Automotive News - June 2, 2008 - (Page 12)

12 • JUNE 2, 2008 opinion Rising gas prices have changed the U.S. market Chicken Little is finally right. Thanks to rapidly rising gasoline prices, the automotive sky is falling. Ill-prepared automakers that failed to hedge their product lineups with small, fuel-efficient vehicles face being crushed by a change in consumer demand. For years, environmentalists and others concerned about our nation’s reliance on imported oil have preached the need to improve automotive fuel economy. To automakers that For years, were busy reaping profits from environmentalists the sales of big SUVs and pickups, it must have sounded more and others have like the humming of gnats than a prophetic voice crying in the preached the need wilderness. But now there can be no misto improve take because the market has automotive fuel changed. In the first four months of the year, retail sales of basic economy. compact cars rose 35.3 percent from the year-ago period, while sales of large pickups and SUVs suffered double-digit declines, according to the Power Information Network. And that was before the big run-up that drove the price of gasoline well past $4 a gallon and pushed diesel fuel toward $5 a gallon right before Memorial Day weekend. Right after Memorial Day, some 90 percent of the U.S. dealers who had responded to an unscientific Automotive News poll reported that consumer demand for fuel-efficient vehicles has increased since the beginning of the year. Nearly two-thirds said the factory isn’t supplying the mix of new vehicles they need to meet that demand. Collectively, the Detroit 3 seem to be having the toughest time adjusting their model mixes to accommodate demand. They relied too long on profits from big, fuel-inefficient trucks, often citing consumer preferences for gargantuan vehicles. But while the biggest demand shocks have been recent, there have been warning signs for years that consumer tastes were changing. Since early 2004, demand for four-cylinder engines has grown steadily, according to Power. Four-cylinders represented less than 30 percent of light-vehicle sales in March and April 2004 but more than 45 percent in the first half of May 2008, Power says. Just a few months ago, some auto executives worried that new federal fuel economy standards would be tough to meet. But if fuel prices continue to escalate, consumer demand for fuel-efficient vehicles could make mileage mandates irrelevant, and that’s how it should be in a market economy. Mercury has been part of Ford Motor Co. since the 1939 model year. Seventy years is a long time for a brand in the car business. During those 70 years, Mercury has seen some ups and downs, and now it looks as if it’s fighting for its life. Mercury needs a leader. That’s one of the problems with modern car companies. Frequently, there is no one person who is the rallying point for a make. All too often, it languishes by the side of the road. If there is any doubt that Mercury should stay with Lincoln, the folks at Ford should take a hard look at what happened when General Motors killed Oldsmobile. It was not pretty, and it cost GM millions of dollars to dig itself out of that mess. GM discovered that in addition to the tough state franchise laws across the nation, many Oldsmobile dealers were dualed with Cadillac. Even if they weren’t DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Mercury deserves a better chance selling a lot of Oldsmobiles, they were keeping the back shop busy with service work that was bound to disappear when the franchise was killed. Whether or not Ford executives realize it, there is a loyal and strong following for the Mercury brand, far larger than it deserves. But that has been a problem for all Ford Motor brands, so it has to be fixed for every one. Mercury had a strong image at one time. It was an image of performance, and it kept Mercury at the forefront for many years. That might be the image that Mercury needs today — not necessarily the highest horsepower but the best performance. That could mean the best mileage or handling or safety. But it would put Mercury a notch above Ford, and it would be a nice fit with That might be the image that Mercury needs today — not necessarily the highest horsepower but the best performance. Lincoln, which seems to be enjoying a resurgence with its newer design. There is a long way between Ford and Lincoln, and there is no reason that Mercury couldn’t fit snugly between those two brands. Keeping or killing a brand is a huge decision, and there always are many good reasons to do one or the other. Mercury has a strong customer base with a loyal dealer body. Its dealers need product. Give them some product, and then give them some time before you pull the plug. wake up years later and wonder where your profits and market share have gone. KIM JOHN CRUMB Chief Results Officer Sandler Training Minneapolis The writer works in sales communication training. Buyers didn’t quit GM; GM quit on its buyers To the Editor: I commend Dave Guilford on his May 19 column. It is a breath of fresh air. Coming from a large family of General Motors buyers I can say the market has not moved away from GM; GM moved away from its customers. In 1986, I bought an Olds Ciera wagon. That was at the height of Oldsmobile sales. Not long after, Oldsmobile became overly focused on its demographics, and in less than two decades it was history. In my mind if you sell a few hundred thousand vehicles, you should not move away from your customer base in a wholesale change of direction. As Guilford noted, the proof of that error was