Auto Roundtable: Driven to adapt [eBook]

From recalls to automated vehicles, burgeoning new consumer markets to a shifting media landscape, the auto sector is now in uncharted territory. Industry leaders joined Steve Barrett in Detroit for this Airfoil-hosted roundtable to discuss the comms challenges and opportunities.

Click here to download the exclusive eBook from this roundtable.


Roundtable participants (clockwise from top left):
Chris Preuss, SVP, corporate communications, Delphi; Bruce Belzowski, MD at the University of Michigan Transportation Research Institute’s Automotive Futures group; Tony Cervone, SVP, global communications, GM; Leah Haran, SVP, client services, Airfoil; John Baird, VP, brand strategy and marketing, GM New York, Waggener Edstrom; Andy Schueneman, EVP, GM Detroit, Weber Shandwick; Pat Pineda, group VP, Hispanic business strategy, Toyota; Jeff Bennett, automotive reporter, The Wall Street Journal; Chandra Lewis, director of corporate communications, Bosch (not pictured: Jeff Kuhlman, VP, global communications, Nissan)

State of the industry
Steve Barrett (PRWeek): How healthy is the auto industry? How is that affecting the way you’re telling stories?

Pat Pineda (Toyota): The industry is recovering nicely and looking to future growth. My area of focus is the Hispanic market. Without question, we’re seeing an upward trajectory. Overall with ethnic consumers, the outlook is very positive.

Tony Cervone (GM): The industry is in a lot better shape compared to a few years ago. The range of products being introduced, everything from electric to super cars, is indicative of demand. It’s great for consumers. We are also getting more information about people. When you listen to them, you can find the attributes they’re asking for.

We’re finding those permutations are everywhere. A 200-mile range on an electric car for 30 grand versus the Ford GT, the super car that’s track ready. And concept cars, some of which are just beautiful, sculpted pieces of art, while others are just exploring different technologies.

And it isn’t about bragging rights anymore. Everyone creates really good vehicles. Being first isn’t a bragging right because it usually means you’re first for about a month.

Jeff Bennett (The Wall Street Journal): We had been trending for so many years toward writing about smaller and smaller fuel efficiency. Now there is this big dichotomy. You have the introduction of electric vehicles on one stand and new pickup trucks on the other. And then cheap gas prices are raising questions about fuel efficiency and what people will buy. There’s also the debate over whether the government should be involved and directing all of it. That’s all come back into play after years of believing cheap gas wouldn’t be around and that we would just continue to see these small econo-box cars or just the continuing push toward fuel efficiency.

There’s no gloom and doom now. It’s going to be a solid year for a lot of people. We’re looking at 16.8, 17 million new car sales this year.

Chris Preuss (Delphi): The game is getting much tougher for the tier ones. A lot more pricing pressure is coming into the tier-one market from the OEMs (original equipment manufacturers). The biggest one is the need to innovate. There is a certain commodity part of our business, but the growth areas – green, connected – will demand heavy investment and innovation.

Communicators need to create a value proposition to the OEM customers that we’re providing more and better than the other guys.

Cervone (GM): Gas is cheaper than it has been in a long time here, but this is a global industry. It is still expensive in some areas of the world. Many cities still have congestion. And cars running on traditional engines that are idling do not help matters, so it’s also pollution.

The development of electric vehicles, technologies, and fuel cells will eventually answer a lot more questions than whether a consumer will just go out and make a purchase because of gas price. It’s a bigger issue than that.

Preuss (Delphi): Customers hate volatility. They can plan around $3 or $4, just as they can around $2 or $2.50. When it’s jumping up and down, though, that’s usually a bad indication for the industry. As for regulations and other fuel-efficiency targets, they aren’t going anywhere. Not here. Not in Asia or Europe.

Jeff Kuhlman (Nissan): You won’t see regulation give up. Even if you extend it here in the US for some reason, China’s not going to give up. India won’t. You can count on regulation. That’s what’s driving electric vehicles, nothing else. Now, yes, low gas prices will drive certain car and big truck sales for a period of time.

