The Latest Auto Extremist
LOOKING THROUGH THE INDUSTRY KALEIDOSCOPE.
14 May 2018 at 11:01am
By Peter M. DeLorenzo
Detroit. Every time I hear top industry execs speak of late, I cringe. It’s as if they’re looking through a telescope that only gives them images of clarity and predictability, and their confident tones take on an air of emphatic certainty that is eerily and ominously matter-of-fact. It’s frightening in that even the most detached observers of this industry know this isn’t even close to being the way things really are.
The reality is that this industry keeps churning with a relentless ferocity that shows no sign of abating. In fact, this swirling maelstrom can only be viewed through a kaleidoscope that gives you glimpses of bits and pieces of what you think is going on, and even then, one can’t be sure.
Speaking of glimpsing bits and pieces, what can I say about the goings on at GM? They gained some believers on Wall Street, but that didn't last long and neither did the pumped up stock price. And whatever euphoria was temporarily present has been replaced by a resounding "now what?" After committing $12 billion to Cadillac, what do they have to show for it? Since adopting the “chasing Audi” strategic posture under former chief Johan de Nysschen’s leadership, the division appears to be starting over yet again. The dropping of the smaller ATS wasn’t a surprise, it’s the fact that it was even built in the first place that was a revelation. But what now? The new Escalade will be stunningly good, the XT5 is doing acceptably well in this all-SUV-all-the-time market, and Cadillac operatives are pinning hopes on the XT4 adding to their momentum. But this is only the immediate situation. The bigger question is what will Cadillac stand for going forward? How will GM/Cadillac marketing strategists project Cadillac into the future? Will Cadillac abandon cars altogether? Or will they double-down on designing, engineering and building a “statement” Cadillac that will continue to define the brand as being part of a genuine historical legacy? Mary Barra and Dan "I Am" Ammann have soaked up a lot of accolades lately, but if they don't solve the future of Cadillac, those kudos won't count for much.
And what of Ford? Suffice to say that the “we’re reducing our footprint in the car business” announcement did not go well. Instead of controlling the rollout of the sequence of events over time to lessen the impact, Ford operatives double-barreled it and set off a firestorm of hand-wringing in the mainstream media. As I said last week, certain Ford executives were directly responsible for botching this announcement, and the stench of it is going to linger over the company for the foreseeable future. It also revealed that Ford has a huge problem with the strength of its executive bench, which is something that is going to grow more crucial by the hour.
There is no doubt that Jim Hackett – aka “The Professor” – is a forward-thinking futurist who appears to be entrenched in that space, which, as Bill Ford has stated repeatedly, is a vital part of the company’s strategy for continued relevance in the future. Where Ford ends up in all of this would only be pure conjecture at this point. I am more concerned with the pressing realities facing the company for the next 36 months. Ford’s product lineup shows promise, but the company’s apparent inability to get new vehicles out with a proper cadence is alarming. Take the new Bronco, for instance. This vehicle has all the earmarks of grand slam home run, yet its appearance in the market a long two years from now is simply unacceptable. The F-150 remains the straw that stirs the drink for Ford, but how long can its runaway success continue? Ford needs new and punchier products in the market. Yes, the Explorer and Escape do well, but they’re not new enough. Ford needs to accelerate its product development cycle. And by the way, it’s a good thing Ford has Lincoln to nurture and grow. And to think the company was actually considering pulling the plug on its luxury brand six years ago. Not Good.
And what to make of FCA? Its CEO has hinged everything – meaning all of its profitability, aka its appeal to suitors – on the success of Jeep and Ram Truck. The new Wrangler is a dramatic improvement in every way, and it appears to live up to the task. But the Ram Truck launch has been a disaster, and it’s killing Marchionne’s Grand Plan. I don’t think that “Grand Plan” has changed one iota either. FCA’s succession order can be talked about and speculated upon, but if Marchionne can get a corporate entity to buy the whole shebang for somewhere between $22 billion and $25 billion, he and his Fiat heir-handlers will retreat to café society back in Italy to toast the setting sun and regale each other about saving the automobile industry, while ignoring the fact that the American True Believers involved should really get the credit.
As for the rest, Hyundai and Kia appear to have it together, but then again that’s only an illusion. Both companies are careening around insisting they can cover all of the bases and deal with any curves thrown their way – from the current market to the challenges of future mobility – but you only have to look as far as the disastrous situation at Genesis to understand how truly screwed up these companies really are. The corroded Korean auto executive mindset continues to be a built-in liability that apparently can’t be overcome. This “we know it all, just watch us” mentality continues to wreak havoc on the Korean automakers, and that will continue to be a perennial, unsolvable problem.
As for Toyota, Nissan and Honda, there are bright spots in thought, especially from Akio Toyoda, who has established a war footing at Toyota to counteract complacency and position itself for an ill-defined future. This is helpful but then again, this business will continue to be all about the product. Toyota (and Lexus) continue to have glaring inconsistencies throughout their product lineups, some of them simply inexplicable. The same goes for Honda. Yes, there are bright spots, but how can the abject futility surrounding Acura be explained? After years of ineptitude? And Nissan (and Infiniti) remain mysteries of the modern automotive world. Ghosn & Co. have managed to present rampant product mediocrity as a viable strategy and continue to succeed. Why?
And what can be said about the German automakers? Audi, BMW and Mercedes-Benz continue to try to be all things to all people with varying degrees of success, churning out everything from electric cars to SUVs to high-performance monster cars that remind them of their glory days. Except that there are such fundamental issues roiling these German automobile companies that they cannot be ignored or swept under the rug. The identifying brand identities for these manufacturers have been so watered-down and muddled that it’s no wonder that they’re having trouble defining their futures. The “good” parts of these companies are being overwhelmed by the “bad,” and then the German auto execs are left to wonder why they’re having so much trouble keeping their respective brand focuses intact. Well, it doesn’t work that way. Trying to play the “all things to all people” game eventually catches up to you. And now these German auto executives have woken up collectively muttering to themselves, "What happened?”
Take Porsche, for instance. Porsche executives remain absolutely convinced that the company’s foray into its new, all-electric vehicle will be fully embraced by its buyers, a constituency made up of the original enthusiasts who embraced the brand way back when but who are now drifting away only to be replaced by consumers with only a casual relationship with the rasion d’etre that used to define Porsche. This isn’t an insignificant problem, but Porsche executives feel that since they managed the transition into SUVs, having one or two (or more) all-electric Porsches shouldn’t be much of a problem. Except that the qualities that Porsche has long espoused as being part of its brand makeup simply won’t be a part of its new all-electric super sedan, starting with the lack of that distinctive Porsche sound. Porsche executives are about to find out that this silence will indeed be deafening, no matter how they spin it.
This business remains a glittering spectrum made up of a million bits and pieces. Yes, there are shards of light and excellence, but those are just furtive glimpses. The broader view is of a teeming stew of mediocrity that ebbs and flows with the inflated certainty and optimistic pronouncement of too many executives with only a fleeting familiarity with reality.
And that’s the High-Octane Truth for this week.
FORD IN FREE FALL.
5 May 2018 at 9:50am
By Peter M. DeLorenzo
Detroit. Depending on one’s point of view, last week’s column either praised the Ford executive team for making a market-driven decision to reduce the number of its car nameplates, or slammed Ford for abandoning the car market. Though I took pains to present the rationale behind both sides of the decision, the more I’ve thought about it, the more it became very clear to me that Ford – at least certain Ford executives – have lost their frickin’ minds for walking away from the car market, especially with its very competitive Fusion.
I should point out that there is much more to this story (there always is), and it should also serve as a reminder of why you come here in the first place, which is to get the nitty-gritty insider stories of this business that you can’t find anywhere else.
