By Peter M. De Lorenzo
Detroit. As the summer season dwindles down to its last remaining moments, I thought it would be a good time to take the industry’s temperature, seeing what has changed, what has remained the same and what’s looming over the horizon. It can be argued, of course, that the more things seemingly have changed, the more things seem to be exactly the same as they were at the beginning of the year.
Wall Street continues to undervalue anything to do with this country’s automobile industry, yet overhypes and overvalues Tesla by about 75 percent in a cessation of all rational thought that is simply mind-boggling to behold. With the serious automobile manufacturers lining up with a series of formidable all-electric machines, Elon Musk’s days are numbered as the P.T. Barnum of the business. It won’t matter, he will get bored and declare the whole automotive exercise as tedious, and move on to colonizing Mars.
We still, of course, have politicians and spineless weasel bureaucrats in the bucolic confines of Northern California and Washington, D.C., creating regulations for automotive conveyances out of thin air that seem to have nothing to do with the desires of the actual paying customers out there in the real world. Accountability? You have to be kidding. When these jokers keep pulling unending tax dollars out of thin air to cover their own asses, how could we possibly expect even a hint of that?
Autonomous cars and ride sharing have been all the rage since the beginning of the year, with the auto companies partnering up with myriad tech startups du jour like drunken sailors at last call. Where will it all lead? Some of the alleged “smarter” auto companies have already gotten burned, so there’s that. But ultimately select urban centers will be set aside for shiny happy experimenting while the rest of the country shrugs its collective shoulders and gets on with life.
Add to this the mind-numbing soundtrack made up of the dulcet tones of a never-ending series of bad decisions and bad behavior by some of these car companies, with no real end in sight, and it’s enough to give you the permanent shakes. Auto company executives make big mistakes sometimes, and the remarkable thing is that they never seem to learn anything from their mistakes. In fact, the chance of repeating those mistakes is frequent and frightening. And the dishonor roll is long too.
Let’s take the VW Group for instance. It’s no secret that this company is in dire straits indeed. Though it still has bankable product stars in its stable of Audi, Bentley, Lamborghini and Porsche models, the lingering stench from the Diesel mess is not only not going away, it seems to be gaining in strength. Despite cash payments to previous owners, some of which have made those people instantly whole while allowing them to have driven their cars for minimal costs over three years when all factors are considered, the VW brand image is in the tank.
Those owners who have been made whole – and favorably pleased with VW’s actions – and who would have normally wandered into a VW dealer again automatically, have dropped the VW brand to the bottom of their consideration lists. And when they make their obligatory stops at Japanese, Korean or even domestic automakers’ showrooms first, guess what? The majority of those consumers will never make it back to visit VW showrooms. In other words, the brand is in tatters and headed down a Dark Road.
And the cash payments to VW dealers for their pain and suffering sounds good at least on paper, but the savvy dealers among them know that what lies ahead is a vast sea of uncertainty, and many of them could be out of business by next spring even with those payments on the books. And for those who think the German automaker “is too big to fail” or some such nonsense, I’ve got news for you: VW is not only perfectly capable of failing in a massive fireball of broken dreams and broken promises, the company is hanging by a thread, twisting over the fire.
Way back when the scope of the dire VW news was first reported, I suggested that the ultimate costs to the company would approach $35 billion. Some people scoffed at that figure. Now? When it’s all said and done it will be even higher than that. There’s only one thing that will dig VW out of this mess, and that’s innovative, breakthrough products that other manufacturers don’t have. And they are on the docket, but as expected, the costs associated with the VW Diesel mess are starting to impact the company’s future product programs.
Yes, there have been other major screw-ups in the long history of the automobile business – too many, in fact, to list here – but the calculated manipulation of Diesel emissions testing by VW operatives will go down as the single, greatest self-inflicted corporate disaster in automotive history.
And then there’s General Motor’s completely dysfunctional marketing department. Let me rephrase that, because GM doesn’t have what can be described as a working marketing department. Queen Mary and Dan I Am Ammann not only do not believe in the efficacy of marketing, they’ve made it clear that the thought of adding another executive with a seven-figure salary and an opinion – aka a Chief Marketing Officer - to their cozy little enclave is abhorrent.
