10-The Company Did Not Get an Invitation

A company can lose a customer’s business without ever learning there was a bid. That is an Invitation Failure, and it is the more damaging way to lose. Customers decide, long before they shop, who is worth asking, and two things decide it: Function and Reliability. A product that has been discontinued cannot be invited, and a reputation that has been damaged will not be. In 2008, only 41% of car buyers would consider a Ford or Chevrolet, while Toyota was invited nearly 59% of the time. Toyota’s lead has lasted: a 2026 Kelley Blue Book survey still shows it ahead of Ford and Chevrolet.

Posted 4/7/08

Remember the grade school experience when you learned of a party to which you did not receive an invitation? For most of us, that was a hurtful experience. But the failure to receive an invitation can cost real money in the business world, both now and in the future.

In our research, we have found that there are two sources of failure when a new piece of business becomes available. The first is an invitation failure. A company did not get invited to bid. The second is evaluation failure. A company is invited to bid but the customer chooses another competitor. The more damaging of these two failures is the failure to get an invitation. Sometimes this failure can be caused by the customer simply not knowing about the company. More often, this failure occurs because the customer has a strongly negative impression about the company.

If an industry has a majority of customers who refuse to invite the company to bid for new business, the company faces real challenges. Recently, Ford announced that its research had found that both it and Chevrolet would be “considered” (read “invited”) to bid for a consumer’s new car purchase only 41% of the time. Toyota, on the other hand, would be invited to bid nearly 59% of the time. Further, public opinion is “favorable” toward Ford and GM less than 50% of the time. Toyota’s “favorable” ranking is 74%.

The used car statistics reinforce the concern that GM and Ford should have. The domestic manufacturers lose a far greater percentage of their original price after five years than does Toyota. In most automobile categories today, Toyota is priced slightly higher than Ford and GM for equivalent models. The difference is relatively slight, say $1000 to $1500 on a $25,000 to $30,000 automobile. On the other hand, the difference in residual value five years later is greater than 15% of the original purchase price. In other words, Toyota holds more of its original value, by far, than do Ford and GM. So, despite the fact that the original purchase price is higher, the long term cost of ownership is lower with the Toyota. It’s likely that a good deal of this difference in residual value is due to negative experiences that the GM and Ford customers have had after the sale.

How is Ford to overcome this problem? Marketing initiatives aren’t enough. Customers have to see that the Ford product offers the Function, Reliability and Convenience they want, especially in competition with Japanese manufacturers. The customers are looking for an experience that satisfies them. They want to know they can count on Ford. This consumer opinion takes years to develop and to destroy as well. Ford and GM have destroyed a lot of goodwill will with customers over several years. On the other hand, the Japanese manufacturers have built much stronger relationships with customers over the same period of time. This set of impressions will not change easily. The after-sale experience must be good for the new Ford and GM buyers. Until Ford and GM can reassure customers that their after-sale experience will be good, the market share of these two companies is likely to continue to slip away.

Ford and GM are in a deep hole. We have seen this in other industries. The sad rule is that companies end up in these deep holes because of conscious decisions they made to cheapen their product or reduce their responsiveness to customers in order to improve their margins. Usually, the problems they face are self-inflicted. These companies don’t get an invitation because the consumer does not consider them a friend.

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Update 10/2/26:

The stories of four competitors, GM, Ford, Toyota and Hyundai, provide a useful perspective on the automobile market in the years since 2008.

Both Ford and General Motors suffered through terrible years in the late 2000s. Ford’s product line fell behind its competition in the early 2000s (a Function failure). It lost market share and reported substantial net operating losses in the years 2006 through 2008. The Ford company streamlined its operations and reduced the number of models it offered.  In 2007, Ford had 27 different vehicle platforms across the world. Platforms are the engineering underneath a vehicle and brands are the badges on top, and Ford cut both. It cut its platforms to nine under its One Ford plan, with five as the goal. Its brands went the same way, and by 2011 it was down to two brands: Ford and Lincoln (Function failure through reduction of customer choice). In the process, it sold off or eliminated many of its other brands, especially the high-end product lines. Aston Martin, Jaguar, Land Rover, Volvo and Mercury all left the company. The cars followed: Ford dropped the Fiesta, Focus, Fusion and Taurus from its U.S. lineup, leaving the Mustang as its only car. While it came dangerously close to insolvency, Ford avoided bankruptcy and declined the 2008-2009 government bailout, although it took a $5.9 billion federal loan in 2009 to retool its plants.

General Motors declared bankruptcy in 2009 and took a government bailout, severely damaging its reputation with consumers (a Reliability failure). The 2014 ignition-switch recall scandal added a second Reliability failure. General Motors continues to own and operate a number of automobile brands across the globe. However, it also discontinued several brands. Pontiac, Saturn, Hummer and Saab were shed in 2009 and 2010, leaving four U.S. brands: Chevrolet, Buick, GMC and Cadillac. It ended the Chevrolet Malibu in 2024, leaving Chevrolet without a sedan. In addition, in 2017 GM sold its European division to French automaker PSA group after 16 consecutive yearly losses.

The ensuing years after the recession have played out primarily to the benefit of the Asian competitors, as we summarize below.

