Understand
ing the first is unbelievably simple! Fuel-efficient cars [in other words, cars that run on traditional petroleum and give increasing miles per gallon]! The reality is that companies that have focused less on providing high level quality (in terms of say, styling, driving, luxury, SUV experience) and more on providing flat fuel efficiency have succeeded beyond anybody’s expectations. The corollary is that companies that have focused on the opposite have tasted devastating billion dollar losses. It’s obvious that the solution was not something hidden away in strategic thingamajigs. And to say all this as an afterthought is, like I wrote above, a no-brainer. But in truth, the concept that fuel efficient cars are the future, was for every auto major across the world to see. Sadly, the only ones that focused on it with passion were the Japanese giants.
Of course, one has to accept that two years back, Bill Ford had divulged to the media that Ford would be necessarily moving towards more fuel efficient cars. That should have done it, right? Well, there was just a slight little problem. Despite his public statement, Bill never moved towards ‘fuel efficient’ cars! [“The market was pulling us in a different direction,” Bill reveals in BusinessWeek this August]. Dangerously, neither had GM! And we’ve not even started discussing the travails of the down and almost out Chrysler yet, which is perhaps simply looking around for a suitable buyer! The Detroit three, unfortunately, focused horse-headedly on selling SUVs and tough trucks, and investing more and more into R&D [close to $12 billion annually] to recreate products that were doomed from the start! That’s how tough it takes some billion dollar loss makers to understand no-brainer issues.
The no-brainer auto issue #2
I caught up with Christian Breitsprecher, equity analyst at one of Germany’s largest investment banks, Sal Oppenheim, and he commented, “Obviously, the auto industry did not foresee the trends... that one day the price per barrel would be so high. Companies, which do not invest in alternate fuel will go down and hybrids is just an element of the entire investment.”
That brought me to the no-brainer issue number 2, hybrids! To say that it’s the most over-hyped concept in the industry today not worth even the media space it occupies, is to speak the truth. The situation today is such that after testing out, one should say successfully, the concept of fuel efficient cars, car manufacturers today are assuming presumptuously that the next logical step in this hugely competitive world is the hybrid (for the rare uninitiated, a car that runs on a combination of petroleum and another source of energy). And more so companies that are leading the race, like Toyota, Honda etc. Dramatically, the fact is that even with hugely profitable companies like Toyota and Honda, who believe that with hybrids they have the instant solution for the future, the concept could be a thrashing in disguise.
The first structural defect afflicting hybrids is the market share. The hybrid is, in simple terms, before its time, and cannot account for significant market share and usage for the next ten years globally. Illogical you said? Look at the figures even in the world’s top auto market (or is it second already?). In the US, despite being ‘in the news’ for the past decade, only 347,102 hybrids were sold in 2007 (see detailed story later on, ‘Where, Mrs. Robinson, lies the problem’). That means that even with Toyota monopolising a 70% share of the market, and after all the billion dollar global marketing hoopla attempted by various auto corporations, hybrids accounted for only a miniscule 2.15% of the total new vehicle sales in the US, and puniest percentages in other global markets.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
ing the first is unbelievably simple! Fuel-efficient cars [in other words, cars that run on traditional petroleum and give increasing miles per gallon]! The reality is that companies that have focused less on providing high level quality (in terms of say, styling, driving, luxury, SUV experience) and more on providing flat fuel efficiency have succeeded beyond anybody’s expectations. The corollary is that companies that have focused on the opposite have tasted devastating billion dollar losses. It’s obvious that the solution was not something hidden away in strategic thingamajigs. And to say all this as an afterthought is, like I wrote above, a no-brainer. But in truth, the concept that fuel efficient cars are the future, was for every auto major across the world to see. Sadly, the only ones that focused on it with passion were the Japanese giants.Of course, one has to accept that two years back, Bill Ford had divulged to the media that Ford would be necessarily moving towards more fuel efficient cars. That should have done it, right? Well, there was just a slight little problem. Despite his public statement, Bill never moved towards ‘fuel efficient’ cars! [“The market was pulling us in a different direction,” Bill reveals in BusinessWeek this August]. Dangerously, neither had GM! And we’ve not even started discussing the travails of the down and almost out Chrysler yet, which is perhaps simply looking around for a suitable buyer! The Detroit three, unfortunately, focused horse-headedly on selling SUVs and tough trucks, and investing more and more into R&D [close to $12 billion annually] to recreate products that were doomed from the start! That’s how tough it takes some billion dollar loss makers to understand no-brainer issues.
The no-brainer auto issue #2
I caught up with Christian Breitsprecher, equity analyst at one of Germany’s largest investment banks, Sal Oppenheim, and he commented, “Obviously, the auto industry did not foresee the trends... that one day the price per barrel would be so high. Companies, which do not invest in alternate fuel will go down and hybrids is just an element of the entire investment.”
That brought me to the no-brainer issue number 2, hybrids! To say that it’s the most over-hyped concept in the industry today not worth even the media space it occupies, is to speak the truth. The situation today is such that after testing out, one should say successfully, the concept of fuel efficient cars, car manufacturers today are assuming presumptuously that the next logical step in this hugely competitive world is the hybrid (for the rare uninitiated, a car that runs on a combination of petroleum and another source of energy). And more so companies that are leading the race, like Toyota, Honda etc. Dramatically, the fact is that even with hugely profitable companies like Toyota and Honda, who believe that with hybrids they have the instant solution for the future, the concept could be a thrashing in disguise.
The first structural defect afflicting hybrids is the market share. The hybrid is, in simple terms, before its time, and cannot account for significant market share and usage for the next ten years globally. Illogical you said? Look at the figures even in the world’s top auto market (or is it second already?). In the US, despite being ‘in the news’ for the past decade, only 347,102 hybrids were sold in 2007 (see detailed story later on, ‘Where, Mrs. Robinson, lies the problem’). That means that even with Toyota monopolising a 70% share of the market, and after all the billion dollar global marketing hoopla attempted by various auto corporations, hybrids accounted for only a miniscule 2.15% of the total new vehicle sales in the US, and puniest percentages in other global markets.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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