As most people know by now, we are in an economic recession. If you didn’t then you can consider yourself informed. The big three have had their time in Washington and after a fairly embarrassing time, not exactly of their own fault, they were allocated a set amount of TARP funds to help them stay on their feet.
-Ford said they didn’t need it and were doing alright, but said thanks anyways.
-Chrysler took it and ran full page thank you ads in major newspapers costing somewhere around $500,000.
-GM then took out a full page apology letter ad in Automotive News.
So there is a trend in this pattern that I see and I think others do too (unless you live in Detroit apparently). I don’t know that the problem is with the housing market, or recession, or with inflated gasoline prices. I think that the problem here is with old companies having a difficult time staying relevant in today’s modern market. Globalization is happening faster than people know what to do with it. The internet and instantaneous news have become a part of our daily lives. People hear global information before there is time to even process what that news means. With that being the type of world we are living in, business has to change.
Sure American’s love their big cars, the sound of a V8, watching race cars go ’round in endless circles, k trucks, and their Escalades, but they also love their money. When you turn on the television, or the radio or read the news online, the one thing that you are certain to hear is that there is an incredible shrinkage of peoples money. 401ks are falling. Gas prices had tripled (and will again), and there are more and more people out of work and losing their houses. I said that I don’t think that the Big 3 are failing because of any of those reasons, and they aren’t exactly. The problem is that people love their money and while they are willing to spend it (look at Walmart’s earnings reports) they don’t want to throw it away. People feel that by putting money into giant, gas guzzling vehicles made by companies that don’t know what to do with free money that they might be making a bad financial investment.
People still like all of the same kind of vehicles that they always have. They just aren’t willing to shell out the money for them if gas prices are going to jump back up to $4.50 a gallon this summer. It seems like Chrysler has been asking the wrong questions of the wrong people. These companies don’t seem to understand that people actually do pay attention to their fuel economy. Chrysler’s has created 4 or 5 vehicles on the same massive platform with a huge 5.7L or 6.1L V8 that get 16mpg in the city. Even the V6 option only gets 17mpg in the city. Everyone goes gaga over them at the auto shows, because they look nice. (I am talking about the Challenger here) Unfortunately, they just aren’t that functional for the day to day when people drive 30+ miles a day. Especially if gas is high. Same thing with the jeep brands, or Chrysler’s trucks. They all have huge engines and terrible gas milage.
That’s a design?
Why in the world do companies design and then green light cars that look as bad as they do. The Chrysler keeps putting what looks like an 80′s luggage rack molded into the hood of the Sebring and former Crossfire. GM is just as bad. Many of their cars have almost no styling at all. You can give a car new name *cough Cobalt* and add some round taillights doesn’t mean isn’t still a Cavalier. In fact I could likely make fun of most of the cars that Chevy currently has out. Just like I can make fun of the Chrysler brand. There are other brands that they run that do look decent. Dodge has some very nice looking car, as does Pontiac this time around.
My point is this. These companies are not paying attention to what people really want. They are following the trend that other companies are setting 5 or 10 years prior and now that times have gotten tough for a number of compiling reasons they are feeling the pain of their decisions. If you want to survive you have to compete. Obviously that means you need to innovate and start appealing to the consumer. If you please the consumer you will in turn please the stock holders. It doesn’t EVER work the other way around.
You will notice that I haven’t been to hard on Ford. I think that they have a pretty well rounded line-up regarding fuel economy and styling. I am going to let them slide. Ford also has a dedicated person to answer questions and listen to what people are saying online.
I don’t want to see any American companies fail. But I do want to see them overhaul their method of thinking. We are watching very closely. Don’t give up guys. You can do it.photo credit to flickr user burnworks