Auto Industry Drives Toward Sustainable Profits

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Honda 2015 Fit Taken By Bill Roth Green Business Coach NAIASThe auto industry has stopped waiting for governments to enact energy policy. Responding to their customers’ concerns on pump prices and emissions the auto industry is taking the initiative by launching price-competitive cars and trucks that met consumer expectations on fuel costs, Energy Independence and human health. Consumer are responding by voting with their pocketbooks in support of the industry’s efforts. Projections are that 2014 will set records for vehicle sales plus record high new car fleet MPG.

There are lessons to be learned for every business from how the auto industry is growing sales through product designs that target sustainable results. The following are three examples from the 2014 North American International Auto Show that demonstrate sustainable best practices that non-auto companies can use to win customers.

Ford bets the company on sustainability

Ford’s stole the technology innovation spotlight at the 2014 NAIAS with their launch of an aluminum body F-150 pickup truck. Ford’s CEO Alan Mulally called the F-150 Ford’s “smartest F-150 ever.” It is also a bet-the-company move because the F-150 is not only Ford’s best selling vehicle but the top selling vehicle in the U.S. The risk confronting Ford is whether mid-America consumers will buy a truck that uses 21st Century technologies to deliver 20th Century expectations for size, hauling capacity and acceleration. The Ford executives I met with at the show went out of their way to emphasis that the aluminum used in the F-150 is military grade and is more dent resistant than steel. Using aluminum enabled Ford to cut 700 pounds in vehicle weight without reducing the dimensions of the F-150’s full size. This lower weight also improves hauling and towing capacity. Ford is also offering a range of more fuel efficient engines including an Eco-boost 2.7 litter four cylinder that promises to deliver V-8 horsepower plus best in class fuel economy. In the F-150 Ford has set the auto industry standard for technology innovations delivering a sustainable triple bottom solution that is good for the consumer’s wallet, better for the environment and fun to drive.

Honda takes 20th Century technology into the 21st Century

I attended Honda’s introduction of the 2015 Fit conducted by John Mendel, America Honda Executive Vice President Auto Sales. The event was standing-room-only. This magnitude of media interest was amazing for a compact car. But it was well earned because Honda’s reengineering of the Fit might is an industry leader on how to move 20th Century automobile technology to their ultimate 21st Century potential. Honda’s superior engineering has made the Fit an inch and a half shorter (and lighter) while also increasing legroom by 5 inches and passenger volume by five cubic feet. The standard Fit comes fully equipped with 16-inch wheels, Bluetooth, USB connectivity, and a rear view camera with normal, wide and top-down views. The Fit’s new engine generates 13 more horsepower and 8 pound-feet of torque compared to last model’s engine. The Fit’s combination of more power, lightweight body and improved aerodynamics achieves 33 city, 41 highway and a combined 36 miles per gallon fuel performance using regular gasoline. This superior level of fuel performance is achieved with a combustion engine without hybrid technologies. Sensing that they have a sales winner Honda has built a factory in Mexico to fulfill North American sales. What Honda has achieved is a price competitive car that aligns with the consumer’s search for products that deliver value, performance, a ton of standard features plus reduced emissions.

Smart EV for less than $20K!

The Smart EV is blazing a new trail in making an electric car affordable. I was all over this little urban commuter at the auto show because of its low price. For less than $20,000 Smart is selling an all-electric two seat car with approximately 60-90 miles of range on a full charge. Over 70% us of drive less than forty miles per day. Most of this driving is with a single occupant in the car. The Smart EV is the cost-effective solution for urban commuting. Price competitive EVs like the Smart are also urban solutions that reduce smog and climate changing emissions.

Auto industry sustainable best practices for winning customers

The auto industry is proving that sustainability is the 21st Century path to winning customers. The industry has listened to their customer concerns over pump price pains and air pollution. Taking action they are spending billions on technologies that deliver answers. The industry’s payback for their initiative is record sales and profits.

One best practice transferable to every business leader is the need for a strategic technology plan. Ford’s pioneering product designs are shaped by their strategic goals for reducing emissions. Ford’s strategic plan is singularly focused upon winning customers and growing profits. What Ford has proven is that a company can achieve ambitious customer acquisition and profit goals by placing sustainability at the core of their strategy.

Honda is proving that sustainable best practices can be applied incrementally to better engineer 20th Century technologies. Most businesses are not in a position to take “bet the company” risks being assumed by Ford Chairman of the Board Bill Ford and CEO Alan Mulally. What Honda is proving is that sustainable engineering delivers customers, environmental solutions and profits. Honda’s Civic, CR-V and Accord combined to achieve sales of more than one million new retail customers in 2013. This sales success is built upon continuous incremental improvement in energy efficiency, quality and production. Each new model is a step forward in reducing emissions. Honda is demonstrating that sustainability is a best practice that absolutely supports sales growth.

Offering a low price is the ultimate commercial path for sustainable products. Sustainable product solutions are now shifting from a niche opportunity limited by its high price to a mainstream product competitive on price. The Smart EV is a low price leader for all urban vehicles. It is a lower cost operating solution to gasoline powered urban commuter cars. This push toward achieving price competitiveness by sustainable goods and services will be the major economic trend of the 21st Century. It is also a sustainable best practice every business must embrace to win customers that increasingly see they can have it all in the form of competitively priced products that deliver “in me, on me and around me” solutions.

About the author

Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017

About Bill Roth

Bill Roth is the founder of Earth 2017, author of The Secret Green Sauce and a nationally-followed contributor to Entrepreneur.com, Triple Pundit, The Green Economy Post and Media Post on best business practices emerging from the smart, healthy and green global economy. He coaches entrepreneurs, business and community leaders on how to grow revenues, profits and jobs by going smart and green.
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