GM Stock Rallies

[jasaero]

I like Buickman's plan. But a few ideas are being used from his Elephant can Dance points already and no one here is giving them credit for them. Primarily they have been knocking down fleet sales agressively. But on that same point they have implimented transferrable 5 year 100,000 mile warranty that HAS to help resale also. Catera is now a CTS and it does have manual. Corvette now has On*Star also. The rest of his points are valid and need work. The no rebate idea is great, but would be a failure in the near term as people still don't respect any GM brands in a way that is needed for them to be willing to pay full price.

His points on how to market their brands more efficiently and leverage their more robust dealer network while helping them out more are the points they need to be paying more attention too. They could be winning a lot more market share at this very moment if they had helped teach all their dealers how to sell good cars once they were getting them. These dealers have mostly reverted to near average used car dealer meathods of marketing, but actually have some decent cars to sell these days.

Really though I think there is too much political clout in some of the marketing managment that was put in place over the mess in the 90's at GM. Probably still tons of marketing managers that sold toothpaste in the 80's trying to set up how to market cars today. They have been trying since the bad cars of the 90's and don't seem to be any more successful with the good cars of today, so I think heads definately need to role in marketing. I find it tough to blame Rick directly though as some of the marketing guys may have had enough clout back in the 90's that they have more pull with the board than Rick does even today as the CEO. Or atleast have some old buddy protection from up high like that. Sure there is lots of that in a company as old and bloated as GM is.

[Buickman]

the speech that was the seed for GeneralWatch.com and Return to Greatness

(Although this article was published in the April, 2001 issue of RETAIL INSIGHTS newsletter, it was really the result of a speech ten months earlier in June 2000, given at the annual meeting of GM shareholders in Wilmington, DE)

THE ELEPHANT CAN DANCE

Why has General Motors’ market share been declining every year? The answer lies in the General’s lack of retail automotive marketing savvy. Executives continue to receive millions of dollars while plants are closed, divisions eliminated, and tens of thousands of employees laid off. The financial wizards have created stockholder wealth through efforts in satellites, computers, and acquisitions and spin offs. However, our core business has suffered, perhaps more from a lack of understanding than a lack of focus.

Although we have taken much of the cost out of manufacturing vehicles and build reliable, fuel efficient, safe, quality and stylish automobiles, our market share has continued to slide. How can GM reverse the decline in market share from 50% to 40% to 30% and headed toward 20%?

We don’t need a remake of our product lineup. We need a remake of our image. The object of this paper is to suggest solutions, giving constructive criticism by offering the TOP TEN things General Motors can do to increase market share:

#10: Real World:

The strength of General Motors is its’ dealer body. When put in charge of General Motors, Mr. Alfred P. Sloan Jr. took a train around the country visiting the dealers. As a result of his travels, he developed many good things, including the 10-day report and the annual model change.

Instead of meeting in Italy or Disney World, the top 500-1,000 salaried employees of GM should randomly be assigned a dealership to visit for one week, unannounced, and spend the majority of his or her time in the service department. They should meet customers, listen to their needs, and build good will for the Corporation.

#9: New Car Announcement:

The annual model change was established for a reason. Traditionally, sales slow down in the fall and increase in the spring. Announcing new models in the fall helped even out production and gave the industry a sense of order. Today, you don’t know what is going on, what is coming out, or when. People don’t like confusion. The anticipation of new models arriving in the fall was always one of the most exciting parts of the business, something you could look forward to. These days we are selling three different model years side by side, which isn’t good business.

#8: Divisional Brand Images:

Buick is a brand. Oldsmobile is (was) a brand. Regal and Century are cars. We should focus our brand marketing on our divisional images and the cars would sell themselves.

#7: Corvette:

Corvette is one car we really do right. We’re hitting on all cylinders. No discount, no rebate, just image. I waited 10 months for mine, paid the sticker price, and love the car. However, the other day I was talking to Batman. He brought the Batmobile in for service and while he was there, I offered him a Corvette to drive while his car was being worked on. Surprisingly, he refused. On*Star is not available on Corvette. This is an example of not matching products to the market we are trying to reach.

#6: Catera:

Instead of offering a Catera lease with a free 1st payment and security deposit waiver, we should offer a manual transmission that would appeal to the market segment we are targeting.

#5: Policy:

Eliminate requiring an employee to retain a leased vehicle for 12 months.

#4: Destination:

Charges should be done away with. A whole marketing campaign could be designed around this savings for our customers. If you want to pay freight, get a foreign car. We would receive tremendous good will and improve our image in the marketplace.

#3: New Car Deliveries:

Why do we call them deliveries? We don’t deliver; the customer comes to the dealership and picks up the vehicle. Let’s change this by working with dealers and offer home deliveries. The customers will love it.

