NOTE! This is an editorial post and the views expressed do not represent the views of the staff, or the clients of AACS. Also, please excuse the long-winded analysis. I feel this is an important issue and needs to be properly addressed. Also, I don’t have an editor to make me more write in a more concise manner.
My Facebook feed has been swamped the past few weeks as the Detroit Auto Dealers Association made the announcement that the Auto Show will be moving from its traditional January date in 2019, to June for the 2020 event. The move is billed as “transformational”, something I cannot argue. June Detroit weather is as far from January as you can possibly get considering they are 5 months apart. Unfortunately the move triggered my spidey-senses. Through a ton of conversations with industry insiders and experts I respect, I have put together the following analysis which, if you are a supplier, should be serious food for thought.
First, a little personal history. I have been a car enthusiast as long as I have memories. At various times in my childhood, I wanted to be a race car driver, a car designer, a new car salesman and a junk yard owner (If you saw my collection of cars and parts you might say I have been successful in at least one of those dreams). Because I lived in the south, the “real” auto industry seemed remote, so I spent my time riding my bike to dealerships. When I was older I found work first as an architect and later in the nuclear energy industry. In 1985 I took my first real automotive job as a cruise control engineer, then slowly moved my way north with stops in fuel systems and lighting before landing in Detroit in 1991, a slightly revised version of a personal journey to my own mecca.
The first auto show I attended was in Detroit, and even though I have been to numerous others on several continents over the years since, the Detroit show still holds a special place in my heart. I remember how excited I was when I was made responsible for the marketing of a supplier I worked for in the early 90s, and I explored the idea of getting suppliers more involved with the show. The DADA told me in no uncertain terms, that the Auto Show was for manufacturers only, and regular suppliers need not apply (some really large companies were allowed to participate in a mostly secondary manner).
Fast forward many years and the LA Auto Show introduced the first (to my recollection) formal industry conference before the show, the Connected Car Expo in 2013. I remember visiting and saying to my coworkers, “they really are onto something here”. It was the beginning of a new understanding of what an auto show could be. The Connected Car Expo continued to evolve and eventually became AutomobilityLA. Recently, the Detroit show introduced a pale version of its own called Automobili-D. For me it still misses the mark as it seems to be more oriented towards revenue and less oriented towards what automotive suppliers and OEMs really need. Want more eveidence of the disparity in the way the two auto shows approach their customers? The NAIAS charges $110/person for Supplier Access (you have to be really lucky to get in during the press days). The LA Auto Show? Register early and get approved for free.
To this day we advise our clients that people are generally overworked, and as such they keep their head down, nose to the grindstone, and pay attention to only the most direct tasks related to their job description. EXCEPT. Except for that 1 week a year when the industry raises their eyes, and pays attention to what is happening around them, the auto show. Detroit has the luxury of actually having 2 events that qualify, NAIAS in January and the Woodward Dream Cruise in August. More on that point later. Let’s first explore the 5 “customers” of a modern auto show (not necessarily in the order of priority) and review if the move to June is an improvement.
1 – The Manufacturers
You can probably blame GM for making the auto shows the spectacles they have become. “Blame” admittedly is a poor choice of words, because really, we should thank them. I won’t go into too many details because others have done a better job (and it does not have an influence on this summary) but if you are interested you can read the wiki about GM Motorama here, and the history of Auto Shows in general here. Suffice to say while the Detroit show is currently run by the DADA, it would be a much less enticing event without the massive support from the car companies themselves. Many changes have happened through the years (the first Detroit show was held in a beer garden in 1907), but the most recent changes are almost entirely due to the Manufacturers deciding to find other venues to showcase new products. That change is not so much a change in their marketing strategy, as it is a run from the competition.
The first real problem with major auto shows, in their marketing department’s estimation, is that with 30-50 manufacturers introducing new products over the 2-3 days of press coverage, it is really hard to get your product noticed. This has a measurable impact on their #1 customer (no, not car buyers, but stock buyers – see the next point), especially when the product is relatively uninspiring and bland. So the solution of having a private intro for journalists in a cool location (like the beaches of Algarve, Portugal) away from any of their competition will continue regardless of the NAIAS move to June.
The second real problem is with Detroit specifically. The advent of the CES event in Las Vegas the week before NAIAS has stolen a large amount of NAIAS’s thunder. And this has hurt as journalists eat up the technology, which results in puff pieces about the future, which drives stock prices up….. of the tech companies, not of the auto manufacturers (see stock comment above).
ANALYSIS: Yes, it gives a “safe” space for the show in the calendar away from CES. Yes, it will give some manufacturers a new way to demonstrate their products, i.e. outside. In the short term should equal some brands investing more in the show. But the root cause of their abandonment of auto shows in general is not impacted. And the real issue with the imported brands is still the elephant in the room: Michigan is home turf to Ford and GM and results in a disproportionate market share. In addition, the midwest (with the exception of Chicago area) is traditionally a poor place to sell luxury items, perhaps due to the conservative financial mentality of the area. The premium German Brands have pulled out, not because Detroit is bad, but because their sales are in California, Texas, Florida and New York.
SCORE: No long term improvement, the slide will continue after a momentary bump.
2 – The Dealers
No matter the announcement, do not forget that the North American International Auto Show is about dealers. The show is run by DADA whose membership “includes 187 new-vehicle dealers who own 225 dealerships-selling 39 different vehicle lines in 72 cities throughout the greater Detroit area” employing “nearly 20,000 people.” The original idea of having the show in January is supposedly for 2 reasons. It is generally a slow month for new car sales and there is not much competition for activities in the Detroit area. Those items still stand and unless you live on I75 in North Oakland County like I do, you really have no clue on how many people in the area head north at the sign of the first decent weather. The original conversation seemed to favor moving the event to October, but I cannot imagine how poorly the show would stack up against college football season. An additional point to consider is that in order for the Detroit show to keep its major international stature, they have to have the date approved by the OICA, the International Organization of Motor Vehicle Manufacturers. There are only so many dates available as the calendar has been fairly static for year.
