GM Shifts Brand Strategy

[ragingfish]

Quote »GM shifts strategy for brandsPontiac, Buick and GMC will be sold at single dealerships to create options.By Ed Garsten / The Detroit NewsOnly two of General Motors Corp.'s eight brands -- Chevrolet and Cadillac -- will remain full-line marques while the others will offer more limited product lines under a new strategy aimed at building sales, cutting costs and bolstering brand identity.The move marks a shift away from GM's long-held philosophy that nearly every brand should offer a full array of cars, trucks and minivans, said Mark LaNeve, GM North America vice president of vehicle sales, service and marketing.The automaker's goal is to clearly differentiate each of its brands and phase out cars and trucks that don't fit in with a brand or are too similar to other vehicles in GM's lineup."People say we have too many brands," LaNeve said in a recent interview. "We have too many brands if we try to do the same things with all the brands."GM is revamping its sales and marketing strategy in an effort to reverse sliding sales and U.S. market share.Analyst Jim Sanfilippo of AMCI Inc. in Bloomfield Hills said he believes the changes are necessary and could pay off for GM."It's like (GM Chairman and CEO) Rick Wagoner and LaNeve putting bricks and mortar back together while they're under fire," Sanfilippo said.LaNeve said mass-market Chevrolet and premium Cadillac will be the two bookend brands, with each offering a broad product lineup.In between, Buick, Pontiac, GMC, Saturn, Hummer and Saab will exist as "focus brands" with more limited portfolios.That means, for example, GM could eliminate either the Buick Terraza or Pontiac Montana SV6 minivan -- which are similar to other GM minivans -- to concentrate on the brands' bread-and-butter vehicles.Pontiac, GM's performance division, is dropping the Bonneville full-size car at the end of this model year and may see its product line further truncated.GM is repositioning Saturn as a more upscale brand below Buick, leaving behind its past as a purveyor of plastic-clad compact cars."We've made this clear to the dealers," LaNeve said. "Chevy's got to compete heads-up with Ford and Toyota and all the mainstream parts of the market, and Cadillac needs to have everything it can to compete with BMW, Mercedes and Lexus. The other brands need to be tightly focused."A key part of the strategy has been the ongoing transformation of Pontiac, Buick and GMC into a single sales channel where all three brands are sold at the same dealership. GM says the three brands complement each other and give customers myriad options.About half of the GM dealers selling the three brands already have reconfigured their stores to sell all three, LaNeve said.The effect, said David Cole, chairman of the Center for Automotive Research, is downsizing without eliminating brands as some analysts have predicted."What they're really doing is taking their divisions and shrinking their number in a de facto way," Cole said.LaNeve said GM is also backing off big cash rebates that have helped elevate sales in recent years but undermined long-term brand equity.The mantra now is "value" or "transaction pricing," where vehicles are priced closer to what consumers actually pay for the vehicle. That doesn't mean GM will abandon promotional deals that allow consumers to terminate leases early if they acquire another new GM model, or its current "Hot Button" contest in which GM is giving away 1,000 vehicles."We're going to be trying to hit much more compelling price points," LaNeve said. "We're clearly not going to go to the market as the incentive leader."That sounds like a smart move to Detroit Cadillac dealer Doug Dalgleish Jr., who says "we need to try value pricing. We'll add more value to the vehicles."Incentives such as cash rebates will be offered a more brand-by-brand and regional basis rather than sweeping one-size-fits-all programs.A former collegiate middle linebacker, LaNeve has become a combination cheerleader and coach in urging GM's marketing team to come up with "big plays."He recently bestowed the first "big play" football on Mark-Hans Richer, the Pontiac marketing director who came up with the idea of landing the Pontiac Solstice as the subject of a task on the reality show "The Apprentice.""All of GM is being asked to think out of the box," Richer said.Over the past month, LaNeve and Wagoner have met with about 2,500 dealers to discuss the new strategy."LaNeve is giving the dealers a clearer picture, telling them 'we know where we are, we know what we're doing and we know what to do,'" Sanfilippo said.Dealers are weary and wary of the almost daily headlines detailing GM's financial challenges and speculation the company may be forced to drop an additional brand following the elimination of Oldsmobile.GM lost $1.1 billion in the first quarter and has withdrawn earnings guidance for the rest of 2005.Rochester Hills Pontiac-Buick dealer Russ Shelton said the combination of the new strategies and the arrival later this year of such products as the Pontiac Torrent SUV, the two-seat convertible Solstice and the Buick Lucerne signal that GM is in better shape than headlines indicate."It tells me I still sell the right franchises and the future is very bright for us," Shelton said.By combining Pontiac, Buick and GMC into one channel, "we're hoping we'll have you as a customer for life," Shelton said.The game plan is good news for members of Shelton's sales force who are fatigued with all of the bad news and are anxious to sell the new products."GM's made some positive moves," said Sue Farrell of Rochester Hills, who has sold cars at Shelton for eight years. "They're really working to redesign the vehicles and offering fresh products. I'm very optimistic."Salesman Adam DeJans says some customers are sensing GM is on the ropes, and using that to their advantage."They're thinking: If GM wants to stay in business, they better cut me a deal," he said.Springfield, Mo., dealer Lynn Thompson is being patient with LaNeve and the company. "It's sort of like a giant ship on the Mississippi River," he said. "You just can't turn it around. I know GM has to pull up its bootstraps."Even as GM's U.S. market share languishes at historic lows, there is hope in the showrooms that upcoming products will pull the automaker out of its swoon."They've faced dilemmas like this in the past," said Ed Springs, sales manager at Suburban Cadillac-Buick-Hummer in Troy. "They're strong and they'll find a way."You can reach Ed Garsten at (313) 223-3217 or egarsten@ detnews.com.RagingCommentary: This reader is optimistic. GM may FINALLY be on the right path...only time will tell.

