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Auto Brands Facing Disruption

September 23, 2019

Car crashIt’s clear to everyone by now that the auto industry is in the painful throes of explosive, disruptive change. Even the near future of the sector is difficult to predict. There are so many new forces impacting the industry, no one can yet say what a future car business will look like, or whether there will be one at all. The climate crisis is the primary “driver” of the change. It’s clear that auto emissions, worldwide, must be brought down. That leads to efforts to build fleets of electric vehicles even though it’s uncertain if the market for so many EVs now exists. It also inspires experimentation with hydrogen propulsion and other clean energy options. But that’s just the beginning. Safety concerns lead to experiments with much better-performing self-driving vehicles. When all this is perfected, one won’t need to own a personal vehicle. It will be cheaper, easier – and cleaner – to simply engage with a public transportation infrastructure, greatly reducing the number of vehicles sold each year. Where will that leave the car companies? And is this what the market wants? Artificial intelligence, nanotechnology, blockchain, internet of things, 5G networks – all these exciting new technologies are pushing and accelerating the transformation. The breadth and depth of this kind of market-transforming upheaval is sure to have profound effects on the auto brands – the shared relationships between the car companies and their markets. The big media companies are grappling with this kind of large-scale disruption too. What about where you work? Think your industry is immune? Of course not. You’re probably also already seeing the writing on the wall.

It stands to reason – small, incremental changes in a brand’s market requires small, corresponding adjustments to it’s positioning. But major sea changes that disrupt the whole industry require a total, new strategic approach to that positioning. In the auto industry, brands are now trying to determine what kind of enterprises they should each morph into. That’s an impossible task given no one can truly predict where all this disruption is going to end up. So auto companies are positioning in ways that will allow them to quickly reposition again depending on which way the wind blows. For instance, GM recently announced it will be transforming into an all-electric vehicle company. That’s a bold move and not without significant risk. But it remains to be seen if they’ll actually do it. And, currently, the bulk of their sales come from gas-guzzling pickup trucks and SUVs so they’re keeping that part of the business as is, thank you very much. Stand by for more announcements from GM as the market keeps changing.

It’s possible there will be no more private ownership of cars at all except for (hopefully) recreational “Sunday” drives for us enthusiasts. Today, in some parts of the country, minimum wage earners have to work many miles away from the only places they can afford to live. So those of us who can least can afford it spend a third or more of their total income just getting back and forth to work. In this kind of world, one can easily imagine a push for a government-guaranteed “Right to Transportation”.

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One can envision a tax-supported transportation system in which clean-energy, self-driving shuttles and taxis connect passengers with rail (again, clean) for first- and last-mile solutions. All for free. In such a system, governments would be the only customers for auto manufacturers. We would not need nearly the number of vehicles that are on the road now. That’s because, as opposed to private vehicles that spend 90% of their lives parked, the taxis and shuttles would never be idle. They’d drop off one rider and pick up the next. You’d only need enough vehicles to meet peak demand.

However, since autonomous vehicles would almost never have accidents, they would be far less frequent and far less fatal. That means cars could be made a lot cheaper. Which means they’d wear out faster and need more frequent replacement. So the car companies could still keep cranking them out. There’s still a viable business model here – at least for somebody.

Ironically enough, the car company that seems best positioned to exploit the disruption in the automotive sector is Volkswagen. “Luckily” for them, they’ve already been thoroughly disrupted. Everyone will remember that, in 2015, VW got busted for willfully building into their vehicles a system for falsifying their true pollution emissions. This led to massive fines in many countries, heads rolling at the top of the organizational chart, and new restrictions governing their future business activities. When all this is happening to you (deservedly so) while in the middle of an industry-wide existential threat, you might as well reposition, and that’s what VW is doing. We linked to the story last week.

It seems to this writer that VW’s new position is, like GM’s, a provisional stand that gives them the opportunity to move again when the market shifts further. And it will shift further. But what gives them the edge over GM is – they didn’t just announce their intent. They actually altered their brand positioning and underscored it with real, if subtle, design changes that the public can see.

All the car companies are developing electric vehicles now. But GM is the only major auto manufacturer to commit, at least verbally, to an all-electric future. And only VW has begun altering its brand be relevant in that future.

As mentioned, the auto industry is not the only sector that is wrestling with real, current, disruption. The big media companies are struggling to reinvent themselves as streaming services. There are plenty of other examples. What about your industry? Is disruption knocking on the door? Or has it already kicked it down? Are you ready to reposition?


Best Branding Reads – Week of September 23, 2019

The Business Case For Building Brands
I love articles like this. Useful for making the case to upper management.

This Is the App Top Brands Are Using to Connect With Gen Z
I must be old. I can’t see the difference between this and the dear, departed Vine.

Why You Should Consider The Sensory Side of Brand Representation
If it looks like a brand and sounds like a brand and smells like a brand …

Applying Hollywood Story Techniques To Brands
Here’s another recipe for baking the perfect advertisement.

The Advantage Of Harnessing Consumer Creativity
We’ve raised an entire generation of visually literate consumers, each one contributing to the cultural and commercial conversation.

Gucci Back In Hot Water, This Time For Mental Health Imagery
Are they being this offensive on purpose?

How Can Businesses Use Design Thinking to Redefine Company Culture?
Not sure I accept the premise of this article but, either way, it’s interesting.

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