For Automakers, Green Mantle Could Become a Golden Cloak
April 22, 2008

By Dale Buss

Toyota clearly donned it for awhile. Ford tried it on for size. American consumers seem to think it fits Honda pretty well these days. But no one covets it more now than General Motors.

We’ll call it the “green mantle:” a figurative decoration on the shoulders of automaker that tells the world, and competitors, that their company is the most environmentally renowned in the industry, both for their products and technologies and – perhaps even more important – in the public’s overall regard.

And taken particularly in the context of an annual worldwide recognition such as today’s Earth Day, it seems at least as important for any corporation to earn the perception of environmental responsibility as to actually be doing something tangible.

Maybe just one automaker someday will wear the green mantle, or maybe the industry will have to share. But whoever controls the green mantle will grab a huge advantage with an American public increasingly obsessed with a private necessity – and a public compulsion – to bathe their purchase decisions in environmental awareness.

“The positioning is still open,” said Alan Dean, vice president of research for BrandIntel, a Toronto-based consumer-market research concern that recently surveyed U.S. consumers about their “green” perceptions of OEMs. “And consumers are paying attention to it at a level that I find surprising.”

A leading monitor of the industry agreed. “That mantle is still up for grabs,” said Derek Tronsgard, U.S. director of Prime Research Inc., which analyzes American news-media coverage for automotive OEMs and other large corporate clients. “It used to be a one-horse race, and now it’s more exciting.”

John Felice, Ford division general marketing manager, agreed that the derby to win the green mantle “is highly competitive” and cautioned “there’s not one silver bullet” that will ensure any automaker stands out from the pack. “It will be difficult for any of us to say that we ‘own’ green,” he said.

In any event, Peter Arnell, Chrysler’s acting chief innovation officer, said every automaker must get decidedly serious about “what is going to be the [most important] subject of all time, according to Al Gore: saving the planet. It’s not something that the industry can approach as either practical or impractical.”

The news media, as well as the American public, will make sure a green lens for viewing the auto industry only grows in use. Just a year ago, roughly  half its coverage of the New York Auto Show was about powertrains generally, and about innovative vehicle design, said Tronsgard. “Fuel economy would be mentioned only in the table of specs for a given vehicle,” he said.

But this year, Tronsgard said, fuel economy “moved front and center” in news coverage of the show, nudging past design news into second place behind discussion of robust powertrain options. “Over just a year, that’s a huge movement.”

The Two Aspects of ‘Green’

In the face of such realities, green positioning has become the strategy du jour for an industry that has steered itself through a succession of similar “eras.”

In the wake of the Japanese invasion and the oil-price shocks of the Seventies, improving product quality and fuel efficiency became the Big Three’s dual mantras. The Nineties brought the beefy supremacy of SUVs. As the new millennium dawned, design became the market’s driving force -- and it is only grudgingly giving way its paramount position.

The ascendancy of “green” concerns among automotive consumers has two distinct aspects, of course. They like automakers that can deliver meaningful improvements in fuel economy in a variety of ways and that offer a growing range of vehicle types and models that are easier on their pocketbooks at the gas pump. Rising sales of small cars and of crossover vehicles offered by all automakers -- and plummeting interest in big SUVs and pickup trucks – are  obvious manifestations of this attitude. So is the fact that more than 80 percent of consumer discussion of green issues online revolves around questions of fuel economy, according to a recent BrandIntel analysis.

A second tier of green consciousness has to do with less immediate – but still significant – worries about climate change, the continued availability of oil, the sustainability of future energy systems and other aspects of a broader environmentalism in which the auto companies are huge players. And on this level, there are certain perceptions about each OEM’s overall green credibility that are detached to some extent from how well their current – and planned – on-the-road vehicles perform in terms of fuel economy and emissions.

For the most part, these main two facets of green positioning go hand-in-hand. “Consumers don’t just care about green when it aligns with their economic interests,” said BrandIntel’s Dean. “But when green considerations do align with their economic interests, then it really catches fire with them. It’s a magic combination.”

Hot Potato

The auto industry has been crafting its role in the green sweepstakes for a decade. But over the last three years, the combination of skyrocketing gasoline prices and nerve-jangling global-warming alarmism quickly has put a huge and unrelenting new spotlight on carmakers’ green chops. And the fast-rising intensity of consumers’ green concerns has again broken open the dynamics of the race.

For a decade, Toyota clearly enjoyed the pole position in this crucial competition. While Honda’s two-seat Insight became the first mass-produced hybrid-electric vehicle sold in America when it was introduced in 1999, Toyota’s Prius took over in the popular imagination shortly after its 2001 introduction because it was a conventionally sized sedan. Toyota quickly ramped up production of Prius and began offering hybrid versions of other models as well, establishing an unchallenged superiority to the rest of the industry in making alternative powertrains available to the American masses.

Among the Detroit Three, Ford also made an early attempt at establishing the strongest credibility on green issues with U.S. consumers. It came out with the first hybrid SUV, the Ford Escape, in 2004. Also, at around the same time, then-CEO William C. Ford III very publicly established environmental friendliness as a leading corporate value at the company founded by his great-great-grandfather, Henry Ford. Gestures such as installing an environmentally friendly grass roof on the company’s overhauled manufacturing complex in River Rouge, Mich., seemed to underscore Ford’s commitment.

