GM dusts off a familiar brand strategy for China boom

[Ming]

GM dusts off a familiar brand strategy for China boom
Mon Apr 21, 2008



By Kevin Krolicki

BEIJING (Reuters) - How do you say, "A car for every purse and purpose" in Chinese?

The boom in China's car market has given General Motors Corp a chance to revive the marketing mantra invoked by the company's long-time chief Alfred Sloan -- and to avoid the costly missteps that marked GM's decline in its home market over the past two and a half decades, executives say.

"Certainly, the lessons of the past, we don't forget them when we come here," GM Chief Executive Rick Wagoner said at the Beijing Auto Show this week.

Sloan, who retired in the mid-1950s, is credited for driving GM toward a dominant position in the U.S. market with a brand strategy that started first-time buyers with affordable Chevrolets and dangled Cadillacs as a badge of success at the high-end.

GM's U.S. market share peaked at 45 percent in 1980, before a long-running downturn spurred by quality problems, relentless competition from Japanese rivals such as Toyota Motor Corp and product miscues that made a Chevy almost indistinguishable from a Buick.

But now GM's rise in China under a decade-old joint venture with SAIC Motor Corp has given it a nearly 10-percent share of a market it expects to become the world's largest by 2020. The China market also gives it a rare chance to try to repeat the business past with a happier ending for investors.

After a slow first quarter, GM is only targeting growth only in line with the Chinese market in 2008, which it expects to be up 16 percent. That amounts to an admission that it could lose share since fast-growing Chinese car makers expect to outperform the industry-wide boom and GM's larger rival Volkswagen AG is on a roll.

But while some analysts expect Toyota to claim the industry's top spot in China by the middle of the next decade, GM executives believe they have a strategy to keep the Japanese car company from dominating in China as it already does in other Asian markets such as Japan, Australia and Thailand.

FULL Article: http://www.reuters.com/article/reute...22539120080421

[give_it_all_]

Well, I hope that they will do as they say and have really learned from the past. I would hate to see them mess up another market

[tgagneguam]

GM's U.S. market share peaked at 45 percent in 1980, before a long-running downturn spurred by quality problems, relentless competition from Japanese rivals such as Toyota Motor Corp and product miscues that made a Chevy almost indistinguishable from a Buick.

Notice how nowhere in there did it indicate that GM's downturn was a result of too many brands. Alfred P. Sloan was a great GM boss, and he called it right: a car for every purse and purpose. He was smart enough to put people in positions in which he was completely out of his league (e.g., GM design) and get out of their way, and he was smart enough to recognize that it would require more than one division to meet the aforementioned goal of covering the whole market. Executed properly, GM thrived, and it had no equal in the US.

That GM leaders after Sloan screwed up the recipe does not at all mean that a multi-division GM is destined to fail. It simply means misguided, myopic suits who are devoid of vision and who are focused on next quarter rather than on their loyalty to GM's long-term success are the cancer that needs to be excised from the bowels of the General.

[tgagneguam]

"We have to pay attention to brand building so we don't just compete on price," Wagoner said.

Wow, fancy that!

[Stéphane Dumas]

Originally Posted by tgagneguam

Notice how nowhere in there did it indicate that GM's downturn was a result of too many brands. Alfred P. Sloan was a great GM boss, and he called it right: a car for every purse and purpose. He was smart enough to put people in positions in which he was completely out of his league (e.g., GM design) and get out of their way, and he was smart enough to recognize that it would require more than one division to meet the aforementioned goal of covering the whole market. Executed properly, GM thrived, and it had no equal in the US.

That GM leaders after Sloan screwed up the recipe does not at all mean that a multi-division GM is destined to fail. It simply means misguided, myopic suits who are devoid of vision and who are focused on next quarter rather than on their loyalty to GM's long-term success are the cancer that needs to be excised from the bowels of the General.

And also Alfred P. Sloan's idea was imitated to more or less extend. Walter Chrysler and KT Keller tried the same with Dodge-Plymouth-DeSoto-Chrysler-Imperial but their successors messed the formula, spelling the end of DeSoto and Imperial first and Plymouth way later. Ford tried the same when they introduced Edsel, no needs to know what happened next.

The strange irony is Toyota seems to try more or less the same with Lexus, Scion, Subaru, Daihaitsu, Hino

Btw, does VW currently apply the formula of a car for every purse currently with Skoda, Seat, Audi, etc...?

[mgescuro]

Fine. "A Car for Every Purpose."
I can go with that.

BUT DO IT WITH ONLY BUICK, CADILLAC, and CHEVY. (And maybe Saab.)
Don't start adding all these peripheral brands that no one cares about!!!

[2648562]

If there's a lesson that should be learned from GM's past it's that they don't learn well from the past.

If they think they'll be able to relive their 1950s and 1960s glory all over again in modern-day China I really feel sorry for them. I've never gotten within a 1000 miles of China and most of the articles I've read about Chinese car buyers have been written by people just like myself, so I could be wrong, but I suspect right now it's primarily wealthier Chinese that are purchasing all these Buicks, STSs, and a big chunk of the country's cars. That's all fine if everyone in China keeps getting wealthier, but that can't/won't be the case. More and more regular folk will desire transportation and what's expensive for the average American will probably be viewed as expensive by the average Chinese citizen. Those people will seek out lower cost alternatives and GM, I fear, will find a way to royally ignore and insult them. And before they know it, Buicks will be as hip as Levi's jackets are in America today. Maybe GM's Chinese "partners" can educate them, but history tells me executives like Wagoner will probably just laugh them off.

Also, this article didn't really say how GM would implement this "every man" strategy. Will Buick be there with a car for every man and every budget? If so, what do they think that's going to do for Buick's brand image?

