Continued from yesterday, with some overlap...
Can the US Car Industry be saved?
It is painful to watch the current attempts to save the American automobile industry through bridge loans, restructuring, lower wages and an auto Czar. (I thought the Czars were ruthless dictators who routinely disregarded what was best for the people—who made the Communists look good by comparison.)
To change things, people need to look at root causes, rather than symptoms: decades of failure to be responsive to the needs of customers, particularly the failure to address quality problems adequately has resulted in horrible WOM. It would take decades to fix it, far beyond bridge loans.
What needs to be fixed is an attitude that takes a long time to change:
The American automobile industry is one of the few that is still running on the old-fashioned attitude that they know better than the customer, an industry that doesn’t realize that the customer has hijacked marketing and taken charge.
The root attitude that's missing is that a well-earned reputation (WOM) resulting in willingness to recommend their car to friends determines sales. And managing WOM is not a marketing technique, it's a way of life.
Restructuring, better marketing, lower labor costs, selling the corporate jets, reducing executive salaries and government oversight are naïve attempts to fix symptoms. None of them will get people to recommend and buy inferior American cars.
What should be done?
Anything will be painful. If we prop up the American industry, they will still fail to turn around attitudes and design in time. Also, it will take at leant hundreds of billions of dollars, and bankrupt us in the process by printing money, thereby devaluing the dollar.
Instead, we should do something counterintuitive: we need to let them go into bankruptcy and leave them to sink or swim, since governmental "supervision" will make things worse. We should repeal the regulations that make it almost impossible for newer car companies to do business without selling to large companies. I've heard that there are many such struggling companies.
There is plenty of room for one or two innovative American car companies that are genuinely responsive to the customer. The decline and/or demise of the present US car companies will create plenty of room for companies that understand customer collaboration, ease of repair, customer support, and other concepts of modern marketing.