In product lines, GM and Ford suffered severely in the 2008 recession. Both companies lost Function benefits as they pared their product lines in order to survive. Their reputations for Reliability took even a larger hit and have been slow to recover. GM built its lead on the basis of its trucks and SUVs. Ford has lost market share. On the other hand, Toyota with its superb reputation for Reliability continued to gain market share, and through the third quarter of 2026 it trailed GM for the U.S. sales lead by fewer than 136,000 vehicles. Hyundai also showed impressive share gains on the basis of its longer warranty, lower prices and Function innovations in the form of advanced technology and superb design in both exteriors and interiors. In the third quarter of 2026, Hyundai Motor Group (Hyundai, Kia and Genesis) came within about 1,200 vehicles of passing Ford for third place in quarterly U.S. sales.

Stellantis, the owner of Chrysler, Dodge, Jeep and Ram, followed the same path. It dropped the Dodge Dart and Chrysler 200 in 2016, and the Dodge Challenger and Chrysler 300 ended after the 2023 model year, leaving Chrysler with only its minivans, the Pacifica and Voyager. Function is what a customer can choose from, and the Detroit 3 have cut it to trucks and SUVs.

The 2026 market has added a new Function battleground: hybrids. Roughly one new vehicle in five sold in the U.S. is now a hybrid. Toyota says electrified vehicles were over 57% of its third-quarter U.S. sales. Cox Automotive blames part of the GM and Ford slide on too few hybrids, although Ford’s Maverick Hybrid set a sales record in the quarter. Cox’s September forecast put the Detroit 3’s combined share at just over 36%, the lowest on record. A customer who wants a sedan or a hybrid and does not find one in a Ford, Chevrolet or Chrysler showroom never invites them to bid.

Consumer Reports gives the cleanest read on Reliability. In its 2026 brand rankings, Toyota is first of 26 brands for predicted reliability, with a score of 66 out of 100. Honda scores 59, Kia 49, Hyundai and Ford 48, Chevrolet 42 and GMC 31. Ford’s 11th place is its best showing in 15 years, a start, not a recovery. Hyundai’s gains have come from Function and Price, not from a Reliability lead.

Company reputations also reveal themselves in pricing. Toyota is now the effective price setter in the US market because its automobiles enjoy quality reputations and strong resale values, and Kelley Blue Book has named it the best resale-value brand six years running. Hyundai’s pricing strategy looks more like that of a Price Shaver, offering slightly lower benefits for somewhat lower prices, and its resale values still trail Toyota’s. On common models (Elantra, Sonata, Tucson and Palisade), Hyundai’s average transaction prices run 0% to 8% below the Toyota equivalents, about 5% on average. Kia’s run 1% to 10% below, about 4% on average. That is Price Shaver territory. GM and Ford maintain premium pricing in trucks and SUVs where they have significant tariff protection. On the other hand, their other products command lower prices both as new automobiles and as used cars.

The original invitation measures have not been updated, but a more recent measure points the same way. In the first half of 2026, Kelley Blue Book’s Brand Watch, a different survey from Ford’s 2008 research, found Toyota the most-considered non-luxury brand at 35%, ahead of Ford at 28% and Chevrolet at 27%. The two surveys cannot be compared number for number. Both show Toyota considerably stronger than its domestic competitors, and the same strength shows up in market share changes and pricing premiums. Function and Reliability both decide who gets invited: Function decides whether there is a vehicle worth asking about, and Reliability decides whether the company is worth asking. Toyota leads on both.

To learn more about how companies “fail” in a market, including “the hidden failure” of not getting an invitation to bid on a customer’s purchase go HERE.

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Quick Hits

Five patterns from the StrategyStreet system this story confirms.

1. Customers screen suppliers out before the bidding starts, and both Function and Reliability decide who gets invited. In 2008 only 41% of car buyers would consider a Ford or Chevrolet, against nearly 59% for Toyota. A company that is never invited cannot win the evaluation. Function decides whether there is a product worth asking about; Reliability decides whether the company is. Marketing cannot supply either one.
2. Cheapening a product to lift margin is repaid, with interest, in lost invitations and resale value. In 2008 Toyota cost buyers $1,000 to $1,500 more, yet its cars kept more than 15 points more of their original price after five years. Ford reported net operating losses from 2006 through 2008, General Motors went bankrupt in 2009, and its European division lost money 16 years in a row. The low sticker price was never the low cost.
3. Function and Reliability are lost quickly and rebuilt slowly. Ford cut its platforms from 27 to nine and its brands to two. GM went to four brands, and Stellantis dropped its small cars. Consumer Reports now ranks Toyota first of 26 brands for predicted reliability at 66; Ford’s 11th place at 48 is its best in 15 years, a start, not a recovery.
4. A reputation for Reliability lets one competitor set the price, and the rest discount to follow. Toyota is the effective price setter, and Kelley Blue Book has named it the best resale-value brand six years running. On common models, Hyundai and Kia average transaction prices run 4% to 5% below Toyota’s. Under 10%, that makes them Price Shavers: they discount to offset slightly lower benefits.
5. Competitors that withdraw Function to survive hand share to those that keep adding it. Ford dropped the Fiesta, Focus, Fusion and Taurus, and GM dropped the Malibu. Toyota electrified over 57% of its third-quarter sales while Cox Automotive blamed part of the GM and Ford slide on too few hybrids. Cox’s September forecast put the Detroit 3’s combined share at just over 36%, the lowest on record.

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THE SOURCES OF STRATEGYSTREET.COM: For over 30 years we observed the evolution of more than 100 industries, many hostile.  We put their facts into frameworks applicable to all industries and found patterns.  Strategystreet.com describes the inductive results of these thousands of observations and their patterns.