Tuesday, June 07, 2005

GM's Shark-Jumping Marketing

[posting on behalf of the Monk]

Last night, while watching Craig Ferguson (free plug!), The Monk saw a GM commercial that made two points: (1) GM had the car production plants ranked 1, 2, and 3 in initial quality by JD Power & Assoc., and (2) that GM would be selling cars to the public for the employees' discount rate.

This is pure desperation.

GM's sales have gone down and down and it has steadily lost market share (just go to Forbes.com and look for Jerry Flint's columns, then scroll the archive). GM's market share is even worse than advertised because it relies heavily on fleet sales (i.e., major rental car companies like Budget). The price reductions to sell at the employee discount rate means GM is desperate to just get its market share back and more GM cars on the road. It would make its money back on GM financing (which could be a precondition of the employee discount rate, the ad didn't say).

As for the initial quality charge: that sounds better than it is. Long-term quality is more important for most buyers who lack Wongdoer's overly high salary [Ahem!] and who won't purchase cars every 3-4 years. GM's long-term quality does not compare to Toyota, Honda, Nissan (including their upscale nameplates Lexus, Acura, Infiniti), or BMW and lags behind Ford among US brands. Initial quality excellence means that GM (to its credit) does not have the computer and electrical problems that can crop up at any time and which negatively impact short-term quality ratings on other brands (two words: Volvo, VW). But mechanical and build-quality are generally more long-term issues.

Finally, GM cars are just boring (other than Saabs -- a GM partner company). Why is GM failing? It's the cars, stupid.

[addition by Wongdoer: I owned two used Saabs back in the day; hardy, eccentric lovable cars. But a couple years ago GM closed the design works in Trollhattan, Sweden. The new Saab's I think are going to be gussied up versions of the boring GM sedans. Even the new Saab SUV is built on the chassis of the Chevy Trailblazer.]

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