The crisis meeting of the ‘Big Three’ US car manufacturers last week in Washington served to indicate how a global financial crisis can impact some of the biggest brand names on the planet and highlight their flaws, the majority of which are management induced.
The behaviour of company leaders can have a profound effect on public and employee brand perceptions. From a public perspective the respective leaders of the Big Three, once sworn enemies in the marketplace, are now seen suitably humbled going cap in hand to Washington in a last ditch attempt to persuade the Democrats to take pity on them and rescue a US industry that is basically bankrupt. Here they are, desperate for a bailout, secure in the knowledge that no bank anywhere in the world will lend them money. Why the reluctance to bail them out? Because they have comprehensively proved themselves incapable of managing their companies and creating products that will sell. Yet the fact that so many employees are involved and such an infrastructure of suppliers are reliant on the Big Three surviving, will ensure a bail out happens. You wait and see. Hopefully it will come with conditions attached and hopefully with an external management group in control, preferably Japanese, Korean or even Indian. Sadly all auto manufacturers will now be treated with extra caution by the banks, which will only make life harder for everyone.
Oh how the Japanese and Koreans must be excited at the prospect of damaged or failed US competitors. The M&A guys must also be excited by the potential opportunities, though the challenge of trying to make something out of such a monumental mess is probably too daunting for them.
The Big Three leaders impressed no-one on the day by flying to Washington in their private jets. Are they so arrogant that they didn’t realise how this may turn public opinion against them? Maybe they just don’t care. Where were their spin doctors?
No one in their right minds would ever believe that US$25 billion split three ways will rescue the three biggest US car manufacturers. No way will it turn around management attitudes, never mind magically produce new, smaller and greener cars and new production lines to make them. And who will bail out the dealerships? Chances are that if the $25 billion bail out magically happens, there will be no dealerships left to sell the ‘new’ cars.
Management were ill prepared to recognise and respond to change. Is it a case that the industry is a dinosaur that needs to die in order for a new and leaner one to replace it, one more appropriate to the needs of customers and the environment? What do the Japanese, German and Korean brands think of all this? How will they respond? Is this the big chance of all time to strengthen their brands and take the US market by storm? You bet.
What has not been considered so far is the damage inflicted on the Ford, GM and Chrysler brands. Let’s face it, the brands are forever tarnished, except in the eyes of the fanatical brand loyalists, whose numbers will inevitably decline. Those people who were at the point of purchasing one of their cars before the crisis set in are hardly likely to do so in the near future. Would you? Who wants to buy a car from a bankrupt car manufacturer with an uncertain future?
There is one hell of a job in the offering for a brand turnaround specialist. The most likely scenario, and this is only my view, is the emergence in the US of a new generation of smaller, leaner, smarter start-up auto brands with a focus on small, fuel efficient cars and trucks. Perhaps they may even be bought out and badged Ford, GM and Chrysler. Or are they more likely to be badged Toyota, Hyundai or BMW? Coming soon to a dealership near you...
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
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Friday, November 28, 2008
Friday, November 21, 2008
Showroom models caught in a brand trap
The quickest way you can destroy the integrity of your brand is to promise one thing while behaving in a way that is totally contrary to this promise. General Motors is experiencing the biggest crisis in its history, which will either see it die in the next few months or be bailed out by the US government. Ford and Chrysler are not far behind and will be eagerly awaiting the outcome. As far as they are concerned one less competitor will give them a market advantage, but on the other hand, if the bail out money goes to GM, will there be any left to guarantee a future for Ford and Chrysler? One possible scenario will be that a Chinese company will buy them, in similar fashion to the purchase of MG in the United Kingdom; or Land Rover and Jaguar by Indian auto giant Tata.