Cervone (GM): Through massive course correction in the last five years, the auto industry has gotten a lot smarter. It’s a great problem to have capacity utilization going over 100% versus 70% in such a capital-intensive industry. The auto sector got really good at that. Technology has helped, but getting close to the grave has probably helped just as much.

Andy Schueneman (Weber Shandwick): It will be interesting when we start pulling oil and more fuel directly out of US soil. It will mean jobs and revenue into the US. Regulations aren’t going anywhere, but once you have that lobby and that side of industry saying we need more of it because it’s good for the economy, there will be a really dynamic tension [between the gas guzzlers and electric vehicles]. This auto show was the first time you saw a big truck being launched by Nissan directly after the Chevy Bolt.

John Baird (Waggener Edstrom): From a macro perspective, the auto sector is getting really good at acting more like the tech industry. It hasn’t quite reached tech’s level from a storytelling perspective, but you can see a certain amount of excitement start to bleed into how consumers think about the auto industry. It’s influencing perception. That is huge because technology is no longer a page in the newspaper. It’s the zeitgeist of America.

Once so insular, tech is now grabbing the attention and imagination of all consumers. If the auto industry can do that, people will think about it very differently. And that actually contrasts with electric vehicles. There’s no question consumers want it, but they don’t know how to think about it yet. They’re a bit scared of the technology. There’s the cost factor, but also the question about whether it will work.

Bruce Belzowski (University of Michigan Transportation Research Institute): At last year’s auto show there was a lot of excitement around more powerful vehicles. This year, it’s even a bigger deal. However, I’m starting to approach it with kind of a schizophrenic view of the industry.

Take Ford. At this year’s show, it led off talking about new mobility and its focus on green. Then it shows a really high-line car and truck and there’s nothing green about either one except the truck probably got great gas mileage. It’s a strange story to tell.

This also shows the industry’s breadth – super cars, small cars, and everything in between. SUVs of every shape, size, and flavor. Pickup trucks and everything. You can see why consumers might get confused about all their options.

Tech perspective
Steve Barrett (PRWeek): Have you seen greater cross-pollination between the tech and auto shows?

Kuhlman (Nissan): As I walked into this year’s auto show, what stood out was 3D printing – an interesting technology that will really impact our industry. We can watch it, for instance, right now on Formula 1. Parts can be prototyped and put on a car. As we see the mainstream applications of this, things will really get interesting.

Chandra Lewis (Bosch): It was fascinating to see automotive take a larger presence at the Consumer Electronics Show over the past couple of years, but what we are really noticing is a convergence of technology and the consumer electronic mindset. Consumer electronics are influencing the auto industry, but automotive is also influencing consumer electronics. And for Bosch, being in both the auto and non-auto spaces, it’s exciting. We are actively looking to take our expertise from the automotive side and blend it with our non-automotive activities and vice versa.

Leah Haran (Airfoil): Working in both the tech and auto spaces, it will be interesting to see how much consumers’ belief systems will be disrupted. Communicators must think about what life will be like with autonomous vehicles and how we need to start shaping people’s perceptions.

Look at how fuel cells are being positioned. At the auto show, I saw a demo basically focus on water plus electricity. I thought if a consumer saw this, their initial reaction would be, "I’m going to be electrocuted." Even with something that simple, we have to focus on how we start educating people about technologies to come and understand that the core belief system that exists today will likely not be the same in two years. And we have to get consumers there.

Cervone (GM): Technologies are allowing you to get a lot more targeted about whom you’re talking to – and it’s no longer talking to, but talking with. It’s a whole different dynamic. The industry and the cars themselves are becoming a completely different phenomenon for people. It’s no longer good enough to talk about how a car drives, horsepower, or fuel economy. It’s now about "Is it setting up my service appointment for me?" "Can I just walk in and have this thing automatic?"