The predictable result? Marketing fiefdoms run rampant and decisions are made based on whims, whimsy and wind gusts. How else would you explain those absolutely dismal “focus group” spots from Chevrolet, you know, the “most rewarded car company”-? GM’s marketing “function” is made up of ten percent actual smart people, 60 percent bureaucratic functionaries and 30 percent marketing impersonators who should be exited from the company on a rail, never to be seen or heard from again. Add to this lethal mix advertising agencies that have been yanked around by the prevailing winds and beaten to a pulp by the sheer calculated mediocrity of it all, and you have a recipe for disaster.
GM’s “True Believers” are building some outstanding products right now, the best in the company’s history, in fact. It’s just too bad that Queen Mary and Dan I Am are incapable of understanding how they’re completely screwing the whole thing up by their intransigence. Here’s a tip for the denizens of the Silver Silos. On the first day back after Labor Day watch for a plane dragging a banner behind it that says: “Hey, Mary, Still No CMO? WTF?” We have it booked to fly up and down the Detroit River from 8:00 a.m. until noon. Have a terrific day!!! And you’re welcome.
And then, as I mentioned in last week’s column, there’s the impending Cadillac disaster. Despite President Johan de Nysschen’s best efforts at remaking Cadillac in the spitting image of Audi, there are so many issues preventing Cadillac from rising from the rubble of past mistakes that it’s almost insurmountable. As I said last week, it really doesn't matter how good the new Cadillac CT6 is if the perception out there in ConsumerVille is that it's not as good as a Audi, BMW, Lexus or Mercedes-Benz.
And Uwe Ellinghaus, Cadillac’s CMO, isn’t helping matters much either. He is being jerked around by a handpicked Millennial Marketing Posse that’s leading him down a Primrose Path of self-destruction. Cadillac’s “marketing–to-Millennials” ad campaign is misguided, at best, and an abject embarrassment if you really want to get down to the nitty-gritty of it. The CT6 is, by all accounts, a nicely executed piece, but you’d never know it because the advertising is doing absolutely nothing for the brand, and the goodness of the car is buried in the dismal cadence of a homily to people who don’t have a clue as to what Cadillac is, and couldn’t be bothered to care, either. It’s funny, but a strong-willed GM CMO who had final say in all of the GM divisions’ marketing initiatives could and would put a stop to this nonsense. Too bad nobody at GM has a clue as to why that might be a very good thing.
And, of course, while Cadillac spins its wheels toward a Promised Land that doesn’t exist, Hyundai is about to take a serious chomp out of Cadillac’s ass with its new Genesis luxury division, as I said a few weeks ago.
Memo to Johan & Co.: It’s fine to operate in an idyllic vacuum of your own making, as long as there are no real world competitors out there who are either doing it better image-wise, or offering a better price-to-value relationship right out of the gate. Oh and by the way, you only get two strikes in the auto biz in case you’re wondering, because this ain’t baseball. And stumbling out of the gate doesn’t bode well for a Happy Future.
And finally, there’s the FCA train wreck. I won’t delineate – yet again – the long litany of atrocities that Sergio – the “G.O.A.T” – has foisted off on dealers, the media, customers and his own employees who, by the way, are operating dangerously close to a full-on, pitchfork-wielding mutiny as you read this (you can read a series of Peter’s most pointed columns about Marchionne and FCA here. –WG), because I’ve covered it all before, and nothing else has changed.
Sergio’s festering Smoke-and-Mirrors Circus has finally run out of gas, and the clock is ticking – loudly – for him to partner up with somebody, well, anybody at this juncture before the whole thing collapses in a pile of bad sweaters, gallons of espresso, stale cigarette smoke and the most maniacal runaway ego this business has seen this side of Ferdinand Piech.
I was so wishing for a different tone and tenor on this Labor Day, but alas, it’s not to be.
In fact it’s the same as it ever was, unfortunately.
And that’s the High-Octane Truth for this week.