Market share magic: Slippery when wet
|Jesse Snyder is senior writer for Automotive News|
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This is the time when market share is won and lost.
Soaring fuel prices and the (literally) shaky Japanese supply chain have created instability in the U.S. auto market again. And instability sharply lowers the cost of conquesting market share.
Look, market share grows and dips all the time. I'm not talking about the ordinary ebb and flow that comes from having a vehicle at the beginning or end of its product cycle.
Most of the time, winning market share comes one of two ways -- slow and expensive, or fast and very expensive.
One is time consuming: building better vehicles every generation and more extensive (and expensive) mid-model improvements. You can speed the process by being a better value than rivals: lowering prices or not raising them as much.
Like I said: Slow and costly.
Faster is buying market share: Big incentives, lots of advertising. Very expensive, and largely corrosive over the long term because big spiffs pummel resale values and brand image.
But sometimes -- in rare and unusual circumstances -- a brand lucks into some share quickly without a lot of cost, and maybe even hangs onto a good chunk of it.
This is one of those times.
It should be a great time for Japanese makers in the U.S. market. Rising fuel prices are driving demand for fuel-efficient vehicles, a traditional Japanese strength. And the speed of the spike adds urgency to consumer demand as the economic recovery gathers steam.
But the quake has shattered Japan's supply chain, and only Japan's. You can't make fuel-efficient cars without parts.
Suddenly, the available fuel-efficient cars are wearing Korean and American badges. Meanwhile, recognition of improved Korean and American product design and quality is emerging.
The timing couldn't be worse for Japan or better for Korea and Detroit.
Some people who had planned to buy Japanese will wait. Others will buy a Chevy, a Hyundai or a Ford.
And some, not all, of those one-time Japanese intenders will become domestic or Korean intenders next time.