THE AUTOEXTREMIST
Tuesday, April 13, 2010 at 02:04PM April 14, 2010
The exceptional will rule.
By Peter M. De Lorenzo
(Posted 4/13, 2:00PM) Detroit. As we crash headlong into this new automotive century, it’s pretty clear where all of this is going. Since the Asian theater of operations is now the dominant market for the industry - and will remain so easily for the next 50 years - the global automotive conglomerates with the most design talent, the most technical depth, the most engineering resources, the most marketing reach and the most economies of scale will be the ultimate winners.
But it’s not enough to have those aforementioned qualities and ingredients if you want to be an elite automotive force in this industry, because the minimum price of admission for the industry’s elite is ratcheting up by the day. No, it’s how these companies go about their business that will separate the merely elite from the truly exceptional.
And by that I mean it won’t be enough to have the bases neatly covered and the boxes minimally checked, because the exceptional in this business will ultimately dominate by leading in every category.
The exceptional companies won’t just present a “competent” design language that will satisfy the needs of a broad spectrum of markets - instead, they will present bold, visual design statements that set the tempo for the entire industry.
They won’t just be content to meet the technical and engineering challenges of the day - instead, they will employ their own deep talent and the talent of their technical partners to innovate and carve out unique solutions that their competitors will have to follow.
The exceptional in this industry won’t just present scattershot marketing offensives carefully dumbed-down so as to appeal to every possible contingency – thus settling at a minimally acceptable level of mediocrity – instead, they’ll craft a global image for their company that will transcend all markets and elevate the brand in consumers’ minds around the world.
And finally the exceptional companies in this industry will utilize their massive economies of scale to democratize premium content throughout their product portfolio in order to forge a reputation for quality that will redefine excellence for consumers, as well as delivering an attention to detail and overall goodness that will be the envy of their competitors.
Who are the contenders for this exceptional level of performance in this industry?
The VW Group for one. With VW, Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Skoda and several truck affiliations at their disposal, the VW Group’s reach and range certainly qualify it as a leading – and exceptional - competitor. (Although their wildly optimistic prognostications for the VW brand itself in this market border on the absurd.)
Toyota, of course, if it can keep from getting caught up in its considerable - and now deservedly bruised - collective corporate ego long enough to regain its focus is certainly capable of playing at that level.
Ford, the newly reinvigorated and newly focused company that has rediscovered its mojo has to be considered to be a serious, global contender for playing at the exceptional level. They’re bringing it.
And GM, for all of its woes, still has the capability – once freed from the shackles of its government ownership – to make an impact, especially when they’re talking about 3 million annual sales in China by 2015.
Hyundai/Kia? Absolutely, as long as they don’t get caught up in their own press clippings, which they’re already displaying signs of doing.
BMW? It is an exceptional company with some exceptional individual models, but they will need more, much more, to meet the myriad challenges of the business going forward. BMW will need an affiliation – and in a hurry – to play at the exceptional level and that future partnership could very well originate in Dearborn.
Honda? Like BMW, capable of exceptional individual achievement and singular goodness, but fiercely independent and intent on staying that way. I applaud the maverick Honda spirit but they will fade to a bit player in the global scheme of things, which, as long as they can deliver brilliance on occasion, would be perfectly fine.
If the Daimler-Nissan-Renault “arrangement” turns into a full-on, all-for-one, one-for-all conglomerate they, too, have a shot, but they remain far behind the VW Group’s scope at this point. The French concern PSA (Peugeot-Citroen) may have to throw-in with another company - and soon - in order to survive, and it certainly wouldn’t be all that surprising if it’s with this group, or the one below.
The Fiat-Chrysler orchestration? Extremely doubtful. They have a shot at getting on their feet but that’s it. They don’t have the technical resources, they don’t have the reach, and they don’t have the talent to play at the exceptional level, even though Mr. Marchionne views himself as being exceptional all by himself. That alone, however, isn’t going to cut it.
And yes India’s Tata conglomerate and at least one Chinese player could certainly become an exceptional force in this global automotive business but that still has to play out. Remember, just being big and established in the world’s largest market doesn’t translate into being exceptional, and that’s why the jury will remain out here for the foreseeable future.
Over the last decade I have watched as this business has careened from companies operating at a comfortable level of “good enough” mediocrity to companies striving for excellence in all disciplines as the minimum price of entry to now one requiring companies to be exceptional in all phases of the game as the minimal cost of doing business to achieve global dominance.
I used to say that the next year to eighteen months would be the most pivotal time in automotive history. That sounds so quaint now. It’s also totally irrelevant.
Because at this juncture literally every single moment in this business is pivotal.
Companies choosing to operate at the exceptional level understand this. The rest will forever be scrambling to catch up.
And that’s the High-Octane Truth for this week.
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