The automotive industry and the importance of embracing change

I caught a few minutes of a show on TV this afternoon (sorry, no reference) comparing the state of the US and Japanese automotive industries and tracing it back to 1993, when Al Gore led a government-funded initiative to develop environmentally friendlier cars. During the Clinton administration, $1.5 billion was poured into this initiative, but American car manufactures opposed it very strongly throughout and set the following conditions:

  • It would be entirely government-funded
  • They did not have to produce anything, simply show that they’d done the research

In the end, shock horror, nothing came of it: they did some research but continued to focus most of their attention and production on very profitable, petrol-guzzling SUVs and pick-up trucks. However, Japanese manufacturers, Honda and Toyota in particular, were a lot more concerned by Gore’s initiative, assuming (correctly, as it turns out) that this was only the start of a process of government demanding that industry start paying heed to environmental concerns. Without any government funding whatsoever, they conducted their own research into developing cars that were less damaging to the environment, resulting in the Toyota Prius and Honda Civic Hybrid, while GM et al. carried on churning out their SUVs.

Fast-forward fifteen years, and the state of affairs couldn’t be more different. The credit crunch has hit, oil prices are fluctuating wildly, and many citizens are concerned about climate change and want to do their bit. Combined result? GM, Ford and Chrysler may go bust, while Toyota and Honda and holding up reasonably well, and certainly have a lot more sympathisers than the US behemoths. If they manage to survive, the US manufacturers are now clearly going to have to start playing catch-up and they’ll be cursing themselves for not grasping the opportunity back in the stable 90s, when they had the time and resources to develop both the relevant products and the goodwill of consumers.

Lesson? Yet again, that industry (not just automotive) should stop thinking that concerns regarding the environment (or health for that matter) are a passing fad that will go away. Rather than being opposed to radical change, industry should study societal developments and try to be one step ahead of the game by accepting that there is a price to pay and trying to be part of the solution. Not only is it the right thing to do, but it invariably turns out to be commercially viable down the line. Just look at Toyota and Honda.


2 thoughts on “The automotive industry and the importance of embracing change”

  1. Good points Steffen. I stick up for the big three on my blog but your right, they just don’t get it. Saw the new Gm commercial for the hybrid escalade but at the end of it they push the non hybrid version with a 15k discount on the gas guzzling version. This commercial was followed by the Toyota commercial for the car that desinegrates over time. at the end they say they will help the environment by not effecting it at all. Very different marketing!

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