The latest European passenger vehicle emissions standard (“Euro5″) was introduced in September 2009. Since that date, in Europe it has been illegal to sell new vehicles that do not meet this standard. Older models that only met the Euro4 standard can only be exported outside Europe to markets with more lenient standards. Within Europe the cars have little value – they can only be disassembled in order to reuse the components – and this value is therefore below cost.

This situation alone raises the possibility that dominant carmakers in the other markets will already be very suspicious of Euro4-compliant automakers. But it can get worse, much worse. Imagine that the government in another market introduced emissions standards that the locally dominant carmakers were not meeting, but with which the Euro4 vehicles were compliant. Imagine that, to compound that, the local market had only recently introduced a new emissions standard so many vehicles were in the early phases of their marketing cycles and the automaker had not had much time to prepare for the new emissions standard.

So the consequence is that the locally dominant carmakers find that (part of) their range is no longer legally saleable before they have achieved payback, plus they do not have new compliant models waiting for release to fill the gaps. And so the Euro4 compliant automakers find a hungry market for their formerly almost-worthless cars.

Well from July 2010, China will require compliance with Chinese5 emissions standards. And guess what? Chinese5 is basically the same as Euro4. So vehicles that become unsaleable in Europe last year remain compliant in China whilst some competing models in that market will be withdrawn from sale. And guess what else? Chinese3 emissions standards were only introduced in July 2008. So some of the vehicles to be withdrawn may have only been available for two years.

So perhaps there will be an opportunity for China to complain about dumping?

Just a bloglet today – a more substantial post will be arriving soon.

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I subscribe to Get Abstract (registration required) which provides 5-page abstracts of business books, allowing me to keep up with trends without spending my entire life reading books. Usually I find it very useful. But today I received an abstract that included the most banal statement ever.

I received the abstract of “Inside the Mind of the Shopper: The Science of Retailing” by Herb Sorensen. Here is a quote:

Studies of shoppers’ behavior show … “Trips always start at the entrance and end at the checkout [or] exit.”

Well DUH !!!

As somebody who has spent a large proportion of his career as a management consultant, I am often accused of selling snake oil or taking a client’s watch in order to tell him/her the time. But never have I been accused of stating the obvious in this way.

Recently I was re-reading Theodore Levitt’s epochal Marketing Myopia and considering the basic premise that companies are not defining their markets correctly (by being product-orientated or service-oriented rather than customer-oriented) and therefore not following the market as it migrates to an alternative product or service to fulfil the same underlying desire.

Then it struck me that maybe there is an exception for which a replacement has not been produced, and maybe cannot be produced …

What about tobacco?

I have been unable to think of an alternative product or service that a tobacco or tobacco product (cigarettes, cigars, mainly) company can produce.

If this were possible, don’t you think that either an existing tobacco company would have staked its claim on this new market or that a new competitor would have muscled in?

Don’t you think that the reason that people find it so difficult to give up smoking is precisely because there is no viable alternative? That the so-called alternatives have been unable to fulfil the same need that a puff of a cigarette meets so effectively?

And if this is the case, what are the implications?

Well apart from legislating smokers into secluded “baccy dens” there seems to be little to reduce the size of the existing market. And 30 years of anti-smoking advertisements have not been exceptionally successful in deterring new adopters. So maybe tobacco companies are the ultimate survivors? Maybe the safest place for a stock investor?

I’m happy to be proven wrong. If there is an alternative to tobacco, please tell me.