R.L Polk tells us that the average length of car ownership in the U.S. is up 24% since 2002. Some 64% of people plan to keep their current car longer because of the recession.
Big 3 Leadership Blind Spot Led to Marketshare Erosion
Motor vehicle production now makes up less than 2% of U.S. gross domestic product versus as much as 5% in the early 1970s when the Japanese began to assemble automobiles here in the U.S.
When Honda began to assemble cars in North America their product quality was not very good...yet, Honda leadership focused on building a quality product. Over time, Honda did just that.
Today, the leadership at Ford Motor is now starting to focus on quality and plans to build market share as consumers perceive the improved styling, design and quality improvements of the Ford brand. Specifically, Ford expects to claim 25% of the expected marketshare losses of GM and Chrysler.
Automotive Quality is Important for Two Marketing Reasons
1. People expect "automotive reliability" in new vehicles. That means everyday dependable performance without the disruption of having to return their vehicle to the dealership to correct premature failures of automotive components.
2. Predictable resale value means reasonable leasing fees for consumers. Over the years, people's expectations are to spend on the average about $300 per month to lease a new automobile over a three year period. However, this expectation can only be met if the automobile holds its resale value when that three years is up.
This year European and Japanese automakers sold more vehicles in the U.S. than Detroit for the first time. That happened because these foreign cars continued to hold their resale value which allowed European and Japanese automakers to offer reasonable leasing fees (meeting consumer expectations) while GM and Chrysler lost marketshare due to their inability to hold resale value---which messed up their ability to finance new automotive leases. For example, my son and his wife this year turned in a leased Cadillac and Chrysler SUV for new leases on a Honda Acura and Audi Hatchback.
As GM and Chrysler shrink, the new big three become Toyota, VW and Ford.
Here in Metro Detroit, the automotive industry is talking about innovation-driven cultures that are imperative in today's globally competitive world. But where are the fearless transitional leaders that can instill the confidence of automotive industry executives to innovate? When will the Lee Iacocca’s of the 1960s and 1970s reappear to overcome the present corporate paralysis? Changing the organization's culture requires recruiting or promoting emerging leaders and helping them get up-to-speed quickly.
Lee Iacocca's career within the automotive industry illustrates how emerging leaders can change corporate cultures to walk the talk of innovation. When the over hyped, oversized and overpriced 1960 Edsel failed in the marketplace, Ford Motor Company needed to listen to new ideas from within the company. The introduction of the 1964 Ford Mustang was an innovative product tuned into customers' call for stylish affordability. Iacocca went on to become president of the struggling Chrysler Corporation where his streamlining measures and new product innovations, including the first innovative front-wheel drive Dodge Caravan minivan, made the difference between failure and success.
When an industry or company is restructuring to survive in the global economy, executives are all driven by the fear of not surviving the transitional period and this fear can adversely affect their decision-making abilities. The turnaround won’t be complete until the fear of failure is confronted in the minds of the executive survivors.
After a corporate restructuring, it is important to provide newly recruited or promoted executives with access to inside mentors and outside executive coaches who can help their perceptions to evolve. Executives often leave a coaching session feeling calmer, stronger, safer and more able to manage within their corporate culture. With every mentoring or coaching session, the executive learns to self-coach—reducing the dependency on the coach. The executive’s leadership capacity grows and becomes a natural part of the self, like knowing how to ride a bike or tie one’s shoes.
Executives are then ready to guide the cultural transition by instilling confidence in each employee's ability to meet and overcome workplace challenges. Confidence precedes competence. Each employee must first believe he or she can succeed by developing a winning attitude reinforced by skill-building practice.