in how it played out. Now GM has done about the same thing with Buick. If its quality ratings and impact in China weren’t as good as they are, Buick would be gone. Where is the continuity of models, the heritage of the line? There is little choice left. You want a convertible, a station wagon, a two-door pillarless hardtop? Go somewhere else. My family bought all of those models and more in multiples across the entire GM spectrum for more than six decades. We were abandoned. What a loss. The industry, with a large portion of its customers making buying decisions based on emotion, desire and brand loyalty, should have done a much better job with its marketing studies and kept car guys highly involved. We all knew what a Chevrolet or a Cadillac was. Working up the ladder carried prestige. Now, vehicle identities have become blurred, and some are almost meaningless. Mercedes and see LETTERS, Page 14 THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Marketing and sales: Context and content To the Editor: Brilliant column by Dave Guilford, discussing the impact of Jim Farley moving to Ford and his changes of direction (“Farley’s smart to value Ford’s heritage,” May 19). I often wonder about the confusion between marketing and sales in the business world. Farley understands the difference. Marketing is everything that you do so that when you present a sales opportunity to your prospect, he or she is inclined to listen. It provides one crucial thing: context. Sales are all the nuts-and-bolts activities: distribution; pricing; delivery; product-specific ads; communications, including face-to-face negotiation, etc. Call it content. Failure to do complete context work (marketing) makes the sales job (content) far more difficult. Of course, Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. marketing is a long-term, upfront investment. There is no instant gratification in this quarter’s numbers. That investment has been sold out so many times, but not by Farley. Hey, it’s easier to do a content sales incentive gambit, slap some cash on the hood to move the metal — now. It’s fine until diminishing returns set in, and you autonews.com Did you know that you can write a letter to the editor on our Web site? Here’s how. Go to www.autonews.com. At the top of our home page, put your cursor on the tab that says “Opinion & Feedback.” Click on the section below that says “Send us a Letter.” That will bring up a letter form. 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Automotive News - June 2, 2008 Gas prices fuel industry's new era Chrysler faces tricky dealer mergers Honda may crank out more Civics in N.A. Mercedes will move into Chrysler Pacifica studio Ford to offer hatchback version of Fiesta Prestige Automotive sells stores but keeps Black Enterprise top spot Dealership marketers take to text messaging Senate to hear personal pleas on roof crush rule Magazine: Chrysler, Fiat are talking Former Fla. dealer gets jail for bilking bank That guy Alfred had possibilities Ford will make next Mustang look smaller Pontiac subcompact may come to U.S. GM: Battery glitch cuts hybrid sales Porsche exec: CAFE 'will not change our nature' Japanese rivals race for lithium batteries Jatco boosts CVT capacity in Mexico for N.A. vehicles Mercury deserves a better chance Rising gas prices have changed the U.S. market Marketing and sales: Context and content Mexico's Nemak grows beyond North America Buyers didn't quit GM; GM quit on its buyers Brand perceptions change slowly Bloggers are journalists, too Nice HQ, Nissan, but where's Nobe? Chrysler's Chernoby: Growing up gearhead Picture this Mitsubishi hopes new gearbox widens Evo's appeal Openlane gets funds Obituaries Survey: Going green can get your auto ad noticed Inrix: Router can reduce traffic delays Mazda6 gets own platform for U.S. ... sort of Mazda6 set to take on mid-sized sedan heavyweights Troubled or not, the United States still beckons What's next? More transplant models headed this way Exports help as Mitsubishi sorts things out Irma Elder: 'This is one of the toughest times we have had' Fitzgerald: Dealers, consumers need alliance Can Bertone design a comeback? Family-owned business struggles for survival Some design houses fall on tough times Hughes: Not a subscriber? No problem American Axle lines up new non-U.S. business GM think tank works to boost service business Toyota offers gas card as tire incentive VW turns to common software to develop products Continental's Calif. office targets Asian carmakers ZF sees chassis, axle opportunities in N.A. Flex: A new Ford image ... or just over the top? Ford targeted Flex interior quiet, ride Ex-dealership managers say firings were over religion Dealers Genesis in Toledo: It's a long story Back woes sideline Nardelli GM: 19,000 take buyouts Panama to head Nissan Mexicana Wilhite jumps to Jumpstart Dauch sons move up, out Kozyra leaves Continental Ford to lay off salaried staff More small cars to arrive in 2009-10 Even on used market, big trucks go begging Auto advertisers adopt mpg mantra Industry to motorists: We're here to help Diesel prices hit suppliers' Mexico sites Can Camry catch F series? Leno's words of wisdom for automakers Nissan's carbon credits ease global warming guilt Automotive CEOs' pay pales next to peers' Year of the Small Car can't come too soon Foreign suppliers adding capacity in Southeast From cows to kimchi: Making Alabama sweet home for Koreans After light-truck push, cars are king again Mexican suppliers expect sales record in '08

Automotive News - June 2, 2008

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