Adapt or perish

08/02/08 07:09 AM Filed in: Marketing & Business in the 21st Centure
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The news this week that Chrysler is terminating leasing means that a lot of people in this country are either going to have to purchase less expensive cars or that more of their disposable income is going to cover the increased cost of car payments. Auto makers are now blaming American consumers for their poor strategic planning and expect consumers to “share the pain”. Notice to Detroit: YOU REALLY SUCK

You know things are bad in Detroit when Chrysler hires the ex-CEO of Home Depot, who was shown the door, and he promptly does what any buzz-saw CEO does; he fires people, reduces budgets and closes plants. Forget trying to rescue the auto giant with an infuse of talent and new models it’s far easier to cut expenses to keep investors happy.

Now Detroit is going to cut lease deals on cars because the SUV’s that are coming off lease are not worth the money they are listed at on paper. This is called turning the screws and it defies logic to do this at a time when all three are fighting for survival. Rather than focus all their energies on new fuel efficient models they are a huge cargo ship trying to do a 180 in a small river.

Right now it is estimated that the waiting list on the new Mini Clubman is 9 months and some cars, like Mini’s and Kia’s, in used car lots are fetching nearly 85% of their original values in sales. How does Detroit respond? Terminate leases ! From a business point of view this makes no sense at all, from a customer service point of view Detroit is telling consumes to piss off.

Of all the car companies poised for a comeback Ford maybe the leader to cross the finish line first. They are bringing more fuel efficient models, currently on sale in Europe, to the US and their Focus model is a success. Chrysler has faded to obscurity and I believe that before long we may see Chrysler go the way of Packards. GM is trying but maybe too addicted to SUV’s to react in time for a smooth turnaround.

In the end it will be the American Consumers who decide who stays and who goes but the car companies better learn to react faster to changing marketer conditions or they will go the way of the Dinosaurs.
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