Being prepared for when consumers change their minds

Will cars become relics from another automotive age? Some North American manufacturers seem to think so, as they embrace utility vehicles (crossovers, SUVs and other light trucks), while de-emphasizing cars, which have fallen to about a third of the North American market in 2018:Ford is reallocating $7 billion from cars to build more utilities. By 2020, 90 percent of its product line will be light trucks. Fiat Chrysler Automobiles is expanding its Jeep brand and electrifying Jeep, Maserati and Fiat offerings. Plans for car-heavy marques Chrysler and Dodge are uncertain. General Motors is adding crossovers at Cadillac. The wild card at such times is the price of gasoline, which is rising. If it climbs high enough, will consumers change their minds again? In the past, large-vehicle sales typically did well when gasoline was cheap and tightened as prices rose. Could the same thing happen in the future? Granted, utility vehicle combined city-highway fuel economy, roughly 20 to 26 mpg, is approaching that of cars. And Americans appear to crave the extra utility these vehicles offer, as well as the higher seating position and the image of off-road ability. Lacking a crystal ball, how can automakers ensure they're not blindsided by such a shift in the future?Agility wins in this environment.The move from cars creates another level of uncertainty in a highly uncertain automotive landscape, one that places a premium on product agility and the ability to shift product portfolios quickly. Such periods have occurred before, notably the shift from full-size to smaller, more economical cars in the 1980s because of gasoline price changes and shifting consumer preferences. This time, we believe automakers should focus on three types of agility as safeguards against uncertainty:

Being prepared for when consumers change their minds

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