But before I get into that, Ford in Free Fall? Come on! How can that be? Isn’t this the home of the vaunted F-150, the most dominant vehicle in this business for more than four decades and a cash machine of Brobdingnagian proportions? Yes, it is. The F-150 is The Franchise, and its success powers the company machine, keeping the whole enterprise going.
This success doesn’t come easily or automatically, however. Ford happens to have the best sales team at its disposal, led by one of the savviest executives in the business – Mark LaNeve – and it’s because of him and his team, the consistent excellence of the F-150 and the fact that Ford has some of the finest dealers in the industry that the Ford cash machine keeps going, month after month and year after year. But take away the F-150, and Ford would be just another car company struggling to keep the enterprise afloat.
It may also help to remember that Ford is an extremely unique enterprise in that the Ford family controls 40 percent of the company through special stock. And for most around these parts that is a very good thing. Often referred to as “Ford’s” - as in, “I work at Ford’s” – Ford dominates so much of the local landscape (The Detroit Lions, The Henry Ford museum, etc., etc.) that through its many involvements with social and charitable initiatives over the decades, it has become an integral part of the fabric of this community, and there is a distinct sense of pride associated with the company because of that. But that doesn’t mean everything is rosy in Dearborn. Far from it in fact, because the internal hand-wringing over this “let’s get out of the car business” decision has exposed the ugly underbelly of what the Ford Motor Company has become, and it now finds itself at the most precarious moment in its history – yet again – because of it.
Yes, the resolute and intransigent bureaucratic fiefdoms that have always defined Ford have reared their ugly heads again, but then again that was to be expected. After Alan Mulally left, they just dusted off their pitchforks and resumed their narrow-minded shit disturbing, company goals be damned. But that’s almost a given at Ford, it’s as much a part of the company’s corporate culture as the Mustang. But that’s not the reason the company is in trouble again.
Chairman Bill Ford Jr., who made the brilliant and gutty move to bring Mulally in when the company was in danger of imploding more than a decade ago, was faced with a similar decision when Mark Fields was exited from the company a little more than a year ago. If Bill had his druthers, Alan would be just now getting ready to retire, he wanted him to remain as CEO that badly. And although this was a view that was shared by many, alas it wasn’t to be the case. So, having gotten to know Jim Hackett over the years, Bill alighted on the notion that Hackett could be The Guy.
And in some respects, Jim showed flashes that he could be The Guy, but only intermittently. Hackett’s esoteric pronouncements and his vision of the future – defined by connected cities et al. – and the Ford Motor Company’s role in it were all deemed well and good, but meanwhile the machine that defines Ford wasn’t being served. The High-Octane Truth is that Hackett, a decent, smart and well-meaning guy, just doesn’t have the depth and breadth of experience to make a real difference at Ford. And right now, the one thing Ford desperately needs more than anything else is a chief executive who understands this business inside and out, and can guide Ford through perilous waters.
I mentioned the notion of "cutting to prosperity" last week, which never, ever works in this industry. But unfortunately the internal climate at Ford right now is exactly that: cutting, cutting and more cutting, which is a giant bowl of Not Good. You would have to assume that what to do with Hackett would be Bill Ford’s most pressing problem and it certainly is, because many now view the selection of Hackett as being an interim choice. And whether Bill Ford is willing to admit that to himself or not, the difficult decision about who will lead Ford into the future is now front and center, as well it should be.
But another situation is roiling Bill Ford’s decision making at this very moment, and it involves the rise of another executive, one who is unfettered by rational thought and untethered by accountability, and who has gone completely off the rails. Jim Farley, the former Toyota wunderkind who was responsible for the launch of the Scion brand, was brought in by Alan Mulally to be Chief Marketing Officer way back when. And not unexpectedly, his debut at Ford didn’t exactly get off to an auspicious start. Farley didn’t waste any time transforming himself into an enfant terrible right out of the gate. Displaying a prodigiously short attention span and burdened by an excruciatingly painful interpersonal awkwardness, Farley’s belligerent, condescending style of dealing with underlings, along with his classic “parachute in, helicopter out” M.O. that has defined bad actor executives for decades in this business, became his calling card. Internally, Farley became known as "The Two Jims," and interactions with him became a crap shoot, hinging upon whether people encountered the "good" Jim or the "bad" Jim on that particular day. Needless to say when the "bad" Jim was unleashed, Farley left a trail of bad feelings and highly questionable decisions in his wake.
Farley has long considered himself to be “the smartest guy in the room” at Ford, much to everyone’s endless chagrin, because the reality is that he isn’t. It’s a carefully crafted façade that is hollow to its core. Farley’s bad executive behavior starts with his inability to listen, considering his own counsel to be by far the best source when it comes to decision making. (Ironically this is the absolute opposite of Alan Mulally, who regularly canvassed multiple constituencies on major decisions.) And because of that, as well as a host of other annoyances, Farley left such a bitter taste in people’s mouths that when he was shipped off to run Ford of Europe several years ago the overwhelming sense of relief internally at Ford was palpable.
Blissfully unaware that he was universally loathed back in Dearborn, Farley seized upon his assignment in Europe, seeing it as a stepping stone to the executive suite at Ford. And the planets were aligned for him to come off as a hero there, too, because the European market had been in the doldrums for so long that the only way it could go was up. Steve Odell, who had been running Ford of Europe and had done all of the heavy lifting by closing plants and laying off people, set the table for Farley to succeed. And the inevitable happened, as Ford’s fortunes recovered in Europe along with the overall market. Farley took advantage of the opportunity and made sure all of the execs back in Dearborn could see what a genius he was, and unfortunately, too many fell for it.
The problem with all of this was that once Mark Fields was jettisoned from the company, not only did Bill Ford bring in Hackett, he brought Farley back from Europe, and made Joe Hinrichs and Farley co-No. 2 executives reporting to Hackett. And it proved to be a fateful decision, because at that very moment Farley decided that he was very much going to be The Guy.
As I said previously, an emboldened Farley, unfettered and untethered, turned out – predictably – to be disastrous. With his eyes set firmly on Hackett’s job, the very worst of Farley returned to Ford headquarters, only now his most repugnant qualities were magnified and amplified, with no one seemingly able to rein him in.
Besides his now-signature belligerence and rudeness in full view, Farley started to get out ahead of his skis, making decisions that were puzzling at best and potentially harmful to the long-term health of the company. Having been gunning for Ford’s advertising agency – the WPP-owned GTB – for years for slights both real and imagined, Farley almost immediately put the massive Ford account up for review. This, after WPP/GTB had been involved with Ford for 73 years. Could the advertising be improved? Certainly. And there's a way to do that. But destroying a long, fruitful relationship to assuage Farley’s gargantuan ego was flat-out irresponsible and uncalled for.
Farley also commandeered company appearances in front of financial analysts, something completely beyond his ken, thinking that if he demonstrated his acumen there that he would gain favor with Bill Ford and the board. And true to form, this proved to be a total disaster as well. Industry analysts are still talking about Farley’s cringeworthy performance at the Deutsche Bank Global Auto Industry Conference here in Detroit back in January, where he came off as being someone who was flippant, woefully ill-prepared and not ready for prime time, and consequently Ford came off poorly too. Do you wonder why Ford can’t gain any traction on Wall Street? Farley’s dismal performance that night didn't do the company any favors.
And then there was the “we’re going to get out of the car business” decision that turned out to be an unmitigated PR disaster, because it was handled poorly and came off as a knee-jerk pronouncement that hadn’t been thought through. It turns out that the idea was Farley’s (no big surprise), wittingly or unwittingly aided and abetted by CFO Bob Shanks. And internally it bore the signature of a classic Machiavellian move by Farley as well, because Joe Hinrichs wasn’t even aware that it was going down until after the fact, which is almost beyond comprehension. (Editor-in-Chief's Note: I spoke with Mark Truby, Ford's PR Chief, and he said that Joe Hinrichs was aware of the car decision. I stand corrected. -PMD)
Am I picking on Farley? Hardly. I have only scratched the surface in describing this egomaniacal character and his blatant power grab, and the sad thing is that there are several other areas he is seeing fit to mess with inside of Ford that could wreak havoc on the company’s future for years. And this simply shouldn’t be, of course. One bad actor shouldn’t be causing this much consternation and hand-wringing throughout the enterprise, threatening to jeopardize everything the Ford Motor Company stands for. When everything is factored in, Jim Farley is simply the wrong person, in the wrong place, at the wrong time.
