Happy Anniversary, Automobile Industry!
Yes, today marks the beginning of the 2012 automotive year. Until reading this, most readers were not aware of the date’s significance.
Not true years ago, when October first heralded the start of new model sales. The industry simply did not allow dealers to sell new models before the official date, Oct.1. Many times, sales in the fourth quarter amounted to 50-75 percent of the model yearly sales.
In those days car manufacturers keyed new model introductions for Oct. 1 — that was an era when nearly all cars received some type of recognition change, at least front and rear.
General Motors Chairman Alfred P. Sloan Jr., a strong advocate of annual model changes, wrote about his stance in his 1964 book, “My Years with General Motors.”
He wrote, “Each year we must produce a line of cars which embodies advanced engineering and styling features, and which will be competitive in price and meet the demands of the retail customer. The cars in the line must have common styling features, giving them all a ‘General Motors look,’ but at the same time they must be clearly distinct from one another.
“They must also complement one another in price, which means that their own cost elements, as well as the trend of competitive prices, must be estimated well in advance of production.”
Explaining the complicated new model process, which is still true today, Sloan wrote, “In General Motors there are thousands of persons — in addition to production workers — involved in the creation of the new models; they include style artists and engineers, scientists, financial and marketing experts; members of technical staffs of the various divisions, and the general executives and staff technicians of the corporation, not to mention our outside suppliers. The problem of coordinating their varied activities is extremely complex.”
How long does this take, after the decision has been made to build a new model? Sloan: “On the average about two years elapses between the time we make the first decisions on the new models and the time the cars appear in dealers’ showrooms. Ordinarily, the sequence of events during these two years is determined principally by the requirements of body production.”
Even the two-year period usually required imposed a strain on the manufacturer’s ability to gauge the market correctly. Sloan addressed this point: “The problem may be viewed this way: General Motors, like other automobile companies, is obligated to invest millions of dollars to devise new products, which cannot, however, be sold until a long period of time has elapsed. Meanwhile, the consumers’ taste, income, and spending habits may all have changed radically. For that matter, we cannot even be certain that the new model is ‘right’ for the time it is first conceived.
“It is an axiom of marketing research that the automobile customers never know they like the product well enough to buy it until they can actually see the real thing. But by that time we have a product to show them, we are necessarily committed to selling that product because of the tremendous investment involved in bringing it to market.”
At the retail dealer level during the Sloan years, pre-introduction advertisements teased customers about the coming new models. Showroom windows were papered-over, arriving new cars were hidden from public view, dealership parties were planned … and then, on THE day, Oct. 1, salesrooms were decorated, bands played and prizes awarded.
At a Chevrolet dealership I managed, we hired an old hunting guide who, along with his dog, set up a tent with cooking supplies — in front of the dealership, with a sign saying, “I’m first in line to see the new Chevrolets.”
It was this type of universal dealer participation that assured success of the announcement period. What has happened to all the exciting new model introductions? Sorry, Sloan — a big yawn.
Today automakers announce new models when they are ready for sale, not making a set deadline. Some 2012 models have already appeared at dealerships, in some cases, months ago.
Sloan’s conclusion merits praise. “We are continuously involved in this process of making a new and better car. Although the many complex steps over the long period between the conception of a new-model program and its execution are costly, they are worthwhile. For the annual model change is part of the very nature of the development of the industry…
“Since its earliest days, long before the expression ‘annual model’ was used, the process of creating new models has generated the progress of the automobile.”
Incidentally, this is the same ‘Sloan’ of Memorial Sloan-Kettering Cancer Center in New York City. Kettering, known as ‘Boss Kett,’ was an early engineer at General Motors, famously known as the inventor of the Self Starter.
Dr. George G. Spaulding is a retired General Motors executive and distinguished executive-in-residence emeritus at the School of Business at the College of Charleston. He can be reached at 2 Wharfside St. 2A Charleston SC 29401.