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Bridging Car Buying’s Last Mile – Part 2: Product

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The final product purchase is the end goal for any consumer searching for a new car. Whether they’re interested in the most cutting-edge sports car or a minivan for hauling the kids to hockey practice, in-market shoppers have decided on some level that they aren’t satisfied with the vehicle currently residing in their driveway and have visions of happiness in the form of a new one.

Automotive Product in the Pre-World War II Era

Henry Ford is credited with many things, but what he really mastered was economies of scale: Build something once and sell it over and over again until the cows come home. With mass-production, Ford was able to lower the price of the Model T from $825 in its first year (1908) to $260 by 1925. The product was stout and reliable, the price was right, and the timing was perfect. Millions of Americans who didn’t have cars could suddenly afford one, at an inflation-adjusted price of as little as $3,500.

The problem – which Henry Ford did his best to ignore – was that as popular as the Model T was, for all intents and purposes, vehicle changes and updates came at a glacial pace. For 19 years, Ford sold essentially the same car, year in and year out. And despite the fact that the company had sales of more than two million units in 1923, competition was slowly eating away at its market share.

Model T advertisement. From the collections of The Henry Ford and Ford Motor Company (04/22/08)

Model T advertisement. From the collections of The Henry Ford and Ford Motor Company (04/22/08)

The competition came primarily from Alfred P. Sloan. Sloan became president of General Motors in 1923 – the same year Ford sold two-plus million vehicles – and he had a different idea about how to market motor vehicles. Ford’s mission was to sell a car that never needed to be replaced. Sloan wanted to sell cars that – despite working just fine – customers wanted to replace with updated models every few years.

It wasn’t quite what would later be labeled as “planned obsolescence,” but it was close. The cars still worked. But by developing a program of year-to-year model changes, and then putting GM’s products into different classes of vehicles that consumers could aspire to, Sloan reinvented automotive marketing for the modern age. If you liked Chevrolet products, there was a design change every year that encouraged you to step into the new model. If you were that Chevy owner now interested in a fancier car, there was Pontiac, Buick, and Cadillac to yearn for, without ever needing to cast a lustful eye at another, non-GM-brand vehicle.

Automotive Product After World War II

With automotive production on hold between roughly February 1942 and October 1945 because of the war, the pent-up demand for new automobile products was feverish after V-E and V-J days. The first “new” post-war models were simply slightly restyled versions of the last products manufactured in 1941.  But by 1949, the automotive industry was back in full swing, with new cars sporting dramatic,  aeronautics-inspired styles. For the first time, exposed fenders were out. In their place were sleek designs and enclosed wheels such as those featured on such cars as the 1949 Ford “Shoebox.”

From then on, car companies came to make at least cosmetic changes to their product lines each year, with complete style overhauls arriving every five years, like clockwork. The result: Americans developed an insatiable appetite for new cars. And with few exceptions – such as Volkswagen’s “Think Small” campaign in 1959 and the arrival of Japanese brands in the late 1960s – automotive products chugged along just the way Sloan had envisioned them.

Safety and Technology as Product

Automotive product design and function began to shift significantly, though, in the mid-1960s. By 1966, more than 50,000 Americans would die in car crashes every year, a trend that would continue until crashes claimed an all-time high of 54,589 people in 1972. For the first time, Americans began to view safety features as important. In 1968, the National Highway Transportation Safety Administration (NHTSA) issued its first round of Federal Motor Vehicle Safety Standards, mandating things like seatbelts and safety glass, all aimed at keeping American drivers safe on the road. In the next five decades, safety features would come to drive as many car-purchase decisions as engine size and power windows and door locks.

Alfred P. Sloan

Alfred P. Sloan

In the last decade, the industry has democratized safety and technology in the automotive product landscape. In Alfred P. Sloan’s era, if you wanted advanced features, you stepped up to much more expensive brands. As late as the mid-1980s, if you wanted advanced safety technology like anti-lock brakes, the Mercedes-Benz dealer was the place you needed to go.

Today, nearly every bit of advanced safety and connectivity technology that’s available in the most expensive Cadillac is also available in a Chevrolet. Lane-keeping assist, cross-traffic warnings, forward collision mitigation and avoidance, and advanced connectivity features are all filtering down into entry-level products.

What’s the future for product in the automotive marketplace? Manufacturers are looking at the success of companies like Uber, Lyft, Zipcar, and even Netflix to learn whether or not a certain subset of Americans even want a physical automotive product at all, or if they simply want access to it for a period of time. Americans will always want cars, but manufacturers are trying to learn if it’s the “service” of an automobile –  simply getting them from Point A to Point B – that some people want more than owning it.

For dealers and sales staff, understanding the shift in product desire is crucial to sizing up the customer that walks through the showroom door. While a salesperson needed only to demonstrate power windows to make a sale in the 1960s, today she has to be able to recognize a customer’s affinity for advanced technology – or lack of it – in order to guide that customer into the product that’s right for them.