“To me, first and foremost, we're in the car and truck business. We're designing, developing, building and selling cars and trucks. If you're going to do that, you've got to have the process that delivers things on time, at quality, and on cost. Those are the basics of the business.”
— COO Nick Scheele
The outlook is a little bleak atMotor Co. right now, but the new “back to basics” man tra Ford Chief Operating Officer Nick Scheele is chanting is music to my ears. After sitting though dozens of automotive press conferences over the past several years where automakers seemed ashamed of their core business and intent on becoming glamorous “New Economy” companies, it's nice to see a top executive come out and say “Our business is building and selling cars and trucks. That's what we do.” (see interview, p.30.)
Mr. Scheele offers no deliberately vague corporate speak about being a “consumer products company” and does not apologize for Ford being a manufacturing company.
It's good that automakers want to be on the cutting edge of e-commerce, and I applaud their initiatives to use vehicles as platforms to sell Internet, telecommunications and other services. But let's face it, if you can't get to first base with consumers and sell them your core products, the rest of the strategy is worthless.
The elevation of product development guru Bob Lutz to chairman of North America Operations and manufacturing whiz kid Gary Cowger to president of NAO in the wake of Ron Zarrella's departure also suggests thatCorp. has decided that designing, developing, building and selling cars and trucks is its top priority as well. That's after spending a confused seven years or so focusing more on elaborate marketing techniques than the products themselves.
The much maligned brand management concept at GM that Mr. Zarrella personified was first put into place and promoted by then-Chairman John Smale in the early 1990s. Mr. Smale, a former Procter & Gamble executive, used the concept with great success at P&G to sell consumer products such as soap and toothpaste. He recruited Mr. Zarrella from contact lens maker Bausch & Lomb in 1994 to use brand management to invigorate GM's divisions and brands.
At the time, it wasn't a bad idea. GM's brands and car and truck divisions were an unfocused mish-mash that needed sorting out. Unfortunately GM's version of brand management tried to use focus groups, market research and brand positioning as a substitute for the creativity, intuition and passion of experienced designers and product development people.
That hasn't worked, mainly because the concept simply can't account for the fact that — unlike toothpaste and diapers — the decision to buy a new car or truck remains an intensely emotional and often impulsive decision.
And, while Mr. Zarrella was gracious and dignified during the press conference announcing he was leaving GM to become CEO of his old employer, he also inadvertently revealed that, even after seven years at GM, he knew painfully little about car design.
Now that it looks like we're starting to see a trend developing, here are a few other “back to basics” moves I'd like to see:
decides its core competency is making stylish cars for the masses that garner premium prices within the segments it competes. It then decides trying to sell gussied up Passats for $40,000 is a dumb idea and trying to sell $100,000 VWs that compete with the top-tier products of Mercedes-Benz is an even dumber idea.
VW also decides that its Audi Div. makes fabulous cars in the $27,000 to $50,000 price range. It quits trying to move down market in Europe with techy little cars like the A2 that should be Volkswagens, and are too small and expensive for the target customers anyway. It also decides to give up trying to compete withand Mercedes at the top end of the market with the A8. It just isn't working.
In its “back to basics” move, DaimlerChrysler decides to quit making Mercedes-Benzes that are “affordable.” It realizes that while $26,000 Benzes like the C230 may be appreciated in other areas of the world, Americans — who consider them sawed-off wannabes — scorn them. It concedes that the failure of the318ti hatchback in the U.S. a few years ago wasn't a fluke, and that American consumers apparently just don't want premium-brand hatchbacks, no matter what the market research says.
BMW decides it's going to stick to making great cars and fabulous engines and stop trying to overreach in design and technology. It admits the new 7-Series is a big step in the wrong direction in both areas. To those precious few customers who actually like the new 7's intimidating array of switches and buttons inside, and the 700-function “I-drive” system, it gently encourages them to learn to pilot the Space Shuttle instead.
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