[scherry2]

Quote, originally posted by ragingfish »RagingCommentary: This reader is optimistic. GM may FINALLY be on the right path...only time will tell.GM needs to do this to survive. way to many repetative models. but the labor force will be hurt because that means plant closings.

[PhillyVibeGT]

Quote, originally posted by scherry2 »GM needs to do this to survive. way to many repetative models. but the labor force will be hurt because that means plant closings. True, People losing jobs is not good but it is something GM must do in order to survive. I wish them luck!

[MonotoneSatellite]

Lets hope that Pontiac becomes the true performance division. It would be nice to see the tin indians running faster, handling better and looking cooler than anything else in the General's ARMY.

[Raivis]

sounds like a good idea but they need to keep saturn as the cheaper cars. im pretty sure the ions are selling good. saturn isn't known for up scale cars really. if they use saturn as their low priced line i think it would do better than trying to upscale them.

[soldierguy]

I think that Saturn could do ok moving upscale, but the products MUST support that move upscale. I could easily see Saturn's move upscale following VW's move upmarket...gradually, with each new vehicle introduced supporting that move. Saturn is already seen as generally a quality brand, their service departments seem good, and their fixed pricing scheme fits in well with the article's talk about GM pricing cars closer to what consumers actually pay for them.What concerns me a bit is the decision to lump Pontiac (sporty) with GMC (premium trucks & SUVs) and Buick (sort of a US version of Lexus). It's not the individual products that concern me, it's the dealership's ability to deal with customers in an appropriate manner...buyers of premium vehicles expect higher levels of service than the standard GM dealership/service experience. This is something that VW has had a real problem with in its move upmarket. When I owned a VW I was always treated well at the service department at the dealer I went to most, but that dealer was also an Infinity dealer, so they had high standards. When I went to the VW/Infinity dealership for service, there was always a comfortable waiting area with free coffee, sodas, and pastries. I was always offered a shuttle ride to work and got picked up at the end of the day, or I was offered a free loaner vehicle if the service was going to take more than half the day or if I simply told them I had stuff to do that day that required a car. And if the service was going to take longer than promised, I got a phone call explaining why there was a delay, an apology for the delay, and I could opt to get a loaner vehicle if I had taken the shuttle. Because of the good service there, I took my VW there for everything. When I moved to another city and had to start going to a VW-only service department, the waiting area consisted of 3 plastic chairs, no shuttle or loaners, and I was treated like my presence there was a huge inconvenience to them. There also seemed to be a lot more delays in service at the second dealership, and there were never any phone calls...if I showed up at the time that the vehicle was promised, it was literally a 50/50 chance that the vehicle might not be ready. After two times of being dealt with like this, I only went back to this place for warranty work...I had all my other services performed elsewhere. Incidentally, prices were the same at both dealers for routine service.I'm not saying that service departments need to treat people like royalty, but a good dealership recognizes the importance of a few perks...it keeps customers happier and more satisfied...happy & satisfied customers come back. I really hope that the Pontiac/Buick/GMC dealerships understand this.

[ragingfish]

Quote, originally posted by soldierguy »I think that Saturn could do ok moving upscale, but the products MUST support that move upscale. I'm assuming that general reaction to the SKY both in the press and the auto shows is a good sign of what we can anticipate in sales. And they're saying if the AURA manages to retain most of it's concept form in the final production model (which recent spy shots indicate is highly likely), it has the possibility to be GM's TRUE Accord/Camry fighter.Honestly, I think Saturn has a good chance at not only renewing itself, but reinventing itself!

[MonotoneSatellite]

That is a very good point. To this point Saturn has been panned in the press for being almost too cheap. "Fit and finish" are words repeated over and over in every review I've ever read. If the Sky and the Aura can beat that reputation solidly, Saturn should be on the edge of being the next big thing at GM.

[Kari]

A lot of the Pontiac dealerships I see are already Pontiac/Buick/GMC dealers and have been for a while. However, the one I bought my Vibe from is a Pontiac/Jeep dealer, and the Buick/GMC dealer is owned by someone else and is only about 200 yards down the road. I'm wondering how they'll handle that -- surely they aren't going to want two Pontiac/Buick/GMC dealers that close to each other.(And if JBR Buick/GMC adopts Pontiac just in time for me to move back to Ohio, I'm gonna be mad because JBR's service department is wonderful...)