Gaining Share in a Down Market

Automotive Industries, March, 2001 by Ken Gross

Companies that increase share in a downturn are the ones that plan ahead and keep the new product pipeline full.

January car sales were expected to plummet, following somber economic forecasts by then president-elect Bush. Instead, several makes posted decent increases, prompting us to look at how companies can actually gain share in a down market.

Before the sharp-eyed among you write to say that a few of the brands I'm mentioning didn't post bullets in January, I already know. I'm suggesting that you can usually count on some auto "blue chips" to spike when others dive.

Here's the battle plan from some of the automakers that did their homework before sales leveled off.

"Our business is simple," says Toyota's Dave Illingworth. "We ask customers what they want and come as close as we can. We always gain a little share in a down market." Toyota (with Tacoma, Sequoia and Tundra) had the right trucks at the right time as the year began. And it has beefed up Lexus' line-up with the IS300, LS430 and SC430. "Our sales don't depend on buzzwords and incentives," Illingworth adds. "Our customers have an appetite for strong products no matter what the market is doing."

Toyota is also trying to keep future momentum going with concepts like the Matrix and RSC showcars. Specifically designed for young people, the hope is that they will bring in first-time buyers and make them advocates for Toyota

Ford boss Jim O'Connor, sitting on five of the top 10 unit movers, also knows a carmaker needs to be there with the right stuff. And Ford's fast-selling Focus proves a Big 3 automaker can solve the small car conundrum.

"We try to bring out products that have buzz," O'Connor says. "Like Focus, Bullitt Mustang and the soon-to-come new Thunderbird." Ford dealers have 11,000 T-Bird orders already "This creates excitement in our showrooms," he says, pointing to a 170 hp SVT-modified Focus he hopes will score in the hot-selling sport compact segment.

Last year, Nissan's Xterra nailed the X generation with a truck that more than met their utility and image needs. And the new Frontier is a serious truck aimed at one of today's hottest segments. Nissan understands that if the products are fresh, the market will respond. It plans to introduce 22 new products in the next three years -- 10 of them in the U.S.

Honda/Acura's Mike Spencer, whose MDX SUV is setting sales records, says the three criteria for success is product, product and product. "We've got the right stuff when we need it," he boasts. "Accord has the product strength to weather down cycles. When times get tough, people know our cars offer great reliability. This (confidence level) takes a long time to build. The domestics have lost consumer trust. You don't get that back overnight."

Mercedes-Benz, which started 2001 with a rush, is making value a cornerstone of the brand. M-B's Dave Schembri says, "Our goal is to be the best value in every segment we compete in."

Pierre Gagnon of Mitsubishi, whose company topped 300,000 units in 2000, has a formula too. "We keep updating core products," like the flashy Eclipse Spyder, a new Montero Sport and a revamped Galant. "We're looking for products with more edge and more attitude," he insists.

Porsche's Fred Schwab says the company could have sold many more than its already impressive 25,000 units last year. "Our products are always in short supply," Schwab admits. (That's another secret from small manufacturers that keeps demand high). Porsche's 2002 Cayenne SUV could double the company's volume. When asked if SUVs are a risk for Porsche, Schwab observes dryly, "We're not exactly flooding the market"

Here's the marketing lesson: plan ahead, strengthen your winners, attack new niches, ensure you're covering successful competitors, and keep new products coming. No matter which direction the market goes, you'll have the advantage.

KENGROSS is an internationally known author and marketing consultant. He has been writing about automobiles and the auto industry for nearly 30 years.