It’s not enough to develop a great product

Chevrolet has instructed its dealers to buy a Camry and put it in showrooms next to the redesigned 2008 Malibu this fall. Saturn dealers will soon be offering three-way test drives pitting its Aura sedan against the Honda Accord and Toyota Camry. In both cases, the thinking is that if only car buyers recognized how well the GM sedans compare, they’d return to the fold.

2008 Chevrolet MalibuUnfortunately for GM, this simply isn’t the case.  To win over a car buyer, it’s not enough that your product be excellent. The car buyer must also be dissatisfied with the existing product and/or the company that made it. As Robert Farago notes in a similarly themed The Truth About Cars editorial today, Honda and Toyota only succeeded because the Detroit-based manufacturers falied to field competitive products and upset so many millions of car buyers back in the 1970s, 1980s, and 1990s.

In decades past, Detroit failed on three levels: product design, reliability, and customer care. The products weren’t close to the Japanese in terms of workmanship, ergonomics, “surprise and delight” features, agile handling, engine technology, fuel economy, and so forth. They also weren’t solidly enough engineered. And when they broke the manufactures didn’t step up nearly as much as they should have to take care of the customer.

It’s quite possible that for Detroit to win millions of car buyers back, it would not only have to succeed on all three levels, but Honda and Toyota would have to mess up on at least a couple of the three.

Consider reliability alone. Back when I was performing my fieldwork within GM, in the mid-1990s, people inside that company thought that if it could match Toyota in reliability, then customers would come flooding back. But matching Toyota isn’t good enough. Toyota also must muck its own products up so much that the gap between Toyotas and domestic cars becomes as wide as it was back in the 1980s, just reversed. And recent recalls notwithstanding, this hasn’t been happening.

And let’s even suppose that Honda or Toyota does have a wave of reliability issues. Even this would by itself not be enough. If the products had competitive designs, and the companies did their best to take care of customers who experienced reliability issues, then those customers would most likely remain loyal. Messing up alone won’t necessarily lose a customer. You must make a mistake, then fail to accept responsibility for this mistake.

Toyota has come closest to this double-error with the engine sludge issue that started popping up a few years ago. At first, when customers had to replace engines because of sludge Toyota blamed insufficient maintenance, and thus the car owner. But before too much damage was done to its reputation Toyota came to its senses and realized that it had better step up and pick up the tab for new engines. And that’s what it has been doing whenever the owner can prove the oil was changed at least once a year. (Owners who weren’t diligent about keeping track of their receipts often end up footing the bill, though.)

So what will come of the Chevrolet and Saturn in-showroom comparisons? Unlike Mr. Farago, I don’t think they’ll be disastrous. They might have a small positive impact, by reassuring people who already want to believe that the GM product is the best. But they aren’t going to win over many owners currently satisfied with the Accord and Camry.