Car Industry Chronicles
When Should a Car Model be Withdrawn?
Life cycles are so complex to manage that automakers end up forced to act in counterintuitive ways every now and then
Products, much like people, spend a finite time in the world and this time is divided into sequential stages. They demand a lot of attention at first but, if you nurture them properly, they’ll soon experience a boost in life. Over time, they’ll reach a healthy plateau which encourages investment in multiple other projects for a long time until they ultimately suffer the effects of getting old.
While that timeline is pretty much what the BCG matrix establishes to analyze life cycles, we can only use it on products because it’s possible to choose when will theirs end. That represents a major concern for companies because it adds several variables to consider and occasionally encourages them to take actions which may seem absurd especially if we have people’s lifetime as a reference.
Let’s start with the basics
What’s the easiest way for a car to be axed? Slow sales. Companies invest a lot to create, manufacture and advertise them, dealers invest a lot to properly sell them, and repair shops invest a lot to handle them. Even the best car model to have ever existed would be easily discontinued over time if it didn’t reach the desired sales volume simply because it would make those parties lose money.
The Lincoln Continental, for example, was revamped for 2017 with attractive styling, well-rounded project and a rather traditional name and caused quite a buzz when released, but succumbed to the declining sales of its entire market segment. Car and Driver says its maker will give up on it by the end of the year to focus on SUVs: it has never done that, but they’re what truly sells right now.
Are there other cases?
If the previous example can be considered a dog according to the BCG matrix, now it’s time for the question marks: cars with a high growth prospect but yet to convert it into actual sales. As an example, we can pinpoint the cases where the car was killed by the very strategy which was supposed to make it prosper in the first place, like when a conservative car ends up having too many rivals.
The iA went to North America as a Scion to cater to young drivers but failed to stand out. The demise of its brand was used as an opportunity to add Toyota’s reliability to its image, but neither that nor the proven hatch and sedan bodies did much to persuade a crowd obsessed with larger and flashier cars. The fact that it was a Mazda 2 rebadged with questionable taste didn’t really help, too.
What’s the next BCG category?
Cash cows, as unbelievable as it may seem. Models whose image has gotten so strong that they practically sell themselves. Even though such stability is great for the automaker’s finances, it can also act as an anchor to its future plans by compromising the new message it wants to send. Replacing a sure thing for a potentially new one is better than having it fade out and end up with nothing.
The Caravan was born when Chrysler was teamed with Mitsubishi to reassure its market share in North America and Dodge was its generalist brand. That it seems so distant from the performance powerhouse Dodge is today illustrates how out-of-place the minivan has become — even though it was its best-seller up to the end. It was axed on the same event where this Durango was shown.
Are stars safe, at least?
Yes, because of their very definition: products that have the best market share and generate the most cash. They perform well at the moment, show no signs of changing that for a while and don’t pose a threat to the maker’s short-term plans, so there’s pretty much no reason for those models to be discontinued in the foreseeable future. Some car models stay in that condition for many years.
The second generation took the Tiguan from a bland, generic crossover to one of the segment references. The MQB platform made it seat up to seven people and, after the latest facelift, offer hybrid propulsion; the bold external styling, in turn, is capable of turning heads wherever it goes especially in the sporty R variation. Why would VW think of axing what has become its best-seller now?
Life cycles are complex, indeed!
Cars are living products and their lives are influenced by many factors, so any company that wants a chance to make them thrive in the market must analyze all of them to use them in its favor — otherwise, they will work against it. That study is so important that separate ones are necessary for each generation the car receives, since they’re essentially different products under the same name.
When it’s time to act, everything counts if it helps. Car models ultimately work for their makers, not the opposite, so there are times when one or two have to take the bullet for the rest’s sake. Those are only some of the resources makers must know how to apply in order to remain competitive around the world and obtain the best sales potential of every model at every moment of its life cycle.