Automobile Mayhem William Haines & Brandon Rieck York College of Pennsylvania

Transcription

1 Automobile Mayhem William Haines & Brandon Rieck York College of Pennsylvania

2 A u t o m o b i l e M a y h e m P a g e i Table of Contents A Short History of Automobiles...1 Economic Crisis Squeezes the Industry...2 A Changing Economy s Impact on One Popular Brand...4 A New Beginning...4 Rocky Rollout...5 Resources...7 Moyota

3 A u t o m o b i l e M a y h e m P a g e 1 A Short History of Automobiles The earliest known automobile was built around 1672, by Ferdinand Verbiest, as a toy for the Chinese emperor. 10 This vehicle was not large enough to hold a person but was likely the first working steam-powered vehicle. 9 In the late 18 th century, the first steam-powered vehicle intended to transport people was designed by Nicolas-Joseph Cugnot. In the end, Cugnot s design demonstrated to be unfeasible but this was just the beginning of a quickening automobile evolution that was about to begin. In 1784, William Murdoch built a working model of a steam carriage and by the turn of the century, Richard Trevithick was operating a completely functional, full-sized vehicle on the road in Camborne, U.K. 1 Once these vehicles were hitting public roads, various innovations were developed to improve the overall performance of the vehicle. In 1838, Walter Hancock, a London-based builder and operator of steam buses, built a four-seat steam phaeton. 3 By the 1860s, the automobile evolution made its way across the Atlantic Ocean when Canadian Henry Taylor revealed a four-wheeled steam buggy that incorporated a two-cylinder steam engine fixed to the floor. 8 Figure #1: The second version (1771) of Cugnot s steam wagon. As the 19 th century came to a close, the blueprint for the modern automobile was perfected in Germany and France. 4 Important figures in this achievement included such men as Nicolaus Otto, Gottlieb Daimler, Carl Benz and Emile Levassor. 4 The European-built 1901 Mercedes is credited as the first modern motorcar in all essentials including a 35 horsepower engine that could reach a speed of 53 miles per hour 4. The Americans would get into the game when J. Frank and Charles E. Duryea designed the first successful American gasoline automobile in Henry Ford s Model T, released in late 1908, revolutionized the design of American automobiles. The Model T, coined as the car for the great multitude, was made out of vanadium steel and had a four-cylinder, 20 horsepower engine; along with a two-speed planetary transmission, detachable cylinder head, and a high

4 A u t o m o b i l e M a y h e m P a g e 2 chassis to clear the bumps found in rural roads. 4 By the late 1920s, numerous technological innovations were installed in new automobiles including: the self-starter, closed all-steel body, high-compression engine, hydraulic brakes, synchromesh transmission and low-pressure balloon tires. 4 The automobile industry played a critical role during the years of World War II. 4 Automobile manufacturers were called upon to produce military vehicles, as well as other important military items. Due to the military needs put on the automobile manufacturers, vehicles were no longer made for the civilian market and tires and gasoline were heavily rationed. 4 Coming out of the war years, America s Big Three (Ford, GM and Chrysler) began to face increasing competition from imported cars from Europe and Japan. The 1970s brought about a decade of trying events, such as the 1973 oil crisis and continuing increase of imports from Europe and Japan, on top of a stalling global economy. To combat these conditions, the U.S. automobile industry in the 1980s began a large-scale organizational restructuring and technological renaissance. 4 Cars began to become smaller, more fuel-efficient, environmentally friendly and safer. 4 Economic Crisis Squeezes the Industry The automobile industry continued its growth and development into the 21 st century but would get caught in a traffic jam, along with other industries, when an economic downturn hit the United States. What some have called The Great Recession, lasting from December 2007 to June 2009, began with the housing industry bubble bursting. 5 The housing bubble burst began a type of domino effect. The loss of wealth led to severe cutbacks in consumer spending which, combined with the financial market chaos, led to a collapse in business investment. 5 In 2008 and 2009, the U.S. labor market lost 8.4 million jobs, or 6.1% of all payroll employment. 5 This was the most intense loss of employment of any recession since the Great Depression. 5 The Great Recession hit the automobile industry particularly hard, compared to some other industries that were impacted. Almost overnight, demand for new automobiles fell from an annual rate of over 17 million units to an annual rate of under 10 million units. 6 To prevent the looming collapse of the industry, the Bush administration granted GM and Chrysler federally guaranteed loans to keep them operational into early

