GM Marketing Chief Discusses Challenges, Plan Going Forward

[Buickman]

you're showing signs of truly understanding what it takes to sell cars, perhaps not the blind follower I perceived you to be initially. lose the Red Ink Rick paradigm and your level of insight rises tremendously in terms of credibility. realize that's no small task for someone who apparently works for GM, but hey...have some balls.

get on board, I've been waiting...

[fp115]

Originally Posted by Buickman

you're showing signs of truly understanding what it takes to sell cars, perhaps not the blind follower I perceived you to be initially. lose the Red Ink Rick paradigm and your level of insight rises tremendously in terms of credibility. realize that's no small task for someone who apparently works for GM, but hey...have some balls.

get on board, I've been waiting...

I've never been much of a follower. Ever since I started working for GM last year, I was a strong believer in voicing my opinions. However quite difficult to do when you are new and especially quite young. Marketing I always found could do with a lot of improvements, last summer I managed to initiate a redesign on the GM Canada website and program to dealerships in Canada. Though the ideas were based off mine, they weren't exactly what I had in mind. By now I have the Board knows who I am and can approach them quite easily with an idea for them to implement. Getting to this level was no easy task. I've gone out of my actual job title several times in order to push something I believe in very much for the sake of the company. At times I have even risked my job to voice my opinion, though always in a very professional and constructive manner.

People do realize these things and as long as they do not feel threatened by me, they will keep listening. In the meantime I will keep doing as I am and keep talking to them. But at the end of the day, they are people like you and me to which I have great respect for. I know these people personally as well as in the workplace. They are great people with great people working for them and with the current environment you can tell that they are very tired. Some are working more than 80 hours a week just to make sure there is a future for the company.

I am hoping all the cuts, additional spending, and plans fit in perfectly like we have all planned in the end. But what I am beginning to stress is whether marketing will be able to do their job to make sure it can go the next step. It will be very difficult to do so and will take a lot of thinking and head bashing to make sure it is done right. In the meantime I will make it my job to ensure change at GM, especially with my latest plan which I think is a great step for GM's future (though no one on the outside may really tell). For now I can only wish I was older with that much more experience, then again my current position seems to pan out to my advantage at times.

[Robert G]

Yes, at 10,000 miles per year, the math results in a weekly difference of $17:

Sliverado average MPG = 16.5. Malibu 4-cylinder average MPG = 26.

At 10,000 miles per year, Silverado uses approx 606 gallons, and Malibu uses approx 385 gallons.

At $4.00/gallon, Silverado gas costs approx $2,424/year, and Malibu gas costs approx $1,540. The difference is $884/year or $17/week.

Originally Posted by 01cavalier

The math is actually about right if you take a two wheel drive Silverado with the 5.3 and compare it to a 4-cylinder Camry, base it on the average fuel economy and base it on 12,000 miles per year. Thinking about the actual cost is why we haven't gotten rid of our truck, it doesn't make sense given the extra cost. We save more by just driving less. When it's time to buy, sure, gas mileage will be more important, but only when compared to other costs.

[eaton53]

Originally Posted by Buickman

goofy as it may seem, now my goal is taking over General Motors. call me crazy, or get on board. should be interesting.

Now I know who to ask for a job!!
Woo!!!..

[PeteM143]

Originally Posted by mgescuro

If you need a truck? You need a truck.
You cannot haul stuff or tow things in a Camry/Malibu/Civic, etc.

But what GM fails to recognize is that there is a cost savings in driving smaller cars than big trucks. ANd in times of economics downturns and high prices, that's what happens.

THe $1,500 or so a month might not be a lot for me. It's about 1/100th of what I make annually. So that's not that significant. But what about people for who it is 1/10th their salary? It's a cost savings.

Is it enough to warrant spending $15,000 on a new car? Mathematically? No way!

But that is GM's mentality. They see spreadsheets.
The cost savings is "only" $1,500 annually.
Therefore, people will still want trucks because the cost differential is insignificant. And they won't spend money on a more efficient car. So why bother offering them? Cause we don't make any money off them anyways? But, just in case, we'll make the XFE and see what happens?