Back to the brand. GM is to be admired for investing heavily in its Volt electric vehicle, hailed as a ‘response to today’s and tomorrow’s energy and environmental challenges’. Here we are witnessing an attempt at a brand makeover – the rebirth of the GM brand as a caring, environmentally focused, world conscious car manufacturer at the forefront of a new era in automotive trasportation. This beggars belief however when you visit the GM website with an array of vehicles that definitely don’t look as though they have economy in mind – dominated by Hummers, Cadillac Escalades, GMC Yukons, Chevrolet Suburbans – a whole fleet of monster gas guzzlers and polluters that would have those nice chaps at Top Gear in the UK slashing their wrists. What were they thinking? Did they think it would go on forever? Surely there must have been one tree hugger in the product development division brave enough to suggest enough is enough?
As regards brand naming – General Motors’ dual values of the moment make the ‘General’ part of the name rather appropriate. Quite ironic really. GM’s Holden Division here in Australia, while having a more balanced model offering, still persists in churning out V8s to satisfy the petrol heads. And guess what? In the Sydney Morning Herald on 19 November is the headline ‘GM Holden to halve car production’. Chilling stuff, particularly for the poor people on the production line and their families.
GM Holden is to be criticised for not having sufficient foresight and not responding fast enough to changing conditions, particularly in the knowledge that it takes a long time to design, test and gain approval for new vehicles and change production lines.
As far as the GM Holden brand is concerned, it doesn’t alter the fact that it can’t be taken too seriously in these troubled times having a Volt on display in one showroom and a Hummer in the next. A conflict of brand values perhaps?
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
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Back to the brand. GM is to be admired for investing heavily in its Volt electric vehicle, hailed as a ‘response to today’s and tomorrow’s energy and environmental challenges’. Here we are witnessing an attempt at a brand makeover – the rebirth of the GM brand as a caring, environmentally focused, world conscious car manufacturer at the forefront of a new era in automotive trasportation. This beggars belief however when you visit the GM website with an array of vehicles that definitely don’t look as though they have economy in mind – dominated by Hummers, Cadillac Escalades, GMC Yukons, Chevrolet Suburbans – a whole fleet of monster gas guzzlers and polluters that would have those nice chaps at Top Gear in the UK slashing their wrists. What were they thinking? Did they think it would go on forever? Surely there must have been one tree hugger in the product development division brave enough to suggest enough is enough?
As regards brand naming – General Motors’ dual values of the moment make the ‘General’ part of the name rather appropriate. Quite ironic really. GM’s Holden Division here in Australia, while having a more balanced model offering, still persists in churning out V8s to satisfy the petrol heads. And guess what? In the Sydney Morning Herald on 19 November is the headline ‘GM Holden to halve car production’. Chilling stuff, particularly for the poor people on the production line and their families.
GM Holden is to be criticised for not having sufficient foresight and not responding fast enough to changing conditions, particularly in the knowledge that it takes a long time to design, test and gain approval for new vehicles and change production lines.
As far as the GM Holden brand is concerned, it doesn’t alter the fact that it can’t be taken too seriously in these troubled times having a Volt on display in one showroom and a Hummer in the next. A conflict of brand values perhaps?
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
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Wednesday, November 05, 2008
Conspiracy theory - the Democrats did it
I think we’re all sick and tired of reading about the latest round of retrenchments from around the traps. Give us a break. We’ve had enough. Yes, it’s the recession we had to have etc etc, but let’s put it behind us, learn from it and move on.
But just before we do...
Here’s a final round up of the latest Australian stats, before Obama wins the elections, a miraculous overnight turnaround happens and the conspiracy theory guys start to suggest that the economic slump was perpetrated by the Democrats.
Data from ANZ suggests that the number of job advertisements – newspapers and internet – dropped by 5.9% in October. Compared to October 2007, the total number of advertisements was 9.8% lower.
A special survey by the Australian Industry Group asked 303 companies their views:
The bad:
60% of companies said the crisis had negatively affected their business
55% saying they expected production to fall as a result
53% claim employment prospects have worsened.