Bill Ford has a very difficult task facing him. He has to admit publicly (after first admitting it to himself) that Jim Hackett isn’t The Guy. Then he has to make sure that Jim Farley is kept as far away from being The Guy as is humanly possible, because left unimpeded Farley will be detrimental to the future of his family's company.
I closed last week’s column with the following words, which still resonate loud and clear today:
“In the meantime, since its future product announcement didn’t exactly set the world afire, the Ford executive team needs to press the reset button and focus on the task at hand. That means focusing on designing, engineering and building the best products they can muster for every segment the company competes in, despite the Wall Street cloud of negativity hanging over them.
Because in the end, there is one fundamental aspect of this business that will never change, and that is that it’s about the product, it has always been about the product, and it always will be about the product.”
And that’s the High-Octane Truth for this week.
MUCH ADO ABOUT SOMETHING.
30 Apr 2018 at 5:00pm
By Peter M. DeLorenzo
Detroit. The news that Ford was cutting most of its passenger car lineup, deleting the Fiesta, Fusion, and Taurus in favor of building more crossovers and SUVs seemed to set off a media firestorm last week. Yes, the Mustang will survive, as will an activity vehicle/wagon based on the Focus imported from China, but from this point forward Ford will be all trucks, crossovers and SUVs, all the time.
Why this news seemed to capture the media’s fancy seemed a little odd to me, considering the fact that this was an American automobile company being proactive while anticipating and positioning itself to take advantage of market conditions that were destined not to change anytime soon. And I am quite sure if this was an imported car company declaring this step, the hand-wringing would be negligible to nonexistent. But then again this is Ford, and the mainstream media feels it is eminently qualified to weigh in on the matter, even if too many of its members are not.
Taking a closer look, on the one hand it’s easy to see Ford’s point of view on this. Keeping plants open to build slow-selling products may have been a signature of Detroit’s “old days” but it is a nonstarter in today’s cutthroat automotive environment, because the burn rate of cash to keep the enterprise afloat is simply too staggering to contemplate. And of the three vehicles in question, the Taurus easily won’t be missed, and neither will the diminutive Fiesta. The Fusion is a worthwhile sedan, however, and I can see why it will be the last of the vehicles to go. (And these products won’t cease to exist this week; it will be a gradual phaseout over the next two years.)
On the other side of the equation, by eliminating these vehicles Ford will be willingly ceding even more market share to the Japanese and Korean manufacturers, who are not walking away from building cars at all. Is it really worth doing that?
But there is a third dimension to this story that people are forgetting. The news of these product moves wasn’t really aimed at public consumption. These moves were squarely aimed at the skeptics on Wall Street who are routinely dismissive of Ford, and who regularly play a role in suppressing the price of Ford stock. In fact, CEO Jim Hackett has been regularly skewered by Wall Street-types for not doing enough in his tenure, and this move was meant to demonstrate to the critics that Ford is moving decisively to position itself for the new normal in the U.S. market by catering to American consumers’ seemingly insatiable desire for trucks, crossovers and SUVs.
When these product moves became public, however, the media jumped all over the news, dredging up what the Taurus once meant to Ford (albeit a long, long time ago) and portraying this development as nothing less than The End of the American Automobile as We Know It. This wasn’t accurate, of course, but for a hectic week in Dearborn the Ford executive team and its PR minions were forced to backpedal and assume a defensive posture, while taking great pains to explain its rationale.
And what the Ford executives were saying made sense of course, as consumers’ need for versatility, usability and adaptability in their vehicles shows no signs of abating, and Ford would be stupid not to reconfigure its product portfolio to take advantage of a trend that is not going away any time soon, as I said previously. Unfortunately, the dominant takeaway in the media and the angle that was splashed over a wide swath of media outlets across the country was that Ford – in spite of all of the explaining and justification for its future product moves – had somehow blown it and even let the American public down, which is a giant bowl of Not Good from Ford’s perspective.
This should be a hard lesson for the denizens of Dearborn, however. Catering to Wall Street is a dangerous game, especially when the domestic automobile industry has always been considered an anachronistic afterthought from a forgotten time languishing in the flyover states. The auto business is too down and dirty for the swells and smugly defined hordes that fancy the bright and shiny objects over everything else, which is exactly why Elon Musk has gotten away with squandering billions while Wall Street keeps propping up Tesla stock against all rational evaluations.
And don’t think ego isn’t playing a role in this either. It grinds the executive team at Ford to no end that GM’s stock has performed appreciably better, and that the GM executive team is considered to have it going on by the Wall Street types, while Ford doesn’t. Jim Hackett in particular has been taking direct broadsides from Wall Street, as they fail to see why they should be buying into Hackett’s somewhat esoteric vision for Ford at this juncture. Hackett has been going on the counterattack to deflect this criticism, embarking on a ruthless cost-cutting initiative that is reaching into every corner of the Ford organization in an effort to demonstrate to Wall Street that it will be lean and fit for the future. (I have one major caution for Mr. Hackett, however, and that is that you can’t cut your way to prosperity in this business; this has been proven time and time again.)
The harsh reality, unfortunately, is that to a large degree Wall Street’s perspective of Ford is not fixable. It is an ingrained notion that, fair or unfair, has been lingering over the company for decades. And there are no switches available to be flipped to fix this either. The bottom line is that the Ford management team’s obsession with justifying the company’s existence for the edification of Wall Street is not likely to yield the results they’re hoping for.
In the meantime, since its future product announcement didn’t exactly set the world afire, the Ford executive team needs to press the reset button and focus on the task at hand. That means focusing on designing, engineering and building the best products they can muster for every segment the company competes in, despite the Wall Street cloud of negativity hanging over them.
Because in the end, there is one fundamental aspect of this business that will never change, and that is that it’s about the product, it has always been about the product, and it always will be about the product.
And that’s the High-Octane Truth for this week.
WHERE DOES CADILLAC GO FROM HERE?
22 Apr 2018 at 1:48pm
By Peter M. DeLorenzo
Detroit. The news that Cadillac chief Johan de Nysschen parted ways with GM last week was a bit of a surprise, but then again, it wasn’t. Anyone who knows de Nysschen, and anyone who knows and understands the GM culture – or what passes for such – knew that it was just a matter of time before the relationship ran its course.
Tired of revamping Cadillac over and over again, and seeing it perpetually languishing in the U.S. market, CEO Mary Barra and Dan Ammann reached out to de Nysschen – the executive who was largely responsible for forging Audi into a formidable force in the U.S. market – where he was temporarily parked at Infiniti, which turned out to be an abbreviated stint after his Audi adventure.
The GM executive team was ultra-aggressive in landing de Nysschen, giving him unprecedented freedom and carte blanche to turn the division around and a five-year contract. But after almost four years into it, the wheels came off, for myriad reasons.
First of all, even though revamping Cadillac was a 15- to 20-year project when looked at realistically, de Nysschen hit the ground running, hell-bent on accomplishing as much as he could for the brand, as fast as he could. Time was wasting, the competition was growing tougher by the minute, and Cadillac, except for a few notable instances, was losing ground at a frightening rate. And GM and the Cadillac dealers embraced the winds of change, going along with de Nysschen’s vision, at least for a while.
