Automotive News - May 19, 2008 - (Page 14)

14 • MAY 19, 2008 Farley’s smart to value Ford’s heritage Efforts to move brands upscale can backfire Dave Guilford Every time I hear Jim Farley’s take on the Ford brand, I marvel at how rare it is among automotive marketing people. Farley is Ford Motor’s chief of marketing and communications. In his view, the Ford brand’s mission is to be populist, democratizing technology by bringing it to mainstream buyers at a reasonable price. That may sound like common sense, but it’s uncommon among marketing executives for midmarket brands such as Ford. More often, marketers seem eager to shed a middle-market heritage and — here’s the dreaded phrase — take a brand upscale. The list of brands that have tried this recently includes Saturn, Hyundai, Volkswagen and Subaru. It hasn’t worked terribly well. Volkswagen and Subaru backed away from the goal after finding their core buyers resistant, although VW seems to be taking a second run at it. Saturn and Hyundai have only just begun to experience what they’re up against. The allure of aiming upmarket is easy to understand. Perhaps your company makes solid, everyday vehicles. Perhaps you can cite data to prove that the quality of your vehicles is as good as that of premium brands. Perhaps your margins are being crunched by the weak dollar. So why not throw some leather and an arena-worthy sound system into the cars? Surely you could harvest that extra $5,000 per car that the posh brands get. Actually, you probably can’t — at least not easily or quickly. EDITORIAL STAFF 313-446-0361 E-mail autonews@crain.com Web site www.autonews.com Keith E. Crain Publisher and Editor-in-Chief Peter Brown Associate Publisher and Editorial Director DETROIT 313-446-0361 Fax: 313-446-0383 1155 Gratiot Ave. Detroit, MI 48207-2997 David Sedgwick Editor dsedgwick@crain.com Edward Lapham Executive Editor elapham@crain.com Richard Johnson Managing Editor rjohnson@crain.com John K. Teahen Jr. Senior Editor Mary Beth Vander Schaaf Deputy Managing Editor Charles Child International Editor David Kushma Retail Editor Dave Guilford News Editor Philip Nussel Special Projects Editor James B. Treece Industry Editor Karen Faust O’Rourke Insight Editor COPY EDITORS: Bob Allen, Tom Fetters, Patricia C. Foley, Kenn Jones, Gregory Skwira Susan Zavela Bamford/Graphics Editor Rick Kranz/Product Editor REPORTERS: Leslie J. Allen, David Barkholz, Mary Connelly, Ralph Kisiel, Jamie LaReau, Arlena Sawyers, Robert Sherefkin, Richard Truett, Bradford Wernle, Amy Wilson Mary Raetz Director, Automotive News Data Center Debi Domby, Camille Pippen Research Assistants Dan Jones Office Manager Robertta Savage Editorial Assistant Corinne M. Price, Michael Garrison Information Center LOS ANGELES Mark Rechtin/Bureau Chief 310-739-8009 Fax: 310-832-6362 Kathy Jackson/Reporter 323-370-2481 Fax: 323-655-8157 6500 Wilshire Blvd. Los Angeles, CA 90048-4947 NEW YORK Diana T. Kurylko/Reporter Phone/fax: 908-273-6059 dkurylko@crain.com WASHINGTON Donna Harris/Reporter 540-668-7295 Fax: 540-668-7296 Harry Stoffer/Reporter 202-662-7212 Fax: 202-638-3155 814 National Press Building Washington, DC 20045-1801 MID-SOUTH Lindsay Chappell/Bureau Chief 615-371-6654 Fax: 615-371-6655 April Wortham/Reporter 615-371-6617 104 East Park Drive, Suite 315, Brentwood, TN 37027 TOKYO Hans Greimel/Asia Editor +81-3-3828-9060 Fax: +81-3-3828-9061 hgreimel@crain.com Yurakucho Denki Bldg., 20th Floor 1-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006, Japan SHANGHAI Alysha Webb/Bureau Chief +86-21-6226-9485 Fax: +86-21-6226-9483 alyshawebb@yahoo.com TURIN Luca Ciferri/Reporter lciferri@craincom.de +39-011 961 0194 Fax: +39-011 961 0113 Viale Cavaglia, 8 10029 Villastellone (TO) Italy STAFF CORRESPONDENT: Eric Freedman/Legal file, 517-337-0269 www.autonews.com DETROIT Victor Galvan/Web Editor vgalvan@crain.com 313-446-0345 Scott Kennedy/Multimedia Editor comment Dave Guilford is news editor at Automotive News. do one cool car or one memorable ad campaign and change a brand image. A former marketing person for an Asian automaker once told me that Honda and Toyota spent a decade patiently stretching the Accord and Camry up to the $28,000 range for high-end models. Phaeton’s failure By contrast, VW found out that its