We've all heard the story of the business owner's son who returns from college and warns his father that a recession is just around the corner and that the business must cut costs — including the marketing budget — right away.
Deferring to his college-educated son, the father slashes his overhead, including what he spent on marketing his company's products. Lo and behold, the business goes into the tank — and the son had seen it coming. Now the father is really impressed by what his son had learned at school.
In times like these, we should be careful not to follow the son's advice, no matter how smart it may sound. If you are not careful, it can become a self-fulfilling prophecy.
It is easy to scare away customers who have money to spend and are ready to buy just by making them nervous about the economy. At the moment, the North American economy is in a delicate state. Make no mistake, with the midterm elections over and tariffs impacting the auto industry, customers are a little nervous. This is when the right mix of pricing, availability and incentives will keep sales humming.
But it will be easy to turn off the spigot and give your competitor an opening to steal sales. I have no idea how long this 17 million sales cycle will continue — indefinitely, I hope. But I do know that the first person who blinks will benefit competitors, and it will happen quickly. Few businesses are as dependent on marketing dollars as the car business.
There is no reason strong sales cannot continue for a few more years. We have all the indications of a very strong economy and no indication that it is about to end.
Plenty of international carmakers are still preparing to enter the North American market, and they show no sign of tabling those plans. Those carmakers do not know what the future holds, but they are ready to invest.
Indeed, you can behave as though you are in a recession, and you can make the recession happen to you — because your competitors will eat you alive.