The global automobile market is one big blur.
By Tom Dougherty
The global automobile market is injuring its shoulder patting itself on the back for improved sales in 2015, but there are warning signs that the industry really hasn’t changed at all.
No matter what part of the world you consider, the brands within the auto industry are a blur of similar messaging, imagery and tone. That’s one of the results of a global automobile market study by Stealing Share strategists focused on automobile brands and models in the US and Europe, with further investigation into the Asia market.
The recent bump in overall sales (expected to be over 2% worldwide throughout the year, with Europe coming out of a recent slump) is attributable to consumers replacing old cars and the stabilization of gas prices. While that may continue, manufacturers are struggling to find why some brands and models resonate in the market place, while others don’t.
It’s the reason why manufacturers have been eliminating brands (Pontiac, Saturn, Hummer, Mercury, etc.) as they constantly adjust to shifting sales.
However, this global automobile market investigation revealed that there is little loyalty to brands themselves. Sales are rising and falling among the models without manufacturers knowing why.
In the US, for example, the Honda Accord, once among the darling of American buyers, has dropped from being sixth-most popular car to ninth in the space of one year. In Europe, the Opal Astra, a family compact car, has seen sales drop a whopping 15% in the last year.
On the opposite end of the spectrum, sales of Skoda Octavia are rising fast (21%) in Europe and, despite the furor over gas-guzzling trucks in the US, the Chevrolet Silverado and Ford Explorer have increased sales.
You might point to market trends for this and that might be so. What should concern the automobile market is that there is little loyalty to the manufacturer brands.
Where are the strong brands?
Ask yourself this. If Ford is such a strong brand, why are the sales of its Fusion, Escape and Focus dropping, while the F-Series truck remains strong and, as mentioned, the Explorer is taking off?
Their sales do not seem to be impacted by whether they are a Ford nor not. Otherwise, if the Ford brand were so strong, all of its sales would be rising. Instead, they fluctuate like a rising and falling gnat swirling around the back deck.
We could show other examples where the brands, with few exceptions, are not being coveted because the sales of their individual models are unstable.
Our global automobile market examination demonstrated the reasons why. Yes, market trends affect purchases, which means manufacturers are victims to events out of their control.
These are not new problems in the automobile market
But the lack of brand loyalty arises out of major problem that the automobile market has been struggling with for years. The brands and models are all basically the same once you put them into a category (such as big trucks or economy cars). The advertising would be identical if not for the logos airing at the end. You could replace an Opal logo with a Kia one and nothing would change. You wouldn’t see the difference.
There is a root problem to all of this. The automobile market has been left to the select few agencies and consultants who have worked in the industry for years. It’s like the NBA coaching tree. Coaches are recycled, fired, then hired again by another team. Like that would make any difference. Auto manufacturers switch the same strategists, personnel and advertising agencies like trading cards, expecting a different result.
This approach means more stale branding and marketing that gives consumers little reason to remain loyal in the automobile market. Automobile advertising and branding has become as clichéd as the bad guy in a movie having a European accent.
Let us count the ways.
The Europe automobile market: The sophisticated continent?
If you’re selling cards in the European automobile market, you are going against Volkswagen, which sports the continent’s two top-selling models with the Golf and the Polo. Volkswagen, also first in overall market share, owns nearly a quarter of the European market. (It is 14th in the US.)
That’s astounding for a company that started during the Nazi era when Adolf Hitler wanted a cheap, simple car to be mass-produced for Germany’s road system. (In fact, Volkswagen means “people’s car” in German.)
After WWII, it was basically defunct as US automakers wanted no part of it with Ford EVP Ernest Breech saying it “wasn’t worth a damn” and its primary model, the Beetle, was considered laughable. It survived by producing cars for the British Army and gradually became the powerful European brand it is today.
Today, Volkswagen positions itself as “The Car,” with its US advertising messages currently centering around gas mileage, a lifestyle and the question: “Isn’t it time for German engineering?”
In Europe, however, it is all about lifestyle, especially urban and upscale. As this ad says, “As advanced as you are.”
