In many neighborhoods, few kids get out on Halloween to shake down their neighbors for candy and other treats. For many years, local police have offered to scan Halloweeners’ loot to look for razors and other foreign objects. In reaction to the potential threats to children, many schools and neighborhood organizations sponsor Halloween parties to prevent predation of children by the thousands of evil adults who would harm children on this most hallowed and cherished evening for kids.
Despite all the hype the family vehicle will endure
So, how many children have been harmed or poisoned by evil people? According to author Lenore Skenazy in this past Wednesday’s Wall Street Journal over the many decades the population has been on alert to battle the threat of tainted Halloween candy, a total of zero children have been harmed. In fact, according to Joel Best, a sociologist at the University of Delaware, the only child ever killed by consuming candy according to his research was a Texas boy poisoned by a Pixie Stix. He got the Pixie Stix from his father, who poisoned the boy for an insurance settlement. The man was convicted and executed.
Despite the facts, many people firmly believe in the danger lurking in tightly wrapped, factory sealed candy tidbits passed out by generous people in the subdivision. What people believe is not necessarily what is true.
On a more day-to-day basis, I’ve often noted slow downs on the freeway or surface streets, either by looking ahead or by hearing about traffic tie-ups on the various radio stations. After hearing or seeing about these traffic jams, I am frequently able to change my route and bypass many hundreds of motorists by taking an alternate.
Most often on a daily basis, how many times have you seen a befuddled driver either tip toe around or come to a complete stop without any reason at a roundabout? People who calmly and simply navigate the notorious “Michigan Left “ (turn right to go left) are completely perplexed by the simple and elegant roundabout, which after all is nothing but a slightly simplified Michigan Left.
Each one of these examples, of overly worried young parents and of clueless drivers, and any number of cases (watching reality TV?, otherwise responsible people voting for John Dingell, the unfathomable attraction of most of popular “music”), challenge the newly revived belief in free markets and individual choice, as opposed to government centrally mandated “choice”, as what was supposed to happen after the 2008 election and financial market meltdown that meant the demise of capitalism.
How can markets be better predictors of outcomes than the wise and educated elites, especially when the mass of individuals that make up the market continue to make such unwise choices? Just see Michelle Obama’s angst at the universal popularity of McDonald’s. How can the market be trusted under these circumstances?
As automotive marketers and product planners, how can we produce the vehicles society needs to be more eco-friendly and responsible as defined by our leading policy makers, when people when given untrammeled choice (and low fuel prices) run out and buy Hummers and Suburbans and Expeditions? Don’t these people know what’s good for them? Is it good for the planet to make more minivans so that soccer teams and dance classes can be shuttled over to fast food drive-ins for third world produced meat patties and carbo loading?
Well, it may be time for everyone to step back and get back to first cases.
If a tree falls in a forest and no one is there to hear it, is there a sound? Ultimately, and perhaps unfortunately for the wise policy makers, what is perceived is reality. New York’s Robert Moses was transfixed by a vision of the future. People were to live in sterile high rise complexes and commute along pristine expressways. In New York in meant taking an expressway through Brooklyn, uprooting thousands. In Chicago, copycat urban planners built Cabrini Green, which became a classic hellhole. In Detroit this benevolent urban vision brought us projects like the Jeffries, where Diana Ross, Cyndy Birdsong and Florence Ballard sang desperately in order to escape. We also had Herman Gardens and Brewster. In Detroit, these experiments in urban living are being dismantled. The recipients of the public largesse somehow just didn’t appreciate the joys of public housing.
The perception of urban planners did not match the perception of the people meant to live in the projects the planners created. Guess whose perception was reality?
In this way, what sort of vehicles will we drive in the future? How does that compare (or contrast) with the cars we will want to drive?
As the “Business of Plugging In” conference was going on in Detroit, the blogosphere was full of people expressing their disappointment in GM in that it was revealed that the Volt carries a mechanical connection between the small internal combustion engine and the wheels. In other words, it wasn’t “pure” electric. Do the EV zealots and their perception carry, the day against the entire market, most of which will probably be turned off by the Volt not because it doesn’t adhere to Electric Vehicle orthodoxy, but because it costs too much and has only four seats.
