3 Things The Auto Industry Could Learn From The Computer Industry

Clearly, the auto industry is struggling. As someone who has spent his career studying ways to improve things with technology and software, I have compiled a list of “recommendations” for the auto manufacturers to consider as they move forward.

1. Build cars like computers.

When you look inside a computer, none of the pieces were made by the same company. Each piece was made by a company that is good at that component. Maybe Western Digital makes the hard drive, Intel makes the chipset, RAM Co. makes the RAM (I don’t know a well-known RAM company), etc.

You may be thinking to yourself, “but Jeff, Ford doesn’t make the GPS they put in their cars either.” Agreed. But could I easily (and for little cost and labor) replace it with a better model later? There, the answer’s NO. Sure, I can buy a new car stereo for my car, but it’s not something I can easily install, nor is it something that’s going to just snap right in, like RAM or a hard drive.

Why not, instead, build cars with universal ports? Like a computer. Devices could plug in like USB devices do on a computer. 3rd party device manufacturers could build their wares to snap into place. Let’s say your car comes with 3 ports. You can plug in a GPS device, a Zune, and a CD player. Don’t care about a CD player? Use your third port as a DVD player. And best of all, you can buy these pieces at your favorite retailer: Best Buy, Circuit City, etc. Not direct (and only) from your dealer. Maybe that will be the end of problems like this one:


This is the GPS that is offered on the Ford Fusion I4 SEL today. DVD-based GPS devices were old 3 years ago. Self-contained, portable, hard-drive based, easily-updateable GPS devices are now the industry standard. New DVDs (you should get them updated each year) will cost you several hundred dollars as well. In addition, it’s not portable. If I want to use it, I’ve got to be using THAT vehicle. All this for the bargain price of…did that say $1592? Holy crap. Maybe THAT’s why they’re not selling. Most GPS devices today cost less than $200. And they’re better! It’s disgraceful. It’s as if they don’t want to sell these things at all.

2. Get rid of the dealer system. Sell direct.

I mentioned this on Twitter today, and got a bunch of great responses, both positive and negative. The biggest point that was made was that there are laws in every state to prevent manufacturers from selling directly.

Over the past century, car dealers have secured a complex web of state laws that protect them from being undercut — by the car makers themselves, and more recently, by people trying to sell new cars online.

My question regarding these “franchise laws” is this: WHY? What happened to a “free market economy?” I’m sure there are thousands of examples where there are laws interfering with the true pricing of products (tariffs, etc.), but this is just ridiculous. Get rid of it. You want customers? Focus on customer service.

High-pressure, commissioned salesmen roaming the polished floor just waiting to be your best friend. Why do we do it this way? Because dealerships are not agents of the manufacturers, they have purchased a bunch of vehicles, and are now in a position where they have to sell them (at a good profit), or they’re going to lose a BUNCH of money. So even though your hopes are high when you look at you next car online, when you get to the dealership, you’re stuck picking from the rotten fruit that remains on their proverbial tree. “We don’t have one with the GPS, but we do have this shiny silver one…” That’s not service.

What if going to a dealership meant talking with someone who was paid to HELP you, not just pretend to be helpful until you decide to buy? What if they sat at a computer with you and helped you customize the exact car you wanted? And then drove it to your home or office to deliver it when it arrived!

One of the other comments people made was that my solution would still require a need for “dealerships.” Yes and no. My dealerships just serve different purposes. My dealerships are based on customer service.

  1. Test drives – you can still test drive at the Jeep Store, but now you drive “the Grand Cherokee.” Test driving a vehicle should not include driving the red one, or the one with the seat warmers. Drive the ONE Cherokee and determine if you like it. Then go home and order one from your computer.
  2. Repairs – there are some that still feel their car should be fixed by the company that made it. So they take it to the shop that they bought it from. What makes that place any more qualified than an independent one down the road? Training? Parts? Those are all things that could be solved other ways. I contend you don’t need a branded dealer repair shop.
  3. Used cars/trade-ins – my last trade-in was done at CarMax. I took my car there, sold it to them, and they never once spoke to me about buying another vehicle from them. And I got the price I expected from the sale. Why do we need to mix new and used cars? Do you buy used Apple computers at apple.com? I think not.

3. Cater to what’s cool. Not everyone’s a motor head.

MP3 players have been on the market for almost 10 years. There are STILL cars being manufactured without a way to plug in these devices directly. We are talking about less than $10 worth of wire and a jack. Why is this being missed?

