General Motors got its transformational deal with the United Auto Workers, which will take a huge bite out of the healthcare cost deficit it suffers compared with Toyota, Honda, Nissan and Hyundai.
Now, the big automaker, perhaps, will get back to focusing on restaging the company to be more competitive with its Asian rivals where it counts with the consumer—product, quality and image.
I am hearing that yet another management reorganization is in the offing. Detroit carmakers like to reorganize. They do it often. For the past several years, GM has centralized a lot of sales, marketing and product development, leaving its brand groups, like Chevrolet, Saturn, Buick-Pontiac-GMC, Saab, Cadillac and Hummer without much stick other than marketing campaigns, dealer relations, some product featuring decisions and the like. The next re-stage, say sources, will return more authority to the brand groups.
It’s difficult to know if this will pay off. What I do know is that GM’s newest flock of vehicles, with some exceptions, are very very good. The crossovers—GMC Acadia, Saturn Outlook, Buick Enclave, Pontiac Solstice and Saturn Sky, the new Chevy Malibu and Saturn Aura. The new Chevy Impala and Cadillac CTS can hold their own bolt for bolt with foreign rivals. Seriously. I drive pretty much all the cars the automakers come out with. From the standpoint of fit and finish, performance and initial quality, I don’t see much difference between the new Malibu and CTS versus the Toyota Highlander and Scion xB I have driven in the past two weeks.
Where the separation comes through loud and clear is reputation and image. Honda has a new Accord out. Dealers and researchers will tell you that Accord buyers just keep coming back again and again, and they are incredible brand advocates, telling their friends that that their Accords never break, never let them down. Toyota and Honda still lead GM in quality and reliability. The gap is narrower than it used to be. But it’s still there.
GM’s brands are not as trusted, nor are they as fashionable or aspirational as Toyota’s and Honda’s. GM has not been able to make much of a dent in this problem, not because of a vast automotive media conspiracy (are you reading Bob Lutz?), but because of its own lack of consistency and coherency of purpose and management execution.
If we, as reporters, see a contractor trying to build a house in a field, and the house keeps going half-way up, and then gets torn down, and the contractor installs poorly designed heating and energy systems, year after year, the overall impression breeds a lack of respect for the contractor. When one of the contractor's houses finally goes up, and he stands in front of it, saying, "Hey...why don't you like my house?" The answer, permeating a lot of coverage of GM's products and performance, is because the writers witnessed the ugly process by which the house went up and perhaps doesn't have faith that the house is really as sound as the other builder's whose house went up orderly and with state-of-art design and manufacturing processes.
Toyota garners much more respect than GM, I believe, because the world has a great deal more respect for Toyota's processes, management decisions and overall conduct of the company. That translates to respect for the end products.
GM may be ridding itself of its healthcare cost legacy. But they are still stuck with their brand and dealer legacies, which spread limited resources too thin. Buick is a dead brand. Saab is hopeless. Hummer is a very dubious business proposition, and probably little more than a distraction going forward. But GM is invested, and it can’t shut down Buick willy nilly without spending perhaps up to $2 billion buying out dealers. And there is no defensible return-on-investment you can sell to Wall Street or shareholders for paying dealers to go out of business.
Images of these brands range from stable to irrelevant. Chevy, GMC and Cadillac are stable and should receive more investment and coherent marketing campaigns. Pontiac and Saturn are stuck in the middle—they each have equity but need more fixing. Buick, Saab and Hummer could disappear and few would care, except the dealers.
Did I say coherent marketing strategies? When you are spread across so many problem brands, keeping coherent and effective brand strategies has been impossible for GM. Jokers who rotate in to marketing jobs from posts such as South American regional sales managers or engineers, routinely make a hash of it. GM perpetuates the system because it’s the way they have always done it. Let me quote Ford CEO Alan Mulally who has been challenging the status-quo all over Ford, “How’s that workin’ out for ya?”
One of the key image problems at GM is that customers and potential customers have a tough time understanding what Chevy, or Saturn, or Buick, or Pontiac or Cadillac is supposed to stand for. You know why? Because the managers at GM haven’t had a clear notion of what those brands are supposed to be either, because they keep letting the marketing person of the week change the strategy.
I was talking to a marketing executive at the spirits companay Brown-Forman this week, and was astonished to learn that the incredibly successful brand Jack Daniels has had essentially the same marketing platform since the 1950s, and that the advertising creative most responsible for stewarding the marketing communication has been on the case since 1967. 1967!!!!!!GM could learn from studying that kind of commitment to marketing and to brand management.
Now that healthcare is behind them…I nominate GM CEO Rick Wagoner and sales and marketing chief Mark LaNeve to be the next stars of No Excuses jeans ads.