Schueneman (Weber): A trend that will impact communications in 2015 is the rise of visual influence. One, it’s human nature. The brain processes visual images 60,000 times faster than text. Two, mobile is everywhere. We all carry a TV screen in our pocket. Three, there’s a democratization of content. Anyone can create great content, publish it, and build a following through that. It is vital we create great visual content.

The good news for the auto industry is we have a beautiful, dynamic product that creates a visceral reaction among consumers when they see it in motion.

Lewis (Bosch): When we were covered by PC World and Mashable at CES, it enabled us to reach new audiences who represent the changing buyers of vehicles. These people want that seamless connection between their smartphones and cars. Telling these stories to these people is an opportunity for marcomms pros to expand our horizons.

At CES, much was discussed about how the vehicle is one of the most complex and intelligent consumer electronic devices anyone will ever purchase. If we continue to approach it from that perspective, it will help shape the marketing we do and the stories we tell.

The Hispanic market
Steve Barrett (PRWeek): Is the auto industry taking advantage of this increasingly growing and vital demographic?

Pineda (Toyota): Numerous data points highlight that the Hispanic market itself is one of the world’s top 20 economies. Projections indicate this year’s market will be $1.5 trillion, $1.7 trillion by 2017.

Hispanic spending is on the rise. They are buying new cars. Numbers also indicate Hispanics are surpassing non-Hispanic whites in terms of college attendance.

And Hispanics skew young, which is a marketer’s dream. The average age is 27. The US Census indicates that every 30 seconds two non-Hispanics reach retirement age, while what I call the potential Toyota Hispanic customer turns 18. In addition, while two-thirds of Hispanics live in five states – California, New York, Florida, Texas, Illinois – we’re now seeing critical Hispanic markets emerge in states such as Arkansas, Kentucky, the Carolinas, Minnesota.

This is also a very brand-loyal market. Overall, it’s a major opportunity for the industry.

Barrett (PRWeek): According to Fox’s ad department, of the top 500 advertisers only 216 advertise in Spanish-language media. Marketing departments still say, "They’re not really our people." How is that?

Cervone (GM): I have no idea. I can’t think of a product line I would just exclude from it. It’s a market you must engage, but we need to do a much better job of engaging with people on their terms. And that’s true for younger people today, too, who can filter information in completely different ways. It’s also true for various diverse markets.

Pineda (Toyota): It confuses me that major brands in the US can look to China and see a huge opportunity, yet we’re blind to this opportunity at home.

Cervone (GM): When people approach a new market such as China, it’s easier for them to realize they must start with a clean sheet. In the US, they have systems and processes in place and you can’t convince people to take a step back. Historically that was a big challenge for the auto industry.

Preuss (Delphi): It’s more fundamental. China is an easier brief because it’s actually a fairly easy demographic to which to market. You hire local agencies. It’s the only market you’re addressing. Here, we have this bifurcated market.

The bigger problem in terms of more targeted and culturally relevant advertising is we still throw the burden of diversity advertising to some niche agency, usually headed by a specific executive, and we treat it as separate. Marketers have a very difficult time speaking truly multicultural languages. We have made it anything but mainstream and are on a model that assures it will stay non-mainstream.

You will see more enlightened approaches, but the answer is a much better diversity profile within the agency and corporate marketing environment to better reflect the demographics of where this country is going.

Schueneman (Weber): You can’t talk to Hispanics as a blanket market. In Miami you must talk a certain way. It’s different in Texas. We should take a much more integrated approach. And a benefit that comes out of the increasing diversity of media is it enables us to speak very specifically.

If you set up your communications and marketing correctly, the amount of data you’re able to gather on each individual interaction should change what your next communication looks like. As you adapt that, you should be able to talk to somebody on a one-to-one level and take advantage of their individual levers to get them to buy a car.

Haran (Airfoil): Marketers still think linear, but consumer behavior is circular in nature. It’s about finding the right triggers. It’s more about persona development. Under-standing behavior, what drives it, and how your product or service aligns to that is how you tell stories.

