Wednesday, March 5, 2008

GM's Brilliant Strategy

GM clearly has no shortage of problems, but one of the most enduring and idiotic is the corporation's insistence on creating various models that are basically identical and having them compete against each other for buyers and GM marketing money. As The Wall Street Journal
explains:

For example, GM has four mass-market midsize sedans. The Chevy Malibu is backed by a ubiquitous ad campaign and is a top-seller. Meanwhile, the Buick LaCrosse, Pontiac G6 and Saturn Aura have struggled to build the awareness and recognition needed to compete. Toyota Motor Corp. has one model to compete with those offerings -- the Camry -- and last year it alone outsold GM's four models, 473,308 to 386,024.

A year ago the Aura was named "Car of the Year" at the North American International Auto Show in Detroit, but now, with Malibu marketing in full swing, Saturn dealers are struggling to move the Aura. In some parts of the country dealers are offering rebates and 0% financing on the car. Mr. Maguire said he had to line up an Aura financing package on his own because GM's marketing support for the car wasn't boosting sales enough.

Pontiac could run into a similar problem this year when it introduces a new rear-wheel-drive sedan, the G8. Although it is Pontiac's most important launch since 2004, GM marketing barely mentions the car.

Even when GM does spend on its smaller brands, it often sees little return. In past years, television ads have promoted Saab's sports cars as "born from jets," but in 2007 Saab dealers sold just 32,711 vehicles -- not much more than a single month of sales for the Camry or Honda Motor Co.'s Accord.


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