If a car manufacturer offered a base model (4 cylinder, 5-speed manual, 30ish MPG) that included some major features inside the car, I guarantee it would be one of the best selling cars of the year. Sure, there are different audiences for different cars. Some guys ONLY care about the size of the engine. But I contend that MOST could care less. Most people buy a car to get them to work. And if they could get a car that not only could tell them HOW to get to work efficiently, but also play their favorite songs, and entertain their kids on a long trip, that’s the car they’re going to buy. Adding GPS, a DVD player and screen, MP3 jack, Bluetooth, and an advanced CD/MP3 multi-disc player should not add more than $1000 to the base cost of the vehicle. I truly believe that you could make a fuel-efficient car with all of those features TODAY for less than $15K. But we won’t see it. Not as long as billion dollar CEOs think it’s acceptable to sell GPS for $1592.

How would YOU improve the next generation of vehicles to make them more appealing?

kick it on DotNetKicks.com

10 thoughts on “3 Things The Auto Industry Could Learn From The Computer Industry

  1. Again I think you guys are holding the Auto industry accountable for a practice you can see in other as well. Unless things have changed (and I didn’t noticed) a lot computer companies, cell phone companies, ect have limits to what you can and can not change on their products because they don’t want to support alien devices being added on. What your asking for, and I’m not saying its a horrible idea, is for them to remove the “Do not open or warranty is broken” stickers you see everywhere. I have no doubt it gives an opportunity to make money but it’s also a way to protect themselves from loss dues to third party vendors. I would think something like this would take a complete overhaul of how warranties are dealt with.And to be quite honest, using the Ford example, I don’t think that the F-150 is on top because they sell proprietary navigation systems.Would be nice if there were a middle ground. Maybe a flexible warranty or choose your coverage like deal.

  2. Just a thought re: the dealership / company owned model. I don’t think you can limit inventory at the “Jeep Store” to 1 type of Grand Cherokee. Sure you don’t need to have one fully decked out with every option (although I think having one like that might be a good idea people like shiny things.) I do think you need to have one V6, one V6, one FWD and one AWD. Basically anything that can change how the car actually feels when it drives. This is no different that Apple having 3 versions of the Macbook Pro at the store though. The most significant changes have to be demonstrated.

  3. Nice commentary. This is exactly why I think we should not “bail out” the auto industry, because there is not enough incentive to make fundamental changes, and with the debtload, probably not enough flexibility to do so either. Let them fail and then have some well-capitalized 21st century investors come in and buy up the pieces and change it from the ground up.I equate going to a car dealership with going to the dentist. (Or worse, maybe the proctologist.)

  4. I like the way you think. If you start an auto manufacturing business, I want get in on your IPO…From what I gather, auto manufacturers already subcontract most of their parts, but coming up with a standard (or even just using USB–it’s probably flexible enough for the job and there’s a wide base of accessories available and using that standard already) and making most accessories modular would be a great idea. I figure that we don’t see this, however, because auto manufacturers make more money on the lock-in than on the auto itself. You pointed out the $1600 GPS device add-on, but the device itself probably costs in the neighborhood of $300-400 when mass-produced and bought in bulk from their wholesaler (it does have a 6.5″ screen, after all…). Ford gets a significant markup from that and then they make money on selling the yearly DVD updates, an edge they would lose with totally modular devices. And in a protected oligopoly (made that way in part due to high costs of entry, but also obscene amounts of regulation and political back-scratching), those lock-in fees look more promising than the alternative because once those cushions are gone, the firms will actually have to become competitive and auto execs and UAW chiefs didn’t get where they are by being competitive!Dealers did serve a purpose at one time, but inventory and communication methods have improved to the point where they’re unnecessary. Back in the day, it made sense (due to economies of scale and higher marginal costs of processing information) for local dealers to buy a load of cars and ship them in blocks to sell over the next several weeks/months, but transaction costs have dropped to the point where you’re right: I should be able to buy a car online and have them ship it near-real-time to a local distribution center for me to pick up (or deliver it to my house for an extra fee). But dealers could see that this would give them a significantly smaller piece of the pie, so they convinced their congressmen (local and national) that this would be a bad thing for the same old reasons anybody argues for protectionist measures and used the political system to make it difficult for their now-antiquated roles to be eliminated.

  5. Kingston. Kingston is a reasonably well known company that makes RAM :-)Nice thought provoking post dude.

  6. Great article, Jeff. And you voted Blue in November? 😉

  7. I've always tried to go a step past wherever people expected me to end up.

  8. Samir No, not again. I… why does it say paper jam when there is no paper jam I swear to God, one of these days, I just kick this piece of shit out the window.

  9. In reply to the question, What was it the last man on earth said Where is everybody

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