60% said sales had fallen as a result of the crisis
64% said new orders had been hit
56% said their capital investment plans have been negatively affected by the crisis
The really bad:
40% are planning to reduce employment
40% are revising their business plans
38% are planning to cut costs
28% are planning to reduce investment
25% are planning to reduce production
10% are cutting back on R&D spending
So that’s enough of that. Things are now getting better. Our troubles are over. Markets are improving. So we can all go out and buy that new car that’s been hanging around on the docks for the past few months and make that cheeky offer on the repossessed holiday home on Avoca Beach.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
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But just before we do...
Here’s a final round up of the latest Australian stats, before Obama wins the elections, a miraculous overnight turnaround happens and the conspiracy theory guys start to suggest that the economic slump was perpetrated by the Democrats.
Data from ANZ suggests that the number of job advertisements – newspapers and internet – dropped by 5.9% in October. Compared to October 2007, the total number of advertisements was 9.8% lower.
A special survey by the Australian Industry Group asked 303 companies their views:
The bad:
60% of companies said the crisis had negatively affected their business
55% saying they expected production to fall as a result
53% claim employment prospects have worsened.
60% said sales had fallen as a result of the crisis
64% said new orders had been hit
56% said their capital investment plans have been negatively affected by the crisis
The really bad:
40% are planning to reduce employment
40% are revising their business plans
38% are planning to cut costs
28% are planning to reduce investment
25% are planning to reduce production
10% are cutting back on R&D spending
So that’s enough of that. Things are now getting better. Our troubles are over. Markets are improving. So we can all go out and buy that new car that’s been hanging around on the docks for the past few months and make that cheeky offer on the repossessed holiday home on Avoca Beach.
Oh and more importantly, before you do any of this, of utmost importance is that you call Heywood Innovation and get your brand strengthened and ready for the good times ahead. Will branding be on Obama’s agenda I wonder? Kevin take note.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
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Tuesday, November 04, 2008
Death of a legend
22 October 2008
At its peak Chrysler was a brand of legendary status. This year the motoring legend is destined to fall from grace and get tossed on the brand scrapheap by private equity.
Herein lies the story of yet another monumental hi-octane blunder fuelled by private equity greed and incompetency. Cerberus – the private equity owner of Chrysler since 2007 looks certain to offload its investment. Described as ‘this terrible mistake’ by a former CEO of American Motors, the purchase from Daimler only last year was widely seen as an ill considered move. Even the transfer of ownership to Daimler in 1998 – an uncomfortable liaison that spawned DaimlerChrysler Motors Company LLC – had many motoring scribes scratching their heads. Auto manufacturer madness.
Here are some interesting facts – Daimler bought Chrysler for US$37 billion, then spent billions more trying to keep it afloat. Cerberus Capital bought Chrysler back from the Germans for US$7.4 billion! Bet the Daimler shareholders were mighty pleased. Perhaps the Daimler brand value took just a slight dip after waving goodbye to US$30+ billion?
So what price will Cerberus now get in this financially battered market? General Motors is seen as the favoured suitor which is presently scavenging in the ruins looking for tasty morsels. Not that General Motors is without its own problems, with estimated debts of US$300 billion – which makes Daimler’s US$30+ billion loss look almost acceptable. All victims of a consumer society once fixated on ‘big is beautiful’ and now too slow to respond to environmental concerns and a global shift to smaller and more economical vehicles – cars that were great for the 1980s but dinosaurs today. Global warming and public sentiment sealed their fate.