#2: Resale:

To have a good image, our products have to hold their value. The reliance on fleet sales to rental companies falsely portrays a higher market share. When the units are bought back after a short while and dumped at auction, it destroys resale.

#1: Rebates:

Rebates are a cancer, they kill image. They are also very confusing. Prestigious automobiles should not have rebates. General Motors needs to break the addiction.

Often times the dealership is notified of the rebate before the cars or brochures have even arrived. Many times customers are alienated because a program has been cut off or missed.

If there were a problem with days supply in the field, a better marketing program would be to increase the residual value 2 or 3 points. Problem eliminated! The image would be that of a great car with a good lease instead of a slow mover with a big rebate.

By making moves such as these our image will improve, our market share will increase, profitability will rise, and the stock price will soar.

[jasaero]

I really think your strongest points Buickman revolve around a need to better leverage their massive dealer network to try and regain share. I think they may actually have enough good and competitive vehicles today that a nearly free effort to communicate too and help improve existing dealer quality could generate massive market share gains if they could increase production to make such gains happen efficiently without wasting money in that effort.

I don't think that would be a huge problem though as improving dealer quality and communication with HQ and Customers and everything from end to end would be a bit of a slow process. But it seems one of the largest problems GM has with the too many dealer thing isn't so much, to many dealers as it is too many crappy ones. Many of those crappy dealers may be hurting GM's market share as much as the products themselves. It's kinda tough to blame crappy dealers on anyone other than GM though as they were kinda forced into such problems over the years of trying to sell poorly made and poorly marketed cars.

I am sure most good people gave up at a lot of dealerships in the darkest years. There is some light now you have to admit though. And that light has been lit for the most part by the very guys you, Buickman, are annoyed with for not paying enough attention to your good ideas. I think the problem now is basically the opposite of the 90's. Focus was too much on marketing to the point that product suffered and marketing went overboard. Now we have product people in that are so focused on product that marketing suffers and product is such a HUGE concern they think and try almost too hard with each new product. Really I think they need to quit spending money on new products unless they are going to make it a market leader in every respect from the get go. Let the products you can't update right away suffer instead handing down half baked updates.

For example Lucerne and LaCrosse should have never happened until they could actually put them on all new platforms that were actually modern and able to be styled as such. LaCrosse could have probably happened a year or bit sooner than next Year as invicta and Lucerne could have just never happened, but been a RWD Park Avenue from China the same day it went available there. In the meantime smart sales people like you could have ensured the aging Buicks were still selling in OK quantity with amortized costs long gone.

Really I think an in between on product and marketing needs to be found. And marketing focus needs to move from brute force all over to more creative meathods that force dealers and HQ to be much closer than they are today, basically working more like the team that they should be.

I really think GM will make it if they find a solid marketing strategy here soon and stick too it. That is something they never talk much about when explaining things to investors and such. They are always focused on product, product, product. That is important and doesn't probably even need much work other than to be more decisive on future product plans. Marketing is just a mess there though. They basically just spend a bunch of money pointlessly and at random when a huge product is launching. That then exhausts funds for the less important launches and really NOTHING is spent wisely at all on marketing. A car like the Malibu would require almost no money it all to launch if you had dealers rehearsed on what they need to do before the cars start coming in. At the very local level most Chevy dealers exist they can almost market a new car without spending much at all as there are so many of them they could almost launch a new car on word of mouth marketing if there was a deliberate effort to get the word out and get prospective customers in that maybe hadn't been to that dealer in awhile to try the new cars out before the actual big on sale dates and such. There just seems to be none of that ground level effort that would be simple and near free for Chevy, even though it would be almost impossible for any other brandd in the land other than maybe Ford.

Do dealers ever get prelaunch cars to help get word out on a new model before the big sales launch?? When you have really good new sell themselves products that ground level marketing is probably the best and cheapest route. It's impossible for Brands like Toyota or Saturn with limited dealers, but Chevy and Ford should be marketing nearly 100% that way.

Only thing similar to this I ever encountered with GM was they let Enterprise rent many of their vehicles for free, but that effort was focused on existing GM buyer thru a mailing. I am pretty sure MANY dealers could have helped with a similar free drive deal and actually got a few lost customers to come back and try some new GM cars. GM is too far away from the customers that have been lost, but I am sure a lot of dealers have plenty of salesmen still in contact with old customers that maybe haven't bought GM in awhile, but once did. And those customers more than likely didn't leave because of problems with the dealer so much as the products they had to offer. I am sure I could come up with more ideas from my armchair right now, but it just seems they aren't trying anything other than big media and big money pushes that rarely ever get people into these new products that actually have some attributes that can win people back. You need something on the ground level with salesman to former customer to get people in these new vehicles if they aren't even considering them anymore.

