Car Stock – Lessons to Learn

I wanted to do some research to fine tune my thoughts about this trading of services vs products question. I used the automobile industry as my source of research. What I was looking for was the way that each of the different companies handled their business between regions to get a feel for their level of service compared to their level of product. In this essence, I was going to compare those ratings with the stock market ratings. This would have been simple.

However, as I conducted my research, I found a completely different pattern. The original grouping, by service and product type, fell to pieces and completely regrouped after checking the stock ratings. Basically, I looked at the headquarters for each manufacturer so that the ratings would match across the board. Then I took each manufacturer with similar market ratings and grouped them together to see what the pattern was like.  Before I did this comparison, I had grouped each company by the way they handled their service and then the way that they branded their cars. The branding helped a little, but not near as much as I thought. 

Here is what actually happened.  The Pattern went that Rolls-Royce, of course, stood far to the top of the list. Rolls-Royce is not just a car dealer but they also specialize in their engines, which is powerful. They actually sell the engines as a separate product, completely of its own nature, from the other items that they sell. They put these engines in Aerospace products, including also helicopters, and Marine products, including luxury yachts. Both branches also work for the defense system.  Rolls-Royce also works with energy and nuclear products. The engines that they design are also placed into their custom made Rolls-Royce.  Clients normally go to them to purchase the engine. They do sell services for upkeep and maintenance, but even so these services are actually marketed as a completely different package than the products themselves.

The second highest on the list was Volkswagen. Volkswagen sells nothing but automobiles. There is no aerospace or marine or energy involved, which may be the major difference in their market value.  I derive this because Volkswagen also markets the car based upon the engine that they place within it. It is deemed one of the most powerful engines in the world. They utilize luxury designs and aren’t able to innovate as much as some of the other brands for the purpose of matching the eco-trend. They have been able to integrate clean-diesel and hybrid engines into their designs, boasting the increased mileage of their Passat engine while still maintaining a superior level of power in its engine. Volkswagen also sells its service separate from the vehicle. All parts have to be sold and shipped from the main manufacturer in Berlin. Service providers have to carry a special certification to service Volkswagen vehicles.  

Toyota was the closest the Volkswagen. Toyota also sells its motor, but not on the face as much as Volkswagen or Rolls-Royce. This is because Toyota designs its cars specifically to match the region where they are being sold. This is not just in the design, but in adjusting the mechanics of the engine and transmission systems to meet the terrain. Toyota once introduced a car into the United States that didn’t match the terrain and they moved into Canada and built the Corolla, the same model as the one introduced originally into the United States, but with a transmission that would not fail to deliver over the mountains and hills of California. They have done this with each car after, utilizing their method of Kaizen. They are great at innovation and have kept in tune with the trends as much as they can, even introducing the Prius in 2003 and some other newer brands. They even join the rest of the manufacturers in providing electric vehicles into Europe and the UK. 
  
One other thing that’s different between Toyota and the other two at the top is that Toyota sells its service along with the cars. The service is set apart from the product a bit, but it’s meant so that the product is manufactured and sold with the same exclusive brand that Toyota prefers to offer with all of its names worldwide.  Toyota also sells its parts. The parts are shipped with the automobiles so that they can be sold at regular servicers within the regions and transported inside borders. Cars can be serviced at the dealership or regular service stations can order the parts to be shipped within the day to their facilities from the dealers. 

In line after Toyota there is a tie between Honda and GMC. This is interesting because both companies use a similar strategy. The companies are not about selling their engines but more in line with selling their innovations. Both companies boast that they can work with anyone to create a vehicle not only for the region, but also for the time. They also go beyond that to work on R&D to build vehicles that reach into the future, ahead of the current trends.   They both sell their service and parts together, along with their product. The parts can be bought on an easy shop n go method at any dealership or even at most auto parts stores or they can be sold straight from the manufacturer through catalogs, by phone, or via online ordering. Honda is about 2-4 points above GMC on the market but Honda also sells motorcycles, a recently a jet, and even a Robot.  Therefore, Honda reaches a greater level of diversified customers whereas GMC so far has focused on the regular car or truck type customer. Both create new brands to fit a region or a specific flavor. 

The last on the list was Ford.  Ford does offer a level of innovation, but they are not actively looking to find futuristic designs. They are offering electric cars in Europe and the UK, and they do have some hybrid models as well as the new fuel cell designs. The difference is that Ford only changes its current models to innovate what they see customers like from what is introduced already. They also do not change brands. They have Ford and Lincoln. Ford is the regular or economy line while Lincoln is the luxury line. Even across regions and nations, the same two brands are what are offered. They mitigate which models are sold where based upon the preferences of the regions, but nothing is designed specifically for one area over another.  They mainly sell based upon their reputation and their history of being the pioneers in automotive invention. They do sell services but they are not highly advertised. Parts are regularly sold at stores but this is done under a variety of names, whereas GMC normally sells parts with the Chevy logo attached, and Honda sells with the Honda symbol on each box.   

I came to the conclusion that customers are not as much interested in parts vs service. They obviously do like the parts, but not as much for upkeep as for the focus on what the original part will do for the product they are buying. Matter of fact, they like to know that is they purchase the motor separate from the frame it’s in, the motor will give them power.  They do want to see a bit of customize-ability, and it pleases them to see that a vehicle will be designed to match their needs as close as possible. While service is important, this aspect has to be well marketed.  However, stretching for a level of innovation and to stay above the trends does help, a little. 

To me, this suggests that it really is about specialization. While service specialization is a good quality, they want to know that the people they are dealing with already has a product that is way above the rest, and different from what they will be able to find anywhere else.  So I can also conclude from that that the best way to keep customers buying, curtail boycotts, and keep money flowing is to pay attention to resource specializations when making decisions according to the best location for new business units. This also works in marketing of new business units. 

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