I wouldn’t want to be an auto dealer right now.
The auto business is getting hammered by the recession. Sales have dropped for 12 consecutive months, the first time that’s happened since the recession of the early ’90s. Through October, U.S. sales were down about 15 percent, according to industry tracker Autodata — and getting rapidly worse, with October sales down 32 percent from a year ago.
Dealers are having trouble securing “floor plan” financing — the money they borrow to buy cars to stock their dealerships. And consumer credit is drying up, making it harder for potential buyers to get financing.
The fix for the auto business is being debated at pay levels far higher than mine. But as a lifelong auto enthusiast, let me offer a few ideas for how the automakers can more effectively market their products.
Make small sexy. Advertising typically focuses on the high-end product lines: powerful machines that cost $40,000 or more. There’s a reason for this: by touting the upper end, you create a “halo effect” that appeals to consumers who will probably wind up buying a cheaper vehicle.
Dealers and automakers also prefer to sell larger, more-expensive vehicles because they make more money off them. At the height of the SUV craze, Ford was making a profit of more than $10,000 on each Explorer it sold, while it barely broke even on smaller cars like the Focus.
But consumers don’t have the money right now to buy those fancy vehicles. Why not spend that creative energy on marketing the more affordable vehicles? Don’t feed us ads for the car that costs more than the average annual paycheck — use all that energy, all those flashy graphics and throbbing music and delectable photographs, on making the mainstream vehicle into something aspirational.
Give us something different. Modern engineering and technology allow automakers to cover their costs with a smaller volume of production. Cars share “platforms” — the chassis, engine and other technical elements — but can be reskinned into distinctive vehicles more easily than in the past.
Carmakers need to take more chances with design. Instead of producing 500,000 Chevy Malibus (an excellent car, by the way), give us 100,000 each of five drastically different vehicles. American, Japanese and European automakers right now are selling some wildly different vehicles in Asia and Europe than they do in the States. See here and here for some unusual and interesting cars that will never be seen in the U.S. market.
There would be some regulatory hurdles in bringing some of these vehicles here, to be sure. But give Americans some crazy choices. What have you got to lose?
Create brand enthusiasts. The classic example of this is the Mini, which has been a huge success since its U.S. launch. Mini built enthusiasm for the car with promotions and online buzz. It offered buyers the chance to join clubs and meet other Mini owners. It sends them branded tchotchkes and gear.
Of course, none of this would have succeeded if the car itself had been boring and bland. And perhaps that’s at the root of the automakers’ problems.
Cars are better than ever. They’re more powerful, more economical and last longer than ever before. Today’s upscale minivan can go from 0-60 mph faster than all but a handful of muscle cars from the ’60s. And while it’s been fashionable to bash U.S. cars on quality, I don’t buy it. That may have been true 20 years ago, but now it’s no more than an urban legend.
But what today’s mainstream cars lack is personality. If the automakers could give us the performance and reliability we’ve come to expect, packaged in a shell that would make people sit up and take notice, they’d be onto a winning formula.
Again, I ask: What have they got to lose?