ANALYSIS: I do not have any inside information, but I can imagine there were plenty of the dealers who opposed the move. But finances are finances. The less the Manufacturers spend, the more the Dealers have to cover or the smaller the show. So they likely supporting the change without really “supporting” the change.
SCORE: Its gonna hurt
3 – The Journalists
Forgive me, but I am going to split the journalists into 2 categories here; those who love the product and those who are just making a living (you know who you are). The first group just wants real news, which will be in shorter supply no matter the date. The other group, which is the obvious majority, are going to be much happier in June then they were in January – of that I cannot disagree. But, it is also going to expose them to a different side of Detroit they may not have any experience with. And forgive me again, that worries me more.
ANALYSIS: Looks like a win
SCORE: Jury is out, all it takes is one incident like this and people are going to go nuts.
4A – The Customers
One thing that gets lost in the discussion is the amount of people who use the show as an efficient way to cross-shop various vehicles. This is the key reason I split the general public into two groups – those who are in the market for a new car and those who are not. There is no other opportunity to see this many vehicles in this short a period of time, without having to drive and park at each location. And the best part? No car salespeople. An additional important point is that product specialists do not fall into the same lack-of-trustworthiness evaluation as car salespeople. I have numerous stories of new car buyers who had really positive interactions at auto shows, and very few at car dealerships. Note to car dealers: something could/should be learned here.
ANALYSIS: People have limited budgets and even more limited time. Many of the people who came in January will not come in June. Why? Because they will be on vacation, or up north, or have plans to spend their entertainment dollars elsewhere.
SCORE: This is directly related to the Dealers, so yeah, its gonna hurt
4B – The General Public
This is going to be THE overwhelming win of the move in the date. People who are not in the market for a new car are going to attend the new date and new events in droves. And why not. The new date gives the chance for outdoor events, and the opportunity to roll the auto show into other June events; the Eyes on Design Car Show, the Detroit Grand Prix, and the Freedom Fireworks to name a few. If the organizers identify the Goodwood Festival of Speed as a key target for engagement, they are actually moving in the right direction. The only thing now is to get the Woodward Dream Cruise to move to June (which also moves it away from Pebble Beach Concours) and you will have a month of automotive festivals that will have no competition anywhere in the world.
ANALYSIS: Attendance, which has been flat at roughly 800k for years, is easily going to break a million. Our worry is that the infrastructure already has issues supporting the current auto show. Detroit is notoriously short of hotels, parking and basic night life. I think a lot of people are going to do it once, then say “never again”.
SCORE: Big numbers, wrong people, where is everyone going to park?
5 – The Suppliers
This brings us back to the automotive suppliers, our clients. We have advised for years that the best part of the show is the point we made earlier; people put their work away for a week and pay attention to the industry around them. This has made hospitality suites a winning solution for many clients. Having a meeting room at the show where your customers can drop their coats, get a drink or a bite to eat, and put their feet up is a valuable tool to have in your marketing budget. The “supplier park” that is the trade show in the basement? Not so much. I know of very few people who enjoy going to a trade show, much less working at one.
ANALYSIS: Unfortunately the change to having more events outside of the building is going to reduce the effectiveness of the hospitality suites. The benefit of coat checks is going to go away (swimming pools anyone?). And the limited space your customers spend their time in has been greatly expanded. I can even imagine that some of your customers will be going downtown and spend relatively little time in Cobo Hall.
SCORE: If you are not imaginative and change your entertainment/marketing concept, this could spell the end of your auto show marketing budget.
One of the most astute business people I ever met was the owner of a brewery in Southfield. He understood people and business in a way I can only hope to achieve many years in the future. One example I like to use is the struggle he was having as the result of the numerous road improvements happening in front of his business for several years that made it hard to come during lunch hours. He explained to me “If I don’t serve you lunch today, I cannot serve you two lunches tomorrow”.
Channeling his sage advice, I will explain my opinion of the Detroit auto show situation using the restaurant business as a point of view. Let’s say you have the #1 restaurant for a number of years, long enough where you feel you have the winning formula and see no need to try anything new. There is a restaurant (#2) across town that offers much the same menu as you and for many years you compete evenly. Then they get the idea to introduce new menu items and get some additional positive press. Right after that a new restaurant (let’s call it #3) opens across the street. They have a better/newer building, and the amenities are much better with features like an outdoor patio and a nice separate bar area. The effect on your business is measurable because people can only eat so many lunches, and there are 2 newer places to eat, with a better atmosphere.
Your solution? First, you add very similar menu items already introduced by restaurant #2 across town. Then, you decide since you cannot compete with the restaurant #3 across the street you move to a new location so you can have very similar outdoor seating and a new party room. In the end all you have done is copied your competitors and alienated your remaining fans.
And so we have the auto show situation with Detroit, Los Angeles (restaurant #2) and CES Las Vegas (restaurant #3). So there you have it. My analysis. The show had issues before the move – mainly a closed-minded approach that did not keep up with the times. The new date is not going to change some of them and going to make others worse. The only thing we are sure of is that total attendance is going to go through the roof – but is that what we really want?
Specifically, if you are a supplier who participates in the show, the question you have to ask yourself is:
Are you going to be able to hold the attention of the 50 or so key decision makers in the industry who are important to you once the show moves to June?