-------

Okay, so there was a page 2 and even 3. I got some answers. I swear they weren't there a few minutes ago. I'll get off my soapbox now.

[Rocket 88]

Originally Posted by mgescuro

Fine. "A Car for Every Purpose."
I can go with that.

BUT DO IT WITH ONLY BUICK, CADILLAC, and CHEVY. (And maybe Saab.)
Don't start adding all these peripheral brands that no one cares about!!!

Nay Nay... Clearly (as posted by others) nothing in the world has changed in the 60 years since Sloan was at the helm. Send all the divisions to China. Saturn - A different king of egg roll. The Chinese need Hummers too. Pontiac can go, just so she doesn't feel left out...

Today, Detnews.com is reporting Ford may axe Mercury because 3 Divisions are more then they can handle...

Seriously, I agree with you that GM needs to keep this clean and simple.

[t-rex]

Okay I read three pages. So what's the brand strategy that GM's dusting off for China?

Anyway...

My wife feels Chevrolet should split up into three "themed" chains, much like Toyota does in Japan. A "Value" Chevrolet, consisting of family cars, crossovers, SUVs and pickups. A "Heritage" Chevrolet (carved out of current Chevy-plus-another-brand dealers), with RWD performance models with a retro-theme. And a "Passport" Chevrolet (she lived in Canada for years), paired with Saab (former Saturn dealers?), offering Opel-based Chevrolets. Ditch Saturn. Dump Pontiac. Rebadge Hummers as "Heritage" Chevys (H3=new Blazer?). So Cadillac, Chevrolet, Buick, and Saab would be the only four remaining brands.

I reckoned it would confusing to have three lines of products at three dealer chains all with the same brand name. She responded by noting that the average American woman (responsible for half of all car sales, and probably plays a role in another fourth of sales) could get honorary PhD's in shopping and could, in short order, keep track of what dealerships sold what brands. She feels that American men grossly underestimate the average woman's understanding of cars.

I think she's nuts...

[chinamonty]

As someone who is living in China 2468562 I can allay some of your fears. The Excelle is certainly being bought by not so rich people and GM does have its breadbox on wheels the Wuling so they are not just after the rich ones although there are plenty of them. Buicks are very popular as company cars/people movers. I would think that 20% of the factories I have visited have had a Buick in their fleet, either a Regal or more likey the GL8 people mover.
I guess in short when you have 1,375,000,000 people then even cutting off 3 "0's" still gives you a lot of potential sales
The last thing China needs is a Hummer although there are a couple of private imports around.
At present the range of GM here is totally and uttering staggering. look at the brands and models they have
http://www.gmchina.com/english/autom..._showroom.html

and they are supposed to add the Hybrid Buick as well.

[prototype66]

Originally Posted by tgagneguam

Notice how nowhere in there did it indicate that GM's downturn was a result of too many brands. Alfred P. Sloan was a great GM boss, and he called it right: a car for every purse and purpose. He was smart enough to put people in positions in which he was completely out of his league (e.g., GM design) and get out of their way, and he was smart enough to recognize that it would require more than one division to meet the aforementioned goal of covering the whole market. Executed properly, GM thrived, and it had no equal in the US.

That GM leaders after Sloan screwed up the recipe does not at all mean that a multi-division GM is destined to fail. It simply means misguided, myopic suits who are devoid of vision and who are focused on next quarter rather than on their loyalty to GM's long-term success are the cancer that needs to be excised from the bowels of the General.

Wow....someone send this quote to Rick and Bob please.
Very poinient and well said statement.

[monza164]

If you ask me...

In a perfect world there would just be Chevy, Opel, and Cadillac. The world isn't perfect; the Chinese love Buick's, the English have their Vauxhalls, Australians their Holdens. I think GM is getting better at reducing the number of different cars/platforms. Wait what was I talking about? China oh yeah. Send over some Hummers, rich people love Hummers. And there's more rich people in China than there are people here.

[SUPERBADD75]

Originally Posted by t-rex

My wife feels Chevrolet should split up into three "themed" chains, much like Toyota does in Japan. A "Value" Chevrolet, consisting of family cars, crossovers, SUVs and pickups. A "Heritage" Chevrolet (carved out of current Chevy-plus-another-brand dealers), with RWD performance models with a retro-theme. And a "Passport" Chevrolet (she lived in Canada for years), paired with Saab (former Saturn dealers?), offering Opel-based Chevrolets. Ditch Saturn. Dump Pontiac. Rebadge Hummers as "Heritage" Chevys (H3=new Blazer?). So Cadillac, Chevrolet, Buick, and Saab would be the only four remaining brands.

I reckoned it would confusing to have three lines of products at three dealer chains all with the same brand name. She responded by noting that the average American woman (responsible for half of all car sales, and probably plays a role in another fourth of sales) could get honorary PhD's in shopping and could, in short order, keep track of what dealerships sold what brands. She feels that American men grossly underestimate the average woman's understanding of cars.

I think she's nuts...

no offense, but with a strategy like that GM would be in more trouble than they're in now. that's the craziest thing i've ever heard of. WOW.....

[Brglotus]

GM can't get rid of any of it's brands because they learned from closing Olds, people just won't go to the next GM brand, they will go somewhere else. I know I'd rather have GMC over a Chevy Truck. I think this is good strategy for GM and hopefully they learned from their mistakes.

[Rocket 88]

Originally Posted by chinamonty

At present the range of GM here is totally and uttering staggering. look at the brands and models they have
http://www.gmchina.com/english/autom..._showroom.html

and they are supposed to add the Hybrid Buick as well.

Great link. you are right. Looks like a lot of vehicles. Thanks.