General Motors Co. (GM) ousted Joel Ewanick, the high-profile marketing chief brought in to change the automaker’s image, after company officials questioned the propriety of a deal he negotiated to sponsor the Manchester United soccer team, people familiar with the matter said.
GM agreed to pay more than 25 million pounds ($39 million) per year for seven years to put its Chevrolet brand on the team’s jerseys, according to the people, who asked not to be identified because the matter is private. That’s 25 percent more than current sponsor Aon Corp. (AON) pays. Terms weren’t disclosed in company statements.
GM leaders had to ask for Ewanick’s resignation after they perceived that he failed to make clear some details of the contract to the senior management team, the people said. As a result, the leaders didn’t know the true cost of the United deal, worth about $300 million to be on the jerseys, one of the people said. GM plans to honor the arrangement, which was altered from what Ewanick originally crafted, the people said.
“Ewanick’s departure may not be indicative of a problem with GM’s marketing strategy or dissatisfaction with GM’s market share, but it doesn’t make things any easier,” Adam Jonas, an analyst at Morgan Stanley, wrote in a note yesterday.
Ewanick’s departure places greater pressure on Chief Executive Officer Dan Akerson, who has overseen several senior leadership changes as the company tries to stem losses in Europe that have totaled $16.4 billion since 1999. Ewanick had announced marketing moves aimed at finding efficiencies and saving $2 billion over five years as part of Akerson’s push to improve operating margins.
Tom Henderson, a GM spokesman, yesterday declined to comment on the value of the sponsorship deal. Ewanick didn’t “meet the company’s expectations of an employee,” GM said July 29 in an e-mailed statement.
Ewanick was recruited to GM in 2010 from Nissan Motor Co. (7201) just two months after he joined the Yokohama, Japan-based automaker.
Before that he was with Hyundai Motor Co. (005380) as vice president for marketing for the U.S. sales division from 2007. It was there where he created his most memorable campaign, the “Hyundai Assurance” program that allowed buyers who lost their jobs to walk away from their finance contracts, an appealing pitch during the recession.
He joined GM during a time of management upheaval. Then-CEO Ed Whitacre had ousted or reassigned more than 30 managers, mostly in sales and marketing.
Ewanick said it was his privilege to “be a small part of Detroit’s turnaround” in a July 29 post on Twitter.
Ewanick’s departure shows that GM is still far from settling its management ranks despite recruiting several outsiders for top jobs, said Maryann Keller, principal of Maryann Keller & Associates, a consulting firm in Stamford, Connecticut. By contrast, Ford Motor Co. CEO Alan Mulally brought in just one outsider, marketer Jim Farley, after taking over in 2006 and has kept a stable management team, Keller said.
“You have a company that still seems to have too much internal dysfunction,” Keller said of GM in a telephone interview. “Mulally really only brought in one high-profile outsider. He proved you can take an organization that was rife with politics and fix it.”
Ewanick arrived with task of improving the image of GM’s Chevrolet, Cadillac, Buick and GMC brands. He introduced the “Chevy Runs Deep” campaign in 2010 during the broadcast of Major League Baseball’s World Series that was intended to emphasize the brand’s heritage and emotional connection. It’s a tagline that Ewanick said earlier this year was under review.
“The marketing has been shabby, erratic and inconsistent so the move is most likely positive for GM if it can find someone who has any notion at all of what the individual divisions stand for,” Art Spinella, president of CNW Marketing Research, said in an e-mail. “The ad agencies have been doing the best they can under Mr. Ewanick’s often helter-skelter approach.”
Facing greater competition from Toyota Motor Corp. (7203) after regaining production capability following last year’s Asian natural disasters, GM’s first-half U.S. market share fell to 18.1 percent from 19.9 percent a year earlier, according to researcher Autodata Corp.
Toyota’s worldwide sales surged 34 percent in 2012’s first half to 4.97 million, ahead of GM’s 4.67 million, putting the Toyota City, Japan-based company on pace to regain the top spot.
Ewanick’s ousting follows a string of high profile statements in recent months that drew attention to GM’s marketing operations and away from marketing its cars.
In May, on the eve of Facebook’s initial public offering, Ewanick announced GM would stop advertising on the social network and questioned its value. A few days later, he announced GM wouldn’t advertise in next year’s Super Bowl on CBS, saying it had grown too expensive. In June, he made off-color jokes during an advertising conference in Cannes, France, trade magazine Advertising Age reported.
“Part of the reason that it may have been a little bit easier for him to be let go was that his track record was mediocre at best,” Rebecca Lindland, an industry analyst from IHS Automotive, said in a telephone interview. “Recent decisions have caused a lot of upheaval. Upheaval doesn’t have to be bad if it’s productive. I don’t know how productive this upheaval was for everybody.”
Ewanick had also been aggressive behind the scenes. He turned over GM’s media planning and buying to Aegis Group Plc (AGS)’s Carat, and Chevy’s ad business was assigned to a newly created firm called Commonwealth, a joint venture between Omnicom Group Inc. (OMC)’s Goodby, Silverstein & Partners and Interpublic Group of Companies Inc.’s McCann Erickson Worldwide. Chevrolet, GM’s largest brand by unit sales, previously used 70 ad agencies around the world, the carmaker said at the time. The moves were expected to save $2 billion over five years, GM said.