Delivering on our Total Value Promise
By Mark LaNeve
Vice President
GM North America Vehicle Sales, Service and Marketing
While many of the business media and industry analysts were understandably impressed with the success of our GM Employee Discount for Everyone campaign, some suggested that it was just a new twist on the marketing approach we’ve been using since Keep America Rolling in late 2001. They warned that we might be eating into future sales and future profits by holding what amounted to a summer fire sale.
However, we saw some very encouraging signs in America’s response to this promotion. And we think we have good reason to be pumped up about the launching of our 2006 product line.
First of all, this program proved that customers like our products. That’s undeniable: we sold record numbers of trucks and sport utility vehicles, and our launch vehicles continued to be hot properties. Unprecedented numbers of GM cars and trucks moved into consumers’ garages in June and July, and a lot of those consumers were new to the GM family. OK, you say, if people like those products so much, why weren’t they flying out of the showrooms before June? Well, it’s obvious that the sales promotion made the difference. Customers liked the lower prices we offered, and they really liked the idea that “you pay what we pay.” It was a simple idea that really caught their attention, and, in fact, the attention of our competitors and lots of other retailers.
Here’s what’s really encouraging to us: the GM Employee Discount program attracted people to real value. They recognized that great vehicles could be had at great prices, and they jumped at the value we offered. Nobody will pay good money for junk, no matter how low the price. So we’re excited about the fact that we can combine the right products with the right features and smart pricing – and people will take notice and respond.
Therefore, we are introducing the 2006 lineup this month with an emphasis on value. We have cut prices on 30 of our 76 models. For instance, the Chevy Silverado Crew Cab was $31,045 in 2005, but the 2006 is priced at $27,990. We are launching new models at prices that are aggressively competitive, such as the Pontiac Solstice at $19,995, when we could sell them all at twice that much this year. Also, we are extending our warranties on certain models and adding former options as standard equipment.
We’re not out of the incentive business and neither is anyone else. Every manufacturer is using incentives today. There’s practically no brand anywhere that says, “we have no deals.” That’s why we believe our Total Value Promise has the chance to be a clear and meaningful difference to you. As we add OnStar and Stabilitrak to all GM models by 2010, for instance, we want to attract people with our features and our quality – not just the latest wad of cash on the hood. What do you think? We know a couple of our competitors have the “value” message down cold. Is GM finally getting it right?
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I like the value pricing idea. Keep the rebates to a minimum and price the cars right and they sell.
OnStar… there is another idea. I have had it on several cars, but never renewed it due to what I think is an excessive cost. Does it really cost $16.95 a month for that service to remain profitable? How many subscribers would you have if the price came down to $5.00 a month? I would renew two vehicles in a second at that price, but never at $16.95.
Keep the quality high, keep up the good work, and think about that OnStar price! You might be surprised how many people would take you up on a cheaper price.
Mark,
I watched you on CNBC today, i’m thrilled that employee discounts were such a big success. I’m also excited that well built and exciting new vehicles like the HHR are coming to market a few thousand dollars less than I was expecting them to! I’m even more exciting for the products yet to come that the journalists have been raving about. I’m hoping that 2006 will be a significant turning point for GM.
The Total Value Promise is a step in the right direction. However, it should be applied to more that just 30 of the 76 models.
The next step is to truly deliver great products to the market. Inspiring designs, great interiors and world class engines and transmissions.
We don’t want to hear – “wait till you see what is coming” anymore. The competitive market demands great products today, not tomorrow.
I think this re-pricing strategy is a good idea. It will give GM’s vehicles a better perceived value.
We’ll see how sales go this fall after so many people bought vehicles in June and July. I bought an ‘05 Silverado in July and I think I got a good value.
When will the rest of the 2006 prices be released?
Hi Mark,
Great job on sales and marketing lately. I heard the latest commercial on the radio yesterday about GM quality awards and mentioning how GM is helping the economy. GM ran great ads during the employee discount promotion showing GM facilities and people. This is what GM’s loyal consumers have been trying to tell you in these blogs. Your advertising needs to be strong like these ads and like the image ads you show for Cadillac.
LIFE AFTER THE EMPLOYEE DISCOUNT?
Here is a suggestion for how to keep the sales momentum. Advertise a “friends of GM” discount for those who have a GM Master Card. GM has these customers on file, and there are potentially even more who would sign up for the GM Card over the internet.
