The auto industry has long been accused of dragging its feet around adopting sustainable business practices. But this perception has been changing as industry leaders increasingly monitor advanced consumer and market research to make decisions that not only satisfy market demands, but also impact their bottom line.
Advances in the industry have allowed auto makers to advance the old ways of production with new cleaner and more energy efficient processes. However, there are still unsolved problems both within the assembly line and along the supply chain.
Companies that hesitate to face these challenges are jolted forwards by mounting external pressure from climate observers and consumers alike. On the other side, those who have embraced sustainability are earning major kudos all round.
Consequently, marketing budgets are going into publicity campaigns with the more popular gaining an edge on their competitors. It is no surprise then, that some have been tempted to capture credit through greenwashing – by talking a good game and not necessarily living up to their words.
And this makes marketing more challenging for everyone in the industry. Consumers seem to have less patience for companies that exaggerate their sustainable efforts than they do for those who aren’t sustainable at all!
Either way, with sustainability movements getting a fresh breath of air, consumers are demanding the future they want. How has this played out over the recent past and what is the likely next stage? Let’s explore!
Time’s Up for Greenwashers
The term greenwashing is used to describe the increasingly common practice by modern companies to misrepresent their internal green initiatives through marketing campaigns. The problem is that when most consumers see “green,” they are more inclined to spend money on the product, be it a car or a smoothie.
Therefore, car companies promoting green messages without actually demonstrating that in their products are seen as attempting to cheat consumers.
Granted, greenwashing can happen accidentally when companies don’t understand the consumer and media outlook on sustainability campaigns.
Mercedes-Benz was recently accused of greenwashing in its “Nature or Nothing” campaign. The campaign, aimed at promoting the company’s electric vehicle (EV) line, featured the famous logo juxtaposed with common patterns in nature.
The automaker has since responded saying that the campaign was not global but only meant to roll out locally in Mexico.
Other companies that have been accused of greenwashing in the past as well. All for allegedly using emission-cheating software (defeat devices) to advertise their diesel vehicles as clean.
Generally, consumers and climate groups require auto companies to back their sustainability claims with sustainable production and products. If it is to support and urge the world towards a green future, the messages shouldn’t be framed as if the company itself is green when it isn’t.
Vehicle assemblers, original equipment manufacturers, gas companies, and other players in the auto industry should be aware of how people perceive their messaging.
Sometimes, ads or campaigns meant to support the green movement can be misconstrued as attempts to defraud consumers. Consumer and market research helps auto brands avoid past mistakes and join the movement without setting off landmines.
Leaders are Taking Charge
Some of the leading automakers have shown commitment to a greener future, not just through their marketing campaigns but also their actions. This includes discontinuing fuel-guzzlers and promoting more fuel-efficient alternatives and even setting themselves up to go full EV in the future.
Ford has announced that the last gas-engine Mustang will be replaced by an EV model in 2028. A similar exit is slated for Dodge Charger and Challenger. According to Dodge, production for these two muscle cars will cease in 2023. Evidently, this is not due to declining sales but fuel inefficiency – both appeared among the top three most sold cars in their category during the first six months of the year.
Mercedes-Benz, BMW, and Audi have taken similar steps by discontinuing cars that aren’t fuel efficient. However, going green sometimes comes at a great immediate cost.
As Ford realigns its strategy to effectively compete as an EV producer, its home state Michigan has been hit first and hard. Up to 3,000 workers have lost their jobs at Ford and the company says more than 3,200 more will have to be let go in the near future.
Such moves by major players are likely to reverberate across the industry. Other companies need to keep track of the trends to catch major changes before they happen or advance too far.
Through consumer and market research, leading auto manufacturers are able to determine the demand for advanced versions of their products. Monitoring their actions such as patent applications, product launches, and M&As can be informative to your own business about how you should move.
EV Adoption is On the Rise
As automakers prepare to transition into EV production, consumers continue to express their eagerness to adopt a more sustainable lifestyle. The US has passed the five percent tipping point of EV adoption and according to Bloomberg, this is a signal to the start of mass adoption.
However, despite their rising interest in sustainability, the larger majority of consumers are hesitant to buy an EV. In a new Deloitte survey, nearly 70% of the respondents said they wanted to retain their internal combustion engine vehicles.
Additionally, up to 53% were unwilling to pay more for EVs or other alternatives to what they are used to. Apart from the upfront cost, consumers are also concerned about how they are going to charge their cars reliably, and struggle with ancillary concerns surrounding making the switch:
A popular solution has been the hybrid vehicle, using two or more types of power for the much needed reliability especially on long journeys. In Europe, for instance, the first quarter of 2021 saw the sales of hybrid vehicles reach approximately 256k units, marking a 264% year-over-year growth.
This is not to say hybrid vehicles are the cleanest alternative. Research has demonstrated that the amount of CO2 produced by a hybrid car is not much less than that by the average gas-powered car.
Further, the amount of CO2 emitted is up to 2.5 times higher than reported by official tests and marketing messages. So, greenwashing is a recurring issue with manufacturers misrepresenting the efficiency of their product.
Consumers are considering a range of factors before they adopt EVs and other fuel-efficient alternatives. These include the price of the vehicle, the cost of maintenance, sources of energy, as well as performance.
Therefore, without consumer and market research, companies are shooting in the dark by going with the general assumption that consumers are universally going green. Research allows you to see what your own target customer base wants so you can make more accurate projections.
About the Inflation Reduction Act
Ratified on August 16, 2022, the Inflation Reduction Act allocates part of almost $500 billion to the reduction of greenhouse gas emissions over the next decade.
This includes a range of incentives to the auto industry to adopt sustainable production and promote clean energy: Renewable energy credits, manufacturing credits, energy efficiency credits, transportation credits, and carbon capture credits.
In summary, the new law is designed to:
- Kickstart the deployment of locally produced clean energy
- Encourage the upgrading into energy efficient processes
- Create more jobs in the manufacturing and clean energy sectors
- Support agriculture and forestation
- Reduce air pollution through transportation
As consumers seek to understand how government laws such as the new Inflation Reduction Act affect them, they will turn to experts, who will be the key opinion leaders (KOLs) on the general understanding of the law.
This in turn will affect consumer buying behaviors: When to buy, where to buy, and which vehicles to buy.
Companies should use consumer and market research to identify the KOLs in the industry and monitor their messages. This will put them in a position to use the KOL messages to supplement or otherwise inform their own marketing campaigns.
Stay On Top of Trends
Ironically, the sustainability driver’s seat in auto is being controlled from different directions. You have a divided consumer base with the younger generations charged up for the future and the older concerned about the seeming lack of preparation for the envisioned future.
In fact, the older generations are the loudest voices right now, and that requires targeted messaging to address their concerns. It’s possible. and a smart tactic, to win over detractors and make them brand ambassadors:
Then you have the environmental activists who are all of one voice about the direction the industry needs to take. But you also have auto manufacturers who have to contend with ensuring the business survives this next phase, which often means moving at below speed limit.
Being responsible for the interests of all the parties, means the government has to be the most cautious and therefore slowest to move, making one side restless and the other complacent.
Listening to all these voices, through consumer and market research can help companies with a stake in the industry utilize and adapt to the changes happening as a result.
Reach out for a demo to see how NetBase Quid® uses its partnerships with social media companies, news companies, and leading research platforms to find the information you need to power these critical decision-making analyses!