Where's the pain?

A friend commented on my VW post (not here, but over at LinkedIn):

"While VW certainly has a big internal issue and culture to fix," he wrote, "I am predicting that the consumer sentiment will not be harsh or long lasting. After all, GM's culture of secrecy and stupidity (re key systems) resulted in many deaths -- and no PR backlash that appears to have hurt revenue. Same with the airbag fiasco and Honda and Toyota."

Sales figures seem to confirm his perspective: in October, Chevrolet had its best sales in 11 years and GM overall posted its seventh consecutive increase in retail market share. Toyota's October sales also increased 13% over 2014. For its part, Honda broke all October sales records with a 9% increase. Even Volkswagen, which couldn't sell diesel models, eked out a 0.2% sales gain, thanks to hefty discounts.

Where, you might ask, is the pain?

Could be it's masked by the combination of lower fuel costs driving truck and SUV sales, heavy promotions and cheap financing getting people into showrooms, and an improving economy making customers feel better about trading up from the clunker in their driveway.

As Automotive News put it: "The final months of 2015 are expected to see widespread incentives and promotions, especially among luxury brands, and on cars, where consumer demand has been weakest. Buick, for example, is offering $6,000 off select 2015 Regal models that have been on dealer lots the longest."

By one calculation, incentives increased 14% to $3104 per vehicle compared to 2014.  In other words, the industry is riding on pricing.

I worked in an industry that let pricing dominate people's purchase decisions. It was not pretty. The alternative, of course, is to sell on brand values. Another word for "brand" is "trust."

VW, GM, Toyota, and Honda are on the equivalent of opiates to mask the pain of of losing customer trust. They all need to work hard to regain it.

 

 

 

 

 

 

Comments

[Leslie Carr]

In a way good for B2B services that produce branding stationary and other products like branded coffee cups, bunting and other merchandising stuff for all the top brand authorised dealers for VW, General Motors et al. In times when trust falls and incentives rise, we see rise in orders by manifolds.

Effectively, people are impressionable but are quick to forget too, and these shiny happy cup full of coffees and bunting and incentives that often do not mean much ( unless in dire times when trust has just been shattered recently viz VW in recent times ) mean a lot as props that like a magicians stage arrangement help the public in forgetting what is actually wrong.

Cheers,
Leslie Carr