Sunday, June 1, 2008

All things being equal, Americans will buy American

On Friday, May 23rd, Condé Nast printed an article written by Jay Leno which purported to tell American manufacturers how to win back sales lost to overseas manufacturers.

(Jay Leno in a Buick Roadmaster that is part of his collection, photo MSNBC, Jeff Minton)

Some of the argument's logic to win back market share in lower priced cars seems a little odd at first, but later on in the article, I see where it is coming from, and he is right on point. To use his words:

"I believe that, all things being equal, Americans will buy American. It just has to be as good as the competition; it doesn’t have to be better. The classic example is Harley-Davidson. Throughout the ’70s, the motorcycle maker had huge quality-control problems. Then Harley-Davidson said, “Look, let’s take our time. Let’s build fewer bikes. Let’s build them properly, so they don’t leak oil and they’ll run forever.” Harley-Davidson won back the market share it had lost, and it continues to dominate today....."

"The problem with what's happened over the past few decades is that you have a whole generation of kids who have no brand loyalty. They've grown up on Honda, Hyundai, Kia and Toyota. To lure them to the American brand, you’ve got to give them something exciting, something bold, something different."
Fewer Vehicles ......built properly .....that are exciting, bold, and different. That is a mantra to live by. The question is whether or not the current structure of the domestic manufacturers will allow them to behave in such a manner.

Leno points to vehicles like the Chevy Volt. It is true that such a vehicle is exciting, bold, and different, but "fewer" of them is unlikely to be the case. It has been reported through various sources that GM is planning to invest over $6Bn in the Chevy Volt. That number alone eclipses by 150% the investment that Toyota made in the Prius, and the boys from Tokyo have already run that little "hybrid-jobby" past the million mark, and fleet sales have only begun.

I think that the economy of scale inchoate in the large-overhead, large dealership, OEM way of doing business will make such exciting cars become ubiquitous instead of the stuff of small volume. So where does that leave Leno's prognostication. I do not believe it is wrong. I do think that this is the way the market is trending, I only think the other half of his prediction is more likely to come true first, and that is that the US manufacturers are going to shrink significantly before they find their groove and begin to grow again.

Oh and as for his last "little" point about the size of cars... we also couldn't agree more, "American buttocks are not getting any smaller" so we have to figure out how to give our buyers the size they demand. That is all part of the true "exciting, bold, and different" idea.

Bravo, Jay, for speaking out. Those at LM believe you have said the soothe.... how did you have time to study up on all this while you were working the Tonight Show?!