I'm going to say something that many people – particularly in Southeast Michigan – may not want to hear. There is more and more evidence that the imports – European and Asian – are controlling and leading the U.S. new car and light truck market. The demise of Mercury is only the latest illustration of this industry trend.
Both European and Asian OEMs have used a two-brand (mainstream and premium) strategy throughout their time in the U.S. market. Volkswagen started this concept (among the imports) with VW and Audi, and American Honda moved to a two-make structure in 1986 when it launched Acura, the first premium Asian brand in the U.S. In 1989 Toyota and Nissan followed with Lexus and Infiniti, respectively. Although Toyota actually has a third brand (Scion), it is considered a small niche make (April 2010 retail share of .47%). Some Asian- and European-based manufacturers only have one make in this country, but those solo makes consistently fall in either the mainstream or premium bucket.
As the Asian and European OEMs have gained share in the U.S. (their April 2010 YTD combined share of U.S. new retail light vehicle registrations is 62.5%), their two-make structure has similarly gained strength and eventually become the dominant paradigm. Sloanism – the concept, created by Alfred Sloan at GM in the 1920s, that the customer will ascend a "ladder" of increasingly prestigious and expensive brands - has simultaneously been marginalized, and is now just about gone. Mercury was the middle rung on the Ford Motor Company's "ladder," and Mercury's discontinuation will transform Ford into an Asian-like two-make enterprise. The discontinuations of Oldsmobile (2000) and Pontiac (2009) were similar occurrences for GM.
The only non-mainstream, non-premium makes remaining from the Sloan concept are Buick and Chrysler; this begs the question of how much longer these two brands will be around. There is a widely-held belief that Buick was retained by GM when it went through bankruptcy only because of that brand's success in China, and one wonders how GM can/will position Buick in this country without stepping on the toes of Cadillac.
Regarding Chrysler, the only long-range plan in which that make would survive is if it were to be re-positioned as a true premium brand competing directly with Lincoln and Cadillac. It is questionable whether or not this can be achieved, and it is clear this will not happen overnight. But, given the industry's move toward a two-brand structure, if the Chrysler Group does not pursue this strategy it's hard to envision an environment in which the Chrysler brand survives.
If Buick and Chrysler do disappear, every new vehicle brand in the U.S. industry (other than the niche brands such as Jeep) will be positioned in accord with the structure initiated by Volkswagen and reinforced by the Asians.
Note: Imports are defined as vehicles sold by an offshore-based brand, regardless of production source.
Posted by Tom Libby, PolkInsight Advisor, Polk (6.14.2010)
Both European and Asian OEMs have used a two-brand (mainstream and premium) strategy throughout their time in the U.S. market. Volkswagen started this concept (among the imports) with VW and Audi, and American Honda moved to a two-make structure in 1986 when it launched Acura, the first premium Asian brand in the U.S. In 1989 Toyota and Nissan followed with Lexus and Infiniti, respectively. Although Toyota actually has a third brand (Scion), it is considered a small niche make (April 2010 retail share of .47%). Some Asian- and European-based manufacturers only have one make in this country, but those solo makes consistently fall in either the mainstream or premium bucket.
As the Asian and European OEMs have gained share in the U.S. (their April 2010 YTD combined share of U.S. new retail light vehicle registrations is 62.5%), their two-make structure has similarly gained strength and eventually become the dominant paradigm. Sloanism – the concept, created by Alfred Sloan at GM in the 1920s, that the customer will ascend a "ladder" of increasingly prestigious and expensive brands - has simultaneously been marginalized, and is now just about gone. Mercury was the middle rung on the Ford Motor Company's "ladder," and Mercury's discontinuation will transform Ford into an Asian-like two-make enterprise. The discontinuations of Oldsmobile (2000) and Pontiac (2009) were similar occurrences for GM.
The only non-mainstream, non-premium makes remaining from the Sloan concept are Buick and Chrysler; this begs the question of how much longer these two brands will be around. There is a widely-held belief that Buick was retained by GM when it went through bankruptcy only because of that brand's success in China, and one wonders how GM can/will position Buick in this country without stepping on the toes of Cadillac.
Regarding Chrysler, the only long-range plan in which that make would survive is if it were to be re-positioned as a true premium brand competing directly with Lincoln and Cadillac. It is questionable whether or not this can be achieved, and it is clear this will not happen overnight. But, given the industry's move toward a two-brand structure, if the Chrysler Group does not pursue this strategy it's hard to envision an environment in which the Chrysler brand survives.
If Buick and Chrysler do disappear, every new vehicle brand in the U.S. industry (other than the niche brands such as Jeep) will be positioned in accord with the structure initiated by Volkswagen and reinforced by the Asians.
Note: Imports are defined as vehicles sold by an offshore-based brand, regardless of production source.
Posted by Tom Libby, PolkInsight Advisor, Polk (6.14.2010)
Powered by Compendium Blogware
Comments for Imports Setting Brand Positioning Paradigm in U.S.