Detroit and the Market

I apologize for starting another thread so closely related to the Smoke and Mirrors thread, but I wanted to bring up a variant on the discussion and not have it get lost on page 20

The question seems to be, why is Detroit getting it's head handed to it at the moment. That's not a question that has an answer in a single point in time. It's the culmination of the all of Detroit's decisions since WWII.

Setting aside the issue of Unions and Production costs, why has Detroit lost market share over the last 50 years, and why are they now stuck with a bad image and a vehicle lineup that are going to make it hard to recover?

I think there is a whole chain of decisions they made that lead us up to the current situation. No single one is the root cause, but they seem to show a pattern.

After WWII Detroit decided it knew what Americans wanted to buy. Giant Barges made of at least 50% chrome.

Yes, they sold well, but there were signs that the market wasn't monolithic.

First, I give you the VW Beetle.

When it came out Detroit laughed, but it proved there was a market for cheap efficient transportation. Detroit chose not to develop their own competitors for that market, and while other manufacturers entered that 'niche' Detroit ignored it. At the time Detroit had the resources to do almost anything they wanted, but it wasn't worth their time.

They left a hole in their product line, and others filled it. They lost some sales.

Second I give you the Ford Mustang.

The original Mustang was a smash hit. It was small, cheap, relatively efficient, sporty, cute, and fun.

Instead of building on that theme, the first thing Ford did was upsize it into a Monster Muscle Car.

They practically created a niche, but then they abandoned it. Other manufacturers moved in with products like the BMW 2000/2002, and Detroit did nothing to guard their turf.

Third turning point is the 70s

In the early 70s we had the first gas crisis. Cars like the Civic and Corolla were there or emerged to fill the void, and what did Detroit do to answer the need? Pinto? Vega? Gremlin?

Ok, so they were inferior products rushed to market. Instead of staying the course and trying to improve them, the niche was again abandoned as soon as they could get back to building 'big iron'.

And, lets not forget what GM did for Diesels during that time.

Fourth, I give you the Ford Taurus

There was a niche between the econo-boxes and the luxo-barges. Let's call it the 'family car'. When Ford came out with the first Taurus, just like the Mustang, it was a runaway hit. Best Selling Car in the World.

The logical thing to do would have been take that ball and run with it. Take a good thing, make it better, and lock up the niche. Instead, they let the Taurus age into clunker status, and CamCords ate their lunch again.

Fifth, of course, is the infamous "Partnership for a New Generation of Vehicles (PNGV)" wherein the federal government gave the big three billions of dollars to research and develop the vehicles everyone knew we would need. Toyota and Honda were cut out of that gravy train. If they were going to compete, the had to do it on their own.

What happened? Three Guesses. The big three squandered the opportunity, and boatloads of taxpayer money, while Honda and Toyota set dead aim on the obvious emerging market niche with their own funds.

So, right there you have 5 major markets that Detroit had covered or could have covered in a competitive manner at any time over the last 50 years.

Economy Cars
Sports Cars
Compact Cars
Family Cars
Hybrids/Diesels

They walked away from major chunks of the market.

That's not the fault of consumers, it's not the fault of government, it's not the fault of Unions, and it's not the fault of the competitors who stepped up to fill the void.

Detroit concentrated on what they saw as the 'biggest niches' at each point in time, which is fine, as long as they always stay the biggest. But, things change, and, as others have pointed out, if you are diversified you can absorb change, if you aren't, you get pain.

Maybe Detroit can recover, and maybe they won't, but if their strategy is dependent on praying that Gas Prices come down so that we all start buying SUVs and Hemis again, I have my doubts about their chances.

Yes, they are trying to get back in the game in some of the niches they abandoned. The Chevy Malibu and Cobalt, and the new Ford Products based on Mazda and Volvo platforms are potential competitors, showing promise.

But, Detroit is starting in a hole in those markets. They have to produce SUPERIOR products, not just competitive ones to gain market share, and their competitors are damned good now, and have a head start.

I wouldn't bet against American Ingenuity and Engineering if they truely put their minds to it, but history makes me wary.

Time will tell. If Detroit stays the course this time and fights head to head in each niche with everything they have, there's a chance.

But, if gas prices drop to $2.00 for a year or two, and they follow true to form, they'll put their blinders right back on and squander what may be their last opportunity to remain major players.

Funny, but ignoring niches has resulted in Detroit being squeezed into niches, and now their competitors who know better than to ignore potential customers are setting dead aim on Detroit's remaining bastions with Trucks, SUVs, and cars like the Avalon.

I truely hope they have enough energy left to get back up off the mat, but it's not going to be easy, and they have to finally learn the lessons they've been ignoring for 50 years.

 

The other problem is that those who don't learn from their mistakes are doomed to repeat them.

This is the same mistake made over and over.

It really doesn't make a difference what the factors were at the time, if your response to any situation is to always make the same mistake.