The pace of growth is only increasing. From 2003 to 2005, new personal registrations among Hispanics increased by 24.4 percent according to a R. L. Polk & Co. study based on U.S. new personal vehicle registrations. By the end of 2005, new personal vehicle registrations among Hispanics stood at just over 8 percent of the national total.
"They're the fastest-growing ethnic group in the market," says independent automotive analyst Joe Phillippi, "and as they move up the earnings ladder, they'll become even more of a force." And as such, stresses Mr. Phillippi, Hispanics make up a group of potential buyers that the auto industry simply cannot ignore. Yet for years, some observers complain, that's exactly what happened. Detroit, in particular, seemed to take the Hispanic community for granted – offering its import rivals an opening they couldn't ignore.
Toyota clearly seized the opportunity last January, when its "hybrid" ad for the all-new, 2007 Camry sedan hit the air, during last year's Super Bowl. The spot got some viewers wondering whether their television sets were broken. "I didn't pay attention, at first," laughs Larry Garcia, a computer technician, and second-generation Mexican American, living in the Detroit suburbs. "But then I suddenly hear them speaking in Spanish – speaking directly to me."
The unusual, bilingual spot, focusing on the '07 Camry Hybrid's combination gasoline and electric powertrain, featured a father explaining to his son that he bought a hybrid for the same reason he speaks two languages – for the boy's future. The "cross-cultural message," Toyota Executive Vice-President Jim Farley says, "conveys that parents act to improve their children's future." But it was also meant to demonstrate Toyota's grasp of its own future.
Toyota's Super Bowl ad, along with its expanding presence in Hispanic broadcast and print media, underscores the company's diversity drive. And it also emphasizes the challenge Detroit-based carmakers are facing in the Hispanic community. "The Hispanic market has traditionally wanted to own a domestic vehicle," notes George Peterson, director of the Southern California-based market research firm, The AutoPacific Group. "But that philosophy is deteriorating today, and owning a Toyota has become as prestigious as owning a Chevy or Ford."
Perhaps even more prestigious, based on R.L. Polk data showing that in 2005, Toyota accounted for 17.3 percent of new vehicle registrations by Hispanic buyers, compared with 12.7 percent for Chevrolet and 12.0 percent for Ford. Japanese maker Nissan came in fourth, at 11.5 percent. Toyota's market share, notably, rose 2.3 percent since just 2003, while Nissan's shot up 4.3 points. Ford's, on the other hand, tumbled a disastrous 3.7 points, while Chevy's market share declined 1.4 points between 2003 and 2005.
The imports, laments Ford's Mr. Codina, "have learned what we've known for a long time. The Hispanic community is now mainstream." The question is how to get Hispanic buyers back into Ford and GM showrooms. The two automakers are betting that a wave of new product, like the Edge, Mariner, and Aura, will expand their appeal. It helps to have independent third-party auditors adding their endorsements. GM took the top spot in a total of four product categories in the latest quality survey by California's Strategic Vision, Inc. That put the U.S. automaker ahead of Toyota, which captured wins in three segments – down from seven in the 2005 study. Strategic Vision President Alexander Edwards suggests that by improving its product, GM should be able to expand its appeal to all buyer groups – and wean itself off the costly incentives that have been decimating the company's bottom line.
GM's Chevrolet division, a brand traditionally identified with Hispanic motorists, and dominant in most of Latin America, is putting its bets on the new Aveo, a South Korean-made subcompact, which it sees as a particularly good bet for urban communities stung by high gas prices. That takes in cities such as Miami, New York, and Los Angeles, and ethnic communities including Asians, African Americans, and Hispanics. To assist in the Aveo marketing effort, GM hired Translation Consultation and Brand Imaging to work with Campbell-Ewald, its longtime ad agency. To get these buyers, says Chevrolet division General Manager Ed Peper, "we need to go where they are."
Like its Detroit competitor, Ford is reluctant – make that loathe – to provide details on its ad spending, but industry observers believe that the swing from general to ethnic marketing – with a heavy emphasis on Hispanic – has been running well into the double-digits since the beginning of the decade.
Reflecting general marketing trends, today's Hispanic auto advertising comes in a variety of linguistic flavors. Depending on the target audience, as well as the print or broadcast outlet, they may be presented purely in Spanish, or even in a bilingual mix. "You simply say, 'gracias,' in a spot and you've got me," Ford's Mr. Codina says. Though his family is multilingual, he noted, English is the tongue used most, especially around his children.
Even with Spanish-language advertising, some automakers have found it useful to regionalize their broadcast spots and print pieces. "Take voiceovers for commercials," Lincoln Mercury's Rodriguez says. "Until recently, we used a more general dialect. Now, in Miami, we use a dialect more oriented toward a Miami market."
As with the industry overall, television eats up a disproportionate share of the automotive marketing budget, but the Big Two U.S. makers have come to realize that there are other – and often essential – ways to communicate with American Hispanic car buyers. There's the Internet, for one thing, with Forrester Research data showing the number of Hispanics accessing the Web is growing 10 percent annually. Yet, sometimes the most effective marketing efforts can be decidedly low-tech.
"If you want to reach the Hispanic community, you have to do a lot with family, because it's such a family-oriented culture," Mr. Codina says. That includes advertising, of course, but also extends to community-outreach efforts, the Ford executive added. The automaker is actively involved in health care programs in key Latino markets, as well as education efforts, such as the Ford Salute to Education. It's a joint, dealer-automaker scholarship program running in Miami, San Antonio, and San Diego.
Of course, Detroit doesn't have a lock on these strategies, and even newcomers, such as Hyundai, are targeting Hispanics quite heavily. To get the message across about its 24/7 product roll-out – seven new models in 24 months – the South Korean carmaker inaugurated the Spanish-language "Respect" campaign just prior to the 2006 World Cup games.
"Given the breadth and depth of Detroit's product portfolio, they should have a natural advantage," analyst Mr. Phillippi says, but he cautions that Ford and GM have made some mistakes that are hurting it in the Hispanic community. Among other things, the Big Two have been slow to market with affordable, fuel-efficient small cars that can challenge the likes of the Hyundai Accent and Toyota's new Yaris mini-compact.
"Detroit has a long way to go to understand (and respond to) the needs of the Hispanic community," adds AutoPacific's Mr. Peterson. But figuring it out will be critical, he quickly emphasizes. Considering its size and growth rate, whoever dominates the Hispanic car-buying community will have a real leg up on the competition. GM and Ford both desperately need to regain their momentum if they hope to turn things around in the overall U.S. market.
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