Stuck in Second Gear

Stuck in Second Gear

The German auto makers are taking a beating. Despite increasing sales, their profits are declining. They were late to the electric car parade, and they made a strategic mistake in going “downscale,” I think out of corporate greed.

Once upon a time, when Mercedes made only relatively expensive cars, their service departments were superb. Today, you can bring in a $180,000 Mercedes and you’ll get the same service as someone with a $30,000 car, which is pretty dreadful. They were correct that their brand made them attractive to the egos of people who could only afford less expensive cars, but they were wrong in failing to realize their brand would take a beating. There’s no feeling of “exclusivity” when you pull up to a service department and there are 30 cars with appointments and a wait to see advisors, and the phones are constantly tied up.

Don’t chase money. Build your brand and attract money to you.