Adv Age Article of 8-17-09 - GM still has too many brands

[jake75]

For your reading pleasure:'New' GM Leaner and Meaner, but Not by MuchAutomaker Still Has More Brands Than It Can Effectively MarketBy Jean Halliday, Published: August 17, 2009 DETROIT (AdAge.com) -- General Motors Co. doesn't appear to be learning from itsmistakes: The trimmed-down, "new" GM still looks a lot like the old one, with too manyvehicle brands and too many overlapping U.S. models.Between now and 2011, GM will launch an astounding 25 models, according to CEO FritzHenderson: 10 for Chevrolet, five for Cadillac and 10 for Buick-GMC. What's more, theautomaker sees itself as making good on its promise to become leaner and meaner byreducing the total number of models it sells by the end of 2010 from 48 to 34 -- still astunning figure, considering the lumbering giant's inability to carve out a real identity for eachwith product and create marketing that truly sets them apart."The problem isn't that 34 is too many models; it's the number of distinctive models," saidMaryann Keller, an auto consultant who has authored two books on the company. "It justfeels like the same old GM." She noted that several models under each of GM's brands arebutting heads with similar models at sibling brands. For example, the new Chevrolet Traverseis up against its sibling at Buick, the Enclave, and GMC's Acadia. "The problem is theyoverlap and compete for the same buyer."GM did shed four of its eight brands, leaving behind Hummer, Pontiac, Saab and Saturn, buteven so, the automaker does not have enough time or money to transform the remainingquartet into distinctive brands. And Susan Jacobs, president of Jacobs & Associates, said evenfour is too many. She, along with two other experts queried by Ad Age, maintains that theautomaker should operate with just two: Chevrolet as its mass-market marque and Cadillac itsluxury marque.The automaker declined to comment.Competitors have a leg upMs. Jacobs said GM failed to take a valuable lesson from its main competitors, which eachhave just two car brands. She cited Toyota and Lexus; Honda and Acura; and Nissan andInfiniti. Because GM did not trim further, it is giving a leg up to competitors who will be ableto react quicker to the market because they only have two brands, she said. Moreover, GMwould have been able to maximize its shrinking ad budget with just two brands. The companyspent more than $424 million in U.S. measured media during the first quarter of 2009,according to TNS Media Intelligence."GM's strategy looks very much like the strategy it used in boom markets," said Ms. Jacobs,who sees GM's revival plan under design-guru-turned-CMO Bob Lutz as focused oncool-looking new products and new kinds of marketing. That approach won't work in thecurrent economic climate since consumers will buy new vehicles based on functionality andaffordability but won't pay a premium for styling.Ms. Jacobs said she isn't optimistic that struggling Buick can survive long-term, given thatGM couldn't revive the brand during peak industry years. The 104-year-old brand hasstruggled since the '80s from the Oldsmobile syndrome: Its loyal buyers have aged and diedand the brand has struggled to attract younger ones to replace them. Strategic Vision peggedBuick as the brand with the industry's oldest buyers, with a median age of 68. Buick sold137,197 units in 2008, down 25% from 2007, and 54,322 units in the first seven months ofthis year, a 33% falloff from the same period a year ago, according to Automotive News.Under Mr. Lutz as product guru, GM has vastly improved Buick's styling in recent years andhas managed to win over buyers in their 50s with the Enclave crossover. Still, the brand's admessages have flip-flopped every year or two during this decade under changing leadership,confusing consumers and further muddying its image.Mr. Lutz assumed control of overall marketing last month and vowed to boost ad budgets. Heis in the process of tweaking messages for the four brands. While he declined to discussspending specifics, he said a new ad campaign, due to break in the fourth quarter, willchallenge misconceptions about the carmaker's vehicles and how they compare to rivals. Mr.Henderson said GM will also shift more resources online to reach and attract youngerconsumers. He also vowed to put more of GM's communications resources to its four corevehicle brands instead of the GM brand, because "we don't go to market as GM."Focus should be vehicle brandsAuto experts agreed the carmaker should quit talking about the tainted GM brand and get onwith the business of promoting its vehicle brands. "They shouldn't even identify themselves asGM. People don't buy GM cars; they buy Cadillacs and Chevys, and that's what they ought tobe talking about," Ms. Keller said."It seems like they are going back to their old ways," said George Peterson, president ofAutoPacific.GM still has too many mouths to feed with advertising and product development and shouldnot focus on GM as some huge super-brand, Mr. Peterson said. He said GMC's all-trucklineup "pretty much parallels" Chevrolet's truck portfolio, which is why he would havepreferred to see GMC killed. He said he's "saddened by the company's announcement lastweek to beef up Buick's lineup," since it appears that brand will absorb models intended forPontiac, which is being eliminated, and Saturn, which is being sold.Mr. Peterson said the Malibu, launched in fall 2007 and backed in 2008 with well over $100million in advertising, was the cornerstone of Chevrolet's marketing, but GM hasn't advertisedthe midsize car in nearly a year. Meantime, GM crows about sales of its "red-hot" modernCamaro, but the car is backed by only a smidge of advertising online and in auto-buff books.That could be a missed opportunity, since the new Camaro is a model that could lift interestin the entire Chevrolet brand. U.S. buyers pushed sales of the car to 7,113 units in July, Mr.Peterson said. It outsold all of Buick (7,099 units) and Cadillac (6,171).~ ~ ~Automotive News contributed to this report.

