Warning To The Detroit Big Three: Don't Overlook California

Implications: As car buyers switch from pickups and large SUV's the Detroit automakers have to be careful not to overlook one of the most important car markets in the world, California.

Analysis:

In their eagerness to adapt to the changing buying patterns of American car buyers, the Detroit Big Three have to be careful not to misunderstand, underestimate and ignore California. They did it in the past, and they are still paying the price for it.

What they must understand is that the culture of car lovers is flourishing in California, the auto industry is a major and under appreciated player in California's economy, and environmental leaders in the state see 35 MPG only as a stepping stone to more stringent controls.

For a long time, the auto industry in Detroit thought California was irrelevant, the Japanese growth there was dismissed as an abberation by a bunch of California nut-cases.

Now, hopefully, the domestic automakers realize what happens in California is very relevant. They'd better watch the trends there, because they're going to spread.

Promising auto executives have migrated from Detroit's crowded executive suites to fast-track jobs in California since Japanese automakers first got serious about the U.S. market nearly 40 years ago.

Initially, the Asian companies hired only sales executives: people who knew U.S. buyers and understood how to build a dealer network here. More recently they've begun to look to Motown for product development help as well.

The Asian companies look to Detroit as a good place to raid engineering talent. Conversely, Chrysler, Ford and GM have begun to look to Japanese automakers for executives who understand customers, know how to work with dealers and understand how to establish and build a brands reputation.

Several  of the largest auto dealerships are in Southern California. The Detroit automakers should find out how the largest Ford dealership in the world can survive in the heart of the land that hates SUVs and pickups. Or how the largest Toyota dealership in the world has developed customer service to a level never seen before.

California is an enormous challenge for Chrysler, Ford and GM. They have individual models that sell well there, but their brands mean nothing.

If they can make their brands relevant in California, the rest of the country will be a piece of cake.