Jumpstart Automotive Group

With the tough blows sustained in 2009, auto manufacturers may have to look carefully to find good news but it is definitely there. Here are a few examples:

OEMs have refined their operations and created efficiencies to make them leaner and more capable of surviving a sub-10 million sales unit year. The current calendar year has managed to be a tremendous learning experience for manufacturing, and the end result will hopefully be nimbler, swifter moving car companies that are in business to satisfy consumer desires.

According to a Bank of America and Merrill Lynch Study “Car Wars 2010-13,” published last month, the annual vehicle replacement rate for auto brands will improve from a 13% average between 1999 and 2009 to an average of nearly 18% over the next four years. In short, this means OEMs will be replacing nearly 18% of their sales volume with entirely new models or next generations of existing models. “Intensified competition and the resulting new products are, of course, fabulous for consumers, who will enjoy the choice of cars and trucks,” the study suggested.

These efficiencies go beyond the factory floor and directly impact marketing strategies and budgets. We’ve seen investment in digital move closer to the forefront for an increasing number of OEMs and dealers, marking a new pattern in smart and efficient spending versus the traditional blanket approach many in the industry had favored.

The difficulties experienced by the auto industry have brought some equally good news for consumers:

This year’s dire challenges forced the industry to make better cars, market fewer gimmicks, and deliver quality products that resonate with what consumers want, not simply the short-term bottom line. New developments with vehicles like the Ford Fusion Hybrid, the Hyundai Genesis, Toyota Prius, Honda Insight, Chevy Volt and various others are setting new standards for vehicle quality, styling and emissions.

Auto manufacturers are listening more than ever, and accepting feedback directly from consumers thanks to the prevalence of the Internet and social networking platforms. Case in point: Buick’s recent cancellation of a planned SUV shortly after negative feedback overwhelmed social media channels including Twitter. While media headlines focused on the fact that Buick introduced a vehicle design that didn’t resonate with consumers, the real news was the unprecedented nature of the transparency that Buick created and maintained with consumers.

The Buick/Twitter example stands in stark contrast to the typical approach manufacturers take for vehicle launches. The modus operandi of a vehicle debut includes multiple focus groups, hundreds of millions of dollars spent in designing, developing, producing, launching and vehicles. GM’s decision to listen and respond to the social media airwaves is a signal of the company’s renewed focus on creating cars that people want instead of cars they imagine people want, and a case study for auto manufacturers across the globe.

Internet communities and social networking sites provide brands with an unrivaled, cost-effective opportunity to elicit feedback before mortgaging the future on the wrong product strategy. In the new economy, where pennies can no longer be wasted, manufacturers are finally seeing the fact that there is no room to ignore consumers, and their opinions are easy to find online.

There are big reasons for auto brands to embrace the growing communities online as they look ahead.

We may have yet to hit bottom as it pertains to monthly vehicle sales volume, but when consumer confidence returns, consumers will likely be pleased when re-introduced to improved car companies offering more desirable vehicles and an overall trajectory into a future of greater innovation. It’s been said that recessions spark the most innovation, and this statement couldn’t be more accurate for the auto industry right now — from the engine to the marketing campaign.

The silver lining is hopefully easier to see: vehicles consumers really want, greater efficiencies from auto companies, and most importantly, transparent conversations between brands and consumers. Sounds like the 2009 news isn’t all bad.