News Column

Motor City Mayhem

November 2006, HISPANIC BUSINESS Magazine

Paul A. Eisenstein

Toyota stepped up with a bilingual TV ad for the 2007 Camry, airing it during the Super Bowl.
Toyota stepped up with a bilingual TV ad for the 2007 Camry, airing it during the Super Bowl.

By unanimous vote, General Motors' board of directors effectively blew off a chance to tie their fortunes to the rival Euro-Asian alliance of Renault and Nissan. "It would only slow us down," declares GM Chairman Rick Wagoner of the three-way partnership that had been proposed by his company's largest individual investor, the maverick Las Vegas billionaire, Kirk Kerkorian.

Now, it seems, GM will have only itself to credit or blame as it struggles to reverse decades of sharp decline. There was a time, not all that many decades ago, when the giant automaker controlled more than half the U.S. market, and on a global scale, easily outsold the next two contenders combined.

Today, there's a very solid chance that, within the next several years, it will be surpassed, worldwide, by its Asian archrival, Toyota. In its home market, GM's sales continue to slump, and with some analysts fretting its share could slip to barely 20 percent, the company is slashing production, closing plants, and cutting tens of thousands of jobs.

Across town, the situation is even worse. Last January, Ford Motor Co. announced a draconian turnaround plan, dubbed the Way Forward, that would shutter 14 parts and assembly plants, while eliminating as many as 30,000 hourly and salaried jobs. Yet by autumn, Ford officials admitted they hadn't sliced deeply enough, revising the plan with still more plant and job cuts.

There's an old adage in the auto industry that Mark Fields, Ford's president of The Americas, is fond of quoting, "You can't cut your way to prosperity." All you have left, he explains, is a smaller company that still won't survive in the long term. The real key, Mr. Fields stresses, is winning back the increasingly skeptical consumers who've abandoned Detroit's dealerships. "It has to be a product-based turnaround," says Mr. Fields, a stand that is echoed by GM's Mr. Wagoner.

"In fact, that's the very key part of our turnaround strategy product," Mr. Wagoner told audiences in August. "No automotive turnaround has ever been sustained without the steady flow of great cars and trucks."

Francisco Codina
Francisco "Cisco" Codina

Both companies are investing billions to roll out an array of new cars and trucks, such as GM's new Saturn Aura sedan, and the upcoming Ford Edge crossover. In October, Ford pulled the wraps off another critical new product, the next-generation of its Mercury Mariner. Tellingly, the automaker used the Miami Auto Show as a backdrop to unveil the new sport utility vehicle. "It was no accident," explains Francisco "Cisco" Codina, the Cuban-born group vice-president in charge of Ford's North American marketing, sales, and service operations. "With products like this, we hope to gain market share in the Hispanic community," which, Mr. Codina adds, could prove critical to his company's long-term survival.

"The facts and figures speak for themselves," the Ford executive asserts. Data compiled for Hispanic Business underscores the dollars and cents behind the auto industry's newfound appreciation of the Hispanic market. While the total number of U.S. consumer "units" increased by roughly 5 percent between 2000 and 2004, the Hispanic auto consumer count soared by something closer to 30 percent to a total of 12.3 million. In fact, the community is now approaching the size of the influential African-American market, a demographic shift not lost on savvy car marketers.

Equally important is what David Rodriguez, a multicultural manager for Ford Motor Co.'s Lincoln and Mercury division, refers to as "the growth of affluence." The Hispanic community is expanding fast, but total spending on automobiles is growing even faster, in part reflecting such things as better education and improved job opportunities. Again, looking at the five-year period, 2000 through 2004, Hispanic Business data show the dollars spent on new cars, trucks, and crossovers shot from $10.2 billion to $19.2 billion during the same timeframe, an astonishing 90 percent jump.

Also telling, the Hispanic share of the U.S. new car market soared from 5.3 percent to 11.6 percent from 2000 through 2004, while the light truck share which includes such things as minivans, SUVs, pickups, and truck-like crossover vehicles jumped from 6.5 percent to 8.5 percent. Those market share figures run well ahead of the new car and truck numbers for the African-American community, at just 6.0 percent and 4.4 percent, respectively, in 2004.

Continued | 1 | 2 | Next >>

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters