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31.7.08

Saving Detroit’s Big Three: the Portfolio letter in full 

I didn’t want to preempt the publisher of Condé Nast Portfolio by running the full version of my letter that appeared in the August 2008 issue when it was originally written in May. Now that that issue has arrived here—which means it’s been on sale in the for three weeks or so—I can share the full text for anyone interested.
   I am grateful to the for allowing me the first slot in the issue. I think the edits made by Andy Young are excellent—in fact, I prefer it. But here’s a little more context if needed. It’s also been written to the magazine’s house style, with American spellings (yes, I do know them). The salutation and closing are omitted.

Mr Paul Ingrassia deserves applause for his ‘Who Will Survive?’ in the May issue of Portfolio, which arrived in my mailbox in the antipodes today.
   He highlights on numerous occasions the importance of non-U.S. sales for the , so a viewpoint from outside the U.S. may be instructive.
   First, I am unsure if fewer will bring success. Rationalizing occurred at the once-mighty British Leyland. At one point, its predecessor, the British Motor Corp., was the second-largest in the world. Now its remnants reside with the Shanghai Automotive Industry Corp., principally in two models and a handful of unused brands.
   The trouble with B.L. was that it had brands which overlapped in but not . In an age of increased , need these brands. This is the lesson U.S. automakers need to learn, yet fail to do so.
   There is no reason either Ford or G.M. could not look to its overseas divisions for product. G.M. is already doing this with Opel and Holden supplying Saturn and Pontiac. Daewoo is another operation that had been selling to Americans under other names. The trick is to define the brands properly and consistently to avoid psychographic overlaps. Bob Lutz of G.M. knows this and the company is integrating its plants more wisely.
   Rationalizing models does not necessarily help G.M. Mr Ingrassia notes that the company offers six midsize sedans, while only offers the Camry. But in Japan, Toyota offers six midsize sedans. It just chooses to build only the Camry in the U.S. We should also bear in mind Toyota offers a couple of Lexus sedans in the same size bracket.
   Ford, to which Mr Ingrassia gives a better mark than the others, is more worrying from a standpoint. While I defer to Mr Ingrassia’s knowledge of the internal workings of Dearborn, all the observer sees is a company totally frightened of non-American designs. The Ford Contour was largely killed in the U.S. through lackluster .
   He rightly points to the 2010 Fiesta as a sign things are changing there. However, when that nameplate was last in the U.S. in the 1970s, it was sold while there was support for it. Take away that endorsement, and Ford slipped back into its old way of thinking. Even its next “world car”, the Escort of 1981, was very different to the model sold in Europe—and it wasn’t even offered in the Asia-Pacific.
   He is right about Mazda, and as a radical idea, how about rebadging some Mazdas as Mercurys? The range is broader in Japan, and Mercury might recover some cachet.
   As to Chrysler, Daimler-Benz A.G. ruined its potential. However, there may still be some life in the parent yet—the 300 has enormous goodwill in overseas markets. It’s closely identified with the brand. Even as a single-model marque it would bring in a slightly different customer to the performance-oriented Dodge buyer.


   This leads neatly into my Medinge Group paper for this year, ‘Saving Detroit, by Not Making the Same Mistakes’, which will be presented in Sweden in September. It will also appear in The Journal of the Medinge Group, which, I understand from CEO Stanley Moss, is the most popular part of the site.
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Entries from 2006 to the end of 2009 were done on the Blogger service. As of January 1, 2010, this blog has shifted to a Wordpress installation, with the latest posts here.
   With Blogger ceasing to support FTP publishing on May 1, I have decided to turn these older pages in to an archive, so you will no longer be able to enter comments. However, you can comment on entries posted after January 1, 2010.


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