This approach works because it suggests a reflection of the customer, demonstrating a car that is a mirror to what you aspire to be.
That equity has carried over into today as Volkswagen still appears to be modern, stylish and simple. It’s a concise brand that fits well into the European model that does not have the big, wide roads of the US.
But when you go deeper within the European automotive market, and ask yourself why the rest of the car brands haven’t made much of a dent in Volkswagen’s market share, you find similar reasons for the US fluctuation.
They just copy the market leader. Or they just copy each other.
Apparently, everybody in Europe is a cool, romantic urbanite.
The simplest way to demonstrate the similarity of messaging in advertising in Europe is to show you back-to-back ads.
One for the Nissan Qashqai.
And one for the Renault Clio.
What you see here are two models fighting over the same ground with a blending of imagery, music and sexy, urban feel that does very little to differentiate them.
In fact, if that brand face is important to target audiences, the fact that most everyone in the European automobile market claims it means audiences are lost in choosing between them.
That inability to differentiate itself is one reason why the Nissan Qashqai has seen sales drop by 3.2%.
The European economy and the automobile market
Of course, market trends are leading factors in the European automobile market. It is now only emerging from a six-year slump but the Euro is weakening and Greece is on the brink of financial ruin.
In response, many manufacturers are simply buying market share, offering discounts in order to spike sales. In Italy, for example, new car sales increased a whopping 24.7%, spurred by discounts.
Fiat, the automobile market leader in Italy, has been a massive discounter, offering up discounts of 3,000 euros on new cards. That has forced competitors to do the same in what becomes a dangerous cycle for all.
In fact, while sales have increased for Fiat, its automobile market share has not. Reuters reported that its share of the Italian marketplace dropped nearly one percent in one month (March ‘ 15 to April ’15).
Once again, that demonstrates that there is little brand preference. Drivers in Italy are simply looking for the best deal, whether it comes from Fiat or not.
Even Fiat understand this as Fiat CEO Sergio Marchionne recently said, “I think we’re scraping the bottom of the barrel. The problem is you never know when you’re done scraping.”
A word about China.
The leaders in China are brands largely unknown to western audiences. A list of top-selling cars in China includes the Wuling Hongguang (a van), the Great Wall Haval 6 (an SUV) and the Bajoun 730 (also a van).
It makes sense, of course. China is the world’s largest automobile market but it is even facing a slowdown in sales. Forecasts say sales will increase by only 7%, half of what it did in 2013.
In China, the economy isn’t the only issue. The country is enacting stricter guidelines on cars to limit pollution as China is the world leader in emitting carbon.
On that same note, China is becoming more urban as populations migrate to the nation’s largest cities. In those cities, the need for an automobile is not as urgent. In fact, to reduce pollution, many Chinese cities have seen an increase in car sharing, which means fewer will see the need to buy a new car, and public transportation is still immensely popular in the cities.
For the manufacturers in that country, the hurdle isn’t just getting consumers to pick your car. It’s convincing them that they need one in the first place.
The Automobile Market and The Big Three: GM, Chrysler and Ford.
Many of the problems facing the Big Three American automakers can be traced right to the beginning of one of them: General Motors.
GM is now the largest US automaker and it was founded in 1908 as a merger of the McLaughlin Car Company and Buick. At that time, automobiles were just for the privileged few. They were expensive and it wasn’t until Henry Ford invented the assembly line five years later that cars became something the mass public could purchase.
In short order, GM became a collection of acquisitions and the name, General Motors, demonstrated it. It had Buick, purchased Oldsmobile later that year and Cadillac followed the next year. There were other acquisitions lost to history, including Elmore and Oakland, but the standard was set. GM would be a house of brands rather than a branded house.
Today, GM sports Cadillac, Chevrolet, Buick and GMC trucks after dropping Saturn, Pontiac and Hummer in 2009. All total, GM currently markets 37 different consumer models in the US, 16 of which come from Chevrolet, with no easy way to navigate through the list.