Pineda (Toyota): The Spanish-dominant population is shrinking, while the population of English-dominant Hispanics is growing. It’s this new gray area.

On one hand, there are people such as my kids who don’t speak Spanish and don’t want to be talked to as Hispanics. They want to be approached on the basis of the clothes or activities they like. However, they’ve been raised a certain way, so some themes resonate with them, family being one. If you’re selling a car, it’s in the context of family. Among Hispanics, families buy cars. Even with those that are English-dominant, the family is much more involved.

Haran (Airfoil): In looking to put together a communications program that’s targeted, direct, one to one, and personal, it’s very hard to get the dollars for that. There’s a resistance to pilot things.

Kuhlman (Nissan): Our structure doesn’t support the type of world you’ve just described. You’ve noted Hispanic consumers in Florida and California and they all want to be talked to differently. However, we centralize the budget and the communications programs. We don’t involve tier-three organizations. We don’t put the talent there to react and work that way in communities.

Preuss (Delphi): If you go to diverse markets in Los Angeles, Miami, and so on, those dealers are hardwired to the Hispanic market. They have very sharp messaging, very good agency resources, and it’s a fairly tactical pull from what the nationals do. But at the national level, the model looks exactly as it did 20 years ago. There is huge resistance to getting to this much more bifurcated, targeted viewpoint. There’s a lot of resistance to making bold changes. They don’t understand that with the shift in how people consume media there’s more relevance to how earned voice works in more integrated and pay-to-play spaces.

Schueneman (Weber): Media buyers have access to so much data. If that flowed down into communications and content development beyond tier-two advertising, we’re talking about directly knowing what Hispanic consumers want.

Lewis (Bosch): American culture 20 years ago, today, and what it will be by 2020 are totally different. So how we tell our stories, utilize data, and do outreach will inevitably change because of how we’re fabricated, how we communicate, and how we live with one another.

Legal dilemma
Steve Barrett (PRWeek): The recalls and crises of the past year have truly tested the auto sector’s comms pros. How do you balance getting your messages out with your general counsel’s opinions and preferred policies?

Cervone (GM): We had support from our legal counsel. They understood we needed to communicate and it was a priority. And that was a counsel that traditionally was extraordinarily conservative, not the person but the culture.

However, when we looked at what was said and what needed to be done, I got zero pushback. We were as forthright, transparent, and aggressive as anybody has ever been in that situation. And it wasn’t because [CEO] Mary Barra said, "You will behave yourself." They looked at it and realized there was an issue here that needed to be fixed. There are clearly challenges from time to time in how far you can go. You must know what you’re dealing with.

Steve Barrett (PRWeek): Is there a tension between legal and comms that sometimes is counterproductive in terms of telling the story and getting the best outcome for all?

Cervone (GM): Tension often raises the level of commitment to each other. Dialogue is the key. What is the root of what we’re trying to solve? How do we do that? As communicators, we often say, "But it’s my problem, therefore it’s the biggest problem in the world." There are other positions you must consider. You need to be responsible.

Preuss (Delphi): It’s a difficult position for the supplier when you’re in a contentious recall situation. On one hand, you absolutely must honor and be a partner to your customer. The first priority for everybody is getting the right analysis, getting the right fix, and doing everything to get parts. The response from GM and Delphi was truly amazing to get 2 million switches into production that were out of production. [Editor’s note: Delphi supplied ignition switches to GM that were blamed for at least 13 fatal crashes.]

Another challenge is that we’re publicly traded companies. We have a responsibility to shareholders and must act in the interest of all parties, customers included. There are legal limitations on what we can do when you have regulators and things get investigated. Our very careful, measured response in these situations is to be very minimal beyond what’s absolutely necessary to understand what the expectations are from external stakeholders. We need to make sure we’re being forthright, transparent, and cooperative with the right parties.

