He Who Rules Social Media Will Rule the WorldFri, 09/01/2017 - 14:30
Social media has become an extremely effective communication tool, as well as a relevant player in both sales and new business' projections. Thanks to US President Donald Trump and his Twitter account, the automotive industry has learned this the hard way
When Jack Dorsey, Noah Glass, Biz Stone and Evan Williams launched the first version of Twitter in July 2006, they probably did not imagine their invention would one day become such a powerful tool, capable of turning the business world on its head. Social media has become an extremely effective communication tool, with platforms that reach around the world. According to Statista, 97 percent of all businesses globally use it in their marketing strategies, resulting in a total expenditure of more than US$17 billion in the US alone.
The market’s globalized nature is forcing more and more players to embrace it as part of their day-to-day activities. The automotive industry is no stranger to these circumstances. Facebook and Twitter have proven crucial for automakers to survive in a competitive environment. No wonder: according to INEGI, 57.4 percent of people in Mexico are internet users and 70.5 percent of internet users are under 35 years of age. Although these people might not go online with the specific intention of buying a car, INEGI specifies that 88.7 percent of all internet activity is related to finding information while 71.5 percent of the time people log into their social media accounts.
There is a definite marketing opportunity that cannot be overlooked. According to Mayra González, President and Director General of Nissan Mexicana, the company focuses a huge part of its resources on its digital presence. “These platforms allow us to connect with our clients on a more personal level, sharing the emotional response we want them to feel with our vehicles,” she says. OEMs know sales paradigms have changed and while customers might still visit dealerships and browse for a while, most arrive with a clear idea of what they want. This is particularly true of the millennial generation. INEGI specifies that almost 30 million people in Mexico fit into this category. “Millennials are tech-savvy and they make informed decisions based on in-depth research,” said Miguel Luz, Marketing and PR Director of Hyundai Motor de México. “We have turned our marketing strategy around so that 70 percent of our investment is in digital platforms. Social networks have become one of our main tools.”
Perhaps the most interesting development is how social media has impacted investor confidence within the automotive industry over the past year. US President Donald Trump’s Twitter campaign was mostly based on attacking automotive companies around the world. After coming up with his infamous wall, Trump’s attention turned to NAFTA, the automotive industry and Mexico’s success in attracting foreign investment. In several campaign speeches, Trump threatened to slap a 35 percent tax on cars entering the US from Mexico and publicly shamed Ford for announcing it would move its entire compact production to Mexico and invest US$1.6 billion in a new plant in San Luis Potosi.
Once elected, Trump’s weapon of choice started to fire again. After Ford announced it would cancel its latest investment in Mexico, the president tweeted his thanks for the 700 new jobs the company would create in its Michigan plant, along with the US$1 billion investment plan and 2,000 jobs that FCA planned for the US. The only US OEM remaining was GM but it was not long before Trump threatened the company directly with another tweet: “General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A. or pay big border tax!”
According to GM, most of the Cruze vehicles sold in the US are built in its Ohio plant. However, the threat was effective enough to put GM on its toes and for its stock to decline by 24 cents that same day. Toyota went down the same rabbit hole after Trump’s next shot. “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.” The statement was incorrect since the company’s new investment will be in Guanajuato. Nevertheless, Toyota’s stock fell 64 cents that same day and by the next had dropped a total US$1.24, ending at US$119.84.
Trump’s declarations put such uncertainty on Mexico that according to Bloomberg, several currency traders joked about the country buying Twitter instead of blowing up its reserves to counter the effect of these threats on the Mexican peso against the dollar. The fact that someone thought of it shows the impact that 140 characters have on the world’s economics. Ari Fleischer, a former White House press secretary, told The Washington Post in a Jan. 3 article that Donald Trump’s Twitter account is the greatest bully pulpit that has ever existed. “In 140 characters, he can change the direction of a Fortune 100 company, he can notify world leaders and he can also notify government agencies that business as usual is over.”