Hence their surprise.... hence GM remains 5-10 years behind the market in small cars... hence GM is in deep doo doo...
All because of their flawed belief that they understand the market and that they still have the ability to dictate what the market wants.

Simply put... GM is out of touch with the market and reality.




Welcome to GMI damurf!!
Oh and yes.... What you say about marketing is absolutely 100% correct.
It is in every marketing textbook. It is taught in B-schools across the country.

Heck... even Bob Lutz himself said it in his friggin book!!!

So... what is Lutz doing at GM? And why isn't GM treating marketing this way?

For years, I've been saying this on GMI!! Where is the disconnect here!!! Why can everyone else see the problems, and why can't GM realize and do something about it!!??

And you're right, we didn't hit these high gas prices overnight! It's 8 years in the making. Even slow GM should have had something out 3 years ago!!! But no.

The reason is... GM cannot make significant money off small cars. They can only make money off trucks. So their focus was on trucks because they need money. ANd now all their cars are so outclassed, GM's in deep hurt because they never tackled the true problem -- corporate inefficiencies that made it impossible for GM to make money of small cars.

And now, the era of the big trucks and SUV's is over. What does GM do now?

They are in a race against time to put out world class compact cars on the first try! GM needs these cars to be a spectacular hit -- a grand slam. Otherwise, GM is dead. And I think they realize it. Every single program seems to be cut at GM now. They don't have the money to survive.

I can't agree more that the management of this company did think, for whatever reason, that they couldn't make money on small cars. I am really confused as to why these folks suddenly can't figure out that they can make plently of money on small cars if they sell lots of them. It's simply economies of scale, the more they sell, the development costs per unit get smaller, and the sunk costs of manufacture get spread more broadly. They had/have economies of scale in trucks, so it shouldn't be a foreign concept to management.
They have to do a small car like they did the Malibu. The Cruze looks very promising, but the small car buyer has to be convinced that GM is just as commited to them as they are the buyer of a Tahoe or Silverado. I have driven both a Cobalt and a Civic, and frankly I see very little in the way of difference between them other than perception and minor stylistic differences. GM is certainly capable, as they have shown over the last few years, to deliver a very high quality product. Trucks were just the path of least resistance to profits before fuel and food started putting the squeeze on the American consumer.
I have to say, as an owner of the much maligned Chevy Colorado Z-71, I can't complain at all about my truck. It has 112,000 and runs like a swiss watch. They skimped on the interior, and having lived with it for almost 5 years, I wish they had done a better job there. Mechanically, it has been a joy to own.
To Mr. Wagoner, Lutz et al, I say this:

Vision without execution is a hallucination.

Execute small cars and folks will come back and buy...

[SierraGS]

Originally Posted by fp115

Ending ads on Trucks and SUVs is rather stupid at this point. Trucks and SUVs still account for a huge portion of sales. Though at its lowest point in ages, they still sell many trucks and suvs. Companies, construction and many people still buy them, it does not mean you must end all.

The idea behind advertising is not to kill something that you have an working, but rather lower that budget and move the funds around somewhere else. For once I have to say GM did somewhat of a good job on the Malibu advertising, but in order to do that they cut into advertising funds that no other GM car has done in the past many years. But sometimes advertising efficiently is not about spending the most amount of money, but doing something different, something that will make people remember. Off the top of my head I can name over 10 different marketing programs that can be done and are relatively cheap. Sad part is that of those GM took 2-3 of the ideas and doing them in Canada and guess what, it worked in the past month (see Saturn's sales).

GM is onto something from the July 15th broadcast when they announced cutting of marketing, not sponsoring Nascar is a huge step towards making marketing more efficient, we aren't in the 80s and 90s where if you win a race you will sell hundreds of cars. Rather we are in the digital age and the age of customer support. Customer cherish hands on experience while seeing something that immediately catch their attention afterwards online or thru a friend.

Good points.

GM has to keep ads going on trucks, SUV's ads can be lowered since this is the segment that will not recover to previous sales numbers.

Full size truck sales will recover to very near previous levels and GM has to keep it's great trucks on customers minds, although they need some fresh ideas. The Hybrid Siverado/Sierra need a strong ad campaign with dealer incentives to help move them, GM needs to push the fact the 6-speed is available on more trucks and the benefits of AFM on the 5.3L.