Phaeton, at a $68,655 base price, was too expensive for its loyalists. Meanwhile, buyers who could afford the Phaeton didn’t want a VW logo on the grille. That VW had put together a very credible car was irrelevant. It makes you wonder about the marketplace reception for a loaded Saturn Outlook that breaks the $40,000 barrier or a $30,000 Hyundai Genesis. The leap isn’t as big as VW’s, but those vehicles still stretch the boundaries of the brand. That’s a dicey proposition. When stretched too far, the boundaries of a brand tend to snap back into place. As tempting as premium pricing may be, if your business has been selling moderately priced cars to people of moderate means, that’s likely to continue to be your business for some time. That’s why Farley is wise to work within Ford’s identity rather than talk about glitzing up the brand and jacking up the sticker price. You may e-mail Dave Guilford at dguilford@crain.com To marketing exec Jim Farley, the writer says, the Ford brand has a populist mission, bringing technology to mainstream buyers at a reasonable price. trates a life-is-not-fair law of automotive marketing: Everyone wants to be BMW, but not everyone gets to be BMW. Discussion of brand images lends itself to hot air. Sometimes when listening to marketing types talk about brand DNA, psychographics and the like, I half-expect someone to divine the future from the entrails of a chicken. But despite the dubious jargon, one marketing truth is real: Brand images are powerful. They’re sticky. They’re like that piece of tape that you can’t get off your fingers. And that’s true whether the image is one that you shrewdly constructed over decades or one that you just sort of slid into. Once a brand’s identity gets fixed in the public’s mind, it is extremely hard to dislodge. Smart, appealing advertising doesn’t seem to do it. Building better cars probably will, but even that doesn’t work quickly. Brand images move in terms of decades or generations. It’s revealing that people still say “this is not your father’s” bourbon or lawn mower or whatever, forgetting — perhaps never knowing — that the original advertising tag line was “not your father’s Oldsmobile.” Think about that. The ad campaign was meant to move a brand image — and we all know what happened to Oldsmobile. You can’t just snap your fingers or BMW envy I think of the urge to take a volume brand upscale as BMW envy. It illus- Absurd logic in the U.S., cowardice in Germany Guido Reinking The new corporate average fuel economy standard mandates a 40 percent increase in U.S. car and truck fuel economy by 2020, to an industry average of 35 mpg. The new standard will determine a vehicle’s allowable fuel consumption by its footprint. The footprint, roughly, is the area bounded by the four wheels. That means vehicles with a long wheelbase and a wide track, such as a Ford F-150 pickup, will be allowed to consume more fuel than smaller vehicles, such as a Porsche 911. Editor’s note: Here’s a European view of the way the United States is handling the CAFE standard. comment Guido Reinking is editor of Automobilwoche, a Crain publication that covers the German auto industry. sionary leadership either. A proposed carbon dioxide-based vehicle tax couldn’t survive objections from the Bild newspaper and ADAC, Germany’s largest auto club. The entire federal government tipped over like a line of dominoes after Bild discovered that owners of older vehicles with poor exhaust scores and high CO2 emissions might have to pay 87 euros (about $135) more a year in vehicle taxes. How small-minded, how cowardly can the politicians in Berlin really be? This is no doubt the low point. Germany’s federal government in Berlin isn’t a stellar example of visionary leadership either. The auto industry would do well to expect little else from the government to help the climate and improve economic conditions. In the United States, politicians are at least pursuing a specific, albeit shortsighted, practical rationality. The goal is to help the domestic industry, including the hundreds of thousands of workers in U.S. auto factories. In contrast, I am no longer able to recognize any system whatsoever behind Germany’s climate and transportation policy. You may e-mail Guido Reinking at