But de Nysschen’s brand of tough love was grating and hard to swallow. He demanded that dealers take the long view, and required them to make considerable financial sacrifices, like Project Pinnacle, in order to get where Cadillac needed to go. And de Nysschen’s personality was a complete “180” from what the dealers were used to as well. de Nysschen was viewed as being sober and dour, which, when you get to know him, couldn’t be further from the truth, because he is exceedingly bright and noteworthy for his droll humor and acerbic wit. A true glimpse of Johan came across in his social media forays, where he was blunt, sarcastic and entertaining. But he was never going to be the classic, back-slapping “dealer guy,” and that added to a lot of the dealers’ discomfort.
But beyond that, the “all-in, all hands-on deck” attitude initially displayed by GM management seemed to wane about two years into Johan’s reign. After all, GM insists that it no longer wants to live in a world of 30-day sales reports, but who’s kidding whom here? GM is still deeply ingrained into the 30-day sales report world, and when Cadillac sales didn’t start to show much life beyond the monster sales performance of the Escalade after three years, the natives got restless and started looking at their watches. And once the grumbling and the rancor started in the Silver Silos – fueled by disgruntled dealers – it became a tidal wave.
But de Nysschen didn’t do himself any favors either. As I stated a number of times in my previous columns, de Nysschen’s quest to remake Cadillac in Audi's image was a nonstarter from the get-go. A product strategy that started with chasing the German ideal of a luxury-performance car not only ignored Cadillac’s historical legacy, but it emphatically stomped on it.
(As for the move to New York, that idea originated well before de Nysschen arrived at GM in the summer of 2014. To be sure, Johan was given the “go/no-go” decision, and everyone consequently bought into the idea that to understand the luxury market you had to be in a luxury market. I don’t necessarily buy that. Yes, I could see putting a young marketing team there as idea generators, but you have to ask yourself this: If Cadillac had instead refurbished a warehouse space in Detroit with a historical connection to the origins of the automobile industry, wouldn’t they look like the mavens of hipness now? And then would the whole New York thing be missed? (How about no?)
And the insipid, Audi-esque alphanumeric naming regimen didn’t help either. Cadillac was leaving great names from its past on the shelf, in favor of generic monikers such as ATS, CTS, and CT6. Consumers were confused enough as it was about the size of Cadillac vehicles and their close proximity to each other, and the lack of names made it even harder for consumers to figure things out. Example? The best-selling Cadillac by far is the Escalade. And this just in, it has a name. (Even Lincoln operatives have figured this out, abandoning their alphabet soup designations for real names.) Great Cadillac names were readily available and just sitting there, but the rigid adherence to the Audi playbook just wouldn’t allow de Nysschen & Co. to go down that road.
But then again, the pricing strategy that de Nysschen enforced for Cadillac might have been his most strategic error. I understand that de Nysschen and the True Believers at GM Design, Engineering and Product Development believed in their work and were proud of it, as well they should be. But that doesn’t mean consumers automatically understood it, and instead of pricing Cadillac sedans notably below their German competitors in order to start to make inroads in the segment, Cadillac sedans hit the market priced right on top of models from Audi, BMW and Mercedes-Benz, which just didn’t translate into a believable reality for most consumers. (The V series cars were another thing altogether, more on that below.) A perfect example of this? When the much-ballyhooed CT6 hit the dealers, too many of them had stickers in the $80,000+ range, and consumers were perplexed as to why. Yes, de Nysschen could justifiably point to higher transaction prices for Cadillac since he took over, but when you aren’t selling enough cars, it was a hollow victory at best.
Add all of these factors together and you have a recipe for Not Very Good. Barra and Ammann had committed $12 Billion to Cadillac’s turnaround, and even though there were a lot of positives introduced to the brand by de Nysschen, the results simply weren’t there, at least not notable enough or fast enough for GM operatives.
And the pressure was getting ramped up, especially with Cadillac sales down overall in the U.S. market for the second year in a row, despite the fact that Escalade was a consistent hit. (Cadillac is doing well in China, but because of the joint operating agreements, the profitability just isn’t enough.) The dealers weren’t happy* and demanding more action in the market, meaning more aggressive incentives because they were getting their asses handed to them. In other words, de Nysschen’s pricing discipline had run aground, and they wanted relief. (*Let's be clear, dealers are rarely happy, but Johan got off on the wrong foot with too many of the dealers from the beginning and it never got better.)
In the end, de Nysschen was given a list of issues that needed to be addressed, many of them clearly not consistent with his vision for the brand, so he agreed to disagree and walked, saying, “It happens. It’s not personal. It’s business.” He’s right, of course, and make no mistake Johan de Nysschen will surface again, as there are any number of car companies that could use his experience and visionary perspectives.
But now, GM has tapped its former head of operations in Canada, Steve Carlisle, to run Cadillac. A longtime GM veteran, Carlisle will be giving a new set of marching orders, many of which will most likely move away from de Nysschen’s previous directional attachments.
But as you might expect, I have my own set of recommendations for saving Cadillac:
1. Move Cadillac in a new strategic direction. As I said previously, ignoring Cadillac’s historical legacy is a nonstarter and an egregious mistake. Despite decades of German automaking superiority, the Cadillac name still resonates around the world as one representing the best of the best. It may not live up to the classic moniker “Standard of the World,” but it’s still the legacy that must be pursued. Cadillac should stand for luxury, elegance, power and design leadership. In short, Cadillac should be allowed to be Cadillac. It doesn’t have to live up to some other car company’s ideals, because living up to its own historical legacy should be impetus enough to aspire to greatness. The True Believers in Design, Engineering and Product Development understand all of this implicitly. And it’s time to refocus their energies on creating the Best of Cadillac.
2. Bring the names back. Starting with the established Escalade, rename the XTS the Fleetwood and go from there. Cadillac has a deep reserve of names (Eldorado, anyone?) along with more recent names like Ciel, Elmiraj and Escala. Names resonate. Names imbue character and personality. Cadillac has some of the best names available in this business. Use them. Now.
3. Gut the portfolio and start over. I’ve seen the new Escalade and it will continue to be a monster hit, if not more so, but from there big changes need to be made. Start by deleting the ATS and the CTS immediately. Then take the Fleetwood (formerly known as CT6) and give it an avant-garde, future-defining Cadillac skin. Cadillac won’t need another sedan if it’s done right. Do the same with the XT5; it’s nice, but nice isn’t anywhere near good enough. The XT5 needs to be better by half. The XT4? Start over. There’s no “there” there. Cadillac had time to make the XT4 a segment-leading product and it isn’t even remotely close, which is disheartening.
4. Say goodbye to the V series. Look, as AE readers know, I like performance machines as much as anyone, and the CTS-V and ATS-V are some of the best driver’s cars in this business. They are examples of the kind of work GM’s best and brightest can do when they set their minds to it, and they are indeed impressive machines. But that doesn’t mean they need to be Cadillacs. In fact, their architectures would be fine starting points for the new Corvette Division that I have been talking about for more than five years now at least. This would take real vision, however, and it would be a real departure in order for GM management hierarchy to seriously consider it. But if Porsche can do it, I firmly believe GM’s True Believers could do it just as well if not better for a new Corvette Division.
5. Delete the Cadillac Racing program. As most of you out there know, I am a huge proponent of racing as a genuine marketing tool when it is applied properly. It benefits Engineering Research and Development, and it’s the most worthwhile training ground for young engineers that there is. But that doesn’t mean every racing program has merit and context. Let’s face it, GM Racing’s decision to compete in IMSA’s top prototype series with “Cadillac-branded” prototypes was a politically expedient one that really had nothing to do with Cadillac as a brand. And it really will have nothing to do with the Cadillac brand going forward. When the new mid-engine Corvette arrives in IMSA's GTLM class, that would be the time to re-brand the GM Racing prototypes as well.
