Comments on: Car Wars

By: Ted Mininni

Ted Mininni — Wed, 02 Sep 2009 12:23:54 +0000

Gianandrea,
Thank you for sharing your terrific insights. You’ve hit on some very important points.
First, in outlining your own choice in a car, you’ve shown that personal preference and needs weight heavily in consumer decision making. You chose a larger vehicle because you needed the space for your three dogs. A marketplace filled with choices enables consumers to weigh their options and factor in cost of the car, costs associated with operating the car, and what they require their car to do for them. Exactly.
Marketing tactics won’t force consumers to change their thinking. As I just mentioned to Kevin, if crude hits $200 per barrel, that will change thinking.
If some Europeans are driving larger vehicles now, they are ponying up some serious cash. The liter price on gasoline is very high in Europe. Again, they’ve made a choice for their particular needs–or they want to show the world they’re more affluent. . .just as many of us do.
Car makers of every kind, and in every part of the world, are struggling to make their vehicles more environmentally friendly. Governments everywhere are raising standards and consumers themselves are becoming more aware. In the long run, that’s a good thing. . .and so is consumer choice, as Beth pointed out.
I am enjoying this conversation very much, Gianandrea. Thanks again.

By: Ted Mininni

Ted Mininni — Wed, 02 Sep 2009 12:14:05 +0000

Kevin,
If U.S. carmakers try to understand the things consumers want in smaller cars, and deliver them, they too will sell small cars. Will they sell as many as some Japanese automakers? Probably not. My reasoning: Japanese cars have developed a reputation for high quality, resale value and technology-driven innovation for the past few decades. U.S. carmakers will have to catch up on all of these fronts. I’m not so sure most Americans don’t care whether they’re buying a Toyota or a Chevy when it comes to choosing a small car.
The question is: will small cars account for most of the sales in our market? Unlikely in the short term. Due to instability in oil-producing countries around the world and the volatility in crude pricing, if oil does hit $200 per barrel, that will force the issue once again in a major way.
This is a very enjoyable conversation, Kevin. I really appreciate your sharing your thoughts and expanding on the ideas presented by my post.

By: gianandrea facchini

gianandrea facchini — Wed, 02 Sep 2009 06:44:14 +0000

Ted, believe or not, but European roads are packed with Suv e big cars, too. In Rome is not unusual to see people driving BMW X5 or Mercedes ML. Not at all. Nor we are talking about Beth feeling about being in a huge car rather than in a small car. Still, as I believe that marketing can shape in someway people’s opinion, I think that we will see more and more small cars around in the US, too. It’s not just a matter of forcing someone to do something but to make people thinking about a lifestyle that is no longer sustainable. Myself I drive a Land Rover Defender, which is rather a big car. Why? Because I have three dogs, I do not use the car in town and drive less than 10k miles a year. When I bought it, I made a calculation about my impact on environment and wallet. I think that this is what is going on in the US market.
How fast American car industry will embrace this revolution? I believe that it could be faster than we think. FIAT/Chrysler deal is going in this direction.

By: Kevin Clancy

Kevin Clancy — Tue, 01 Sep 2009 22:11:07 +0000

I think the point that “Americans buy what they want to” should give some hope to the U.S. car companies looking to tap into the small car market.
I wonder whether the average small car buyer really cares anymore if they are buying a Toyota, a Honda, or a Chevy. Or do “they buy the car they like.”
I don’t know that the Japanese companies have any sort of corner on the market on what small car consumers want. They do a more consistent job of talking about the entries they have in these markets, that’s true, so buyers are more aware of Toyota’s offerings. But that doesn’t mean there aren’t buyers who might be open to considering GM, Chrysler, or Ford.