greinking@craincom.de Absurdities Consider some of the absurd consequences. Under the new rules — assuming the automakers continue to produce vehicles of the sizes they now build — Mercedes’ cars must achieve better average fuel economy than Toyota’s. BMW’s light trucks must get 4 mpg more than those built by General Motors. And Porsche must average 41.3 mpg, about 7 mpg better than Toyota, Lexus and Scion cars collectively. It’s clear what the Americans intend to achieve with this. They aim to protect the domestic industry, including the U.S. plants of Toyota, Honda and Nissan, from importers that primarily sell smaller cars. The domestics specialize in light trucks. But this pill will prove poisonous to GM, Ford Motor Co. and the rest. In the future, it will lead them to build vehicles that won’t find an appreciable market anywhere outside the United States. These include light trucks with questionable safety standards and pathetic fuel economy and use of space. Germany is no better But Germany’s federal government in Berlin isn’t a stellar example of vi- http://www.autonews.com http://www.autonews.com

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Automotive News - May 19, 2008 Ford eyes smaller F-150 cousin Sonic: Mercedes tries to 'extort' store upgrades Chrysler seeks 25% slash in parts prices Dealership managers pushed Chrysler's latest incentive Crain names 4 new VPs Automotive News staffers win Wheel Awards GM will keep cutting sales to fleets GM studies the future of full-sized trucks American Axle plans to expand in Asia At Lexus, the sales laggards are cars VW positions Tiguan as 'GTI' of small SUVs Tata enters race for 100-mpg car Harley Earl was the daddy of auto design Focus will follow Fiesta as a global vehicle Lexus shows how it sweats details Industry slows tide of state CO2 rules Chevy tweaks Cobalt to add fuel economy Be careful; don't do anything dumb Looking ahead to different industry They thought they knew everything Cerberus doesn't belong in autos Dealers as scapegoats Smart, steady growth works best for suppliers Farley's smart to value Ford's heritage Absurd logic in the U.S., cowardice in Germany BMW, Daimler keep a wary eye on U.S. economy James Franey Dealers' approach can lessen pain of staff cuts GM plans to distinguish Opel with image makeover Make or buy? Software can estimate costs for company Honda, Toyota see robots in their futures Bosch aims to lead in hybrids technology King of hearts Clarke aims to get GM back on track in N.A. Fields navigates Ford through 'white water' LaSorda steers Chrysler's global ventures Toyota's Lentz: A crash course in hard times Truck sales fall 13% in April Modine sells Thermacore unit Alcoa to close Mexico plant Toyoda Gosei expands in Mexico Hayes Lemmerz plans to close Georgia factory Japan's sales slide 2% in 1st quarter; output climbs Dealers Hyundai let U.S. direct Sonata freshening After .com and .edu, is it time for .car? Panoramic sunroof of Lincoln MKS boosts Inalfa sales Chrysler hedged gas price bet Smart phones help dealerships retain customers CAW completes pacts with GM, Chrysler early GM, UAW resolve 2 disputes New media buyer for Chrysler Visteon names Stebbins CEO Convertible registrations drop Ferrari: From denial to debut Buildings Porsches in U.S.? Depends whom you ask Toyota will go slow in Tupelo Ghosn is glum on prices, U.S. sales prospects Pischetsrieder has earned a celebratory cigar NHTSA spins VINs, averts meltdown F_RD GU_S WI_ BUI-_KS 50 PEOPLE FOR 50 YEARS Yutaka Katayama Clarence Talley Jim Morton Pete Brock Marvin Runyon Yoshikazu Hanawa Bill Bruce Shin Maki Jack Collins Mitsuya "Scape" Goto Bob Link Soichi Kawazoe Jerry Hirshberg Takashi Ishihara Roy Rogers John Parker Bob Thomas Teruo Uchino Morrie Sage Bob Thomas Nobe Wakatsuki Earl Hesterberg Carlos Ghosn Lee Clow Jerry Benefield Yutaka Kume Doug Betts Tim McCarthy Jed Connelly Atsushi Nakatsuji Dave Hubbard Joe Opre Patrick Pelata Yoshiyuki Kimura Diane Allen Mad Mike Taylor Chuck King Larry Dominique Mark Igo Mitsuhiko Yamashita Shiro Nakamura Tom Mignanelli Dick Roberts William Cushing Emil Hassan Chester Luby Jane Nakagawa Louis Schweitzer MR. K Ray Lemke Richard McCutcheon

Automotive News - May 19, 2008

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