6. And Cadillac marketing needs to be overhauled too. A new divisional strategy will require a new marketing strategy, because flipping a switch to "tune up" the advertising never works, especially in this situation. And it's up to Deborah Wahl, Cadillac's new CMO, to figure it all out. She has the relevant experience, but does she really know what she's getting into? Does she understand that Barra and Ammann fundamentally do not believe in the power of marketing and advertising? At least not enough to hire an actual CMO for the executive suite, who would then lead all of the divisional marketing efforts? Why do you think they leave it to the divisions? Because they don't want another seven-figure salary parked in the executive suite, and they pay dearly for that misguided notion every single day. Does Cadillac marketing and advertising need to be overhauled? Yes, of course it does. But without a carefully thought-out strategy that would point Cadillac in the right direction, none of my previous points will matter one bit.
Ms. Barra and Messrs. Ammann and Carlisle need to ask themselves the following hard questions: What is Cadillac? Better yet, what should Cadillac be about going forward? Then instead of paying lip service to the brand they need to become True Believers, because the Cadillac name has resonance and power and a genuine historical legacy that could and should become the foundation for greatness again.
And that’s the High-Octane Truth for this week.
VW PRESSES THE RESET BUTTON, YET AGAIN.
16 Apr 2018 at 12:26pm
By Peter M. DeLorenzo
Detroit. Every few years or so of late VW undergoes a boardroom coup and a new leader emerges. This time it’s Herbert Diess, a German auto industry lifer who maneuvered the all-powerful supervisory board to get rid of the previous CEO, Matthias Mueller, who had been on the job for less than three years. That Diess weaseled his way in and around the supervisory board behind the scenes to lay the groundwork for Mueller’s ouster is not exactly a secret. But then again this is par for the course for a German company that seems to thrive on corporate intrigue and skullduggery, going way back to the Ferdinand Piech dictator days.
Mueller was summarily dismissed after having steered VW through the worst and most costly crisis in its history, the Diesel cheating scandal. That Mueller was able to do this while still delivering notable profits and developing a future product plan skewed heavily to electric vehicles is inconsequential at this point, because his time at the helm was abruptly, and for the most part undeservedly, ended.
And like every new VW Group CEO before him, Diess is out to change VW’s way of doing business by rocking the too often conservative automaker to its core. This means jettisoning some current holdings accumulated over the years, like Ducati, and coming to grips with the fact that the VW Group has way too many employees by half. What Diess will be able to accomplish when it comes to cutting the company’s bloated workforce remains to be seen, but previous CEOs have always talked a good game but remained unable to deal effectively with the superpowerful unions. So that part of his new plan doesn’t bode well.
Another part of the Diess plan to jump-start VW is to focus on the U.S. market, taking a page right out of Mueller’s playbook. But this is something I’ve heard before too. VW’s marketers have been rumbling, bumbling and stumbling in this market for years, thinking they know what’s best for American consumers, while saddling dealers with ridiculously named products that were difficult to sell and handicapped right out of the gate. And though the clouds seemed to part long enough for the light to shine on the Atlas – both with the product itself and the name – VW went right back to their time-honored and confusing ways by displaying a concept for a mid-size pickup truck recently at the New York Auto Show called the Tanoak. Uh, excuse me, but WTF?
The VW Tanoak pickup truck concept.
And despite the fact that VW operatives make some brilliant driver’s cars available in this market like the GTI and R, the reality is that the company’s product line in the U.S. is a mishmash marked by fits and starts. For instance, the all-new Jetta sedan comes better equipped with a lower price, but it’s so painfully conservative to look at that you’d have to be a devoted Jetta owner to give it even a second look. Not exactly the kind of inspiring product that will generate momentum in this market, that’s for sure.
The new VW Jetta.
And what about the all-new Tiguan? After the success of the Atlas, you’d think that VW operatives would take a flyer at a new name for the small crossover to give it some real juice in the market, but no. Not only that, the “new” Tiguan is another blandtastic design that doesn’t resonate in the least. And it’s too heavy and gets marginable mileage to boot. Not exactly a recipe for success to put it mildly.
The new VW Tiguan.
Yes, VW has some products in the works that show promise, like the Arteon, which is the successor to the CC but then again, it’s a sedan in a SUV-crazed market so what are VW dealers supposed to do with it? Sell it as a junior Audi?
The VW Arteon.
And then there’s the new five-seat version of the Atlas SUV, which dispenses with the third row and injects more style into the equation. Now this product does have real potential, and it should be here by the end of the year. So there’s that.
The five-seat Atlas.
And then, of course, there’s the VW I.D. BUZZ concept, the all-electric bus that if executed properly should be a grand slam, frickin’ home run. But that’s a big “if” and it’s two long years away.
The VW I.D. BUZZ concept.
Memo to Mr. Diess: If you really want to focus on the U.S. market, I suggest you and a handpicked team of product planners, engineers, designers and marketers come over and live here for one solid month. Roam around, take in the sights, and then really listen to people and observe, more than you talk. You can start by listening to the American VW operatives already in place, including the long-suffering dealers. They know and understand this market better and with more depth than you and your colleagues ever will. That means setting aside the built-in tendencies of every German auto executive who has ever walked on the face of this earth to think that they know better than anyone else in absolutely every given situation, especially when it comes to the U.S auto market. This just in: You don’t, Mr. Diess… and neither do your cohorts.
Pressing the reset button for VW - yet again – is a noble endeavor, Mr. Diess. But it’s fraught with peril brought on by classic executive intransigence and the “we know what’s best for you” syndrome that runs rampant throughout VW headquarters in Wolfsburg. And if you can’t break through that and bury it for good, it won’t matter how good the I.D. Buzz is.
And that’s the High-Octane Truth for this week.
A GIANT ?WE?LL SEE.?
11 Apr 2018 at 8:02am
By Peter M. DeLorenzo
Detroit. As readers of this website are well aware, I haven’t taken too kindly to the notion that Alfa Romeo, as a brand, can be resurrected successfully with a flip of a switch or a snap of a finger. As much as a certain CEO at FCA would like it to be so, and promised it to be so, the launch of Alfa Romeo back into this market has been a long and painful slog, stumbling out of the gate and ricocheting in fits and starts. The incessant bluster and braggadocio didn’t help, but nonetheless it is a very hard task even under the best of circumstances, and for a brand that has been long moribund in this country it was bound to be particularly difficult.
So where is Alfa Romeo now? Let’s take a look at March 2018 sales and for the first quarter (thanks to Automotive News for the data). Alfa Romeo sold 22 4C sports cars (54 total for the year so far), 1,284 Giulia sedans (3,085 for the quarter) and 1,270 Stelvio crossovers (2,653 for this year). Yes, minuscule numbers to be sure, although the Stelvio and the Giulia actually outsold the ballyhooed Cadillac CT6 in March.
So, as I said, this is going to take time, but any notions that Alfa Romeo would be selling 70,000 vehicles in the U.S. in 2018 have long been abandoned, succumbing to the cold winds of reality. But progress is indeed being made, and though the glitches and annoyances on early product – even on the hand-massaged press cars – seemed to reaffirm consumers’ misgivings about embracing a brand that never exactly bathed in a glow of a sterling reputation for quality and reliability, Alfa Romeo is present and accounted for here.
The show pony cars that Alfa Romeo operatives provided to the press – the Giulia Quadrifoglio and the Stelvio Quadrigoglio – delivered impressive performance with their 505HP Twin-Turbo V6 engines, but those $80,000-plus vehicles are not going to determine the fate of Alfa Romeo in this market, just as the lithe 4C sports car wasn’t going to.
