THE AUTOEXTREMIST

July 20, 2011

Simpleton Luxury and other atrocities of the week.

By Peter M. De Lorenzo

(Posted 7/18, 4:30 p.m.) Detroit. We’re hearing of late that Volvo doesn’t want to be Volvo anymore, that Hyundai is never going to make a mistake that will derail its momentum, that Sergio Marchionne is actually going to make an attempt at delegating, and that there’s a little bit of Porsche in all Volkswagens.

Uh, that’s a roster of stuff worth contemplating.

First off, let’s talk about Volvo. This is a company that has had an ongoing identity crisis for 30 years now, and just because it has new Chinese owners and a new CEO in Stefan Jacoby – the self-appointed marketing guru who previously plied his trade at VW – it thinks it’s going to press the reset button and miraculously reinvent itself as a maker of vehicles featuring “simple luxury” aimed at the Chinese market.

This is in response, of course, to the fact that the brand’s previous market positioning – safety – has been completely democratized throughout the industry, and that complying with various safety regulations is simply the price of doing business and that no one can claim superiority unless they add another dozen air bags for whatever possible contingency they can get consumers to care about. (By the way have you heard about the new “butt” bag, designed to protect citizens of more substantial girth? Don’t be surprised if you do one day soon…)

At any rate, Stefan Jacoby, rightly seeing the safety positioning as being a strategy to nowhere, has come up – with his Chinese overlords, of course – with a marketing strategy that is uh, vapor ware. Simple luxury? Why not just call it Simpleton Luxury and be done with it? I get the fact that Chinese buyers are operating in a weird Twilight Zone that vacillates wildly between wanting non-showy transportation boasting the frugality just above a bike, and the biggest, most luxurious thing they can get their hands on, but this new positioning by Volvo is simply laughable.

What does it mean? Nothing. What are they saying? Nothing. What are they doing? Nothing. This is the marketing equivalent of selling air.

It won’t work here, but then again that’s not their focus. They’re going all-in for the Chinese market and they expect it will work like gangbusters in that arena. Except it won’t. Not with Audi, BMW and Mercedes-Benz already flexing their muscles there. And besides, if you want luxury on the more simplistic side that niche is already taken in the Chinese market. It’s called Buick. And even Buick isn’t that simple, because Buick’s designs are light-years more sophisticated than anything Volvo has. So, memo to Stephan & Co.: Good luck with that.

As for Hyundai, I’ve said it before and I’ll say it again, but no car company stays as hot as Hyundai has been indefinitely. Many car companies before Hyundai have had it all figured out – or so they thought – only to run straight into a swirling maelstrom of shit of their own making, followed by a comeuppance in the market place that resonated for years afterward. Toyota and Lexus are just the most recent examples of that. Yes, of course Toyota will be back, but we’ll see to what extent. While Lexus may have more trouble getting back, because what, exactly, are they getting back to? The “automatic” Lexus sales success has seen its peak, and from here on out they’re going to have their hands full, you can count on that.

But when I read where Hyundai’s U.S. sales boss Dave Zuchowski told Automotive News that the Korean automaker won't risk quality lapses by increasing capacity too quickly in order to increase its sales 10 percent every year over the next three years, I figure the Hyundai train could be derailed at any moment. "We've made a conscious decision as a company not to compromise on quality in order to build more," he told Automotive News. "Not everybody has made that decision, and it's not always worked out very well for them."

Really? And how is Hyundai going to be different from the “others” in this business who have failed before? I can answer that one, too, because Hyundai is no different. They’re on an incredible roll and they have two exceptional products in the market in the Sonata and the Elantra, but they’re not immune to what has befallen more accomplished automakers in the past, by any means. And Zuchowski’s statement is the first confirmed Autoextremist sighting of a burgeoning arrogance that is bound to rear its head more and more as the months go by.

Every single sales executive in this business boasts about increasing sales or taking more market share. And if every sales executive got his or her wish, the total sales “pie” would be two-and-one-half times the size of the market that actually exists. But Hyundai’s creeping public arrogance has a more ominous tinge to it, as in, they’re actually starting to believe that they cannot fail and that they won’t make mistakes.

Well, I’ve got news for them: They will, on both counts.

And here we go again with Sergio Marchionne, who is now ready to unveil a new operating structure for the Italian-American company that will soon be based out of Auburn Hills, much to the chagrin of the Italian government and people. According to inside sources the new structure will have Marchionne relinquishing some of his legendary control in favor of establishing regional heads who will report directly to him, except that Sergio will still have over 50 people reporting directly to him as he does now. This is progress? Nah. It’s just so much window dressing designed to assuage the hand-wringers’ concerns about Marchionne doing “too much.” Sergio isn’t going to do anything different. He may create a layer underneath him but absolutely nothing will change. He will control every single inch of the company until he’s ready to cash in his millions and walk away. He simply can’t do it any other way. And besides, there’s no one there to tell him he can’t.

And last but not least we have VW’s Chief Shoveler (aka Ranier Michel, vice president pf product marketing and strategy for Volkswagen of America) who actually had the nerve to say to Automotive News – while talking about the next-gen VW Beetle due in showrooms in the fall – that "The genes of Ferry Porsche are in all the cars," mentioning the similarities between the shape of the new Bug and the Porsche 911 and Audi TT.

Really, the genes of Ferry Porsche are in all the cars? That’s interesting. Since up to now Porsche has conjured up the use of Ferry Porsche only when it has been most convenient, stretching its credibility often in the process. In the last few years we’ve heard the spin as to how Ferry Porsche would have approved of the Cayenne and the Panamera, which was bad enough. But now we’re to believe that there’s a little bit of “Ferry” dust on the new Beetle too? Ugh. It’s bad enough we had to endure the fabricated connection between the Porsche philosophy and leviathan SUVs and four-door sedans, but now this?

The Porsche story is one of the most remarkable in automotive history, but I can safely say that the next-gen Beetle has nothing to do with that. Rather it has everything to do with delusional German marketing executives trying to spin their way to success. Even though it’s clearly painful for them they should try keeping quiet for a while and let the market bubble up to them. The industry would be so much better for it.

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

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