But instead of making a strong bid to secure the green mantle, both Toyota and Ford lately have treated it more like a hot potato.

Toyota has been frustrated in its claim by several factors.

For one thing, its predominance in hybrids has evolved into a mixed, rather than unequivocal, blessing. Hybrid powertrains continue to command a substantial price premium. Some consumers were disappointed because hybrids’ real-world fuel-economy performance over conventional powertrains often was below expectations.

Nearly every major automaker now offers its own hybrids. And the rapid emergence of “clean” diesel engines has provided a new challenge to hybrids as a way to achieve significant boosts in both fuel economy and environmental friendliness.

Charges of Hypocrisy

In this calculus, Toyota has further hurt its environmental credibility with its recent all-out pursuit of the very segments where the biggest environmental “offenders” abide: trucks and large SUVs. And at least online, according to BrandIntel, Toyota also caught the wrath of many green-oriented consumers by joining the Detroit Three in resisting Congress’s late-2007 passage of tougher Corporate Average Fuel Economy standards.

“Consumers [online] are saying that they recognize Toyota as a ‘green’ company but they can’t understand why Toyota would oppose the [tougher CAFE] standards, because they have so much more than other automakers to gain under them,” Dean said.

Ford has faced a different set of problems in its desire to lock up the industry’s greenest positioning. After the company’s trailblazing initiatives, over the last four years Ford and its top executives have become preoccupied with more immediate and existential questions as they have struggled to field a complete lineup of worthy vehicles, to downsize the company responsibly, and to restore some stability to the CEO chair that has been occupied since 2006 by Alan Mulally.

“Ford ran into other priorities,” said David Cole, chairman of the Center for Automotive Research, an Ann Arbor, Mich.-based industry think tank. “Ford has been partially distracted from its green goals, and they haven’t been able to put the resources behind them that they’d like to. Their urgency became less on ‘green’ and more on, ‘We have to live year to year.’ You can talk green, but you have to deliver at some point.”

In fact, an executive of a competitor alleged that a perception of hypocrisy has been hurting both Toyota and Ford.

“You can shout from the rooftops that you’re doing everything you can, but it’s risky when you send mixed messages like Toyota does – with Prius but also Tundra and Sequoia,” said Justin Osborne, national manager of brand strategy for Hyundai of America. “And Ford has lots of great initiatives. But consumers are hearing about grass on the roof and then seeing an F-350 pulling this huge boat. It’s a confusing message.”

A Volt of Lightning

The rapid, riotous impact of the 2010 Chevrolet Volt may be the best illustration of how scrambled the race for the green mantle remains.

GM’s planned “plug-in” hybrid – the company prefers the term “Extended-Range Electric Vehicle, or E-REV – won’t even be available for at least a couple of years. But the mere announcement of production plans for the avant-garde, muscular-looking car, and its highly accelerated development track, have set green tongues wagging furiously – and almost singlehandedly vaulted GM into serious contention as the most environmentally hip OEM. Thousands of enthusiasts absorb with rapid interest every speck of news about Volt, its state of development and its debut date.

Among other things, the public focus on Volt apparently prompted Toyota to demonstrate its own urgency about producing a rival to the GM project. Cole, of the Center for Automotive Research, said that, largely because of the strong green buzz generated by Volt, Toyota executives decided to soft-pedal their Tundra pickup and Sequoia large SUV at some auto shows during the last year. And in GM’s backyard, Toyota emphasized plans for its own plug-in hybrid at the North American International Auto Show in Detroit in January.

The intense spotlight on Volt also is why people like Prabhakar Patil don’t get much sleep these days. A decade ago, he became head of Ford’s crash effort to produce the Escape Hybrid. Nowadays, as CEO of Compact Power Inc., Patil is chief of an even more accelerated timetable as his company races another supplier to provide GM with still-unproven lithium-ion batteries that are powerful and durable enough to enable the Volt to deliver on its lofty performance and economy promises.

GM’s manic development pace for Volt means Patil and his 55-member team at Troy, Mich.-based Compact Power are “running a marathon at a sprint pace,” Patil said, including endless working weekends and 6 a.m. weekday meetings with GM engineers.

“But we’re thrilled to be standing toe-to-toe with GM in its efforts to take technological leadership back in this area,” said Patil, whose company is owned by LG Group, the Korean chaebol. “You’ve seen what it did for Toyota, so you know what it can do for GM.”

Photos:

1. Installing an environmentally friendly "living" roof at Ford's Rouge factory complex in Michigan (courtesy Ford Motor Co.)

2. Stylized socket for prototype Ford Escape Plug-in Hybrid (courtesy Ford Motor Co.)

3. Toyota Prius, granddaddy of it all (courtesy Toyota Motor Corp.)

4. Prototype Ford Escape using plug-in hybrid technology (courtesy Ford Motor Co.)

5. GM squeezes public-awareness mileage out of its Chevrolet Volt concept car during a celebrity event (courtesy General Motors Corp.)

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