Auto sales, specifically for light vehicles aka light trucks, came in 'light' today.
As an aside, I grew up around and worked with the US auto industry most of my life, and have some particularly strong opinions on how they have failed to execute strategically. And after many years of product management, albeit in an unrelated field, my thoughts on using product line strategies are fairly strongly set.
The Bloomberg anchor
du jour thinks that domestic car sales are light because most of the kids are moving to a few large cities, where they do not need cars, and if they do, they will share them with Bitcar.
And his counterpart chimed in that the US automakers have made cars so well that people do not need them as often.
As if. Not a shred of evidence provided.
Yes, urban consumers tend not to own cars, but I mean, come on. And people are hanging on to their cars for much greater lengths of time. And car repair and maintenance costs are no joke. Is it car and truck ownership overall that is falling dramatically, or is it something else entirely related to our being in a continuing recession, the worst which we have seen since WW II?
Rather, I think it is more likely that in their never-ending quest for maximum short term profit, the US automakers keep moving the goalposts for the average vehicle cost higher, even while the average US consumer is experiencing a balance sheet recession, and a great reluctance to make major purchases and take on years of debt.
What is the average cost for a decently equipped light vehicle these days, $30,000 or so? And import prices are decidedly higher. At these higher prices more affluent Americans tend to buy imports, rather than Fords or Chevies. If the US automakers are smart, having finally learned a lesson about quality, they need to relearn some lessons about marketing that they have also forgotten, and selling to your target markets. And most importantly, knowing who they are.
Why, for example, Ford does not more aggressively carve out a chunk of market share for themselves by making a determined effort to force BMW, Mercedes, and Toyota into the even higher brackets of consumer, and beat them to death with lower cost with quality and more basic vehicles with more standardized engineering components? As I recall, the US did this spectacularly well once upon a time. They can segment with real luxury brands as they once did, like Lincoln and Cadillac, and not trumped up high end basic vehicles with a few more standard options.
Ford had remarkable success with its Focus, but again they keep moving the average price higher and higher, treating each car line not as a strategic component but as an independent line competing on profit margin with each other.
So they tend to blur their marketing and attempt to optimize on profit margin on a vehicle line basis. And they continue to do some of the dumbest things in engineering their products, as if they have institutional amnesia with each model year. They repeat the same mistakes over and over, and manage for pennies while losing dollars.
This higher low end is the niche being targeted by Hyundai and some of the other newcomers, but their quality is lacking based on what I have seen. If the US firms keep trying to be all things to everyone, they may find themselves going down with the disappearing middle class.
But again, much of this is due to misalignments and distortions in government policy, rolling over for mercantilism.
Have a pleasant evening.