Policy makers are busy determining that the average vehicle for sale in the US by 2016 must achieve 36 mpg. Aggressive policy makers are eyeing 50 or 60 mpg by 2025. What will those cars look like? Will the Mom of the 21st century be able to schlep her progeny and her son’s and daughter’s friends to Quidditch or its equivalent’s practice?
Like the station wagon, the minivan, and the SUV before it, the underlying needs will be there, the question will be will the auto industry be permitted to match the perceived value mothers will have in only 15 short years?
There are a couple of lessons to be taken. One is that some of us may be enlightened and manage to be “smarter” than the market as a whole. We studied the market or the environment and manage, like a commuter in a hurry with a few decades of alternative routes tucked away in memory, to be a bit more agile than everyone else. So what? The mass of people may be frustrated by the choices they have, but on the other hand, they are ultimately resigned to whatever happens. If you are not aware of faster or more efficient routes, then the reality of getting stuck in a traffic jam is just that – the reality.
The other lesson is that the enlightened, for all their intelligence and education, may not present a future that its anymore satisfying than what the mass of people choose for themselves. Look at how airless and sterile the vision of Robert Moses turned out to be. Just as the projects turned out to be crime infested, soulless and unlivable, how will the “enlightened’s” vision of EV’s and small urban vehicles, square with the entirely predictable need for parents to shuttle troops of children to various events and activities?
What people believe in, whether it’s dangerous Halloween candy, or global warming, or EV’s or fear of roundabouts, may not always be able to be predicted with certainty. On the other hand, irrational fears or attitudes can be predicted to always exist. No matter what, though, auto marketers and product planners will always need to be able to navigate the Scylla and Charybdis of both transportation and societal reality versus the fantasy world of policymakers and politicians.
After church this afternoon, my daughter Kate and I decided to have a little brunch. We went to Village Kitchen on Ann Arbor’s northwest side. Outside the door a sandwich sign was propped up with the saying,
You Come
You Eat
You Like
You Come Back.
Perhaps no better summation of “Marketing 101” has ever been made. Derrick Kuzak, Ford’s product development chief (and fellow Harper Woods Notre Dame alum) made a similar point speaking at the high tech Convergence conference this week in Detroit. With Mr. Kuzak speaking at a technology-oriented conference, the Automotive New headline writer understandably got it slightly wrong when he (or she) wrote, “New technology in cars brings 14% more revenue, Ford product boss says.”
What fellow Notre Damer Derrick Kuzak said was that about one-third of Ford’s 14% improvement in average vehicle revenue could be ascribed to technology. The rest of the gain was roughly one-third due to “improved pricing” and one-third towards customers opting for “pricier trim levels” according to the Automotive News.
Ford’s recent gains in profitability and market respect have been driven, as evidenced by Mr. Kuzak, by per-vehicle revenue enhancements. Which is a geeky way of saying Fords are now cool. Cool to drive, cool to park in the cul-de-sac. Cool to brag about when people ask about your new car.
This is the summary of “You come, you eat, you like.” As marketing is the art of creating satisfied repeat customers, you end up with, “You come back.”
I wish I could ascribe Ford’s product ascension to this blog, but while I have been advocating revenue-based profitability for many years, I will confess that Mr. Kuzak, despite out mutual east-sider backgrounds, is not a Chrome Sweet Chrome subscriber. His product vision was forged during his tenure as product chief in Europe, where Fords gradually became more and more desirable with each new product introduction.
We see the same today, as more and more people comfortably admit that a “domestic” vehicle more and more matches their needs and lifestyle. Mr. Kuzak’s speech at Convergence, though, does represent a continuing change at Ford and within the industry as a whole. Revenue is seen more and more as a path to profit, and I couldn’t be more happy. “Revenue-siders” can lead to the industry’s continued revival, as the previous “we can cost cut our way to profitability” crowd gives way.
While I wish I could take the credit for the change of heart regarding Revenue versus Cost Cutting at Ford, I will admit to being part of the general discussion that has stopped automatically looking to take costs down via building less desirable vehicles, squeezing suppliers, and shedding employee costs and benefits.
Having “won” this debate as the Fiesta has shown ultra small cars (“B” segment) to be cool and desirable and the upcoming and more market mainstream Focus is introduced over the next few months, we see a change of heart in the domestic industry. Over at GM, for example, the new Cruze hopes to capture both hearts and pocketbooks via higher content and better product configuration. Over at Chrysler, the plans for a replacement for the sad Sebring and Avenger product lines are taking shape.
