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The End of Detroit: How the Big Three Lost Their Grip on the American Car Market by Micheline Maynard


Rating: (Mildly Recommended)


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Fans of marketing and customer strategy will find many interesting stories of success and failure in Micheline Maynard’s new book, The End of Detroit. After a prompt dispatch in the early chapters of how the big three went astray, Maynard delves into detail about what both Japanese and German car companies have done right. Here’s an excerpt, from the middle of Chapter 4, “From the Inside Out,” (pp. 96-101):

More than any other vehicle, the Odyssey exemplifies a strategy that import auto companies are using with great success to torment the companies from Detroit. By offering excellent products, with innovative features and a top pedigree of durability, reliability and quality, the imports are able to attract the most desirable portion of customers in any single market, whether for cars, minivans, SUVs or pickup trucks. "The story here really is one of the domestics losing out because the imports are suddenly competing in areas that were the privy of the domestics, and the imports are doing a wonderful job, " said Ron Pinelli, an auto industry analyst with Autodata, based in Woodcliff Lake, New Jersey.

Moreover, these customers become ambassadors for their vehicles, posting enthusiastic missives about them on Internet message boards, telling their friends, family and neighbors about their new automobiles, and prompting them to go out and buy them. In short order, the reputation of the vehicle is made, its profitability generally assured, and Detroit is left, once again, to scramble after customers more attuned to the aspects of a deal than the attributes of the vehicle that the companies are trying to sell. When this strategy is used successfully, an import automobile company can become a leader, selling 100,000 vehicles or so, enough to establish it as a real competitor and sufficient to cover investment, but scarce enough so that customers believe that they own something rare and special.

Within only a few months of its introduction in 1998, the Odyssey had leapfrogged Chrysler's minivans to become the gold standard in family transportation. Even now, five years after its creation, as Honda prepares to introduce its next version of the Odyssey in 2004, the second-generation Odyssey remains virtually sold out across the country, selling for close to sticker price. "The Odyssey continues to be the best minivan sold in America," said the 2003 guide to new cars and trucks. Simply remaining in such strong demand, without incentives, is a remarkable achievement in the breathlessly competitive U.S. car market. And that would be expected if Honda had limited its production and kept it deliberately scarce, or if the Odyssey were moderately priced to begin with. But Odyssey starts above $24,000, much more than Chrysler's cheapest minivans, and fully equipped versions can cost as much as $31,000. Regardless, in 2002 Odyssey was the second-best-selling minivan nameplate, behind the Chrysler vans and ahead of minivans from Ford, GM and Toyota, whose Sienna is considered to be the Odyssey's only true rival for import customers. To meet the American customers' feverish demand for it, Honda, which originally built the Odyssey on one assembly line at its plant in Alliston, Ontario, built a new factory in record time in Lincoln, Alabama, so that it could expand its supply of Odysseys. The Odyssey is not a niche product but a real volume competitor, selling nearly 200,000 a year, all at a substantial profit and to the enthusiasm of consumers across the country. "Get the Odyssey," declared Tom and Ray Magliozzi, hosts of "Car Talk" on National Public Radio, when a caller one weekend asked which minivan to buy.

Tim Benner had no idea that the Odyssey would turn into the juggernaut that it has become when he set out in 1994 to measure the dimensions of his Orange County, California, garage. Benner, the father of a young daughter, worked as an engineer at Honda R&D in Torrance and had been assigned by Honda on a project that the company considered to be of critical importance: the design for the second generation of its minivan. The first-generation Honda Odyssey had merely been an adaptation of the minivan that Honda sold in Japan, and the flaws were visible at a glance. "The first-generation Odyssey was a home run in Japan. It was not a home run in the States," said Erik Berkman, an executive engineer at the R&D facility in Marysville who joined Benner on the second-generation Odyssey project. In a country where a sliding side door had become mandatory, so that children could hop in and out at will without their parents having to unbuckle themselves and let the kids out, the Odyssey arrived in the United States with four conventional doors. Moreover, the Odyssey was narrow, designed for Japan's crowded streets and small parking places. It had a four-cylinder engine, the same used on the Accord, and lacked the power and maneuverability that a minivan needed to transport families on the highway. Interestingly, the original Odyssey had a feature that would eventually become a Honda trademark: a third row of seats that could be folded flat into the floor, creating more storage space. That was a standard feature on Japanese vans, known for their interior design and flexible use of space, which is at such a premium throughout all aspects of Japanese life. But the fold-flat seat was hardly noticed on the original vehicle, given all the other ways in which it was inferior to other minivans on the American market. Honda was selling only about 25,000 Odysseys a year when Venner was assigned to work under the project's leader, a Japanese Honda engineer named Kunimichi Odagaki, on a vehicle they called PJ—for "personal jet."