That’s far too many, especially in the case of Chevrolet. When you think of a Chevy, what comes to mind? You might think of the Corvette or a truck like the Colorado or Silverado. But the image is fuzzy because GM has fractured the brand into so many pieces (including the Spark, the Cruze, the Volt, etc.) that some of those pieces wilt under the glare of auto retail inspection.
For example, the sales of the Chevy Malibu, a mid-sized sedan, dropped a whopping 11.9% in the last year. The Chevrolet brand can’t provide the cover for the Malibu because the brand isn’t what carries the sale today. It’s the model.
There are other issues. What does owning a GMC truck mean, especially when Ford’s F-Series leads the US automobile market and the Dodge Ram isn’t far behind? The top-selling GMC truck is the Sierra with its many versions, but trails far behind many other truck brands.
GM has been hit by sagging sales from Buick and Cadillac, and you have to wonder if the way General Motors was founded – as an organically grown house of brands – holds the automaker into a continuous dance of trying to give meaning to their four brands and many models.
The outcome of that effort is marketing that is, for the most part, spent on features and benefits. There’s no underlying brand meaning that gives preference to them all.
The problem is exasperated when only the logo tells the difference between a Chevy ad and a Ford one. In fact, its Chevy trucks have advertising (with Kid Rock singing “Born Free”) that’s not that far from Denis Leary narrating the Ford F-150 spots or Sam Elliott doing the same for Dodge Ram trucks.
Take out the logos and could you tell the difference? They are nearly carbon copies of each other in look, feel, sound and imagery.
Chrysler, the Detroit Import
The truth is that the big three in the automobile market are really hybrids.
Chrysler is the parent brand but it has its own auto line with its 200 and 300 as well as the Town and Country minivan.
But it also has Jeep and Dodge, which are stand-alone brands. Like GM, Chrysler grew into a house of brands (or at least a hybrid) organically. It was founded in 1925 and its primary early success was with a low-cost brand, the Plymouth.
But it didn’t really take off until it bought Dodge from brothers John and Horace.
Chrysler has tried to be something of parent brand with its “Imported from Detroit” advertising campaign, which has now morphed into “America’s Import.” The problem here is that neither theme is important to target audiences because they are all about Chrysler, not the target audience. In addition, they are too clever. They sound like marketing and, therefore, they are not believable. (Also: Who cares?)
Chrysler does better with Dodge and Jeep. The latter has especially become a powerful brand because it expresses an idea: adventure, with a typical Jeep Wrangler promotion saying, “Adventure can happen anywhere.” That’s who you are when you drive a Jeep. Someone on an adventure.
We are fans of the aforementioned Dodge brothers campaign, but it may take awhile to undo the damage. None of its models – not the Challenger, the Charger, the Dart, the Durango, the Journey, the Viper or the Grand Caravan – are among the top 30 best-selling cars in America.
That is because, until now the most recent campaign, Dodge hasn’t invested in the brand of Dodge but rather in the models. It also hasn’t been helped by the Chrysler parent brand that is just as meaningless.
Ford Tough and the automobile market
The Ford Motor Company is the one American brand that you could pretty safely call a branded house. Sure, it owns Lincoln, but its Ford brand carries the rest of the lineup and accounts for an industry-leading 13.8% market share in the US. (That is, if you count GM, Dodge and Jeep as separate brands.)
Its F-Series trucks are the nation’s best sellers, with the Fusion, Escape and Explorer all in the top 15. It was also the only one of the big three not to take government money, and its success is built on one brand: Ford.
Ford has more equity in its brand than the other two. We associate it with the Ford family, starting with Henry Ford and his invention of the assembly line in 1913 and the Model T. (Note: Contrary to what many believe, Ford did not invent the automobile. Carl Benz invented it in Germany in 1886. It was Ford who invented the process that made cars available to the general public.)
