Why Don’t Automakers Sell Every Vehicle Model Globally?
Have you ever been car shopping, or just surfing the net, and came across a really nice vehicle you would love to see in your driveway? Then after a little digging, it turns out that vehicle is no longer sold in America, or at all? Man, we’ve been there. Literally, the new Kia Ceed teased for the Frankfurt Motor Show was shaping up to be real nice, but it may never see the light of day in the North American Market. And don’t get us started on how long it took Mitsubishi Motors to bring the Mitsubishi Outlander PHEV to America . Why do automakers selectively sell their vehicles to certain markets? Apparently, there are many variables to juggle when it comes to selling automobiles in the international market.
The Market and its Factors
Going global is probably one of the smartest things an automaker can do in today’s day and age. One good example is Mitsubishi Motors, expanding with Nissan resources to get a better foothold in the auto market. At the same time, an automaker needs to perform careful analysis of where an automaker makes the majority of its sales, like Swedish automakers for instance – 90-percent of their sales come from outside of Sweden. However, there’s a larger factor at play than sales.
Automakers need to use certain strategies to appeal to a certain market, usually depending on the economic and cultural background of the people they target. Depending on the location, there may be certain standards and regulations to meet, and depending on the local culture, marketing and production can quickly become a high-stakes game of trial-and-error. Some automakers can make the move and modifications, but not all can tackle these variables.
Variables In the Way of Going Global
Regulations is a big one for many automakers. One of the main reasons we won’t see certain models come overseas to the U.S. market is due to environmental regulations enacted by the government. It’s a little backwards – the government wants to protect the air and the environment, but companies still get the go ahead to tear down forests for shopping malls. Either way, along with environment regulations, there are federal regulations that control gasoline and diesel prices, and standards that must be met for an automobile’s emissions.
Not all vehicles pass those inspections. Then safety is another matter. The U.S. has its own safety standards called the “Federal Motor Vehicle Safety Standards”, and they control the standards for the minimum safety performance requirements that must be met for motor vehicles or items of motor vehicle equipment in the U.S.
To sell in the North American market, an automaker has to go through an expensive certification process in order to be able to sell its car in the United States. This calls for a retooling of a car model to create a whole other version for the US/Canada, and that can be quite expensive for an automaker. Add that onto the high price to export/import, and international automakers may shy away from going global. Sometimes, this is a ploy by the government, aiming to get more consumers to buy locally to stimulate the national economy.
Economy is the second largest factor controlling the international market. We’re talking fuel economy as well as the economic status of a nation. Americans like large cars, and with crossovers becoming ever so popular, fuel economy isn’t as large of a loss as it was decades ago. European automakers however prefer smaller vehicles, and with the North American market going big, some European models may instead choose to go home.
When it comes to the national economic status, there can be a bit of trouble for automakers. Take the Mitsubishi i-Miev for example. It was the first highway-capable all-electric vehicle to make it to America. It was sold during a time where the U.S. economy was in a major crisis though, and consumers weren’t willing to splurge on a vehicle that wasn’t as practical as it is today.
Then we have culture to worry about. Cultural differences will easily change whether an automaker bothers to retool a vehicle for another market. Some cultures care about the look of the car, whereas others care about its functionality. When trying to sell a new Chevy model in Latin America, Chevrolet called it the “Nova”, a phrase in Spanish that reads as “No Va” or “Doesn’t go”. Someone didn’t do their research in the marketing department. At least it wasn’t as embarrassing as Dodge almost marketing the original Dodge Demon as the Dodge Beaver.
To combat some of these problems, automakers will often rebadge a vehicle on a similar platform, like Mitsubishi did, selling a vehicle to Dodge, later known as the Dodge Colt. Another form of rebadging is making cross-brand platforms or sharing features across the brand under an umbrella group, like the Fiat Chrysler Automobile Group does with Uconnect, or how the Renault-Nissan-Mitsubishi Alliance is making cross-brand electrical vehicle platforms. This practice saves much in manufacturing costs and also helps the automaker make some money outside of their origin, even if under a different name.