evolving.
Here is the deal:
There remains a lack of leadership, accountability, populated by sidestepping, supported by reasoning that often defies gravity. This often captures the attention of the autosphere for a few fleeting moments, before its lost or superseded by another story which is more timely and might capture a few additional eyeballs.
In the autosphere its the superficial opinion often supported by a catchy headline (you need the headline for the eyeballs). When the opinion is discussed or questioned, the ensuing discussion is often deflected, since there is little "real" knowledge to corroborate and support the opinion.
In the business arena its the project that goes forward at a glacial pace, speeds up to a snails pace, while never getting into real time. It begs the question "Who owns this sh&t?"...which often is deflected with a seemingly rational explanation of various stakeholders, acronyms, and teams. While never answering "who owns the sh&t" or who is going to make it work.
Leadership, teams, teamwork, contributions, knowledge workers, the "thing" gets bogged down, and its easy to double back and distribute the ownership of the sh&t. To the point of "this broke while the team member was in the bathroom"
Think about this...who in his right mind is going to step up (lead) and own the sh&t while potentially jeopardising their mortgage payments?
Yes...we agree the Peter Principle remains enduring.
If you have been in the auto business long enough you hopefully remember from a few decades ago the movement to rationalise the number of models that were offered by a make. At the time the rationale was the Europeans and Japanese have less models.
Back in the day, Chevrolet as an example had a myriad of models and body styles, the same for Ford, and Chrysler. The thinking was to cut back on the number of models, to stop trying to fill every minute segment of the market, while selling more vehicles, and improving profitability.
The Japanese had dramatically less models, and were inexorably gaining ground.
Once the models were rationalised, the focus shifted to decreasing the number of platforms. When you hear that a manufacturer has gone from 15 to 5 platforms. You can conclude that they are saving money while increasing profitability.
You also remember when models had an actual name, and not an alpha numeric (alphabet soup) nomenclature. Today the names are still around, Impala, Taurus, Camry, Accord, Elantra, to name a few. While the alphanumeric also thrives and seems to gain in disciples. A few examples, 3 Series, X5, CLA250, RX300, CTS, A3 to name a few.
From a manufacturer identification most vehicles have a body/platform identification; its a B Body, a W222, and a model designator its a 7BL57, 1BP67.
If you get the feeling that the model designators are creeping as "marketing" model names that are used to identify the vehicles in the market, we agree with you.
If you get the feeling that some manufacturers are establishing a parallel model line up with even more alpha numeric identifiers, we again agree with you.
Not only do the additional alpha numeric names confuse, you have to ask if they do not also dilute.
This business that constantly pushes the envelope, 1 is good, 2 is better, and 3 might be too much; with a fine line between 2 and 3.
If you think that some manufacturers are close to, or even past the 3, be patient it will be clearer in the following months. Its the classic case of sell 10 with 3 models, sell 12 with 6 models, sell 13.5 with 8 models. The sales are increasing along the the complexity, confusion, dilution, and perhaps even values.
How could you not notice the spate of recalls this year...perhaps its the year of recalls with over 50 million vehicles being recalled for one reason or another.
The auto industry went global decades ago, suppliers have a global foot print, cost saving is a global undertaking. Its a potent mix...with a gazillion variables.
You have to wonder if the customer is not completely recall jaded at this point.
The 2 cent part, the factory on the other side of the planet, the cost analysis, and some spread sheet jockey splitting hairs. It all makes for exciting times.
One way to save money is to develop common parts, and components. What the customer does not see could be generic to several manufacturers.
A generic airbag hidden in a steering wheel, or behind the dash on the passenger side can be used by several manufacturers, and made in the millions. Now make the same air bag in a low(er) cost area of the planet to save further money.
This is the new reality of some recalls, with several manufacturers, and millions of vehicles impacted.
While customers become increasingly recall jaded.
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?