General Motors is going through a metamorphosis, as you know. Actually, this isn’t the first time. GM 1.0 was the emergent GM—a collection of disparate and dysfunctional brands (Chevrolet, Oakland/Pontiac, Oldsmobile, Buick and Cadillac) and parts makers assembled before and immediately after WWI by William Durant and others. GM 2.0 is the professional GM created by Alfred Sloan, starting in 1923. Sloan and his successors created an organizational structure focused on distinct market segments bolstered by a culture of strong styling and R&D. GM 2.0 worked from the ‘20s through the ‘60s and generally is viewed as GM’s best incarnation. GM 3.0 is the cancerous GM beset by bad labor contracts, difficulty coping with international competition and excess capacity. GM 3.0 begins roughly with the oil crisis of 1973 and extends to 2009. GM 4.0 is the post-bankruptcy GM. This series covers issues with the direction of GM 4.0.
I suggested to Fritz Henderson (GM CEO) in my last missive on GM 4.0 that he buy a bunch of Hyundai Genesis Coupes to inspire his executive team. Toward the end of that piece, I mentioned that GM still very much needs to get a handle on what each of its cars should stand for in the marketplace. The first part of that exercise is coming to a strong understand of what an American car is (Alan Mulally might want to listen in on this conversation, BTW). My thoughts on this below.
The issue of what constitutes an American car isn’t an issue of flag waving. It isn’t an issue of national pride either. Nothing wrong with those things, but they aren’t compelling enough as part of a product strategy. The idea of the American car also isn’t primarily a function of the fact that members of the U.S. Government (i.e. Americans) are the primary shareholders of GM. That won’t last forever, or at least it shouldn’t.
The idea of the American car is important because GM’s focus on the American market could be a special asset in its product strategy. GM and Ford are the only automakers who are likely to consistently develop high volume cars with the U.S. market as a primary if not singular point of focus. And while GM’s cultural weaknesses are a real problem, it has the potential to understand and execute on American-ness better than other players. You can’t build a strong culture around eliminating cultural problems. You have to build toward something. American-ness provides part of that thing you build toward.
I’d add that understanding and articulating and executing on American-ness would help get the public behind GMs brands. If the public doesn’t understand the reason for GMs existence, then how do they back it? This is an issue, whether or not the government is involved. Ironically, that American-ness, properly done, could also be an asset in building brand strength and product differentiation in other markets. There it may not be articulated as “American,” but the necessary attributes will be there nonetheless.
So, what is an American car? Or better yet, what should an American car be going forward? We can figure out most of this simply by looking at the American context – the place, the idea, the history and picking the best parts of that.
First off, I’d suggest that the definition should be that American cars are practically larger. The United States is a big place. Xenophobia aside, bumper stickers like “Texas is bigger than France” contain a simple truth. The U.S. is continental in size (as are only a few other countries—China and India and Brazil) and it is built on a suburban density model (whereas China, India, and Brazil are not). Partly because of this, and partly because of American habits, people in the U.S. use their cars like motive Swiss Army knives. That means they carry a lot of stuff and people in a wide variety of ways over various distances. Put all this together, and the American car needs to be somewhat larger than the comparable European or Asian car. It also needs to be more configurable.
This isn’t a new idea, but somewhere the domestic companies went off the rails on this one—confusing practically larger with pointlessly huge. In the upcoming era, with greenhouse gas emission controls and $4 or $6 gasoline, the implementation of the practically larger idea needs to be subtle and purposeful. It is the difference between the Corvette trunk and the Boxster trunks, not the difference between the H2 and the XC90.
Second, I’d suggest that American cars are technologically innovative. There is an element of tradition to this one (self-starter, two-cycle diesel, Hydra-matic, EV1, plug-in hybrid etc). But the idea of being technologically innovative isn’t a pedantic notion of literally having to invent all sorts of things. That’s okay, but the real issue with technology is the practical deployment of interesting ideas in a way that captures the hearts and minds of customers. If management can seize that idea, GM has two advantages here: size and that core focus on the U.S. market.
Third, I’d suggest that American cars are expressive. Americans really do still like cars, and Americans really still are mostly people who love self-expression. European styling is pretty conservative, and Asian styling is, well, not that good on average. There is an opening here to do bold but beautiful cars. Just as much, there is an opportunity to capitalize on the Mini and Scion insight that folks want some personalization in the mix (see the computer industry for world leadership example).
Fourth, I’d suggest that American cars are sensual. American cars are powerful. American cars make good sounds. American cars feel good to the touch. American cars are solid. While this is an area of European strength, I’d say Euro cars are symphonically sensual, and what we’re looking for here is a jazz and pop sensuality (note: area of American leadership).
Fifth, I’d suggest that American cars are class-aspirational. This is a tough one to articulate in our political-correctness-over-rational-thought culture. But hang with me for a second. GM has pretty much been a bottom-feeder in the market since the ‘70s. That is, GM has focused on the low-end and middle segments of the market. For example, almost all of GM’s volume comes from cars priced below $40k. That’s the price point where BMWs start. In the U.S., part of brand strength comes from having brands that are aspirational. I don’t care how many times you read Karl Marx, the reality is that even in the democratic, melting pot U.S. people aspire to experiences and brands that are somewhat out of reach. More or less by definition, you don’t aspire to what you and your friends commonly have or could have. For American cars, this needs to happen on the backs of a segmentation scheme where American cars can be strong.
Up until recently, GM had half a brand that was aspirational, in the sense that it sold almost no cars that pretty much anyone who could buy a new car could buy. That half a brand was Corvette. When GM executed the Cadillac turn-around, Cadillac more consistently occupied aspirational territory. That still left Chevrolet, Saturn, Buick, Pontiac and GMC with low aspirational content. Dumping Pontiac and Saturn will help clean this up, but Buick has some work to do. It, or something, needs to sit in between Chevy and Cadillac on aspirational measures. Buick needs to be where Acura is, only target a segment where Buick can win.
This isn’t just about pricing, it is also about cultural expression. You have to know or learn the aspirational rules. As a telling example, you can’t offer chrome wheels on an upper-middle class aspirational car. GM does it all the time, but it’s a no-no. Trust me on this. American companies should be the best at this, since their designers and engineers and product planners live in the culture, but you can’t just assume that you know the answer because you live here. And you can’t operate with a pure sales culture as your compass.
So, Fritz, those are some thoughts on the kinds of cars you need to build, which is to say American cars. You can’t win trying to catch up to what other guys are doing (you have to do some of that, but the last 20 years have shown that won’t win). Remember, this is a leadership idea. You have to make it become true. When I say “American cars are…” I don’t mean that’s true today or was true 10 years ago. You aren’t, with some exceptions, building American cars today in the sense outlined above (though you’re building some fine American trucks). You are building bad Eurasian cars in America. That’s different. When I say “American cars are…” I mean these are the attributes that follow that phrase are the attributes that real American cars should have. Now that your cost and capacity problems are receding in the distance, it is time to turn some attention to making these attributes consistently real. Best of luck.
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