Odagala, now one of Honda's highest-ranking development executives, arrived in the United States speaking only a modest amount of English, but intrigued by the challenge of how the Odyssey could be improved. "I wanted to create an all-new minivan," he said. "I didn't want to eat into Chrysler. I wanted to expand the minivan market." Modest and soft-spoken, with curly dark hair, Odagaki yields enormous power within Honda as what the company calls an LPL, for "large project leader." Though he is virtually unknown outside Honda, within the company he demands such respect that there is talk he may ascend to one of the company's top jobs, perhaps even as chief executive someday. The clout that Odagaki holds makes it even more remarkable that he would spend so much time on the project. In Detroit, it's rare that a chief engineer would make it out of the office, unless for a company conference, let alone spend months on the road researching whether there was a market for a new vehicle. But it is a common practice at Honda, and a reason why its chief engineers carry so much clout. "This is good for the customer," Odagaki explained. "I am always saying this to young engineers at Honda: 'Please do not follow the competitors' cars. Customers' needs and demands are always changing. I want to hear the voice of the customer.'" Adds Berkman: "We don't have layers of protocol and so on. Engineers have to develop their own data. Some people say, 1 don't want to get dirt under my fingernails.' And we say, 'Didn't we explain that to you in the job interview?'"

In more formal terms, Honda's practice is a Japanese term that translates as "go to the spot." That is exactly what Odagaki did, traveling 25,000 miles over six months across the American South and West. Honda's research had determined that the primary market for the kind of minivan that it wanted to create lay in cities and suburbs where new homes, new schools and new shopping malls had sprung up during the past 15 years. Though it welcomed customers from everywhere, its goal was to meet the needs of modem Middle America (or, in reality, upper-middle-class America). It felt the best place to find these people was in states like the Carolinas, Georgia, Tennessee, Kentucky and Ohio, along with California—all places where Odagaki and his engineering team visited. "We wanted to see the situation of usage," said Odagaki, interviewed on a warm afternoon at Honda’s research center in Wako, Japan.

The difference between how minivans were used in Japan and their role with American consumers became dear almost immediately. In Japan, he explained, minivans were more like recreational vehicles, used primarily for long trips and for holidays. His first lesson, Odagaki said, was that "in America, minivans are not used for camping" but for everyday commutes. The three engineers—Odagaki from Japan, Berkman from Ohio, and Benner from California—learned a lot of things that any mother might have been able to tell them but seemed even more compelling because they discovered them for themselves. One realization came late at night, when the crew missed their highway exit and had to stop to look at a map. The only way to turn on a light in the old Odyssey was to illuminate the entire passenger compartment, which woke up the dozing engineers in the backseat, much to their displeasure That taught Odagaki that there should be a separate light for the driver, so that sleeping children would not be disturbed.

Returning to California, the engineers traveled to the elementary school in Benner's neighborhood to watch parents unload their children in the morning and load them up after school. (The research trip got them in trouble more than once. Sitting in the minivan one day, taking pictures and filming with a video recorder, Odagaki and Benner were startled to find a policeman rapping on their window, telling them in no uncertain terms to get moving. "He thought we were going to kidnap the children," Odagaki said.) Their observations resulted in one of the biggest disputes the engineers had with senior Japanese officials over the minivan. When it introduced the original Odyssey, Honda hadn't seen a need to indude sliding doors, even though they were a feature of American minivans, and its lack of them was one of the original Odyssey’s biggest flaws. But after spending time in America, Odagaki became convinced that the Odyssey should have sliding doors on either side, and that they should be easy to operate. The Japanese engineer saw that it was difficult for both adults and children to yank open their minivan's sliding doors and to shut them afterward. He watched in sympathy as one young father, laden with a baby, tried to open a minivan door with his free hand to let out his other children.

American car lovers will hate this book, and fans of imports will have some increased justification for their purchases. If you’re looking for a mildly interesting business book that’s long on stories, The End of Detroit, will be just right for you, especially if you can put up with some really dull pages.

Steve Hopkins, January 22, 2004


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The recommendation rating for this book appeared in the February 2004 issue of Executive Times

URL for this review: End of Detroit.htm


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