American Spirit

What is it that evokes the great American spirit when it comes to our cars? Is it one certain brand that makes us feel it? Is it a certain type of vehicle, Semi-truck, pickup truck, car or even a motorcycle? What is the great American spirit that I am referring to? We could ask a thousand different people what the American spirit is to them and get a thousand different answers. I believe that when it all boils down to it the great American spirit is Freedom. Two hundred years ago the only way to get from one place to another was to walk or depend on an animal like a horse or ox to take us where we needed to go. The trips were often times long and very dangerous resulting in very few people venturing too far from the area they grew up in. Of course this is on land. Many people traveled great distances on the oceans. As time progressed and inventions came about the modes of transportation began to change. Locomotives became more prevalent and as the railroads spread across the nation more and more people moved in ever larger groups.

This had become the preferred method of moving from one place to another over long distances. This invention had helped to speed up the American spirit of freedom, which means not being held down in one place or having the freedom to set out on your own path to create your own future. A series of inventers in the 19th century had visions of new forms of personal transportation. These men lived in many different parts of the world. Paul Daimler in Cannstatt, Germany is credited with the first one to invent a working automobile. Carl Benz of Mannheim, Germany built his in 1886. ( http://www.ordain.com/history.htm) Henry Ford built his first automobile in 1896. (http://www.history.com/this-day-in-history/ford-motor-company-incorporated) David Buick built the first automobile to be called a Buick between 1899 and 1900. But Buick traditionally dates its beginnings to 1903.

(http://www.buickheritagealliance.org/buick_history/motor_division)

Of course over the years many others came along. Chevrolet, Oldsmobile, Plymouth, Cadillac and several more that we still know of today. From 1896-1930 there were 1800 automobile manufactures in the United States. Cars like Zip (1913-14), Halladay (1905-22), Gasmobile (1899-02), Stanley Steamer (1896-24). Why am I telling you this? Since its inception the automobile industry has been a very competitive market. At first there were very few barriers for entry. A little time and money and of course know how and anyone could enter the auto market. In those early days all manufactures were strictly a geographical based company, meaning there cars were bought and used a relatively close distance from where they were built. As each manufacture grew and became actual company’s they began to have more and more of an impact on larger and larger areas because they could now ship their automobile farther away. The manufactures that couldn’t compete with this began to close their doors and when the great depression struck only the strong survived to better times.

The company that I have chosen to do my paper on is Chevrolet. Chevrolet came around in 1911 and was started by William Durant and Swiss racecar driver Louis Chevrolet. It was built to compete with Henry Ford’s Model T. Chevrolet has a long history of leading the industry in sales for many years. As of late they have been struggling with their market share. As of 2011 Chevrolet had 37% of the market share in the Unites States. During the 1980’s and 90’s Chevrolet mainly used the Cost Leadership Strategy. During this time the auto industry was going through a transition and starting to use more and more technology. The technology being used was very rudimentary by today’s standards and was used almost all across the board. Meaning there was very little other than styling to differentiate the different auto manufactures. During this time Chevrolet and its parent company General Motors shifted most of their effort to their pick-up trucks. The reason for this was that with the car market the Federal Government had mandated many new laws governing these cars, ie placement of certain items like gas tanks, fuel mileage, safety features just to name a few.

Pick-ups were considered different because they were built to be used in a utilitarian way, not just to haul people around, so the rules and laws were more relaxed for these vehicles. Because of this Chevrolet could build these vehicles differently than the other manufactures. This is also the same time that Pick-ups really came into their own. They were no longer rough riding uncomfortable bricks on the road. Chevrolet also knew that not everyone would want the new “bells and whistles” that they offered on their vehicles so they also offered them anyway the customer wanted them. Fully loaded with all the fancy things or bare bones with no frills. This is where Chevrolet gained a real Competitive Advantage over the other manufactures. With the introduction of their Independent front suspension on all of their four wheel drive vehicles in 1988 the ride became even smoother. Because this suspension design and many of the parts where used on all truck lines they were able to lower the cost of producing their vehicles and passed those savings on to the customers. Chevrolet and General Motors sold many trucks in North America to not only businesses that would use these trucks but also to regular people that needed a “box” to carry their things around in but also wanted the smooth ride of a car.

Today, with innovation coming so fast for vehicles it is getting harder for manufactures to be on top of the “newest” trends. How can they differentiate themselves from the others? Time was that automotive designs changed about every five or six years and when they did it was usually a body design that was changed. Today technology is advancing at such a fast pace that manufactures are having to design their new vehicles with ways that this new technology can be added during the body style time line without having to change the body design which come with great cost that will need to be passed along. Differentiation Strategy can be very hard with all of these factors. Everyone loves the big things that come out that help us in one way or another, but sometimes it’s the little things that really help. Several years ago Ford started putting built in steps and a hand rail in the tailgates of some of their trucks. Just this year Chevrolet put integrated steps into the corners of the rear bumper. Anyone who has had to crawl into the back of a pick-up truck has wished for something like this for years. It doesn’t have to be a big innovation like a navigation system or built in vacuum cleaner that will draw buyers to certain products.

In the early 1980 General Motors had a manufacturing plant in Freemont California that was struggling with some pretty sever personnel problems. They ultimately closed the plant but a couple of years later in a joint venture with Toyota, Another auto manufacture, the plant reopened. The entire work force was sent to Japan for intense training and as a result the plant became one of Chevrolets best functioning plants. (http://www.npr.org/templates/story/story.php?storyId=125229157) Despite the fact that the automotive industry is a very competitive market sometimes a joint venture with another manufacture can be a recipe for success. Some of the big manufactures own other manufactures and share products like Ford and Mazda or for several years, General Motors and Isuzu there have been and are some that are in corporate partnerships. Chevrolet and Suzuki some to mind.

The Geo Metro was a rebadged Suzuki Swift built in Japan and shipped to the US. This proved to be a good strategy for Chevrolet because it helped them to enter into the small car market and hone their skills and refine their cars and options for those cars. If I could make one recommendation to Chevrolet as to which strategy that they should use or in their case get back too, it would be that they need to get back to the cost leadership strategy. In the past when a customer could order a vehicle the way that they wanted it Chevrolet possessed a large market share. Today when a customer orders a vehicle they are stuck with a “bundle” of options. The customer might want this option but not the rest in that particular bundle but they are stuck with all of them. Because of this “bundling” of options the price of the vehicle goes up and there might be some customers that look elsewhere for what they want not what the manufacture thinks they need at a higher price than the customer is willing to spend. Individual vehicles made for a niche segment of the market are this way too.

Several years ago Chevrolet came out with the SSR which was a new version of their 1953 Chevrolet Pickup and Ford reintroduced their Thunderbird which was a new version of their 1955 Thunderbird. These two vehicles where intended for the older baby boomer population that the manufactures figured would love a hot rod version of the classics that were on the road when they were young. The problem was that both Chevy and Ford priced these vehicles very high because of their “Bundle” of options on the one hand and the total lack of other options on the other. These cars were only produced for about five years apiece and finally dropped because of a lack of sales. It is possible to have a great idea but ruin the finished product. Whether it was greed, because they figured people would pay anything to own one, or shortsightedness. A product can come and go in the blink of an eye if the wrong strategy is used.

REFERENCES

( http://www.ordain.com/history.htm)
(http://www.history.com/this-day-in-history/ford-motor-company-incorporated) (http://www.buickheritagealliance.org/buick_history/motor_division) (http://www.npr.org/templates/story/story.php?storyId=125229157)