Hal Sperlich, a former president of Chrysler who retired two decades ago, says Detroit's auto makers are dreaming if they think they can market their way out the problem they're in.
And they better not think they can do it solely with improved quality either. Unless they come out with ground-breaking products, he says, they'll never change consumer perceptions.
If you don't know who Hal Sperlich is, all you need to know is he's one of the fathers of the original Ford Mustang, as well as the Chrysler K-car and Chrysler minivan. Take my word for it, this guy knows product!
Sperlich says Detroit needs to do a car like the first Mustang. But he's not calling for a retro revival. He says the secret to the Mustang's success was not just because it had terrific styling. The real key was it had great packaging and was offered at an irresistible price.
It could seat four adults comfortably, had a good-sized trunk and was priced within reach of the average family. Interestingly, he says the secret of the Mustang's success was that it was a sporty family car. And it completely changed how the public perceived Ford.
If Detroit wants to change people's perceptions, he says it needs to do those kinds of products again: Great looking, well packaged and priced to sell. Not with every single model, mind you. He says you just need two or three “killer” cars to electrify an auto maker's image.
He's also concerned Detroit is locked into the idea of chasing small market niches, rather than going for big sales volume. He complains there are too many models planned for sales of only 45,000 units or so a year. Having so many models makes it difficult to properly advertise and market each one. And since their volume is so low, they can't make much of a financial impact even if they sell out.
Fascinatingly, Sperlich believes the original Ford Mustang and Chrysler minivan are quite similar. They both addressed the transportation needs of the American family, but didn't do it in a boring way.
Instead, they introduced a new dimension to transportation. The Mustang offered sporty family transportation at a great price, while the minivan was about compact-sized functionality in a van that fit in a typical garage.
He emphasizes the price has got to be unbelievable. It's got to offer so much value that the reaction on the street is: “You mean I can get all that, and at that price? You've got to be kidding!”
Sperlich criticizes Detroit's mentality that assumes sales volume will stay fixed, so the only way to make money is to either raise prices or cut costs. If Detroit truly wants to recover, he says management has got to go out on a limb and take the risk to price a car very low. So low it sells in huge volume.
“Put those things together and that's how you make the magic happen,” he told me.
Sperlich ought to know. He made magic throughout his career.
John McElroy is editorial director of Blue Sky Productions and producer of “Autoline” for WTVS-Channel 56, Detroit, and “Autoline Daily,” the online video newscast.