Brand Relevance: Making Competitors Irrelevant - always yours

MARKET DYNAMICS IN THE AUTOMOBILE INDUSTRY 99
The gas embargo of 1973 stimulated a government initiative
to create more effi cient cars. It led to the corporate average
fuel economy (CAFE) regulation of 1975, which specifi ed that
the average mpg of each automobile firm must improve over time
(although, somewhat strangely, heavy SUVs and trucks were
excluded, in part because of the political influence of farmers
and small businesspeople who used trucks). Complying with the
CAFE regulations was a challenge for sure. Although the hybrid
was a potential solution, there was little progress in Detroit.
A curious exception was the work of an engineer and inventor:
Victor Wouk had been working on a hybrid under the auspices
of the founder of Motorola, who was worried about air
pollution as early as the 1960s. Wouk was drawn to a hybrid
design because of the limitations of the battery - powered option.
The Environmental Protection Agency, the driver of the initiative,
tested a Wouk vehicle and found that it met the strict
guidelines for emissions and was fuel effi cient. Nevertheless, in
a puzzling decision, the EPA rejected it outright despite the fact
that the world price for oil had not declined substantially. There
were undoubtedly political and interpersonal reasons based
in part on the fact that Wouk was a Detroit outsider. It is not
enough to have the best car if there are barriers to bringing the
car to market that are not overcome.
Even more puzzling was why one of the U.S. manufacturers
did not pick up on the innovation and create a subcategory and
brand. There are a host of potential economic, political, technical,
and market - based explanations. In particular, automobile
manufacturers (who of course infl uence legislators in different
ways) may have been concerned that success would create costly
and inconvenient mandates. In addition, there were perceived
corporate limitations, the risk - adverse culture of the U.S. fi rms,
and strategic momentum toward existing technology. There
might also have been a not - invented - here syndrome. In retrospect,
it may have been an opportunity lost. Even if early models
had not been profi table, improvements over time could have