GM was so forthright and aggressive on contending its responsibility for the issue. It really took a lot of pressure off Delphi from a public standpoint, including Barra stating at the Senate hearings that this is not a Delphi issue, but a GM issue.

Schueneman (Weber): The auto industry is completely cyclical. There are times of great prosperity and a time where everyone individually is in the frying pan. It is immensely important to be ready when that time comes. When sales are high and growth is happening, that’s when you can burnish your reputation in whatever communities you’re working in. Then, when something happens across the wider public, you’re ready for it and those communities will also come to your defense.

Looking down the road
Steve Barrett (PRWeek): What will be the biggest items on either the auto industry’s or your own agenda over the next 12 months?

Cervone (GM): Translating these technologies into the true benefits they are driving to the consumer and speaking in those terms, as opposed to how it’s making my company better. We’re going to see more massive changes in the next five years than we’ve seen in five decades.

Bennett (The Wall Street Journal): As the technologies come out, it’s easy to present them as technology. Writers are still trying to connect with that human element and tell the story. That means challenging companies to explain in a very human way how the technology came to be and why it’s here.

Preuss (Delphi): We’re occupied with a CEO transition right now. We are working aggressively with getting him on-boarded with both customers and the internal network. In addition, we’re a very global company that is not really stationed in any one place. Culturally, that’s a challenge.

We’re also excited about the automated active safety driving space. The response to this at CES has given us a lot of energy to tell that story. It’s the future of our pipeline. There’s also CO2-reducing technologies, fuel systems, and the like. We have to make a strong case for that with customers.

Schueneman (Weber): In the b-to-b space, we’re currently conducting behavior research on how engineers, designers, and people in automotive get their research. Where are they getting information and how? How can we help our clients develop materials that will go directly to them, make it easy to find them, and ultimately help our client’s sales force not only go in smarter into the initial meetings, but also have companion content to follow up.

Baird (WE): You could argue the automotive industry was the first real technology consumers became enamored with. If you go back a few decades, you see images of guys under the hood all huddled around talking about the size of the engine and really technical things.

Cars are smarter and more complex than any technology out there. It would be fascinating from a brand perspective if you could grab the public’s imagination like that again. Silicon Valley had its moment in the sun for the past decade or two. Let’s put it back on Detroit.

Belzowski (University of Michigan): We have a project looking at the future of powertrains going out to 2020, 2025. I have a couple ITS (intelligent transportation systems) projects looking at using cell phones to measure road roughness and also collect data for what we call micro-weather reporting. You could actually find weather information on a specific highway exit, as opposed to just all of southwestern Michigan.

Kuhlman (Nissan): There are three things that will drive what I focus on: autonomous driving, zero emissions, and the connected car. How I tell those stories won’t be the same in every country. In India, newspaper sales are still rising. They aren’t here. So to think we will package the story the same way in both places is silly. I must find a way to support our regional teams with a better ability to tell our story globally while respecting the issues happening in the individual regions.

Lewis (Bosch): We’re pushing the triad approach – automated, connected, and electrified mobility. We’re also looking hard into the convergence of the IOT (Internet of things) and connectivity not only within the vehicle, but also your entire living space – from home to vehicle to infrastructures to cities. This is a large and global focus.

In addition, we must make sure we’re being as creative in our marcomms approaches as we are in our technology.

Haran (Airfoil): One focus will be education around smart mobility. That’s where automotive is going. We need to educate auto reporters about the technology, tech reporters about the auto industry, and both about how this convergence will make a huge difference with consumers.

We also must encourage companies to invest in their brands. Products will start fading away and brands will emerge. When you look at who is competing in autonomous vehicles, it’s not just auto companies. So investing in the brand is very important as it helps people understand what you are as a brand as opposed to just a product.

See the exclusive eBook of this roundtable for a deeper look into how the US auto industry is faring compared to the rest of the world; how the entire sector, with a focus on GM, has refocused after a record year for auto recalls in 2014; and how the media covering the industry has evolved and the impact it is having on comms efforts and outcomes.

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