[Buickman]

Originally Posted by jasaero

I really think your strongest points Buickman revolve around a need to better leverage their massive dealer network to try and regain share. I think they may actually have enough good and competitive vehicles today that a nearly free effort to communicate too and help improve existing dealer quality could generate massive market share gains if they could increase production to make such gains happen efficiently without wasting money in that effort.

I don't think that would be a huge problem though as improving dealer quality and communication with HQ and Customers and everything from end to end would be a bit of a slow process. But it seems one of the largest problems GM has with the too many dealer thing isn't so much, to many dealers as it is too many crappy ones. Many of those crappy dealers may be hurting GM's market share as much as the products themselves. It's kinda tough to blame crappy dealers on anyone other than GM though as they were kinda forced into such problems over the years of trying to sell poorly made and poorly marketed cars.

I am sure most good people gave up at a lot of dealerships in the darkest years. There is some light now you have to admit though. And that light has been lit for the most part by the very guys you, Buickman, are annoyed with for not paying enough attention to your good ideas. I think the problem now is basically the opposite of the 90's. Focus was too much on marketing to the point that product suffered and marketing went overboard. Now we have product people in that are so focused on product that marketing suffers and product is such a HUGE concern they think and try almost too hard with each new product. Really I think they need to quit spending money on new products unless they are going to make it a market leader in every respect from the get go. Let the products you can't update right away suffer instead handing down half baked updates.

For example Lucerne and LaCrosse should have never happened until they could actually put them on all new platforms that were actually modern and able to be styled as such. LaCrosse could have probably happened a year or bit sooner than next Year as invicta and Lucerne could have just never happened, but been a RWD Park Avenue from China the same day it went available there. In the meantime smart sales people like you could have ensured the aging Buicks were still selling in OK quantity with amortized costs long gone.

Really I think an in between on product and marketing needs to be found. And marketing focus needs to move from brute force all over to more creative meathods that force dealers and HQ to be much closer than they are today, basically working more like the team that they should be.

I really think GM will make it if they find a solid marketing strategy here soon and stick too it. That is something they never talk much about when explaining things to investors and such. They are always focused on product, product, product. That is important and doesn't probably even need much work other than to be more decisive on future product plans. Marketing is just a mess there though. They basically just spend a bunch of money pointlessly and at random when a huge product is launching. That then exhausts funds for the less important launches and really NOTHING is spent wisely at all on marketing. A car like the Malibu would require almost no money it all to launch if you had dealers rehearsed on what they need to do before the cars start coming in. At the very local level most Chevy dealers exist they can almost market a new car without spending much at all as there are so many of them they could almost launch a new car on word of mouth marketing if there was a deliberate effort to get the word out and get prospective customers in that maybe hadn't been to that dealer in awhile to try the new cars out before the actual big on sale dates and such. There just seems to be none of that ground level effort that would be simple and near free for Chevy, even though it would be almost impossible for any other brandd in the land other than maybe Ford.

Do dealers ever get prelaunch cars to help get word out on a new model before the big sales launch?? When you have really good new sell themselves products that ground level marketing is probably the best and cheapest route. It's impossible for Brands like Toyota or Saturn with limited dealers, but Chevy and Ford should be marketing nearly 100% that way.

Only thing similar to this I ever encountered with GM was they let Enterprise rent many of their vehicles for free, but that effort was focused on existing GM buyer thru a mailing. I am pretty sure MANY dealers could have helped with a similar free drive deal and actually got a few lost customers to come back and try some new GM cars. GM is too far away from the customers that have been lost, but I am sure a lot of dealers have plenty of salesmen still in contact with old customers that maybe haven't bought GM in awhile, but once did. And those customers more than likely didn't leave because of problems with the dealer so much as the products they had to offer. I am sure I could come up with more ideas from my armchair right now, but it just seems they aren't trying anything other than big media and big money pushes that rarely ever get people into these new products that actually have some attributes that can win people back. You need something on the ground level with salesman to former customer to get people in these new vehicles if they aren't even considering them anymore.

you bring up some excellent points. its particularly frustrating when GM announces a vehicle, spends millions and millions on advertsing the thing and the dealers don't have more than a sprinkling of units on hand. the desire is there, the traffic is there, but the product isn't available.

I totally agree that enormous sums would be saved by simply allowing the franchisees to handle the bulk of the marketing both at launch and during the product cycle. forget the Red Toe Tag Sales, March Madness, and 4th of July Events. the manufacturer should focus on promoting the features and benefits and leave the merchandising to those most capable of addressing their local markets effectively.

the incentive mess is in desparate need of streamlining. in place of the confusing nightmare of constantly changing programs, GM should provide quarterly retail promotions. the consistency alone would be of immense benefit.