THINGS THAT MAKE YOU ASK… WHY?

By Peter M. DeLorenzo

Detroit. We’re right back in the swirling maelstrom this week as the automobile business continues to careen between good tidings and bad news at a dizzying rate. On the one hand the GM strike seems to be over, with ratification from the UAW rank and file seemingly on track. But then it’s Ford and FCA’s turn in the barrel, and more strikes are not out of the realm of possibility. So, there’s that.

That this isn’t a business for the faint of heart has been well documented, and the difference between success and abject failure is razor thin. The success part is usually fleeting, a momentary day in the sun before “the grind” presses on. As for the failure part, the two most dangerous words in this business are complacency and mediocrity, because when those two pillars of ugliness take hold of an organization, bad things inevitably ensue.

And why is that? Why, in this day and age, after everything that has transpired in this business over the last decade, would complacency and mediocrity even have a place at the table? Why, indeed.

Let’s take Ford, for instance. As the naysayers seem to have faded into the woodwork about CEO Jim “The Professor” Hackett, with the media apparently having been been lulled into thinking that Hackett could be “the guy” (not yours truly, of course), all of a sudden Ford has another product launch debacle on its hand. Only this time it goes right to the heart of its profitability, with the new Explorer and Lincoln Aviator. 

Are these good vehicles? No, they’re excellent vehicles, with impressive execution and an overall refinement that is noteworthy. And they’re crucial to the success of the company going forward. Yes, the vaunted F-150 is “the franchise,” but Ford needs these two vehicles to soar in this SUV-crazy sales environment that drives the market today. And to have these vehicles beset with problems is inexplicable. Yes, some are minor, but some are glaring faults with systems and electronics that simply shouldn’t be occurring. Why is this happening? There are rumors of personnel unrest in the Chicago assembly plant where the vehicles are built, but this isn’t the first time that Ford has had problems with the launch of a new vehicle. In fact, Ford has a checkered history with botched product launches, and to see this happening again is unacceptable. 

Ford operatives are insisting that all is well now, and that the vehicles are being delivered to dealers as planned, but the question remains, why? With the new “enlightened” Hackett era allegedly taking hold at Ford, why did this happen? And the buck stops with Hackett, in case you’re wondering. He’s responsible and now all of the doubts about him have resurfaced and he’s right back where he started, which is under the gun. I’ve never been a believer in the Hackett “aura” and I don’t see that changing anytime soon. And the bad news for Ford is that the “whys?” far outnumber the answers at this point.

But of course, Ford is not alone in the “why?” business. You only have to look across town at General Motors to see that. Let’s consider the Chevrolet Silverado pickup, which is “the franchise” for GM. It generates tremendous profits for the company and it has been the bedrock for the Chevrolet division for decades. No, it hasn’t eclipsed the Ford F-150 in sales for four decades, but it was comfortably and solidly in the No. 2 position and combined with the extra juice delivered by the GMC Sierra pickup, it allowed GM to remain a formidable force in the market. 

Until recently, that is, because FCA’s Ram truck has upended the status quo in the pickup segment and has passed Chevrolet to become the No. 2 pickup truck in the market. According to Automotive News, Silverado has 22.6 percent of the full-size pickup segment in the first nine months of this year. That’s down from 24.2 percent a year earlier. And Ram? It has 25.2 percent of the full-size pickup market after the first nine months of this year, which is up from 21.4 percent from a year ago. And those numbers don’t reflect the disruption from the strike. (For the record, Ford has 36.5 percent of the full-size pickup truck market, down from 38.6 percent a year ago.)

How did this happen, or better yet, why did this happen? Is the Silverado a good truck? No, it’s an excellent truck - the best-engineered pickup ever built by GM. But to a lot of customers, apparently, the Ram is that much better. For some reason, GM pulled back on the interior of the Silverado, figuring that buyers wouldn’t want or need some of the detailed features found on the Ram, including Ram’s massive 12-inch center stack screen. Whether this was a case of GM operatives figuring that “good enough was good enough” while making the obviously flawed assumption that pickup customers wouldn’t care, or it was simply a cost-tinged decision, it really doesn’t matter, because customers who got into a Ram instead of a Silverado are now out of the market for at least two to three years, and it will be very expensive for GM to get them back. If they can get them back.

This development in the full-size pickup truck market would have been inconceivable as little as three years ago, and the entire industry is looking at this and asking, “Why?” As in how could GM allow this to happen? How can GM squander a franchise like the Silverado and cede huge market share to a rival? Make no mistake, this is a crushing development for GM. Brand loyalty is usually ironclad in the full-size pickup segment, and to see these Chevrolet buyers wandering off to Ram - buyers who may never return - does not bode well for GM’s future profitability. 

In case you're wondering, the “whys” will continue to vex this business as long as it exists. It’s a simple formula, actually: Complacency + mediocrity = loss of customers and market share. And from there the downward spiral begins. 

Will Ford and GM get a handle on these “whys?” and back them up with solid answers and meaningful improvement? It’s a giant “we’ll see” at this point.

And that’s the High-Octane Truth for this week.