No, the real future of Alfa Romeo here in the U.S. is the daily, one-vehicle-at-a-time sales grind. It’s all about convincing consumers that Alfa Romeo vehicles are not only worth a look, but that they’re actually worth considering owning. This is a huge leap for most people, because beyond the flashy advertising for Alfa Romeo going on right now, it means consumers making the effort to go to an Alfa Romeo dealer after stops at Audi, BMW and Mercedes-Benz. But the Italian march-to-a-different-drummer appeal can only go so far in the showroom. Alfa Romeo vehicles have to stand up to intense scrutiny, and they have to provide enough of a driving difference to make consumers even embrace the thought of spending real money on them. And even once those consumers make that leap, those machines have to run flawlessly with no issues, repeat visits to the dealers, or any other problems that can turn into the kind of horror stories that can swallow a brand. Taking all of this into account, Alfa Romeo is up against it in this market. It’s a rigorous 24/7 journey that requires relentless drive and focus, and traction will only come in the smallest of increments. A switch can’t be flipped, and a finger can’t be snapped to make it go any quicker either.
After writing this column for going on nineteen years, it has been hard to watch as mistakes are repeatedly made in this business. It’s as if serial incompetency is handed down on silver platters to the next generation of auto executives and there’s no accrued learning of any kind, certainly not enough to keep those same mistakes from being made. And Alfa Romeo operatives are certainly not immune from the kaleidoscope of pitfalls and missteps that can happen.
Knowing all of this, it has been easy for me to criticize the notion of a rejuvenated Alfa Romeo, especially when you throw in the constant “it won’t be long now” bleating that seems to come with every FCA product initiative. But, and this will be a shock for most, I am about to take the leap to find out about the Alfa Romeo brand for myself.
No, I don’t want to read one more Quadrifoglio review from a racetrack, which counts for not much when you really think about it, and I don’t want to hear another opinion from a journalist who will never own an Alfa for him or herself either. That’s easy, and that has been the conundrum in the car writing game for decades. You write about a car and you move on to the next. You provide opinions and perspective about vehicles you will never drive again let alone own.
I have my own lingering questions about Alfa Romeo. Is it viable in this market? Does it have a real chance? How does it feel? How does it drive? How is it to live with on a daily basis? There really is only one way to get answers to those questions from my perspective. And it’s not by having an Alfa to drive for a week. So, I am in the process of acquiring a 2018 Alfa Romeo Stelvio Ti AWD. And no, it isn’t being provided by the manufacturer for a free, long-term test drive. I am engaged in this process like a reader would be – I’ve been to the dealer, I’ve got the lease numbers and I should be driving it today.
Do I need to do this? No, but as critical as I’ve been of FCA through the years, I am going to give the Stelvio a real shot. And I will provide occasional updates in our “On the Table” column. Incredibly enough, it will be only the third Italian car I’ve ever owned. The first was a used ’68 Fiat 850 Coupe, and then there was a new ’80 Fiat Strada, because I worked on the sales training materials for that car. And now, the Stelvio.
I don’t know if it’s a leap of faith, but it’s a leap nonetheless.
And a giant “We’ll See.”
And that’s the High-Octane Truth for this week.
THE GOOD, THE BAD AND THE MOSTLY UGLY FROM THE NEW YORK AUTO SHOW.
2 Apr 2018 at 9:46am
By Peter M. DeLorenzo
Detroit. In the aftermath of the New York Auto Show, it’s clear that just showing up still counts for something in this business in some circles, which is beyond unfortunate. But being present and accounted for doesn’t constitute a marketing strategy, or a bold reach – it’s just showing up.
This was most evident in the introduction of the Cadillac XT4, which is an homage to the uninspired and expected, and living, breathing proof that Cadillac is utterly lacking in originality at this juncture. One look at the cohesive visual brilliance of the Jaguar I-Pace will tell you just how much GM Design phoned it in with the XT4. (See more of Peter’s comments about the New York Auto Show in “On The Table” -WG)
The Cadillac XT4.
And the CT6 V-Sport doesn’t change my opinion of Cadillac one iota. It’s a niche of a niche machine that means nothing for the brand’s tenuous upward trajectory, because Cadillac is now mirroring Buick in that it exists for the Chinese market, and everything else is just going through the motions. Which is why its racing program is vaporware and why its entire high-performance push exists in a vacuum that means exactly nothing. I have been saying this for at least four years now: Corvette should become its own division within GM and all of Cadillac’s V performance cars – which are outstanding – should be rebranded as Corvettes, because those cars are nonsensical with a Cadillac badge.
The Cadillac CT6 V-Sport.
But then again that’s not all that’s wrong with Cadillac. You only have to look at the new 2019 Lincoln Aviator to see that Cadillac is about to get its ass handed to it in the market. Everything about the Aviator is slick and silky smooth, from its tapered profile to its exquisite interior, this SUV has hit written all over it. And Lincoln’s rejuvenated embrace of real, actual names for its vehicles is going to pay massive dividends in the market as well, while Johan de Nysschen’s continued quest to remake Cadillac in Audi’s image – complete with coldly uninvolving alphanumeric nomenclature – is resonating with no one. Just a reminder: what is Cadillac’s most sought-after product (besides the internally ignored old school XTS sedan)? The Escalade. There’s a reason for that, but it’s just too bad that Cadillac operatives simply don’t get it.
The Lincoln Aviator.
The Lincoln Aviator.
The Lincoln Aviator.
And another thing wrong with the XT4? Cadillac PR minions chose to use the hoary "First Ever" moniker in its communications, which is hands-down the most tedious and unoriginal buzz phrase in current PR speak. Sad to say that they are not alone, because Ford is running launch advertising for its EcoSport subcompact SUV with the words “First Ever” figuring prominently. It’s like a plague or something and I find it depressing that a total lack of originality seems to be running rampant throughout the business right now. This just in: “First Ever” means absolutely nothing, you unmitigated hacks. Get a new idea, and quick.
In other news from New York, Hyundai unveiled a magnificent piece of vaporware for its Genesis brand with its Essentia Concept. (See it “On The Table” -WG) It’s nicely rendered and executed, but it does nothing to quell the feeling Genesis dealers have that the brand is in disarray and that the whole thing is hanging by a thread. They’re right, of course. Hyundai arrogance and hubris – which are so deeply ingrained that they are part of the brand's soul – have led Hyundai operatives to botch the introduction of the Genesis brand from the get-go, and they’re still throwing ideas up against the wall to see what sticks. If Genesis continues floundering the brand will disappear into the ether by 2020.
The Genesis Essentia Concept.
The Genesis Essentia Concept.
Other brands were either worth mentioning for the right reasons, or the wrong reasons. GMC blew their brand conceit to smithereens with its Sierra AT4. I only have one simple question: Why? And a follow-up: WTF were you guys thinking? Never mind, clearly you weren’t. The Sierra AT4 is apropos of nothing to do with the GMC brand.
The GMC Sierra AT4.
And I don’t have to ask what Acura operatives are thinking anymore, because they have been lost in the Twilight Zone for years. The RDX is abysmal, proof positive that they don’t have a clue as to what they’re doing. Honda needs to press the reset button for Acura and start over. It’s the only hope for the brand.
And the new Hyundai Santa Fe was simply forgettable, which means more of the same from the Korean brand. The Nissan Altima seems better overall, but since Nissan deploys some of the consistently worst designs in the business it’s more of a sigh of relief than a rousing endorsement. And the Toyota Corolla Hatchback is a significant upgrade and nicely done.
My final comment today is about Porsche. I knew this was coming and it was probably inevitable, but we have reached Peak Porsche. This isn’t about the fact that it’s predominantly a truck brand, because every automaker worth its salt is a truck brand now. There was something missing about Porsche at the New York show, a hollowness that was palpable.
Porsche 911 GT3 RS.
The German manufacturer had on display a yellow 911 T, a lime green 911 GT3 RS, a silver Cayenne and two white Panamera Hybrids (one of them a Sport Turismo). The most alluring Porsche on display? A beautifully restored white 356 Cabriolet from Porsche Classic. What does that tell you? My feeling is that endless variations of the 911 is a product strategy that has been played out. And the modern Porsche models on display felt calculated and oddly uninvolving. The GT3 RS seemed like it had been done 1000 times before, because well, it has, and the 911 T is yet another blatant money grab adhering to the traditional Porsche marketing formula, which goes something like this: De-contenting + Limited Production = Piles of Ca$h. And the Panamera models were coldly antiseptic and off-putting, like they showed up to a party that they weren’t invited to.
