Selling the Future
"We're building a new car company." That's the headline on the full-page ad Chrysler ran just days after its May 1 Chapter 11 filing. Pictured in the ad are autos planned for 2011 and beyond, including two electric cars. The message: Chrysler has a future.
Will consumers buy it? The company's sales are already down 46% so far this year, compared with 38% for the industry. Now comes bankruptcy, a word that has a negative impact on the buying decisions of 21% of consumers, a recent Cars.com poll found.
"There needs to be a powerful message about a new beginning—a message of trust like the one Iacocca conveyed," says consultant Leo-Arthur Kelmenson, the architect of the ads featuring CEO Lee Iacocca that ran following the company's bailout almost 30 years ago.
Crisis management counselor Eric Dezenhall says Chrysler's recent ad may be a good start. "The advertising should paint a picture of the Chrysler of tomorrow—and how a new generation of consumers might benefit from it," he says. Other auto marketing experts agree. No campaigns featuring old Jeeps or vintage Dodges, they warn. The nostalgic approach some other marketers are using in the recession doesn't apply. "Chrysler's history is irrelevant during a bankruptcy," says Cameron McNaughton of TreeFarm Partners, who has run campaigns for Audi and Mercedes-Benz (DAI). The company "needs to make a promise to its employees and the American people and then keep it." For leading auto shopping site Edmunds.com, the answer lies less in promises and more in promotions. "Chrysler's best bet is the old standby of bigger incentives," says Edmunds CEO Jeremy Anwyl. Chrysler vehicles already sell for an average 18% below sticker, vs. an industry average of around 16%, according to the site.
So far, the bankruptcy seems to have piqued the interest of the loyal and the frugal. Chrysler Vice-Chairman James Press says there was a surge in showroom traffic after the May 1 filing, with shoppers saying they "wanted to be part of this." Edmunds reports a 15% rise in searches for Chryslers, but says some of its participating Chrysler dealers say customers are making "outrageously low offers."
The Dalai Lama on the Economic Crisis
When you think of the people you'd expect to be doling out advice in the wake of the global economic meltdown, the Dalai Lama may not come to mind. But the exiled spiritual leader of Tibet, who has written about ethics and on-the-job stress (The Art of Happiness at Work, with Howard C. Cutler, 2003), has strong opinions about the crisis and its causes. BusinessWeek senior writer Steve Hamm met with the Dalai Lama in New York on May 5. Here are some excerpts from that conversation.
On what caused the collapse:
I'm telling people, including some businessmen who are my friends, what this global economic crisis was caused by: One, too much greed. Second, speculation. Third, not being transparent. That's my view. These are the moral and ethics issues.
On the importance of transparency:
When things become difficult, make it clear to the public. If right from the beginning the true picture is made clear, the public may be less shocked. So be transparent and honest right from the beginning.
On the obsession with money:
There are those people who are only concerned with money: It's just money, money, money, money. With such people, since the crisis happened, there are much disturbances. Of course, money is important. Without money you can't survive. However, it is not the only measure of value. We have other values: the happy family, compassionate family, the family full of affection, and the compassionate community. Those people have much less disturbance due to this money crisis. Therefore, this crisis reminds us you should find some other values. Money value alone is a limitation.
On how people who lost jobs or savings should deal with their anger:
The tragedy has already happened. Instead of more frustration and anger, think about alternatives. Make an effort. That's better. There's a Tibetan saying: Nine times failure, nine times effort, without discouraging oneself.
On the Buddhist approach to dealing with economic calamity:
According to Buddhism, these things happen due to their own causes and conditions. Through years or through decades this present crisis developed. All the causes and conditions were fully ripe. No force could stop it. It's the natural law. So you accept it.
Lobbying for a Better Blend
The ethanol industry is about to hit a wall—the "blend wall." U.S. biofuel factories now have the capacity to make about 12 billion gallons of ethanol a year, and the U.S. market can't use much more than that. That's because annual U.S. gasoline consumption is about 137 billion gallons, and gas isn't allowed to contain more than 10% ethanol, a blend called E10. If every drop of gas actually met that limit, the ethanol market would be 13.7 billion gallons. But for logistical reasons, a portion of the gas sold will never contain any ethanol.
The looming blend wall is making it harder to get new ethanol plants financed, so corn growers and ethanol producers are lobbying to increase the blend to allow up to 15% ethanol (E15). Opposing them: a coalition of oil producers, food companies, and green groups, which complained to the Environmental Protection Agency that raising the quotient may lead to higher food prices and other woes. In April, the EPA agreed to review the issue.