In some ways, the new consumer-friendly attitude on the part of the Domestic OEMs is like the rise of the Tea Party movement. That is, the needs and desires of ordinary folks are taking precedence over the dictates of the elites. People want more content and desirability in the vehicles they buy. In the Fiesta, Focus, Taurus upcoming Explorer, Ford is delivering products more in line with their consumers’ desires. We see that over at Hyundai, Kia and Subaru. We can see GM beginning to shift in that direction with the content levels of the Chevy Cruze and the reach of luxury content of smaller and smaller Buicks.
While my “gospel” of higher content leading to happier consumers and more average revenue and profit per vehicle may not be solely due to this web-based platform, what I’ve long advocated is clearly part of the mix going forward. It looks now as if I’m going to have to hector the industry in other directions, as my main themes have been largely accepted as mainstream ideas, again much like the free market, limited government ideas are sweeping the political landscape amongst policy makers in Europe, Asia, and in many cases, North America. (Canada, for example, is now decidedly more successful than the United States in recovering from the current recession the more open and free their economy has become.)
One theme I may develop is how a consumer centric approach will lead to lower inventory and faster turnover, leading to further profit enhancements. In the old DuPont charts so beloved by Alfred Sloan, the Return on Net Assets is governed by two measures. The first is margin and the second is inventory turns. Improved content and desirability is improving margin as Mr. Kuzak points out. The next frontier, as George Patton was fond to point out, is moving the proverbial fecal matter through the goose as fast as possible.
We see this effect in increasing the content level of vehicles while making this content more and more the norm, as Honda has done in its products for decades. This lowers product complexity, but more importantly, it lessens inventory and increases profitability. Many people look to use of factory space and engineering resources as reasons to decrease complexity. I don’t disagree with that assessment, but the big pay off is in rapidly turning inventory. In fact, in commercial and vocational segments having a high orderable complexity is a sine qua non of competitiveness. Imagine restricting orderable combinations heavy truck or airplane industry and being successful. Each customer comes in and places an exact order for the configuration they want in those industries, and in the light duty automotive industry larger pick up trucks and commercial vans follow the same pattern.
Of course, orderable complexity is not the same as buildable complexity. If the customer, mostly fleet customers with a multitude of orders, orders many, often hundreds, of the same configuration buildable combinations increase by single digits and are easily accommodated. Complexity becomes unprofitable if commercial products are built on spec or if retail products are forced into production with undesirable (and usually poorer) content and begin to clog dealer lots with slow moving, undesirable and expensive inventory.
Another possible theme would be addressing throughput not only in finished goods inventory, but in process deliverables as well. Deming always suggested that personnel evaluations were largely worthless and that overall enterprise profitability was the only way to reward employees beyond their usual (and market-derived) salary. I’m beginning to wonder if there may not be another, but still effective, way to improve performance of individuals.
Overall profitability is a good measure of customer satisfaction, as we’ve seen how margins and profit improve the happier the customers are. With dealer bodies, OEMs have looked their CSI’s or Customer Satisfaction Indices, to rate their performance. While dealers have chafed at such measures, we have seen overall sales experiences improve as dealerships become cleaner and more organized and dealer personnel more responsive and friendly. What OEM’s have done is use the next entity in the value chain, in this case the consumer, to evaluate the performance of the entity, in this case the dealer, immediately upstream.
What would happen in an organization, then, if the evaluations were completed not by one’s manager but by the consumers of your work? What if a Design Staff was evaluated by the Product Development staff as they turn over their initial designs to be engineered? And Product Development was evaluated not by themselves but by Manufacturing? And Manufacturing and Assembly evaluated by Marketing and Distribution? And Marketing and Distribution then evaluated by the Dealer body?
Therefore what is sauce for the dealer body goose would be good for the OEM gander.
Last week I was able to attend about half of CAR’s “The Business of Plugging In” conference in Detroit. As GM was launching the Volt, it was heady times indeed. What was amazing to me, though, was that like extra extreme Leftists disappointed with Obama many Electric Vehicle (EV) true believers were disappointed with GM and the Volt. There was an Edmunds.com posting entitled “GM Lied!”, just because GM incorporated a bit of limp home mechanical technology in the Volt in the form of a back up mechanical connection of the internal combustion engine with the driveline.