Memo to the brainiacs at Porsche: you have reached a critical juncture in your history, and I'm not even sure the much-touted, all-electric "Mission E" machine will be enough to save you. Porsche has become ubiquitous in the leafy suburbs and urban centers all across the country, but is that a good thing for the long-term health of the brand? I will answer that for you, no, it isn’t. We watched as BMW strategists embarked on a strategy of putting a BMW in every neighborhood in America, chasing niches both real and imagined, and the result is that the brand has lost its luster (see Peter’s comments about the BMW 440i in “On The Table” -WG). And now Porsche seems to be doing the same.
Porsche operatives need to ask themselves the following: What is Porsche? Why does Porsche exist? Where do we – as a company – go from here? And why should we – as enthusiasts – care? And remember one very important thing, just having hybrids and BEVs does not mean the brand will survive.
And that’s the High-Octane Truth for this week.
ON THE EVE OF THE NEW YORK AUTO SHOW, THE DETROIT AUTO SHOW FADES TO BLACK.
26 Mar 2018 at 10:49am
By Peter M. DeLorenzo
Detroit. So, here we are in the Motor City, still one of the most vibrant technical centers in the United States and the world – much to Silicon Valley’s chagrin – and the unquestioned capital of the U.S. auto industry. A region that is seeing an infusion of new technical investment unprecedented in its history from companies around the world. A region anchored by Detroit, the city that is undergoing a much-touted renaissance – albeit a selectively intermittent one – that aims to transform a town long written off as “a wasteland of unfortunates” by the coastal elite into an urban center of vibrancy and elusive hipness.
How could this momentum be derailed? How could this calculated rejuvenation fail? What could possibly go wrong?
Unfortunately, reality has a way of rearing its ugly head around here in sobering ways. The renaissance of this city is intermittent, at best; it’s a top-down fraud emphasizing the window dressing of ever-increasing rents and glitzy, overpriced restaurants that open and close at an alarming rate, while ignoring the heartbreaking hopelessness of a school system perpetually in grave trouble, one that churns out a disproportionate number of “graduates” mostly ill-equipped to do college work. The “rebirth” of Detroit is a concentrated show, one that ignores the abject poverty of a large part of the city that remains untouched by the gloss of new money.
Another unfortunate reality for this town is the fact that the Motor City’s premier auto show has now been relegated to second-tier status overnight. Mercedes-Benz announced a month ago that it wouldn’t return to display at the Detroit Auto Show next year. This came on the heels of Jaguar/Land Rover, Mazda, Porsche and Volvo already declining to participate. Now comes the announcement last week that BMW is pulling out too.
Once upon a time the Detroit Auto Show stemmed from an idea local dealers had to pump up the regional market in its most moribund sales months, January and February. And it bumbled along like that for years and years, the “homer” of all “homer” auto shows, a back-patting lovefest like no other, with hardly an imported car in sight. Then, emboldened by the attention going to Paris, Frankfurt and Geneva, the local dealers in charge of the show came up with the idea of rebranding the show as the “North American International Show,” more befitting of Detroit’s visibility on the global auto stage. And this worked for a while, until recently.
How did the idea that Detroit’s auto show had become no longer essential gain steam among the manufacturers? Maybe it was the fact that it took a decade to refurbish Cobo Hall, the venue that was obsolete easily 20 years ago. The city’s constant precarious financial health – including a painful bankruptcy – prevented anything of substance getting started at Cobo. And unfortunately, for the record, even though it’s dramatically better now it’s still a second-rate venue, despite millions spent on it. It didn’t help that the transformation of Cobo took much longer than expected, and each year that it didn’t happen the participating manufacturers questioned its viability. After all, they attended better shows in better venues here in the U.S. and all over the world, and the excuses to spend money in Detroit became harder and harder to justify.
And the time of year didn’t help, either. At first it was the L.A. Auto Show bumping right up against the Detroit show dates, until those show dates were moved back to November. Then, out of the blue, the Consumer Electronics Show emerged as a direct threat to Detroit, not only because the date for the Las Vegas extravaganza was the week before Detroit, but because the collision of the digital realm and the transformation of our transportation future became the hot topic overnight. Auto manufacturers scrambled to be a part of what was going on at CES, and the justification for participation in the Detroit show became even more tenuous.
And the weather in Detroit in January was another strike against the show. It may seem like a small thing, but it really wasn’t. The cold and snow affected everything to do with the show, and it was a negative that just wouldn’t go away. Let’s not kid ourselves here because Detroit can be a dark, foreboding and unfriendly place in January. And the press and the manufacturers alike contributed to the refrain of negativity hanging over the show with their constant comments about the weather.
Then, on top of everything else, the fact that auto shows have become more and more irrelevant and cost-prohibitive for manufacturers is something that has emerged as a real thing over the last several years. Mounting proper auto show displays costs millions of dollars, and manufacturers have discovered that hosting targeted “fly-in” events for the media in interesting locales is much more appealing and effective. These events have no competing “noise” to detract the media’s attention from the intended focused message, and the opportunity for the media to drive the vehicles can elevate the impression of the brand in question overnight. This has caused manufacturers to abandon all but the most important auto shows, and this just in: Detroit isn’t one of them. It’s a direct blow to the domestic automobile industry and an even harsher blow to the city of Detroit itself. In other words, a giant bowl of Not Good.
The Detroit Auto Show organizers have been late to the realization that their show was in trouble, as in, five years too late. I have been writing that the Detroit show was in trouble for at least that long, and others have chimed in recently too. The Detroit Auto Show organizers are frantically changing things, saying a new name is in the works – Detroit Auto Show anyone? – and they’ve floated the idea of moving the show to October, one of our best months when the city is bathed in the warm glow of vivid fall colors and the imagery is decidedly opposite from the bleakness of January. But then again, even this isn’t going to be accomplished without a lot of consternation and hand-wringing. The show organizers are talking 2020 for the new fall date, saying that the contracts are already in place for next January and they can’t be changed.
I say bullshit to that.
If the manufacturers have to gather the show organizers, Cobo Hall and city representatives and the participating unions together to discuss moving the date to October 2019, they need to do that. Accommodations can and should be made to make this happen, because if a half-assed show is staged next January – and make no mistake it will definitely be that given the lack of participants – then I predict the show will not be salvageable, no matter what the date is.
Right now, there are two high-visibility auto shows in the U.S.: In L.A., the largest automotive market in this nation and in New York, which emphasizes the higher-end offerings and is in the media center of the country. New York happens this week, and every manufacturer that’s worth considering will be there, and Detroit is only a speck in their collective rearview mirrors.
A total rethink of the Detroit Auto Show is in order, but I’m afraid that the people involved are ill-equipped and not up to the task. If the two domestic auto manufacturers based here believe that the Detroit Auto Show is essential and cannot slip any further, then they’re going to have to get involved.
If not, the Detroit Auto Show will fade to black, for good.
And that’s the High-Octane Truth for this week.
THE LONG ? AND SHORT ? OF FORD.
19 Mar 2018 at 8:59am
By Peter M. DeLorenzo
Detroit. Last week, key executives from the Ford Motor Company took members of the press under the tent in an “On the Record/Off the Record” presentation that basically laid bare the company’s product plans over the next 24 months. Though it wasn’t an unprecedented move – many auto companies have taken this route in the past – it was a signal that the company’s momentum has been brought into question, and that the gathering storm clouds off in the distance are getting closer.
There’s no question that the perception that Ford is in trouble triggered this rare press event. And the timing of this presentation was calculated to break through the cloak of negativity that seems to be lingering over the company, especially from certain denizens of Wall Street who view anything connected to Detroit and the automobile industry with skepticism, if not outright hostility. (Especially now that Elon Musk has become the Patron Saint of all that is righteous and good when it comes to the automobile for many Wall Street types, and that anything that isn’t Tesla must therefore be antiquated and bad.)