GM has to get an automatic version of the Cobalt XFE and needs a V6 XFE model on both the Malibu and Impala, think what a 30-32MPG rating would do for sales - V6 power with better MPG than some 4-cylinders!!!

Imagine how easy it would be to sell a Malibu XFE V6 and Impala XFE V6 with a 30+ MPG rating for say $22,500.

GM could then advertise that EVERY Chevrolet passenger car with 4-cylinder OR V6 power has a model that gets over 30 MPG for under $23K.

You are right about expanding marketing to places outside typical mass media and GM needs to do a better job on the web, they are not terrible but need some new ideas.

[damurf]

I keep reading GM can't make money on small cars. Why not? As an owner of a BMW 3 series (don't hate me - I have a 300C SRT8 also) I see how manufacturers can take one platform and have it proliferate. The 3 series can be had for $30K up to $65K depending on engine, body style, etc. It even spawned the X3 SUV. Why can't GM come up with a small car platform that could be had in a "base trim" for around $15 - $18K and then a "luxury" or "performance" trim for $35K? Sure, you don't make much or even lose money on the lower end models but you make a profit on the higher end models. Doesn't GM basically do that with their full size trucks - low end Chevy work trucks priced in the low $20K range and then they have the Cadillac Escalade which is pushing $60K. Basically the same vehicle with different trim levels, engines and transmissions, and option packages.

Hell, aren't the Pontiac G6 and the Saab 9-3 on similar platforms? The G6 costs $20K whereas the Saab Turbo XDrive is over $40K. Why can't Pontiac follow the 3 series approach and have a low-end (but very high quality) G6 (4 cylinder, manual trans, fwd) and then go upmarket with a G6 with AWD, paddle-shift, turbo DI DOHC? There is no reason why some of the Saab "goodness" couldn't be baked into a G6.

[PrenupTB]

Originally Posted by mgescuro

Yes. I read the paragraph and article.
Did you even bother reading what I wrote?
Not only is their math overly optimistic, but the "worry" of people that fuel is going to cost more is hurting trucks. Notice, this runs COUNTER to what GM has been preaching for the past 35 years, "Americans want trucks. Nothing will stop Americans from buying trucks. So, we will continue to build trucks. Forget about all the small cars because we can't make money on them anyways. And no one wants to buy them."

How long did it take for GM to realize that what they were the only ones doing this? Everyone else hedged their bets with competent small cars, mid-sizers, AND trucks. You realize the first competent mid-sizer from GM came out last year? LAST YEAR! And the Aura doesn't sell well.

The market has been completely rational. It is GM that has been unable to read the market trends. Compact cars have been a significant trend since the 1960's. They have NOT gone away. Every year, compact cars have gained in acceptance. And compact cars are also becoming more and more feature filled. But GM has not kept pace.

Let's do the math!!

A Silverado 4.8L is 14/19. Let's call it 16 mpg. 26 gallon fuel tank. $4/gal. $104 fillup. Range = 416 miles.
A Malibu 4-cyl is 22/32. Let's call it 27 mpg. 16.4 gallon fuel tank. $4/gal. $65.60 fillup. Range = 442.8 miles.

In 10,000 miles, the Silverado, assuming these numbers, will cost $2,500.
In 10,000 miles, the Malibu, assuming there numbers, will cost $1,481.48.
The difference is $1,018.52.

In 35,000 miles, the Silverado, will cost $8,750 in gas.
In 35,000 miles, the Malibu, will cost $5,185.19.
The difference is $3,564.81.

The average miles driven by an American is 15,000 miles per year.
In 15,000 miles, the Silverado will cost $3,750 in gas.
In 15,000 miles, the Malibu will cost $2,222.22.
The difference is $1,527.78.
Spread out weekly.... That's $29.38 per week!!

That's $12.38 MORE than estimated by GM!!!!!

GM's math is bass ackwards!!!

I love this guy.

[motorman]

what is going to happen when all the small cars hit the road to get the new federal mandated MPG,more highway deaths and you know what is next, federal 35 MPH speed limit to help prevent these deaths. mark my word. there are always unintended consequences with all changes the feds make.