5 A u t o m o b i l e M a y h e m P a g e 3 Figure #2: Employment in the automobile industry declined between early 2008 and mid Amount of total U.S. light vehicle sold also encountered a dramatic decline between late 2007 and mid Leading up to the economic crisis in 2008, the leaders of the automobile industry had been putting more focus on manufacturing larger vehicles. This was a result of being able to make larger profits on SUVs and pickups, compared to small, fuel-efficient cars. Automobile manufacturers were able to make a 15%-20% profit margin on SUVs, compared to 3% or less on smaller cars. 2 When the recession did finally hit the automobile industry, gasoline prices rose above $4 per gallon. High gas prices, combined with employment uncertainty and consumers holding on to their money, led to Americans reconsidering whether or not to purchase a large, fuel-eating SUV. Instead of buying a vehicle that caused consumers to frequently visit the pump, smaller, fuel-efficient cars seemed to be the best way to beat having to pay high gas prices.

6 A u t o m o b i l e M a y h e m P a g e 4 A Changing Economy s Impact on One Popular Brand Moyota is a U.S. based automobile company headquartered in Buffalo, New York that has been established since In its early day, Moyota was a local brand. It brought in great success in its first few decades primarily selling larger vehicles that were designed to handle the cold, snowy winters found around Buffalo. By 1983, Moyota had expanded to having its vehicles on car lots throughout New York, New Jersey and Pennsylvania. Throughout its first 50 plus years in existence, Moyota s bestselling vehicle was the Mountaineer. The Mountaineer brought Moyota the type of success that many automobile brands dream of, as consumers were very loyal to the Moyota Mountaineer brand. Figure #3: The Moyota M is widely recognized in the automobile industry. When the 2008 recession hit the U.S. and the automobile industry, Moyota was not immune from its impact. Along with other automobile companies, the market share and revenue that the company had enjoyed for many years was now declining with no saying how far it would go. Consumers now had a growing spending mentality of being more careful with their money. This spending strategy, combined with rising gas prices, began to damage the Moyota brand and what it was known for; powerful, all-terrain SUVs. Now, with its best product suddenly not meeting its consumers needs, Moyota was at a crossroad. The Moyota brand was beginning to crumble, and the company was forced to generate new ideas for gaining back lost market share and revenue in an industry that was trying to figure out what the next step would be. A New Beginning With smaller, more fuel-efficient cars rapidly becoming highly desired by consumers, executives at Moyota noticed that this was a growing trend that they could maximize. Moyota releasing a car that was cheaper to buy and keep running was unanimously viewed as the smartest move to get back in the market and keep from going bankrupt. The company wanted everything in and about this new car to be completely new. Releasing a new car was easier said than done, especially when bringing in a fraction of what the company was use to making. As Moyota began developing its own small, fuel-efficient car in late 2009, the company started to

7 A u t o m o b i l e M a y h e m P a g e 5 notice that the budget available for this project was not feasible. Executives at Moyota found that this project was using up more money than they had anticipated. At a meeting with all senior executives at Moyota, the decision was made to make cutbacks in the technology department. The technology department at Moyota held chief responsibility over things such as the in-car computer system and everything that worked with the computer. The Moyota CEO gave the green light to this decision after his technology director assured him that the new car wouldn t be negatively impacted by using the company s old engine control units (ECU), also known as the car computer. These old ECUs were to be taken from the past few years of the Mountaineer, as these SUVs were getting outdated and not selling very well. When Moyota s new car was close to being ready to be rolled out to its car lots, the senior marketing executives agreed on what the name was going to be. Moyota s new small car brand was to be known as The Hamry. The Moyota Hamry was a very stylish and sleek, fourdoor car. Available in a wide range of colors, interiors and additional packages, the Hamry had a very eye-catching design. Able to get around 40 mpg, the Hamry was Moyota s most fuel efficient vehicle ever. Moyota was searching for a new, sophisticated and cheap vehicle that would offer overwhelming value at a time when consumers were being wiser with their money, and that s what they had in the Hamry. Rocky Rollout As the new Moyota Hamry was being rolled out, the Moyota CEO released the following statement announcing the release of their new vehicle: Moyota to Release New Fuel Efficient Vehicle We at Moyota are excited to announce our new vehicle that is now available to the market. Our new vehicle, The Hamry, will offer the same, high value automobile that our loyal customers have come to expect from us. The Hamry has the most up-to-date parts and technology, and is the best option for consumers who want the most bang for their buck.

