U.S. AUTO MAKERS LIMIT SMALL CARS FOR SALE – ALL THE MOVING PARTS

In ALL THE MOVING PARTS: ORGANIZATIONAL CHANGE MANAGEMENT,  we talk specifically about a number of auto manufacturers, their leadership, and their efforts at organizational change management.  

The latest decisions concerning the size of the cars that will be manufactured and sold this coming year is yet the latest iteration of these companies’ organizational change efforts.  Companies must stay ever-vigilant to the “rules of the road,” so-to-speak.  And those “rules,” specifically, include the desires and interests of the consumer.  And, thankfully for all the rest of us – and in this instance of the lessening manufacture of small cars – there will now be fewer small cars on the freeways and city streets, and, consequently, greater safety for all drivers.  This should make those avenues safer for all concerned, particularly those who would have been the drivers of those small cars.  General Motors has announced that it is phasing out its Chevy Cruze compact car as well as the Chevy Sonic subcompact.  Both car models were designed a decade ago to respond to consumers’ interest at that time for saving on gasoline consumption.  And, then, realization set in about the accompanying safety issues – that is, when you put very small cars on the roadways with average and larger cars and other vehicles, which are both built stronger and are more powerful in their acceleration abilities, the accidents that can occur involving the small cars, are almost certain to involve greater incidents of injury, as well as other safety hazards to the drivers of the small cars.  Ford Motor Company is dropping the Ford Focus compact car from its U.S. dealerships and is also ending sales this year of the even smaller Ford Fiesta.  And Volkswagen AG’s Beetle will no longer be sold both in the U.S. and globally, as manufacture of these vehicles ceases.  In 2016, Fiat Chrysler discontinued its Dodge Dart compact.  Toyota Motor Corporation also deleted its compact, Scion, in 2016.  These shifts of the auto manufacturers reflects an auto-industry move away from traditional, and smaller, sedans, and into the higher-margin crossovers, and the highly desired SUVs and pickup trucks.  The transition has helped boost profits for the auto makers and, at the same time, of course, has tended to boost the sale price of new cars.  Last year, the average price paid for a new car was $32,500, up from $29,300 five years previous.  Historically, the small, low-priced cars have delivered very slim profit margins.  Thus, it has been determined when that fact is combined with the weak demand for these vehicles – sales of subcompact cars fell 22% last year – and added to the fact that millennials now tend to wait until their late 20s to purchase their first car (at which time they can traditionally afford a pricier vehicle), then these elements acting together have made the small cars unprofitable to keep in the manufacturers’ lineups.  Ergo – almost no compact and subcompact cars manufactured and sold for 2019’s U.S. market.

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