LOOKING THROUGH THE INDUSTRY KALEIDOSCOPE.

By Peter M. DeLorenzo

Detroit. Every time I hear top industry execs speak of late, I cringe. It’s as if they’re looking through a telescope that only gives them images of clarity and predictability, and their confident tones take on an air of emphatic certainty that is eerily and ominously matter-of-fact. It’s frightening in that even the most detached observers of this industry know this isn’t even close to being the way things really are. 

The reality is that this industry keeps churning with a relentless ferocity that shows no sign of abating. In fact, this swirling maelstrom can only be viewed through a kaleidoscope that gives you glimpses of bits and pieces of what you think is going on, and even then, one can’t be sure.

Speaking of glimpsing bits and pieces, what can I say about the goings on at GM? They gained some believers on Wall Street, but that didn't last long and neither did the pumped up stock price. And whatever euphoria was temporarily present has been replaced by a resounding "now what?" After committing $12 billion to Cadillac, what do they have to show for it? Since adopting the “chasing Audi” strategic posture under former chief Johan de Nysschen’s leadership, the division appears to be starting over yet again. The dropping of the smaller ATS wasn’t a surprise, it’s the fact that it was even built in the first place that was a revelation. But what now? The new Escalade will be stunningly good, the XT5 is doing acceptably well in this all-SUV-all-the-time market, and Cadillac operatives are pinning hopes on the XT4 adding to their momentum. But this is only the immediate situation. The bigger question is what will Cadillac stand for going forward? How will GM/Cadillac marketing strategists project Cadillac into the future? Will Cadillac abandon cars altogether? Or will they double-down on designing, engineering and building a “statement” Cadillac that will continue to define the brand as being part of a genuine historical legacy? Mary Barra and Dan "I Am" Ammann have soaked up a lot of accolades lately, but if they don't solve the future of Cadillac, those kudos won't count for much.

And what of Ford? Suffice to say that the “we’re reducing our footprint in the car business” announcement did not go well. Instead of controlling the rollout of the sequence of events over time to lessen the impact, Ford operatives double-barreled it and set off a firestorm of hand-wringing in the mainstream media. As I said last week, certain Ford executives were directly responsible for botching this announcement, and the stench of it is going to linger over the company for the foreseeable future. It also revealed that Ford has a huge problem with the strength of its executive bench, which is something that is going to grow more crucial by the hour.

There is no doubt that Jim Hackett – aka “The Professor” – is a forward-thinking futurist who appears to be entrenched in that space, which, as Bill Ford has stated repeatedly, is a vital part of the company’s strategy for continued relevance in the future. Where Ford ends up in all of this would only be pure conjecture at this point. I am more concerned with the pressing realities facing the company for the next 36 months. Ford’s product lineup shows promise, but the company’s apparent inability to get new vehicles out with a proper cadence is alarming. Take the new Bronco, for instance. This vehicle has all the earmarks of grand slam home run, yet its appearance in the market a long two years from now is simply unacceptable. The F-150 remains the straw that stirs the drink for Ford, but how long can its runaway success continue? Ford needs new and punchier products in the market. Yes, the Explorer and Escape do well, but they’re not new enough. Ford needs to accelerate its product development cycle. And by the way, it’s a good thing Ford has Lincoln to nurture and grow. And to think the company was actually considering pulling the plug on its luxury brand six years ago. Not Good.

And what to make of FCA? Its CEO has hinged everything – meaning all of its profitability, aka its appeal to suitors – on the success of Jeep and Ram Truck. The new Wrangler is a dramatic improvement in every way, and it appears to live up to the task. But the Ram Truck launch has been a disaster, and it’s killing Marchionne’s Grand Plan. I don’t think that “Grand Plan” has changed one iota either. FCA’s succession order can be talked about and speculated upon, but if Marchionne can get a corporate entity to buy the whole shebang for somewhere between $22 billion and $25 billion, he and his Fiat heir-handlers will retreat to café society back in Italy to toast the setting sun and regale each other about saving the automobile industry, while ignoring the fact that the American True Believers involved should really get the credit.

As for the rest, Hyundai and Kia appear to have it together, but then again that’s only an illusion. Both companies are careening around insisting they can cover all of the bases and deal with any curves thrown their way – from the current market to the challenges of future mobility – but you only have to look as far as the disastrous situation at Genesis to understand how truly screwed up these companies really are. The corroded Korean auto executive mindset continues to be a built-in liability that apparently can’t be overcome. This “we know it all, just watch us” mentality continues to wreak havoc on the Korean automakers, and that will continue to be a perennial, unsolvable problem.

As for Toyota, Nissan and Honda, there are bright spots in thought, especially from Akio Toyoda, who has established a war footing at Toyota to counteract complacency and position itself for an ill-defined future. This is helpful but then again, this business will continue to be all about the product. Toyota (and Lexus) continue to have glaring inconsistencies throughout their product lineups, some of them simply inexplicable. The same goes for Honda. Yes, there are bright spots, but how can the abject futility surrounding Acura be explained? After years of ineptitude? And Nissan (and Infiniti) remain mysteries of the modern automotive world. Ghosn & Co. have managed to present rampant product mediocrity as a viable strategy and continue to succeed. Why?

And what can be said about the German automakers? Audi, BMW and Mercedes-Benz continue to try to be all things to all people with varying degrees of success, churning out everything from electric cars to SUVs to high-performance monster cars that remind them of their glory days. Except that there are such fundamental issues roiling these German automobile companies that they cannot be ignored or swept under the rug. The identifying brand identities for these manufacturers have been so watered-down and muddled that it’s no wonder that they’re having trouble defining their futures. The “good” parts of these companies are being overwhelmed by the “bad,” and then the German auto execs are left to wonder why they’re having so much trouble keeping their respective brand focuses intact. Well, it doesn’t work that way. Trying to play the “all things to all people” game eventually catches up to you. And now these German auto executives have woken up collectively muttering to themselves, "What happened?”

Take Porsche, for instance. Porsche executives remain absolutely convinced that the company’s foray into its new, all-electric vehicle will be fully embraced by its buyers, a constituency made up of the original enthusiasts who embraced the brand way back when but who are now drifting away only to be replaced by consumers with only a casual relationship with the rasion d’etre that used to define Porsche. This isn’t an insignificant problem, but Porsche executives feel that since they managed the transition into SUVs, having one or two (or more) all-electric Porsches shouldn’t be much of a problem. Except that the qualities that Porsche has long espoused as being part of its brand makeup simply won’t be a part of its new all-electric super sedan, starting with the lack of that distinctive Porsche sound. Porsche executives are about to find out that this silence will indeed be deafening, no matter how they spin it.

This business remains a glittering spectrum made up of a million bits and pieces. Yes, there are shards of light and excellence, but those are just furtive glimpses. The broader view is of a teeming stew of mediocrity that ebbs and flows with the inflated certainty and optimistic pronouncement of too many executives with only a fleeting familiarity with reality.

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