CEO Jim Hackett opened the proceedings by talking about the future of Ford and the advanced technologies that Ford is fully engaged in that will drive transportation into The Future. This has been “Professor” Hackett’s standard stump speech for a while now, just as it has been the standard fare for every other automaker of late too. But given that this was a product-focused meeting, Hackett’s remarks seemed a little stale, especially since they have been out there for a good long while now. After all, this was clearly an “all hands on deck” effort from Ford to convince the gathered press that the company’s products would be vibrant and competitive, so meanderings on where The Future was going had people looking at their watches.
This is the essence of the problem for Ford, and a source of much of the negativity hanging over the brand. Hackett has spent too much time talking about the long view for Ford – the connected cities, the coming fundamental changes to our lives, etc., etc. – and not enough time conveying the transformation going on at Ford right now. This event was designed to change that.
From there, the presentation was handed over to Joe Hinrichs, President of Global Operations, who laid out just how successful Ford has been with the F-150 pickup. And make no mistake, the F-150 is “The Franchise” of the Ford Motor Company. How much so? If the company stopped selling everything but the F-150 today, it would still generate more than $40 billion in revenue, a staggering statistic. But the point of the meeting was exactly that – that as successful as the F-150 is Ford needs more vehicles for the heart of the market, which means SUVs, and lots of them. In fact, 86 percent of Ford’s vehicle lineup by 2020 will be trucks and SUVs, up from 70 percent today.
To achieve this transformation – there wasn’t a peep about cars, except for a reveal of a King Kong Mustang that’s coming – Ford is working on a wave of SUVs, ranging from a total (and long overdue) revamp of its other hot performer, the Explorer, to a brace of new, edgier SUVs, including a sharp alternative execution of the Escape, and a very interesting BEV crossover that seemed dangerously close to being vaporware. (That I am suggesting that this particular product is vaporware speaks to the High-Octane Truth about Ford, and the fact that they are absolutely nowhere when it comes to BEVs. Not that BEVs are the be-all and end-all for this business, but the fact that Ford is clearly lacking in this area looms large.)
But by far the most interesting product (briefly, hinted at but not fully revealed) discussed last Thursday morning was the all-new Bronco. The Bronco is one of the iconic nameplates of this business, and the fact that Ford is bringing it back is crucial. And just based on a few glimpses, I expect it to be a full-fledged hit in the market.
As I’ve said many times previously in this column, it’s shocking that FCA has been allowed to sell the Jeep Wrangler without any serious competition from Ford and GM. Due to the bankruptcy GM gave up Hummer, which was an egregious mistake, especially since the Hummer had made notable inroads in the market at the expense of Jeep, and the Hummer H4 concept, which was on GM Product Development computer screens when the bankruptcy hammer slammed down, was going to be a real threat, taking dead aim at Wrangler.
And now, here comes the Bronco. The fact that Ford waited this long to even consider bringing back the Bronco is borderline criminal, but now that they are bringing it back, the fact that it is still two years away is a real shame. In fact, that all of the vehicles discussed last week are at least two years away (except for the Mustang, which is scheduled for 2019) is a real problem for Ford. As people immersed in this industry know, 24 to 36 months is an eternity in this business. And though Ford displayed some very competitive-looking products to the media last week, this business doesn’t exist in a stagnant holding pattern. The players in this business are constantly percolating ideas and churning out new products, in fact the pace of competition is growing fiercer by the month. I have the utmost respect for and confidence in Hau Thai-Tang, Ford’s executive VP of product development and purchasing. He is one of the most talented True Believers in this business, and if anyone can deliver on Ford’s product, Hau and his team can deliver, and then some.
So, this is the long – and short – view of Ford.
On the one hand, Professor Hackett’s long view is indeed compelling, at least up to a point, but it’s only as compelling as every other automaker’s pronouncements on The Future and their role in it. Everyone’s putting their spin on the same idea: connected cars, ride sharing, AVs, and on and on and on. It’s allegedly going to be a beautiful world filled with shiny happy people skipping to a new beat and rolling in anonymously uninvolving vehicles, hassle free. The fact that whatever transpires is years and years away and will be confined largely to a few urban centers across the country is beside the point. All of the auto manufacturers are cut from the same cloth, they refuse to be dictated to by Silicon Valley and they will be part of the Driving Future, one way or the other.
That’s all well and good, but on the other hand the short view is that Ford has its back against the wall. The enduring success of the F-150 will go down as one of the lasting achievements in automotive history, but the ugly reality is that it isn’t enough, and Ford executives are now painfully aware of that fact. Ford desperately needs new products in-market, as in yesterday. Taking the automotive media under the tent was as much about generating positive buzz with Wall Street-types as it was to give the press something positive to write about when it comes to Ford.
But two years is a lifetime in this business, and the clock is ticking.
And that’s the High-Octane Truth for this week.
HERE'S TO THE ONES WHO DREAM.
14 Mar 2018 at 9:28am
By Peter M. DeLorenzo
Detroit. Though I'm tired of using the term "swirling maelstrom" to describe this business, I have yet to find a more apt descriptor. It's a land where you're only as good as your last hit, a state of mind where you're forced to make what's happening right now work, while struggling to make what's happening next come into focus. It's a cruel, nonsensical world that punishes those who would deign to march to a different drummer, but it's only those who dare to break through that gauntlet who rise to the top.
It's easy to get mired in the minutiae of this business; the endless meetings, the constant "reviews," the endless hand-wringing and second (and third) guessing. Overthinking might be an operational component in corporate America, but in the automobile business it's a full-blown cottage industry, which makes effectual decisions extremely hard to come by. Why? Because 90 percent of the time is spent worrying about what an upper executive in question might want or might be thinking, which forces underlings to become interpreters and acquire the skill set of nuanced anticipation.
This business is unfortunately littered with so-called genius executives who parachute into the decision process, make a few pronouncements, then helicopter out. And the worst part of this phenomenon is that they come back six weeks later and question why a particular direction was undertaken, totally forgetting that's what he or she directed. Thus, time, effort and money are wasted at a prodigious rate because executives are too self absorbed to get their heads out of their asses and realize how destructive their behavior is. And no, it isn't exclusive to the automobile business, but it's decidedly more pathetic when product programs or advertising campaigns are on the line.
And yes, product. Product is the straw that stirs the drink, the raison d'etre of the automobile business. It's not selling air. It's not about what a company's vision of down the road will be. That's all well and good and fine and wonderful, but it's not the business now and it isn't the business for the next 36 months. It's about product cadence, which means having the right products, at the right time, for the right market segments. Whatever a company's vision is for the future doesn't matter if it isn't generating serious profits to fund that future.
Remarkably enough, some companies forget all of this. They get sidetracked and off kilter, they chase their tails, they start listening to the dulcet tones of their own thought balloons, and they become buried under the heavy mantel of their own hubris. In short, they lose their way and start making mistakes. Except this isn't a business that tolerates mistakes. It's not a strike three business, either. Two strikes and you're out. And in this league, playing catch-up is not only a brutally tough and long road, sometimes it just doesn't work out. And in the new reality of this globally-driven automobile business, some car companies are just not going to make it.
The companies stocked with True Believers, the ones unafraid to dream, the ones focused on delivering the best in all aspects of this business - Design, Engineering, Product Development, Marketing - will succeed. It not only requires savvy management, it requires a complete cessation of the normal bureaucratic cesspool that paralyzes these companies, which means loosening the reins of the True Believers so that they can do what they're capable of doing.
When it comes to The Future of this business, I will bet on the companies who value their True Believers, because those companies who refuse to do so will be ringing their death knells.
And that's the High-Octane Truth for this week.
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