So what value is put on the Chrysler brand now? Apparently precious little. Peter DeLorenzo, a former auto ad exec commented “After you get Chrysler, you take Jeep and the minivans, and get rid of the rest”. It seems that in order to restore brand strength and sales of the legendary GM Hummer (down 47.3% this year) all GM needs to do is to align it with Jeep ‘a brand with worldwide appeal’ (sales down 26% this year). What do you end up with? You get two brands with declining sales – one being the most despised and environmentally unfriendly auto brand of them all, sold alongside an honest and reputable ‘fun 4WD lifestyle vehicle’ albeit with a distant military heritage. Guess which brand will tarnish the other? You think Hummer will revitalise, or will Jeep’s brand suffer after the initial showroom frenzy and PR spin die down and everyone checks the sales figures? I’ll leave it up to you to figure that one out. What will all those loyal baby boomer brand diehards, who grew up with the ‘classic’ Chryslers think of these well heeled, smart talking, suntanned, quick buck merchants from Cerberus? Do we need to mention gun laws here? I guess here’s another brand going down the toilet big time, that’s likely to get its ass shot off or run over before it does so.
Chrysler brand RIP. 1925-2008
STOP PRESS 27 October
Chrysler has announced it is to cut 25% of its white collar workforce.
Daimler has announced it is to suspend production for one month after unveiling a big fall in profits.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
Share on Facebook
At its peak Chrysler was a brand of legendary status. This year the motoring legend is destined to fall from grace and get tossed on the brand scrapheap by private equity.
Herein lies the story of yet another monumental hi-octane blunder fuelled by private equity greed and incompetency. Cerberus – the private equity owner of Chrysler since 2007 looks certain to offload its investment. Described as ‘this terrible mistake’ by a former CEO of American Motors, the purchase from Daimler only last year was widely seen as an ill considered move. Even the transfer of ownership to Daimler in 1998 – an uncomfortable liaison that spawned DaimlerChrysler Motors Company LLC – had many motoring scribes scratching their heads. Auto manufacturer madness.
Here are some interesting facts – Daimler bought Chrysler for US$37 billion, then spent billions more trying to keep it afloat. Cerberus Capital bought Chrysler back from the Germans for US$7.4 billion! Bet the Daimler shareholders were mighty pleased. Perhaps the Daimler brand value took just a slight dip after waving goodbye to US$30+ billion?
So what price will Cerberus now get in this financially battered market? General Motors is seen as the favoured suitor which is presently scavenging in the ruins looking for tasty morsels. Not that General Motors is without its own problems, with estimated debts of US$300 billion – which makes Daimler’s US$30+ billion loss look almost acceptable. All victims of a consumer society once fixated on ‘big is beautiful’ and now too slow to respond to environmental concerns and a global shift to smaller and more economical vehicles – cars that were great for the 1980s but dinosaurs today. Global warming and public sentiment sealed their fate.
So what value is put on the Chrysler brand now? Apparently precious little. Peter DeLorenzo, a former auto ad exec commented “After you get Chrysler, you take Jeep and the minivans, and get rid of the rest”. It seems that in order to restore brand strength and sales of the legendary GM Hummer (down 47.3% this year) all GM needs to do is to align it with Jeep ‘a brand with worldwide appeal’ (sales down 26% this year). What do you end up with? You get two brands with declining sales – one being the most despised and environmentally unfriendly auto brand of them all, sold alongside an honest and reputable ‘fun 4WD lifestyle vehicle’ albeit with a distant military heritage. Guess which brand will tarnish the other? You think Hummer will revitalise, or will Jeep’s brand suffer after the initial showroom frenzy and PR spin die down and everyone checks the sales figures? I’ll leave it up to you to figure that one out. What will all those loyal baby boomer brand diehards, who grew up with the ‘classic’ Chryslers think of these well heeled, smart talking, suntanned, quick buck merchants from Cerberus? Do we need to mention gun laws here? I guess here’s another brand going down the toilet big time, that’s likely to get its ass shot off or run over before it does so.
Chrysler brand RIP. 1925-2008
STOP PRESS 27 October
Chrysler has announced it is to cut 25% of its white collar workforce.
Daimler has announced it is to suspend production for one month after unveiling a big fall in profits.
Tony Heywood is a Fellow of the Design Institute of Australia, founder of Heywood Innovation in Sydney Australia and joint founder of BrandSynergy in Singapore.
View some of Heywood’s work on www.heywood.com.au
Share on Facebook
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