General Motors' Mark LaNeve: "When you're there, it feels like an import-dominated market. And it is."
In 1998, Ford Motor Co. sent its Lincoln Mercury division to join its newly acquired European luxury brands at the gleaming new Premier Automotive Group headquarters in California.
The idea was for Lincoln and Mercury managers to soak up the culture that has made this state America's trendsetter. That atmosphere would inspire future products and turn around the brands' dull image.
Unfortunately, Ford located the headquarters of its PAG headquarters in Irvine, an unhip corporate enclave nestled deep in nondescript south Orange County.
Forget club-hopping the Sunset Strip or checking out trendy retail on Melrose Avenue in Hollywood. Most of the executives retreated to townhouses well behind the "Orange Curtain" and never soaked up anything more than a good suntan on the region's numerous golf courses.
Less than five years later, Ford realized the idea was a bust. The Lincoln and Mercury teams moved back to Dearborn, Mich., largely untouched by their vacation in surf city.
'Crazies in Irvine'
"Michiganders don't travel well," says one former Lincoln Mercury executive, who now works for an import brand. "They had lived in Bloomfield Hills, so Orange County seemed wild to them."
What's worse, despite Ford's good intentions, the conservative corporate culture in Dearborn often held back Lincoln Mercury operations. Executives in Dearborn often didn't understand or go along with any new ideas created by "those crazies in Irvine," the executive says.
"There was a lot of jealousy and disdain from the mothership. We were exposed out in California," the executive says.
Ford's misadventure in California became one more case of deck-chair shuffling by domestic manufacturers desperate to regain market share in California. The state accounts for one of every eight retail sales in America.
Six years ago, the Big 3's domestic brands still retailed more vehicles in California than all Japanese and Korean brands combined. But last year the Japanese Big 3 (Toyota/Lexus, Honda/Acura and Nissan/Infiniti) alone outsold the Big 3's domestic brands.
In 2004, Toyota Motor Sales U.S.A. Inc. was the top seller in California, and General Motors' domestic brands were second. American Honda Motor Co. was No. 3, ahead of Ford Motor's domestic brands.
Mark LaNeve, GM North America vice president for vehicle sales, service and marketing, says: "When you're there, it feels like an import-dominated market. And it is."
So what's the problem?
Why can't the Big 3 turn it around? Trendy Californians want what is new and cool. It does not help that nearly one in three domestic vehicles sold last year in California sported a stodgy rental car sticker.
Big 3 executives blame a fallow period of product launches for their swoon. They believe recent redesigns of hot products such as the Chrysler 300, Ford Mustang and Cadillac CTS will help stop the bleeding.
But it's going to take much more than that, analysts say. "The decline in Big 3 market share has exactly tracked the decline of relevant product from those manufacturers," says Eric Noble, president of The Car Lab consulting company in Orange, Calif. "If you're looking for a domestic vehicle that leads any segment, it becomes an exceedingly small list."
In addition to introducing new products, the Big 3 have attempted some organizational changes. In the overdealered San Fernando Valley near Los Angeles, GM consolidated dealerships to gain economies of scale and a more consistent marketing message.
Since 1999, GM has been the only domestic automaker to increase retail registrations in California. But the state's overall sales growth means GM's market share has not budged from 16.8 percent. Cadillac, Chevrolet and GMC have buoyed GM.
In 2002, the Chrysler group tried to shake things up by giving unprecedented power to the chief of its California regional business group, as well as additional staffing and a larger marketing budget. But Chrysler's brands now sell fewer vehicles to Californians than Nissan and Infiniti.
Despite decades of Big 3 market share losses in California, some domestic executives feel that the pendulum could swing the other way.
Lew Echlin, Ford Division's California regional marketing manager, sees hope in California's endless pursuit of trendiness. What's cool today may be stale tomorrow.
Perhaps with a bit of wishful thinking, Echlin says: "Californians are almost bored with their affinity for Toyota and Honda."
Jamie LaReau contributed to this report
You may e-mail Mark Rechtin at [email protected]