Since then, we chuckle in a friendly manner over the disaster of the Edsel in the late ‘50s (named after Henry’s son) as it’s as much a part of the Ford story as the Model T. But we also respect Ford for its willingness to be single minded. It once owned Jaguar and Land Rover, but sold them both in 2007, sold Volvo in 2010 and discontinued Mercury in 2011.
Because of its history (equity), Ford intrinsically reflects America more than Chrysler’s “America’s Import” but it doesn’t exactly capitalize on it.
The automobile market’s dealership model stinks.
You know the drill. It’s always a hassle, even if you walk right in and point immediately to one car and say, “I’m buying that.” There are all kinds of documentation, the discussion over add-ons and, in most cases, the financing. (Dealerships make a killing on financing.)
In a way, dealerships are the keepers of the brand’s flame, which is why we’ve always wondered why so many car dealership commercials are so amateurish and, often, ridiculous. What are they trying to achieve, other than copying Cal Worthington?
The experience at a dealership becomes more of a hurdle because we have become less patient. We live in a world in which access to the world is right on our phones. We can watch just about anything we want on our big-screen TVs at any time. We are so tuned into technology that we can buy almost everything we want without even leaving the house.
Therefore, the dealership model feels incredibly outdated, and we have less patience for it. (That’s why we’ve wondered if Carmax isn’t on to something in the used car arena.) In fact, there is sure to be a growing demand for manufacturers to cut dealerships out of the deal all together, just setting up distribution centers where you pick up your car after purchasing (and financing) online.
At this moment in time, the dealerships are fighting back as many state laws prevent manufacturers from building those kinds of centers if they have a dealership in that state. That pretty much eliminates everybody from adopting that model today.
However, it’s hard to stop progress. Right now, Tesla is battling with states for the right to adopt that distribution center model. States (and dealership lobbies) are fighting back with state courts saying that allowing Tesla to build those centers goes against the spirit of those state laws.
Basically, the lobbyists for the dealership organizations are winning, but it still feels like only a matter of time until the focus becomes on the customer and not what’s best for dealerships.
And do dealerships affect the manufacturer’s brand? Quantitative research would answer that question, but our thought is that dealers do affect the manufacturers’ brands with the negativity spread among all manufacturers. Consumers think that the whole world of dealerships is flawed.
However, all it takes is for one manufacturer to get states to overturn those laws and put dealerships out of business (at least for new cars) with its own distribution centers/online-shopping model. The first to take that plunge will create preference and reflect the brand in a positive manner.
It will only take one.
How do automobile market shoppers decide?
Let’s work through some of the possibilities. It is extremely doubtful that most have a preference of dealerships, unless there’s a personal relationship involved.
Location would be a contributing factor, but many dealerships are located in clusters. Across the street from the other.
On the other hand, is the choice based on brand or the type of car?
That question gets at the crux of the whole matter. If it’s based on brand, then the hurdle of the dealership doesn’t matter. If it’s a type of car (say, you’re looking for a gas-saving sedan), then the dealership poses a larger problem.
The cause for concern for all automakers is that preference is most likely in the type of car. How do we know? If you look at the best-selling cars in America from February 2015, there is no overriding brand doing well.
Chevrolet’s Silverado saw a 17.6% year-to-year increase in the US, while it’s other truck, the Colorado, has fallen off the map. Ford’s Escape and Explorer are nearly identical except in size and price. Yet, the Explorer (the larger and more expensive of the two) has seen sales rise 27.4% while the Escape has dropped 5.7%. Where’s the brand preference in that?
We could go down the list, but you get the point. No brand is winning in the automobile market across the board, which means shoppers are looking for a specific model or type of car.
And why is that? For one, who knows the real difference between any of the brands. The advertising and messaging are so alike and meaningless it’s no wonder car shoppers find little to choose from. For example, here are the main messages for each of the Buick models:
Verano: “The only thing expected are the double takes.”
Regal “The never-ending road just met its match.”
LaCrosse: “Thoughtfully innovative, beautifully crafted.”
Encore: “Sized to fit your life.”
Enclave: “Suddenly, every drive is worth making.”
How do you choose based on those?
