Things change

Are you ready for a change in your market? Take a lesson from American automakers:

Automakers reported higher sales of small cars as oil and gasoline prices climbed to record highs in April, but said Thursday that overall vehicle sales in the United States plummeted during the month.

Sales decreased 29 percent from April 2007 at Chrysler, 23 percent at General Motors and 19 percent at the Ford Motor Company. Toyota’s sales fell 4.5 percent, and both Honda and Nissan reported 2 percent declines. The numbers are adjusted to account for two more selling days in April this year.

The difference between US and foreign manufacturers is striking, and the reason is not that surprising:

Much of the misery occurred in the lineups of pickup trucks and sport utility vehicles, which consumers have been shunning in search of smaller, more fuel-efficient offerings. That is bad news for the automakers, particularly the Detroit Three, which build many more trucks than cars, because bigger vehicles have much higher profit margins.

Light truck sales fell a staggering 32 percent at G.M., 31 percent at Chrysler and 25 percent at Ford. Nissan and Toyota experienced steep declines, too: 19 percent and 16 percent.

High gas prices are, obviously, having an affect of buyer decisions; that 12 mpg Ford Expedition isn’t so appealing with today’s fuel costs. What you have to wonder is, didn’t automakers see this coming? Yes, this is an external factor that can’t be precisely predicted, but there have always been different segments in the auto market; one understands why a manufacturer would focus on the high-margin SUV market when those are selling well, but wasn’t anyone thinking, “What do we have to offer others? What if tastes change? What will we sell in France? What if some global event makes gas prices double?”

This kind of thing is never easy, but it’s important if you want your business to survive. While American carmakers have smaller, more fuel-efficient cars, they don’t stack up terribly well against their foreign competitors; moreover, the focus on big, inefficient vehicles means that in the consumer’s mind, “efficient” means Honda and Toyota.

Just as it did twenty years ago, the last time we saw this story play out.

There’s no reason American carmakers can’t produce highly competitive smaller cars, but it seems they have chosen not to, and will be trying to catch up for a while now. Again.

For the rest of us, there’s a lesson here: spend a little time asking, “What if?” What if Google offers a feature that does exactly what your web-based service does? What if your key vertical goes bust? What if consumer tastes do an about face? You might not be able to predict these things very well, and they still might mean hard times, but if you’ve given it some thought, at least you’ll be ready to roll out Plan B.

(And yes, in fairness to the automakers, this is much harder in their industry than any other. It takes years to develop products and gear up manufacturing. Which is all the more reason that it makes sense to be sure to have a competitive presence in as many market segments as possible, even when some of those segments aren’t the most appealing ones. Things change.

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