THE AUTOEXTREMIST

July 8, 2009

The toughest job in marketing history.

By Peter M. De Lorenzo

(Posted 7/7, 11:45am) Detroit. A couple of weeks ago when I issued a midterm report for the automobile industry, I said that Ford and the General Motors Co. (as the “new” GM will be known from now on) will emerge as the leaders of what’s left of the domestic automobile industry here in the U.S.

In Ford’s case, it’s clear now that the tough decisions made under CEO Alan Mulally’s watch in terms of marshalling financial resources, reducing costs and most important – making long-term strategic sense out of Ford’s product plan - have been shrewd, prescient and position the company well out front of its domestic competitors. So out front in fact that Ford hasn’t just blown by its domestic rivals in terms of right-sizing its capacity and its ability to act ahead of the market rather than play the “old Detroit” game of reacting, it has passed its chief import rival in the market – Toyota – too, much to the surprise of most in the business and much to the consternation of Toyota managers both here and in Japan.

But that’s Ford, which has now become the leading domestic automobile company - basking in the hugely positive glow of being America’s original car company again - and it should stay that way for the foreseeable future.

What about GM?

All signs point to the “new” GM emerging from bankruptcy as early as this Thursday, in a stunningly swift turn of events that few anticipated. That doesn’t mean that there won’t be monumental problems and collateral damage left in this “surgical” bankruptcy’s wake, because there will be. With the giant supplier Lear Corp. filing for Chapter 11 this week, it’s safe to say that the fallout in the supplier industry will continue to be brutal and devastating to supplier companies and their local communities for years to come. There’s nothing about this part of the bankruptcy that will be “quick” or “clean” either, to put it mildly. Indeed, it will be horrific and disheartening to watch.

So the “new” GM emerges from bankruptcy, now what?

If you focus on the products on hand and the products in the pipeline, GM is even better positioned than Ford in terms of the depth and breadth of the vehicles they have coming.

Oh, if it were that easy.

The biggest problem by far for GM - and something I’ve been hammering on for years now - is the perception of the company, which is now at the lowest point in its history by far.

Start with building decidedly mediocre to crappy cars - with a few notable exceptions - for about 25 years (roughly 1977-2002, aka “The Darkness”), add in the negative word-of-mouth “buzz” associated with that, and add in the fact that a generation of buyers walked away from GM (and Detroit) because of that hovering negativity, add in the anti-car, anti-Detroit “intelligentsia” adding fuel to the fire at every opportunity (with the NY Times’ Tom Friedman acting as self-appointed Patron Saint of the movement), add in the congressional hearings in Washington last December - aka “The Witch Hunt” - where GM and the rest of Detroit became the scapegoat for all of America’s ills - both real and imagined - and finally, add in the constant drumbeat of the two “B’s” associated with GM for over eight months now – “Bad” and “Bankruptcy” – and the fact that the government and the UAW now control the company, which has turned-off legions of consumers predisposed to buying American cars, and you have a recipe for disaster unprecedented in the annals of American industry.

The fact that GM can’t seem to market itself out of a paper bag isn’t helping either, because the obvious thing that GM must get its act together on is marketing. And knowing this, I believe the following key questions must be asked by GM management at this juncture:

If GM’s products are so damn good and competitive, then why aren’t more American consumers aware of just how good they are?

If it’s all about Cadillac, Buick, Chevrolet and GMC from here on out, then what vehicles will be in the forefront for each of these divisions? And if they can’t be leaders or equal to the best in the segments they compete in, then why are we bothering?

Should “GM” as an idea and a company be pushed to the background in favor of touting the individual brands, or is denying the origin of the divisional offerings a fool’s errand?

And if you can’t deny the lineage of the brands, then what will be done to change the fundamental perception “out there” that GM is a failed, “loser” company?

And finally and most important, isn’t it time to do a wholesale reevaluation of the ad agencies who have been involved in doing GM advertising, and isn’t the time long overdue for a fundamental change in order to find an entirely new approach?

Emerging from bankruptcy is a victory of sorts for the “new” GM, but it frankly isn’t much to hang your hat on because now the hard part really begins.

I used to think that changing consumers’ perceptions about GM would be the toughest task in automotive marketing history.

Now, I believe it will be the toughest task in marketing history, period.

Thanks for listening.

See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, July 9, at 7:00PM EDT at www.autolinedetroit.tv.

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