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Auto Companies Should Fail

By Sid of Stone Marmot

Aug. 1, 2009

For a year now we have been hearing how bad the automobile market is. Sales this past year are supposed to be down over 30% from previous years. GM, who use to be by far the biggest car company in the world and still is gigantic, actually went bankrupt and is being bailed out by the US government at considerable taxpayer cost. All these companies are supposed to have a tremendous backlog of inventory.

So the US government creates their CARS program, better known as “Cash for Clunkers.” I find that my vehicle and the ones I am considering qualify me for the maximum government incentive. So I go to my local Ford and Toyota dealers to get a new vehicle under this program.

Guess what? THEY HAVE NO VEHICLES!!! They don't expect any of the kind I want for weeks. They were supposed to have this huge inventory backlog. When I look at their lots, I see plenty of new vehicles. Yet, there are supposably no vehicles like I want in the entire southeastern United States. What is the problem?

The problem is that they are still trying to sell the kind of vehicles that THEY want to sell, not what WE want to buy! They still haven't waken up to the fact that the best way to sell product is to satisfy their customers' needs. Instead they are still trying to cram down people's throats the stuff that they feel would get them the most profit per vehicle.

How many times have you, or someone you know, gone to buy a new vehicle and drove off the lot with something other that what you or they were looking for? Usually this something else is bigger, more stuffed with frivolous accessories, less fuel efficient, and always more expensive than what you were originally looking for. But the vehicle you were looking for wasn't available, wouldn't be available for weeks or even months, and this more expensive and decked out something else was available. The salesman also managed to convince you that this was such a great deal and worth the extra cost.

But this strategy is not working this time because the something else that the dealers would ordinarily try to cram down your throat does not allow you to meet the federal CARS requirements. You MUST buy what you originally planned to buy to get your sizable government incentive discount. Consequently, their handful of “teaser” vehicles, you know, the ones they advertise as having super great fuel economy and a super low price to get you to come to their lot, sold out immediately.

The auto companies will probably claim they were caught by surprise by this sudden demand. The CARS program was a surprise? It has been one of the top news stories for the past six months! They had months of warning to prepare for this. Isn't that the job of marketing and management, to anticipate market trends and moves and adjust the company direction accordingly? What other purpose are they supposed to serve? How do they justify their overinflated salaries and bonuses?

The auto companies will probably also claim that they are making what has sold best in the past. But is the stuff that sold best in the past what people really wanted, or what they were forced to settle for? For example, my experience is that if I want a car with a particular set of features, I am usually told that a vehicle with those features isn't presently available. I could order a car with those features, but in order to take advantage of the presently available dealer incentives, often worth thousands of dollars, I would have to chose a vehicle off the lot or take delivery of my ordered vehicle within three days, which isn't possible. So the vehicle I want would end up costing thousands of dollars more than what they are trying to cram down my throat and take me weeks longer to get. So is what sold well in the past really a good indication of what the customer wants?

In fact, my looking for a vehicle right now is a compromise as the auto companies still aren't making what I really want. But it is looking like it will be at least another five years, optimistically, before the vehicle I really want is available, if it ever is. I don't have much confident in my over ten year old vehicle lasting that long without very major maintenance expenses. Hence, I feel I'm forced to presently consider a second rate vehicle to tide me over until what I really want is available. So, is my buying a vehicle right now a good indication of what I really want?

Companies with bad marketing and management should fail. The people who run the auto companies feel that the customers serve them, not that they serve the customers. They feel that the public and government efforts should be directed to what is best for the auto companies, not what is best for the public and the country. They need to fail as that is probably the only way to get them to grow up.

And I mean FAIL, not government bail out. People need to suffer. Tough medicine, but it seems to be the only way for people to learn. Unfortunately, it is usually the bottom 99% of the employees on the corporate ladder that do most of the suffering. The top 1% who horribly misguided the companies only have to suffer living out the remaining years of their lives on the tens of millions or more that they have accumulated as compensation for their screwups.

By the way, before anyone claims I have a very biased view and have no idea what things look like from the viewpoint of someone in the auto industry, you must understand that I was once a design engineer for a major US auto company. I've seen what it looks like from the inside and know what they are technically capable of doing.

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