8 A u t o m o b i l e M a y h e m P a g e 6 Consumers in the market for a new car showed a high level of enthusiasm towards Moyota s new car. One happy customer, who had just bought a Hamry, said The test drive went great. The car looks good and drives well. I couldn t believe the deal that I got! Moyota saw sales for the Hamry to be climbing day after day, week after week. The overall affordability of a car that was able to get a large mpg and looked apart from other competing vehicles was one of the main reasons consumers were drawn to the Hamry. For the first two months after its release, everything was going better than expected for Moyota and its new vehicle. Sales were more than hitting their expected targets. About two and one-half months into the Hamry s availability, Moyota began to receive news that a few Hamrys were experiencing issues. The common complaint was that while driving the Hamry, the engine would seize up and completely shut down the car. Day after day, there were growing reports of more Hamrys shutting down while in the midst of being driven. One specific event caught national media attention. A Hamry that was carrying a family of four shut down on the highway and caused a 27 car pile-up, resulting in the death of over five adults and three children. A young marketing assistant and automobile aficionado, Steven Liu, was assigned to the team that was responsible for the marketing campaign prior to the launch of the Hamry. One of Steven s tasks was to research what Moyota s competitors offered that was similar to the Hamry, as well as what specific systems and parts those companies used. After gathering information on all of the cars that would be competition for the Hamry, Steven started to notice one main difference between Moyota s car and all of the rest. The ECU in the Hamry was of an older and different style that matched the ECU found in Moyota s past Mountaineers. Steven remembers that, when he and his father restored a car together years ago, one of the biggest challenges they encountered was properly hooking up a new, after-market head unit and using a standard wire harness instead of the one that originally came with the car. Steven and his father experienced similar issues with their car shutting down randomly. Steven contemplates, what if Moyota took parts from previous vehicles and put them in the new Hamry? This case was created by students of York College of Pennsylvania under the supervision of Professor Osborn. This case was designed and written by the group of William Haines and Brandon Rieck.

9 A u t o m o b i l e M a y h e m P a g e 7 Resources Information retrieved from the following sources during the creation of this case: 1. Buchanan, C.D. (1958). Mixed Blessing: The Motor in Britain. 2. Cloud, J. ( ) Time-Why the SUV Is All the Rage Time.com. 3. Georgano, G.N. (1985). Cars: Early and Vintage, Kearney, M. & Randy, R. (2006). Whatever Happened To? 9. Setright, L. J. K. (2004). Drive On!: A Social History of the Motor Car. 10. " R P Verbiest's Steam Chariot"

10 A u t o m o b i l e M a y h e m P a g e 8 This is a marketing case because product is central to the case s dilemma. At the center of the problem, a part in the product s engine is causing the car to shut down and is causing deaths. Problem Statement: Word has come out that Moyota installed used ECUs that seize up the engine in their new vehicles which has caused numerous deaths, and now Moyota must evaluate their future product decisions. Case Background o Provides information from the case which sets up the dilemma. Tells the reader that Moyota was selling a new car with mix and matched pieces in it. Single Sentence o The sentence flows and doesn t feel like it is two sentences put together. Not too narrow o The solution is not a yes or no answer to the dilemma. The solution leaves the door open for Moyota to make whatever decision it wants with its new product. Not too broad o The sentence only focuses on the product dilemma presented in the case. The solution deals with what should be done about the parts used in the Hamry. Future Marketing Direction o The sentence tells the reader that a product decision will need to be made to provide a solution to the dilemma found in the case.