To the extremists, even this car isn't 'green' enough.
As it turned out, the conference was mainly about Battery Electric Vehicles, or BEV’s, and the issues surrounding their acceptance. The biggest issue was the relationship of BEV’s to the Grid, that is the means of electrical power generation and distribution. There were two primary concerns, one was some hand wringing about whether people plugging in during the day was going to over strain our still rather primitive system and handling the sudden demand of thousands and later millions of people adding 240V recharging systems to their garages to provide relatively quick four hour recharging for their BEV’s.
Despite that most recharging is expected to be beneficial to the Grid, happening at night, some residual worries remain. But the interface between OEMs, utilities, suppliers of recharging systems, customers and vehicles dominated most of the concerns. GM particularly wanted to be sure that the “customer experience” with Volt was to be as rewarding as possible. This despite GM having the least to worry about, as the Volt carries around a perfectly capable ICE to keep the batteries charged.
As you could imagine, the minutiae of this discussion quickly led into the deep weeds of policy debates, infrastructure concerns, and political posturing. This sort of scintillating banter eventually led to a sort of day dreaming about related topics. And phrases like “value added customer experience”, “range anxiety”, “incorporation of emerging technology interfaces”, “smart grid regeneration”, “consumer interface with smart apps on Gen4 mobile phones” started to take their toll.
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Volvo has created the hearse for its own brand.
With such quiet strength, Volvo used to sell 100,000 boring, reliable and safe cars to Americans and many others worldwide year in and year out. Now Volvo has, understandably, nipped around the edges of their unique brand proposition, and offered luxury Volvo’s like the S80, SUV Volvo’s like the XC90, sporty Volvo’s like the C30 and S60, and even economy Volvo’s without the stigma of a low price like the S40 and V50. Somehow, somewhere, the true Volvo of the simple, square sedan, an “S70” if you will, got lost. A remnant remained in the V70 wagon, and the comic XC70 “crossover”, i.e., a wagon with more ground clearance and AWD.
Inexplicably, Volvo has ran away from their image and buyers, hoping to chase down BMW intenders who really wanted something Scandinavian and front wheel drive, instead of Bavarian and rear drive. Which is why Volvo’s growth has turned negative and so many college professors are leasing Camry’s and Accords. Sales thus far over 9 months for the brand is only about 40,000 units, far below the 100,000 or so annual sales when all Volvo had in the showroom were 242, 244, and 245 models.
And while Volvo has gone “naughty” (no, I’m not kidding, google “naughty Volvo” and take your pick), we see how Saab’s choice of losing its friendly, fun and summery Swedish demeanor has nearly vaporized the firm. The heavy-handed GM management was trying even harder than Volvo’s to turn the Swedish company into a, wait for it, front drive BMW competitor. Gone were any cheeky Saabs and in their place were boring sanded down Opels with a near Bavarian mien. All the image of a knock-off poseur with a near BMW price.
Of course, the Swedes aren’t the only ones trying to produce knock-off BMW’s. Honda’s Acura brand once had its vibe working with a fairly good size and fun Honda called the Legend, and an absolute little terror called the Integra. The brand had sales that had both Lexus and Infiniti looking up Acura’s tail pipe. But having that performance, fun and youthful niche staked out wasn’t good enough, and American Honda was bit by the “upscale, luxury”, i.e. BMW, bug. While Acura has sales of near 100,000 thus far for the year, half the volume is in trucks, and the carline is plugging along at neat Volvo numbers, and are only a bit over 10% of American Honda’s total sales. Lexus, with a richer mix, is at 162,000 sales. The Accord alone more than doubles the sales of the entire Acura brand.
Spider Charts go back a while, this example is from 1979.
In other words, each brand would mark out its own territory and customer share of mind. If sufficient volume is not present in the marque’s base, then perhaps a strength into adjacent areas would be called for. Who couldn’t love the Volvo C30 with its performance and style? While the A4 is the quintessential Audi “Vorsprung durch Technik”, why not an A8 or a TT as variations on the theme?
The overall point is that it is best to stake out your own territory rather than to directly compete with a well-established competitor. Ford’s Lincoln was strongest when it invented the luxury SUV with the Navigator and held on to the rear-drive large luxury crown with the Town Car in the nineties. Cadillac ended up outdoing the Navigator in sheer bling with the Escalade, and Ford never did develop a large, luxurious replacement for the Town Car, turning the front drive Continental into an intramural competitor and never really coming up with either a competitive entry-level entrant or a real “Hot Rod Lincoln”, both of which were waiting to be exploited.
