INDUSTRY UPDATE
Capitalizing on "White Space" Opportunities Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org
Automakers and suppliers are constantly evaluating the changing consumer needs to identify the potential for new product opportunities. Any portfolio gaps between existing products are commonly referred to as ‘white space’; representing a blank canvas of opportunity, so long as any new product offerings executed closely represent the genuine needs of consumers. To explore recent or pending examples, consider the Jeep Gladiator, the Ford Mustang Mach-E, the Kia Telluride, the Chevy Trailblazer, the seven-passenger Jeep Grand Cherokee L, or the Hyundai Santa Cruz compact pickup among many others. What do they all have in common? They represent a variety of all-new light truck entries intended to grow market share and drive profitability by taking up residence in what was previously denoted as white space. For a variety of reasons, consumers over the past decade have shifted away from passenger cars toward of a growing range of light trucks, including Pickups, Sport Utility Vehicles (SUVs) and Light Commercial Vehicles (LCVs) in the form of various Van offerings. Manufacturers are more than happy to comply with these shifting preferences, as light truck offerings tend to command far greater pricing power than passenger cars on average. Moreover, light truck portfolios benefit from more lenient fuel economy and emissions standards, which do not require as much costly technology investment to meet such targets, which further bolsters profit potential. For this reason, many manufacturers have pruned their passenger car portfolios, meaning dealers would have fewer nameplates available for sale, unless new light truck entries are evaluated and introduced into the market. This is especially important for unibody light vehicles, where platforms are designed to accommodate a wide range of product types including passenger cars, crossover utility vehicles (CUVs) and others, as a means to reduce costs by achieving strong economies of scale. Recall that Ford’s C1 platform was also the basis for the Transit Connect as well as the now discontinued Focus sedan and C-Max Compact MPV. However, the phasing out of low margin passenger cars or other entries can dramatically reduce total platform volume and sabotage the business case for what had initially been profitable programs. To counter this effect, Ford is pursuing a proven strategy of differentiation within its compact CUV portfolio. FCA took a similar path to portfolio expansion, as it successfully spawned unique entries on a common platform by pairing a more rounded and organic aesthetic for the Jeep Compass with a rugged two-box design for the Jeep Renegade that appeals to different consumers. Ford has 2 │ OESA News - 2021 First Quarter
