There are a lot of misperceptions about the auto industry.
They say the auto industry is a mature, low-growth industry. Nothing could be further from the truth. In the last decade, worldwide auto sales have soared by 10 million units.
They say there's no sense in pursuing an automotive career because all the car companies are going to do is lay off people. Yet, on a global basis, the auto industry created hundreds of thousands of jobs in the last 10 years. (At the nation's dealerships, there is a shortage of employees and the need to fill 100,000 job openings.)
They say the industry is not a good place to do business because you can barely make any money. That's only true for some auto makers. Last year, the top seven profitable OEMs earned a collective $34 billion in net profits.
They say you can only succeed in this industry if you have great quality. But look at J.D. Power's 2006 Vehicle Dependability Survey:
- Mercury is No.2.
- Buick is No.3.
- Jaguar and Lincoln are above the industry average.
Know what those four nameplates have in common? Their vehicles are not selling.
They say if you have poor quality your sales will suffer. But in the same quality survey, Kia is fourth from the bottom, yet it's gaining market share. Suzuki is third from the bottom, yet sales are up nearly 30%. Land Rover is dead last in quality and it only sells SUVs, yet sales are up more than 8%. How can these brands be doing so well when their quality is in question?
They say great product can solve any auto company's problems. But consider the '06 Ford Explorer. New sheet metal. Beautiful new interior. All-new chassis. Major engine improvements, more power and better mileage. First in its class with a 6-speed automatic transmission. Arguably the best Explorer ever. Yet, sales are down nearly 30%. Yes, SUV sales are down in general, but the new Chevy Tahoe is off just 2%.
They say eye-grabbing styling will bring buyers into showrooms. Then why are the Cadillac XLR, Chrysler Crossfire and VW Phaeton nailed to the showroom floor? Why did the stylish Chevy SSR and Toyota MR2 Spyder go away?
They say customers only want the cheapest price. Yet in the last five years, the more Detroit auto makers raised their incentives, the more their market share dropped. Today, the more GM chops incentives, the faster its sales and residuals improve.
The way to win in today's market won't be found in what “they” say.
Focusing on the customer, developing a brand they truly want to be a part of and creating a wonderful ownership experience is what rules the day.
John McElroy is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit, and Speed Channel.
