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Wednesday, August 08, 2007 Fly on The Wall Report No. 2 – Automotive Management Briefing Seminars
TRAVERSE CITY - Tuesday’s Designing for Customization briefing was chaired by John Waraniak, vice president of the Specialty Equipment Manufacturers Association. This marked the first major participation in CAR's annual international conference by automotive aftermarket forces. It's a multi-billion dollar market that's getting bigger as the Generation Z population climbs toward 100 million. SEMA's big show in Las Vegas last year drew 14 OEMs, hundreds of aftermarket firms, 45,000 dealers and close to another 100,000 attendees. Designing for customization plays to buyers who want their cars and trucks to be distinctive in appearance or performance or both. It calls for collaboration between OEMs and specialty product makers, generating revenue and profits for all. Waraniak calls collaborative growth "an alternate way forward." With a smile, CAR's David Cole calls collaboration "an unnatural act." Waraniak says it means modifying mass production and mass marketing practices to make room for "customization, accessorization and personalization." Toyota Motor Sales USA product planning manager MIke O'Brien says pickup trucks are the largest segment by far for customization. Dealers who offer customization find it creates value, drives showroom traffic and increases closing ratios. Toyota Motor Sales visited hundreds of owners who use their trucks for everything from pushing snowplows to herding cattle. This led Toyota to offer Tundra customers five- and six-speed transmissions with more low-speed pulling power, plus stronger frames, higher suspensions and additional attach points. Does it work? Tundra pickups are selling at two times last year's rate. SEMA's Waraniak says that dealers account for about 32 percent of accessory sales, but the big winners are aftermarket shops that enjoy 63 percent of the market. The consensus? Customization is a growing factor in this relentlessly changing world. Automakers who fail to take customers' desires for customization into account when engineering new vehicles may lose market share. Those who do engineer their vehicles for easier customization, and whose dealers can offer a range of on-the-spot customization options, can win big-time. RUMORS ARE RIFE. Conference hallways echo with speculation about Chrysler. One vintage auto reporter wonders how long it will take Cerberus to "flip" its new baby. "It could happen pretty soon," he says, "especially if Cerberus' pockets aren't as deep as assumed, and if the venture company is anxious to recoup its investment rather than wait while Chrysler rebuilds." Conference host David Cole thinks Cerberus' options could include an IPO, thereby returning Chrysler to public ownership, or a "strategic alliance" with another automaker, or even an outright sale. Who might ally with or buy Chrysler? How about Volkswagen, which reportedly seeks plants in the U.S? How about Carlos Ghosn if he thinks he could mate Chrysler with Nissan? Or, might Cerberus make Kirk Kerkorian's dream come true? "No chance!" counters the managing director of a consulting firm. According to him, Cerberus has raised the curtain on Act One of a three-act play. Act One will focus on operational efficiency, cost reduction and quality; Act Two on short-term and sustainable profits; Act Three on the future which could include a range of exit strategies. This executive says Act Three hasn't been written yet. For now, he says, Cerberus will concentrate on control, especially finances. As a private firm, the reborn Chrysler is free from Sarbanes-Oxley reporting constraints. Says another consultant, "A culture clash is already evident, so (quoting fictional actress Margo Channing), 'Fasten your seat belts. It's going to be a bumpy ride!' This is a special report written by Neil Jackson of Hudson Mills Communications
Author: Neil Jackson Source: Hudson Mills Communications
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