[michaelgt]

This article has a defect. They comment that Toyota only has Toyota/Lexus. Last I saw, the Scion brand was still being built and was a "Toyota" brand.

[jake75]

Quote, originally posted by michaelgt »This article has a defect. They comment that Toyota only has Toyota/Lexus. Last I saw, the Scion brand was still being built and was a "Toyota" brand. Yeh - a lot of these auto writers are far from being "experts". I wonder if Scion has been profitable. [Of course I also wonder if the Vibe has been profitable - might be a big reason it was dropped.]However the overlap at Toyota/Scion/Lexus seems minimal - the Camry and Lexus 350 are similar underneath but there is probably more differentiation than the "sister" models marketed by GM such as Traverse, Acadia, Enclave. At least either the GMC Acadia or Buick Enclave is probably history with the new dealership configurations, but both Chevy and Buick-GMC probably will fight to keep their truck lines. The same minimal overlap seems true with Honda and Acura. Ford has Mercury and Lincoln - but I don't think there are any stand alone Mercury or Lincoln dealers. Most Lincoln dealers could probably not survive with just that brand. So it is basically just two dealership networks.

[Old Tele man]

...maybe Ford could resurrect the EDSEL and Chevy could resurrect the CORVAIR?

[scherry2]

Well, like my pappy used to say:If your so smart why ain't you rich?and Bar Luhrman who said:Be careful whose advice you buy, but, be patient with those who supply it.Advice is a form of nostalgia, dispensing it is a way of fishing the past from the disposal,wiping it off, painting over the ugly parts and recycling it for more than it’s worth.

[KNINE]

Quote, originally posted by Old Tele man »...maybe Ford could resurrect the EDSEL and Chevy could resurrect the CORVAIR?

[djkeev]

Sorry, I don't see the big problem here. In fact, I see genius still in use.Take a $20,000 product you are already producing and have done all of the engineering on.Change the front grille,change the interior emblems,add a little upholstery,add a few electrical dodads Ok, you've spent maybe $1000 on extras?Now you sell it as a $30,000 "premium" brand.The real problem is that they have allowed Chevy's to be fitted with the extras so they are just like a Caddy or Buick should have. They muddied the class structure way too much.You want vinyl seats? buy a ChevyYou want cloth seats? buy a BuickYou want leather seats? buy a CaddyThat is how simple it should be.Dave

[Old Tele man]

...anyone remember the saying: "...and EDSEL is just a MERCURY sucking a lemon."...or, "...a MERCURY is just a FORD with fancy seat covers."

[jake75]

Quote, originally posted by djkeev »Sorry, I don't see the big problem here. In fact, I see genius still in useYou want vinyl seats? buy a ChevyYou want cloth seats? buy a BuickYou want leather seats? buy a CaddyThat is how simple it should be.Dave1. The Chevy dealers probably don't want to get stuck with just the vinyl seat models.2. Consumers probably don't want to have to go to 3 different dealers to see the possibilities. You don't want to make it harder for consumers to buy a car.

[Old Tele man]

...maybe they could simply stock/sell after-market slip-covers like they currently sell extended warrantee insurance?...in my best Jack Nicholson voice: "...you want WAL-MART car sales, you can't handle WAL-MART car sales!"

[silvrhawk7]

Quote, originally posted by Old Tele man »...maybe Ford could resurrect the EDSEL and Chevy could resurrect the CORVAIR?Naah not the Corvair, More like the Chevette...Oh wait isnt that the Current Aveo??? GM's Answer to the econobox....

[jake75]

Quote, originally posted by silvrhawk7 »Naah not the Corvair, More like the Chevette...Oh wait isnt that the Current Aveo??? GM's Answer to the econobox....I had a 1978 Chevette 4 dr hatchback. Automatic, but no a/c. I liked that car. My son totaled it in 1985. Then I bought a used 1984 Chevette 4 dr HB AT with a/c, - paid $4,300. I had to get rid of it a year later it was so bad. I got $2,700 in trade (real money - applied after discount on new car) on a 1986 VW Golf. That 1984 Chevette barely made it to the dealer, and was relatively low mileage. The Golf had a lot of issues but fortunately I had a 6 yr 72,000 mile extended warranty on it. Warranty cost about $450. Paid for itself 4x at least.

[silvrhawk7]

Quote, originally posted by jake75 »I had a 1978 Chevette 4 dr hatchback. Automatic, but no a/c. I liked that car. My son totaled it in 1985. Then I bought a used 1984 Chevette 4 dr HB AT with a/c, - paid $4,300. I had to get rid of it a year later it was so bad. I got $2,700 in trade (real money - applied after discount on new car) on a 1986 VW Golf. That 1984 Chevette barely made it to the dealer, and was relatively low mileage. The Golf had a lot of issues but fortunately I had a 6 yr 72,000 mile extended warranty on it. Warranty cost about $450. Paid for itself 4x at least.My mother had a T-1000 in 82, had it for a month and my father had to get rid of it because she couldnt drive stick if it saved her life, a month later the new owner totaled it because the brakes went south on it. Then when i moved to FL in 87 one of our neighbors had a late 70's chevette that one day the engine just died on it, and they couldnt bring it back to life at all....i think that one didnt owe anyone anything.However i always feel that the Aveo is the carbon copy for that, especially when they made them with No AC, no PS, and an AM/FM Radio as the econo version, You cant sell the econo version down here in South Florida, i watched one rot on the chevy dealers lot in West Palm Beach.