By: Ted Mininni

Ted Mininni — Tue, 01 Sep 2009 21:32:23 +0000

Kevin,
You’ve made some very salient points and I thank you. There is no doubt that Americans are buying small cars because they want to. Still, in survey after survey, Americans have stated a clear preference for larger vehicles. It’s funny but when looking around in NYC, for example, you’d think there would mostly be Priuses due to crowded streets and tight parking. You do see small cars, but many are also driving around in Hummers, so go figure. . .
What you said here is right on the money: ” The trick for car companies will be to identify who they are and udnerstand what’s motivating them to look for a small car.” Exactly. But as the article pointed out, the Japanese have decades of experience building small cars and they already know what the consumer is looking for in a smaller vehicle. In Asia as well as Western markets. It will probably take U.S. carmakers time to figure this out in a new learning curve. Question is: how much time do they have?
Smart comments as usual, Kevin. I appreciate your weighing in here.

By: Kevin Clancy

Kevin Clancy — Tue, 01 Sep 2009 20:49:05 +0000

This seems like a strange blanket statement to make to me–that American’s don’t like small cars.
I imgaine that whether or not you like or would consider buying a small car has a lot to do with where you live–are urban drivers only looking for large automobiles?–and the purpose/occasion for which you are considering a purchase.
I can’t drive down the street without seeing a Prius on the road! Three of my neighbors have one sitting in their driveway. They didn’t buy them because they got some sort of deal from the government or simply because of the price of gasoline. They WANTED a small car. They did NOT want an SUV. They did not want a big family sedan. They did not want a sports car or a luxury automobile.
The thing car companies need to think about is that “small” is not the key selling point–it’s the price of entry. Great to have a small and fuel-efficient entry in a category–GM for one would certainly do itself a world of good to just build awareness it has SOMETHING to offer here. But to beat out competiting products will take something more.
I think there are plenty of American who like small cars and would prefer to buy one. The trick for car companies will be to identify who they are and udnerstand what’s motivating them to look for a small car.

By: Ted Mininni

Ted Mininni — Tue, 01 Sep 2009 15:01:15 +0000

Beth,
Your $.02 is just as valid as everyone else’s. Your perspective has been shaped by your experiences and that does a great deal to temper our market choices, doesn’t it? Thanks for sharing your POV with us.

By: Beth Harte

Beth Harte — Tue, 01 Sep 2009 13:08:27 +0000

Paul, Elaine & Gianandrea,
I totally get people’s perspectives about the environment and bigger is not always better…
But when I see a Smart car tailgating my Commander and cutting me off on the highway (yep, this has happened about 5x) I think “that person’s not so very smart, are they?!” My car (even at reduced speeds) would crush a Smart car and it would, unfortunately, be fatal. That said, when it’s my car versus a tractor trailer or another SUV, you bet I’d rather have my car and hope to survive to live another day.
I think it would be unfortunate if our government took away our market freedoms to drive the cars we choose to. Just my $.02.

By: Ted Mininni

Ted Mininni — Tue, 01 Sep 2009 11:31:41 +0000

Gianandrea,
Every marketplace around the world is a reflection of its culture. Americans work hard, dream big and think big. We always have. Our country is large and expansive. We also have a network of large interstate systems and wide roads. Try crossing the U.S. in a sub-compact; it may not be the most comfortable experience! Unlike Europeans, we haven’t put so many high taxes on gasoline in the past that made driving larger vehicles prohibitive. We’ve downsized cars on occasion; the oil embargo, sharply rising oil prices due to much higher consumption in China, India, etc, forced the issue. But those were “temporary” deterrents. On the practical side, many of us carpool, take turns bringing the neighborhood kids to school, lug the kids and their sports equipment to games and practices, etc. We like to be able to do all of those kinds of things and that calls for vehicles with lots of roominess.
Thanks, Gianandrea, for your questions. It’s always interesting to converse with people who have different perspectives.

By: gianandrea facchini

gianandrea facchini — Tue, 01 Sep 2009 09:01:21 +0000

Ted, great and provocative post, as usual.
What I like the most is that, apparently, Americans are still reluctant to understand that the world has some limits. Bigger cars, bigger burgers, bigger houses are all element of a cultural revolution that America must face to turn into small cars, small burgers, small houses. I understand Beth point of view but crash test can deliver surprising result. The Chrysler Voyager had horrible crash test result according with European standard, far worst than a Smart.
My take to get Americans taking seriously smaller cars? Size doesn’t matter!