Drop In Crossover Sales
Crossover vehicle sales were booming as we entered 2008, but have dropped dramatically as consumers flocked to smaller, less expensive, and more fuel-efficient cars.  According to the Wall Street Journal on August 4th, crossover sales were down 11% in July 2008, compared to July 2007.  Many consumers who were looking to replace their traditional trucks saw those vehicles lose a huge chunk of their resale value. As a result, these buyers have been pushed out of the relatively expensive crossover market and into the compact and mid-size car market.  Here, for example, in the GM arena, they find the Saturn Astra, a small hatchback, costs $16,000, versus $29,000 for the Outlook, Saturn's crossover vehicle.

Likewise, SUV owners have not been able to balance their resale losses when attempting to purchase crossover vehicles. Ford has found its silver lining in the Focus, where sales increased 16% in July (26% year-to-date).  Unfortunately for Ford, its margins are very thin for these cars, as they don’t make nearly the same amount as they do for crossovers or larger vehicles.

What They Can Do Now! “Cherry Pick”
GM and Ford can remedy, overcome and mitigate these ails by using a Blue Ocean strategy of looking at business from a different time horizon from competitors in the crossover market and take a mid-range view of 2 to 4 years.  However, they must stop the short-term bleeding.  Essentially, GM and Ford need to “cherry pick” the customers who are less effected or less sensitive to losses in the resale value in their SUV’s.  For this strategy to work, they must understand who wants to trade down from large SUV’s.  They must identify sub-groups or spaces within this population which are more price inelastic segments, and devote a critical mass of marketing resources and dollars to these regions where the driving critical factors skew toward favorable demographics and lifestyle.  They should also not forget to identify the “straight-up” crossover buyer groups which are also inelastic.

GM and Ford should also identify the elastic buyer segments, taking the lower margin hit in the short-term by encouraging these customers to trade down to the smaller cars.  In the short term, margins will suffer, but sales volume losses will be minimized or remain even. More importantly, production capacity will be utilized at the same level and not be taken off-line.  They should offer substantial “game changing” incentives, rebates, and holistic service amenities. 

I am willing to talk with blog participants live via phone for free consultations.  I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities.  For any of these request, E-mail me .  I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist - writing to inform, enlighten, and inspire.  Author of forth coming book, "Owning Marketspace".  Available for consulting and speaking engagements.


Crossover Sales SUV Owners Blue Ocean Strategy Inelastic Segments Elastic Buyer Segments GM and Ford Turbo Tagger