Success is in the details.
A Marine Corps story for Automotive
The automotive industry is facing unprecedented challenges in 2022. New car production is a big reason due to the supply chain shortages but that is more of an effect, not a cause.
Covid 19 was certainly the catalyst for where we are today but the mismanagement of the pandemic response caused a lot of the problems we are facing now and will for many years to come. Of course, we will all have varying opinions on how that response should’ve been managed. This article is not intended to debate that. However, it’s undeniable that the amount of money the US government dumped into the economy on three separate occasions is the major cause of our inflationary environment today. Certainly, some form of the stimulus was needed during an international shut-down to keep the economy running but the subsequent stimulus packages that were passed only increased the demand side of the curve in a supply-constrained economy. That artificial demand generation over an extended period in a supply-constrained market causes inflation.
So now we’re sitting in a perfect storm. We created an inflationary tsunami with an overreaching stimulus policy coupled with aggressive Fed bond purchasing. We’ve also created an energy-deficient state that’s causing logistical bottlenecks and labor shortages throughout the globe. The feds recently announced rate hikes and aggressive tapering of bond-buying but in the end, this didn’t happen overnight and won’t get fixed overnight
In light of all that, including the war in Ukraine that’s impacting the supply of auto parts and microchips, the automotive industry is unfortunately finally feeling the impact of Covid.
As hard as they’ve tried, new car manufacturers have not been able to bring back production volume as anticipated. Because of that, the used car day supply is aging at an accelerated rate leaving our current used car market littered with older vehicles in need of significant reconditioning before they can be retailed. Finally, with a low supply of used vehicles in this inflationary economy, used car prices are becoming more and more out of reach for many consumers. All of this has had an impact on our annual spring bounce in a much bigger way than many of us predicted.
So, how do I connect back to the title of this blog? It’s simple. The time is now to get back to the fundamentals. The “DETAILS” matter. The things that seem mundane and boring can be the difference between success and failure for the remainder of the year. Some of those details are knowing your market day supply, price to market, scarcity, sale rate, investment portfolio, inventory age and look to book. There are many more but those are a good start.
You may now be asking, how does this relate to the subtitle’s reference to the Marine Corps. Easy. As a Marine, we were taught to do something no other military service requires. We were taught to drill. Drill is marching in cadence with complex rifle and body movements that, if done correctly, look like one fluid movement. You didn’t graduate from Marine Corps boot camp without perfecting this skill. So, why would a bunch of infantry Marines whose life expectancy in combat is only 2.2 seconds need to perfect marching in cadence? Unity and team synergy is a good guess and that would be partially correct. However, the real reason is simple and critical. It saves lives.
The details matter in everything you do from marching to polishing your brass belt buckle, to spit shining your combat boots to ridding your uniform of Irish pendants for inspection. (Look that one up if you don’t know what it is)
Regardless if you like them or not details matter. I can assure you in the summer with full gear from head to toe on a black tar drill deck we didn’t like it very much. However, we learned to pay attention to the details under brutal conditions because if you don’t you don’t become a Marine.
What we came to understand later was that by training ourselves in this way, when things got chaotic and there was a lack of stability, the ability to focus on the details brought clarity to the chaos and did save lives.
The message relatable to automotive, or any industry for that matter, is crystal clear. In these increasingly chaotic times, you must focus on the details, the fundamentals, to bring clarity to the chaos. By doing so, success can be achieved in any environment. Unfortunately, Covid allowed us to be sloppy and still achieve unprecedented success. Those days are behind us and the details, once again, matter most.