Whatever Volvo’s core values are, being “naughty” isn’t one of them. Saab’s core certainly wasn’t to be a front drive Bavarian. Acura has plenty of hooligan opportunity to get its groove back by rummaging through Honda’s performance catalog and not being your mother’s Honda. But a “luxury Acura” has proven to be a customer’s oxymoron. Audi might be able to carve out its niche as BMW’s German baby brother, but I’m not so sure that’s what Ferdinand Piech has in mind.
We’re finding how Ford with its Fiesta, upcoming worldwide Focus, and other exciting products is putting some of the old magic we once saw in the Mustang, the Taurus and the Tjaarda-designed Fiesta. On the other hand, the new Chevy’s are as good as they’ve ever been, if not better, but I wonder if they’ve got the same panache that Ford’s been able to capture. On the spider chart, there are high marks on everything needed but “style” or “soul”. We see GM begin to roll out their replacement Pontiacs as Buicks, just announcing the Chevy Cruze derived Buick Verano. At least GM is not going after BMW, but will their attribute map (which may include “price” as they attempt to create volume) strike that chord with the buyer?
Ford has the same issue as they’ve cleared the deck of Mercury and now must reconstitute Lincoln. As success for all other brands means not necessarily being on the top rung on all measures, like an Arctic polar cap during the Little Ice Age, the ideal for each brand is to leave some room for their own Northwest Passage to consumer acceptance and profitability.
The slick and swift C-X75, stretching its extended range legs.
The key to the Jaguar’s significance to future automotive innovation lies in the two turbine generators, each could fit in the palm of your hand. It is these “flux capacitors” who spin the “dilithium crystals” of science fiction into the future of the automobile.
And that future will belong to Ratan Tata.
A synopsis from the Jaguar press release frames this impressive engineering achievement:
The C-X75′s 580kW (778bhp) propulsion system combines powerful 145kW (195bhp) electric motors at each wheel for outstanding performance. At the center of the car sit state-of-the-art, mid-mounted micro gas-turbines. These can either generate 140kW (188bhp) to charge the batteries and extend the range of the car to a remarkable 900km (560 miles) – enough to drive from London to Berlin on a single tank – or when in Track mode provide supplementary power directly to the electric motors. The four electric motors provide torque-vectored, all-wheel drive traction and grip, essential in a car that produces 580kW (778bhp) and 1600Nm (1180lb ft) of torque.
One look at the Bladon micro turbine that generates the electricity to keep the lithium-ion batteries of the C-X75 charged and you can see how one can be easily jazzed about it. A long time ago I linked the reader of this blog to Kiwi Simon Jansen’s site (http://www.asciimation.co.nz/beer/) where he showed how a small and yet powerful a micro-jet could be created via existing turbocharger technology and a bit of creativity. His “beer cooler” was a bit of cheek, but still it pointed the way for ultra-small, low cost and efficient means of generating power. Bladon Jets on their site (www.bladonjets.com) show how they took the technology to a very advanced degree, permitting electrical generation from their micro-turbines.
Why is this particular means of hybrid technology so important, and why is it so ground breaking?
The Bladon Jet, note the pencil in front for scale.
Now here's a horse of a different color.
If the secret to happiness lies in low expectations, then the prospect for joy at Hyundai over the sales success of their new luxury car, the over $55,000 Equus, is great indeed. The new model, whose name means “horse” in Latin compares favorably with the $91,000 Mercedes S550, has only to fill 2,000 to 3,000 garages to meet its sales target in the U.S. according to sources at the automaker.
Usually when a volume manufacturer hits two or three thousand in sales for a given nameplate it is not hailed as a success. The two year run for MG’s ill-fated C model was only 8999 sales worldwide. My brother once owned the very slick, but unpopular Cosworth Vega, a car with a dash plaque stamped with the sequence number of production. I don’t recall how many were built, but they didn’t need a very big plaque, as they would only have needed 4 digits. To put the target in focus, the Mercedes S-class thus far this year has sold a little over 8,000 luxurious chariots, surprisingly a little behind the BMW 7-series, which ended August with nearly 9,000 sales.