The conundrum that for many, especially the US automakers, their house of brands grew organically and they did nothing to address them. In addition, the emotional aspect that the manufacturers had in the 20s has become trite, expected and all about the car.
The perfect model is BMW, which is a branded house with long-lasting and powerful theme (“The ultimate driving machine”) and a way to navigate through the brands. We know how the 3 series works.
And it is singularly focused.
Automakers should consider themselves as branded houses in which the individual brands support the overall brand promise through their own meanings, diverse advantages and unique places in the market.
Currently, the automakers are slaves to market trends, without a way to navigate them for consistent success across all product lines.
Where the manufacturers also go wrong in the global automobile market
What’s lacking is true engagement. The automobile brands have fortified themselves against any kind of change or investigation into the triggers that make consumers choose.
A quick aside to demonstrate the point. Companies in many industries seem to trade ad agencies like Topps baseball cards, with one firing one agency and another manufacturer picking up that agency to do its work. What develops is a kind of incestuous environment in which the players in the industry have all worked with the same agency at various times, believing that industry experience will steal them share.
What kind of valued expertise does it take to film a car riding along a coastal highway and sporting the car’s features? “Just make it look good” is often the mantra of the automakers.
This creates a kind of inertia so that even the umbrella brands, as discussed earlier, provide no cover for the models beneath it. That’s why the sales of a Ford Focus drop while the Ford Fusion does not. The automakers have taught us to look at the individual models, not the brand. They’ve done that by simply promoting product features.
What automakers should do.
As an essay on the global automobile market (authored by four experts) recently stated, “Consumers appear to be re-thinking their long love affair with individual automobile brands and viewing cars more as transportation machines.”
There are a handful of strategies and tactics automakers should employ to steal market share. One of them is a tactic so simple it’s a miracle that none of them have done it before: Speak to target audiences at life moments when they are deciding to buy a car.
Here’s what we mean. What if there were specific TV spots aimed at college seniors as they are about to graduate? The spots would only run in the late spring, and could also be targeted to parents of graduating students.
Pinpoint a point in life when a car is something to be considered. After an accident. Having children (where you need a bigger car). A new job. Those tactical spots would speak directly to a customer who then believes the right car for them in the right life situation is at hand.
Think of it this way. Right now, according to several estimates, automakers spend more than $600 billion on advertising worldwide. That’s an absurd number because most advertising is so inefficient.
A more targeted spend (beyond advertising sports cars and trucks during sporting events) would be far more efficient than rolling out general spots at all times of the year.
There is, of course, a larger strategy that few automakers actually take in the automobile market: Developing a parent brand that is an emotional reflection of the target audience.
What is the Ford driver about? What is the Honda driver or the Kia driver for that matter?
Instead, automobile marketing is all about product features and the cars themselves. Little about the driver.
Other than in price, there’s little reason to choose one brand over another. That means shoppers find their cars by looking at price, dealerships and types of cars (like, sedan vs. truck). With the exception of a few (most fitting into the luxury category), no one is building a true brand preference.
To build that preference, the automakers need to find answers to the following questions:
2) How are customers able to navigate your offerings? Do they make sense?
3) How do target audiences decide what is important? What drives them? How do they fit brands/models into their considered sets?
4) What do they believe about your brand? What do they believe about other brands? Who is most vulnerable?
6) Why are those currently not interested in your brand rejecting it? What are the barriers? How are those barriers overcome?
To gain preference in the automobile market, automakers have to get out of their own way and ask themselves the difficult questions. Too much of the marketing and branding in the automotive industry is thinking inside out, which usually only results in promoting product features and using clichéd themes.
Until the automobile market begins to find the emotional cues of the target audience and become honest with themselves about where they stand, the automotive brands will continue to watch cars sit idly in lots. According to data provided by Kelly Blue Book, a typical vehicle sold in the US last year spent more than 70 days on average on the lot, while many stay for more than four months. That means more models will be discontinued and makers will try to find new ones to take their place, continuing a losing cycle.
Automakers must be smarter.
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