Drivin’ Em In: Capturing The Urban Market Will Be Key For Detroit Carmakers

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    380pxMercedes

    Again.

    With last week’s news that the deal for Penske Automotive Group (PAG) to buy Saturn from General Motors was dead, signaling the potential loss of more jobs, we were once more reminded of the impact of the past troubles of the Detroit Three automakers.

    It’s a harsh reality that we’ll be dealing with for years to come.

    For many of us with strong ties to the Midwest, the hope that GM, Chrysler and Ford will find more solid ground in the future has very personal meaning. Regardless of our occupation, the downturn in the Detroit automotive industry has impacted our lives, directly or indirectly.

    And as a Detroit-based journalist who has covered the industry since 2000, I’ve taken a deep interest in assessing the challenges GM, Ford and Chrysler have faced in the U.S. market and where they went wrong.

    DEEP CONCERN

    Now, with the future of GM and Chrysler hanging in the balance and Ford pushing to redefine itself in the marketplace, assessing what the Detroit carmakers need to do differently to compete is a much more pressing issue.

    It’s an American saga that historians, business experts, commentators and analysts continue to debate. Some believe brighter days are ahead now that the carmakers have addressed issues such as union contracts, health care costs and overlapping products among various brands.

    Others contend that the recent efforts to focus on more fuel efficient vehicles and smaller cars should help. Then there are some who hinge hopes of a new day on smarter business practices for the automakers, such as the Chrysler and Fiat deal.

    They’re all legitimate points.

    BIGGER ISSUE

    Still, I believe one of the most neglected issues that have affected the Detroit automakers lies in the challenges they’ve faced to understand and connect with the urban market in the past. Aside from a few spotted successes, the urban market has been an obvious trouble spot for the American carmakers.

    Even with the recent surge that Ford has shown in the market with its sales, the Dearborn-based automaker still suffers from some of the past issues that have haunted the Detroit Three when trying to appeal to the urban market.

    It’s apparent by how many people I come across traveling around the country, ages 21 to 45, who still have such a negative image of GM, Chrysler and Ford despite the strides the carmakers’ have made in a number of key areas such as styling, quality, technology and performance.

    It’s a sure sign that despite their efforts, they have continued to struggle to connect with a key consumer demographic in the U.S. for new vehicle sales and positioning their brands in the future. A group that’s considered one of the most influential market segments in the U.S. with an estimated buying power of roughly $900 billion and growing.

    Where did the Detroit carmakers go wrong? Well, it’s hard to nail it down to one specific thing. But some of it is a result of not understanding the urban market; having the wrong people in key positions; failing to get their messages out effectively; not being receptive to new ideas presented by their marketing agencies; and misguided insight on the market.

    Some would even argue that being based in Detroit has affected the Detroit automakers’ ability to connect to the urban market because it’s limited their scope of the diversity that exists within the urban market. The American automakers’ issues in this area have also been compounded by their challenges to recognize the difference between the urban market and the African- American market.

    It’s been apparent in practically every facet of the companies’ operations. Yet, it’s seldom discussed or makes the headlines, despite being a key factor in driving sales.


    MOVING FORWARD

    I’m sure some will argue that even if GM, Chrysler and Ford had effectively reached the urban market, they still would’ve found themselves in their current predicament. True, but probably not to the degree that when the car market rebounds (which it will), there are still questions about whether the Detroit carmakers will be able to compete.

    The urban market has and continues to be a driving force when it comes to new vehicle sales and has proved pivotal to the gains in market share made by carmakers such as Toyota and Nissan. So, who’s to say what would have happened if the American automakers would have effectively targeted this market over the past decade.

    Either way, there’s a lesson to be learned from past mistakes that could prove to be critical to GM, Chrysler and Ford in the future.

    Now, we can only hope that they’ve learned from those mistakes as they move forward.

    Marcus Amick is a national automotive correspondent and market analyst.

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