Many folks would consider the term “luxury Hyundai” highly oxymoronic, and perhaps that acknowledgment accounts for the car’s modest U.S. sales goal. In its native Korea, however, the Hyundai name is not a handicap. Hyundai has been selling executive class cars there for years, Chairman Chung would have it no other way. The company has a sterling business reputation in its native land, and is expected to reach a volume of 24,000 units south of the 38th parallel. One might infer that any North American sales might be considered so much “gravy”. (Do they have gravy in Korean cooking?)
Regardless, the press accounts, such as in Automotive News (September 13), wonder if the Equus story will be more like the Lexus experience or like the sort of indifference that met the VW Phaeton? Both examples are instructive, but they reflect two very different things. In the case of Lexus, Toyota set out to create a knock-off Mercedes and they spent years and years of research to develop not only vehicles but also an image and sales experience that would match or exceed any rival. And still theirs was a very near run thing. The success of the brand was not assured until they created not only a new brand, but also a new vehicle category with the luxury crossover RX300, a Celica derivative that quickly accounted for half of the brand’s sales. The ambitions of Toyota were met not only by engineering a very respectable new sort of car, the original Lexus LS400, but a whole new marque and vehicle line up.
The April 11th “Chrome Sweet Chrome” noted a three way tie for sales leadership in the U.S. At the time, the March monthly sales figures were:
- General Motors, 188,011 sales
- Toyota Motor Sales, 186,863 sales
- Ford Motor, 183,425 sales
The new Chevy Cruze - my fleet car critique can be rescinded, if Chevy launches a "Sea Cruze" song and video. Oooo weee baby!
As of the end of August, two-thirds of the year are gone, and positioning is becoming clearer. GM has been able to maintain its lead, but its market share is eroding, Ford is continuing to accelerate in terms of market share, while Toyota has suffered, losing the luster the brand once had as each recall becomes headline news. At the eight-month mark, the three market leaders yield:
- General Motors, 1,462,308 sales, 19.1% share
- Ford, 1,308,887 sales, 17.1% share
- Toyota, 1,164,154 sales, 15.2% share
The new Focus. 'Nuff said.
Today’s title is a cleaned up version of Rahm Emanuel’s expletive recorded in Steven
A quiet moment for our Potty-Mouth-in-Chief
Rattner’s upcoming book “Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry”. According to the excerpt in Saturday’s Wall Street Journal, White House Chief of Staff Emanuel provocatively asked the question, “Why even save GM?” and the response from Ron Bloom was that tens of thousands of union workers’ jobs were at stake. Mr. Emanuel dropped the F-bomb regarding the fate of the loyal Democratic workers and their union. For the record according to the Journal, Mr. Emanuel denies asking the question or giving that emotive response.
The teaser for the book contains a number of insights from those heady days when politicians and economists tried to determine the fate of, if not the whole auto industry, at least the union-organized portion based in Michigan. Looking at the ease at which the Administration seemed to be able to throw their rust-belt adherents under the bus, one has to wonder whether with friends like these, who needs enemies? On the other hand, given how with what equal ease the various bondholders were jettisoned in favor of UAW and government interests to obtain equity shares in GM and Chrysler, perhaps the Emmanuel outburst was just a momentary flash, or Mr. Rattner’s recollection may have been faulty.
We’ve seen how the saving of GM and Chrysler in the way that it occurred was not especially legal and questionable in terms of helping the country. The insertion of government and union rights in front of bondholders struck at the structure of capitalism and bankruptcy law, and weakens every firm’s fundraising going forward. We also see that the likelihood of the U.S. taxpayer becoming whole for their investment in both firms is vanishingly small. In the case of GM, a valuation of $70 billion at the upcoming IPO is the breakeven point. GM’s valuation is probably in the $30-40 billion range, meaning that the taxpayer will eventually hold the bag for $30-40 billion, or at least $100 for each man, woman and child in the country.
Of course, GM and Chrysler weren’t saved for their own sake, but in consideration for the supply base. If the automotive suppliers were to all fail due to a GM and Chrysler liquidation, the supply base, which had experienced hundreds of small and large bankruptcies as it is, would have collapsed, which would have in turn toppled Ford and the operations of the “New Domestics” as well. While Ron Bloom may have focused on the immediate problems of GM and Chrysler’s UAW workforce, you could say the Auto Task Force did the right thing, if for the wrong reasons and certainly in the wrong way.
