FC NOW: The Fast Company Weblog
August 26, 2005
Past Imperfect
This news, about GM and Chrysler cooperating to create their own Hybrid Cars, is an interesting development. Both companies announced their SUVs would be using the Hybrid engine in 2007. Why only mention the SUVs and not other kinds of automobiles?
True, the SUV is a gas-guzzler that could use hybridization. But, really, I think they singled it out because of the slump in SUV sales. With gas prices so high, consumers aren't buying cars with low fuel-efficiency. So now, auto-makers are moving to put SUVs back on top. But a hybrid sedan would still be more fuel-efficient than a hybrid SUV.
Companies should not worry about reestablishing the glory of former top-sellers. They should look to the present and what's hitting big now. If a company's strategies are formed by the past, their bolder competitors will pass them by as they head toward the future.
Is it a risk to recapture past success, rather than moving forward?
Posted by Kevin Ohannessian at August 26, 2005 10:52 AM | Category: strategy |
10 Comments
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Yes.
Running a business is like driving a car -
you cannot drive looking in the rear view mirror - and expect to get anywhere
... at least not for long.
look, it's this simple; lead-follow-or get the heck out of the way. Who CARES which direction we are going as long as we're moving somewhere.
It's easy to criticize, just ask Cindy Sheehan. I don't hear anybody offering a creative alternative SUGGESTION. Any OTHER ideas floating out there, would you please stand up??.....
I didn't think so. Ok, we work on the electric cars for a while. So what. Somebody is doing something. And we start down the road. Have you noticed oil is nearing $70 a barrel. Quit your collective bitching and get on the bandwagon which ever direction it is going.
Hmmmmm - why am I thinking that our friend Roger drives an SUV - a Hummer perhaps?
Just teasing - please don't run me over. I'm sure there is more to it than driving in reverse. SUV's are very popular because Americans like BIG. While I agree that we should only drive a car as big as we use, groceries fit very well in the back of a mid-size sedan and don't need a Suburban XL, I also believe that the car companies need to follow the market. If we (the collective American "we")like SUV's, then we NEED to find a solution to the guzzling problem.
Every company strives hard to remain in business and retain the consumers.The innovative ways,
aggresive marketing help them and they are also keen on devising ways and means to compete.The advantage with them is their established brand,and once the product rolls out succesfully,
and has custmer acceptance then the purpose is achieved.The example of two companies quoted are no exception.You will always find a critic.It is this wherefrom they take their initiative on and act to produce result desirable.In mobile technology,when CDMA came,every one thought it would be a bad time for the GSM operators.See the result of GSM technology,its still popular and is getting accepted.
The U.S. consumer, including his environment, will be much better off once Toyota and Honda put GM, Ford, and Chrysler out of business.
Investigate the technology before bashing GM. This product was developed for city buses; it's big, heavy, and rugged. Weight is not an issue for Jimmy's and Suburbans; it's very much so for a Cobalt or a G6. I imagine that there is a very high priority program in place to pare half to two-thirds the mass from the units so they'll fit into a Neon.
SUVs are the only category where American manufacturers still win: Americans like to buy them, and they like to buy American ones.
Announcing a futre of SUV Hybrids allows people to delay a purchase until they're available - perhaps preserving the last vestige of a viable American automotive industry.
Do the math. A Civic sedan with CVT gets 30mpg in city, while a Civic hybrid sedan with CVT gets 47mpg; driving 12,000 miles a year saves about 145 gallons of gas.
A Chevy Tahoe 5.3 gets 15mpg in the city. Assume GM/DCX's new hybrid is 30% more efficient--19.5mpg in the city. You'll save 185 gallons driving the same distance.
I would suggest auto companies should balance future expenditures against current investments to optimize shareholder value while providing products and services to customers they want and will purchase from them at enough profit to continue to meet the companies obligations while providing a return on investment for their shareholders which will continue to attract capital. If hybrid sedans accomplish all this, then I think auto companies should build a bunch of 'em!
GM had a much more interesting (to me) alternative some time ago - the "Lean Machine". It was a 3-wheeled, enclosed, hydro/pneumatic suspension personal transportation pod that could get phenominal gas mileage while still providing an exciting driving experience. But GM lost interest in it because GM (and Daimler-Chrysler/Ford/et al), like all large businesses, is in business to make money on a large scale (as opposed to "boutique" manufacturers). It will produce the products they think will sell in greatest quantity, with the lowest possible investment costs. Given that it takes about the same amount of resources/costs to construct a sub-compact car as it does a SUV/truck (but the revenues on SUVs/trucks are much higher), don't be surprised if more SUVs/trucks are constructed - if they continue to sell. Hybrid or no. If you don't like it, don't complain - just buy something different or construct your own. Let all the others divert larger chunks of their personal budgets to buying gasoline if they wish. It's called consumer choice.