Today, I’d like to talk about my experience in using the Kano Model to predict customer wants, and how a former vendor, RDA, is working today to provide insights into the future as a sort of over the horizon radar. Upon arriving home from Traverse City, I received a pamphlet from RDA regarding their “Auto-Ideation” product line. This market research product uses otherwise unvoiced consumer input to predict the winning technologies and features of the future, providing the wise OEM and supplier a competitive advantage.
Farther back than I care to relate, I was on the cutting edge of translating the needs and desires and customers into product actions that meant that competitive advantage for the OEM or supplier that I worked for. The tool of choice for such action was Quality Function Deployment (QFD) and the basis of QFD was the “Kano Model of Quality”.
In those quaint days, “quality” wasn’t merely a metric of the absence of a fault, or
The humble Festiva, a bundle of pleasant surprises that really wasn't permitted to take off.
“thing-gone-wrong”, but was more comprehensively understood to mean finding and meeting customer wants, and therefore increasing the source of quality, customer satisfaction. In those days, there were not only “things-gone-wrong”, which needed to be minimized, but “things-gone-right” sometimes known as “surprises and delights”. The goal of product planners in those halcyon days as domestics tried to overhaul the Japanese manufacturers was to manage to package as many happy surprises for customers as we tried mightily to reduce failures. The Kano Model was the means by which planners could forecast future “things-gone-right” and what customers would view as a surprise or a delight.
Prior to becoming a marketing manager at TRW, my experience was with Ford. My commuter car was a trim little Festiva, a Mazda design built by Kia in Korea with a Ford badge. While many people thought my choice was amusing (to them), I often took folks along for lunch runs and we’d play “find the surprises and delights”. In fact, in my “upscale” GL model, there were plenty. There was the foot-operated button that opened access to the rear seat. There was the under seat tray for storage. There were flip opening rear windows for ventilation. The steering column had a tilt feature. It wasn’t that these features were really all that advanced, but then none of them were available on the Escort of the time. Throughout the car there were lots of little thoughtful touches that made the car a delight, even if the image of the diminutive car suffered significant headwinds.
The endangered 2010 Ranger. The sharp-eyed will see the door and box stampings as laid out in Bob Pettry's 1993 MY classic.
Early this month, Automotive News presented its view on Ford’s future product plans. In their predictions, they said, “Ford is expected to pull the plug on the aging Ranger in 2011. It is unclear whether the company will replace the compact pick up with another product.” While the once popular compact pick up segment may be abandoned, SUV’s and crossovers are having a heyday at Ford. Long ago looking at projections in the press, I predicted a “pile up at the intersection for four-door and utility”, and the gridlock is approaching Chinese month long traffic jam proportions.
While Ford may well eliminate the Ranger, despite the overall CAFÉ pressure for more fuel-efficient vehicles, the list of SUVs and crossovers continues to grow. Plans are in place for revised Flex, Edge Escape and Explorer products. The Expedition continues to explore the larger SUV segment with regular and extra long products. All this while the long delayed EcoSport Fiesta-derived and Grand C-Max Focus-derived crossovers are expected in the showroom. While the Transit Connect remains essentially a commercial offering, adding some of the interior trim on the Euro Tourneo model would add yet another four-door crossover to the mix. Personally, the Transit Connect is just a few creature comfort features away from being a tremendous choice for my family, what with handicapped scooter, walkers, and other paraphernalia. While Mercury has been axed (as well as the chance for a, wait for it, Mercury Kuga to replace the Mariner), Lincoln MKX, MKT and Navigator products are still in the plan, while the new more upmarket Lincoln C-sized vehicles are yet to be revealed.
While Ford’s certainly made competitive strides, let’s not forget the strategic objective of business is to conquer and hold the territory known as the consumers’ share of mind. It looks like the portion of that landscape known as “compact pick up” is currently suffering from lack of attention, while there are plenty of assets bumping into each other at that “four-door utility” cross roads. On the principles that investment dollars are always scarce, that one should exploit gaps in the competitive landscape, and that opportunities exist for efficiencies in a line up overfull of four door utilities, permit me to recommend to Ford that they do replace the Ranger, while rationalizing an increasingly overlapping SUV and crossover lineup.