Yet another suggestion, is to have a nationwide GM Goodwrench club card that offers menu pricing for brake jobs and routine maintance. Benefits could include time saving by not having to fill out billing information at service visits and information about discounts on GMAC Auto Insurance and ONSTAR.
Another suggestion is a “WE HEARD YOU” advertising campaign offering to reduce MSRP’s on new 2006 models along with a $1000 rebate, and a come and see our new low prices on 2006 models.
GM really must continue to broadcast its message of being a great company with quality products and service on radio and TV because the competition has been doing these things. GM needs to be heard, don’t just take for granted that people know who GM is, because in today’s market many groups of consumers have no sense of what a great company is anymore. Many of the undecided just have not heard or do not know your brands. Many undecided look to popular media sources for advice, many of which are biased.
New educated immigrant groups and younger buyers just look to the strongest message they hear. That’s why GM needs a newer fresher marketing campaign to reach them. GM car owners already have been doing their part to recommomend GM’s new products to their friends, so its nice to hear GM finally sticking up for itself for a change.
A suggestion from a friend to test drive a GM product to one of these new consumer groups often results in a purchase. Where without it, the consumer has only whatever message they hear from the loudest media source. For conquest and conversion try something like a “friends and neighbors of GM owners” test drive and register to win campaign.
Here is an example: just by mail send GM owners and GM master card holders test drive referral slip for register to win to give to a friend or neighbor who doesn’t already have GM, award extra percent on points on their GM card if the friend neighbor actually turns in the referral slip and test drives the new GM product and results in a sale.
In speeches GM execs have been too modest about GM products and some what overly complimentary of the foreign competition, it makes them seem un competitive and unconcerned.
Your foreign competition doesn’t pass the same nod to GM, some media use GM’s soft soap generousity against GM biased reviews. Try this, concede nothing, and tell them GM aims to be the best, and isn’t so concerned about being the biggest, accept the challenge, and tease them by telling them to wait and see GM’s new product response coming soon.
GM got to be the biggest by being the best, don’t forget that much. Aim to be the best at what you presently offer and believe in GM’s product line as much as GM’s loyal customers do. If sales are not up to expectations, admitt that GM is just not getting its message to the public, or use the line GM is working on a “new design” that is a can’t wait for secret. Let the public know how proud you are of the great engineering team that GM has, give the consumers the confidence that GM owners already have in GM’s wonderful products.
GM owners really can’t believe when other brand owners don’t know or haven’t heard about GM quality, durability, and reliabilty, or even know which brands are GM brands.
A classic conversation is when a GM owner says, GM makes the best, and the hearer responds, “you mean like GMC”? Showing that the person is completely unaware that GM includes Cadillac, Pontiac, Buick, GMC, Chevrolet, Saturn, SAAB.
This is what happened to Oldsmobile, GM stopped spreading the good news. Yet, GM owners still love it.
Keep spreading good news,
I think that one of the strongest features of the Employee Discount for Everyone program was that prospective customers found the pricing simple. They knew that they were paying the same price as their neighbor, and weren’t getting ripped off by the dealer. I’ve seen this comment over and over again on Edmunds and other sites that host automotive discussion forums.
Good luck. I like to think that buyers are sofisticated enough to know the difference between rebates, sticker prices, and the bottom line, but that’s me. After some thought, I realize that the typical consumer isn’t that sofisticated. I like Chevy trucks, but I’ll probably never own another because the bottom line is never competitive with Ford, at lease for what I need, which is a base model 2WD, standard trans, 6 ft bed, 6 cylinder. Oh, I do like AC. Anyway, good luck with your typical consumers.
I drive past a Chevy dealership & a Pontiac dealership each day on my way to work and it amazes me that such a once great company builds such pathetic vehicles. Do you really think ‘value pricing’ will excite someone about a malibu or impala? Even if a buyer could save a few $$, why would anyone want a Cobalt?
The August issue of a major magazine commented on how the Buick GS and Olds Cutlass were really great cars that justified GM having 60% market share. What happened?
Stop the proliferation of badge-engineering. Build interesting, quality cars that retain their value. Cars that people would be proud to own. Then the price wouldn’t matter.
Reducing the prices a bit on only half the models you sell also only makes half of the those shopping happy.
That reduced cost does not overcome the lousy servicing by dealers, multi trips to get the same repair done or the sloppy workmanship dealers do so the slight lower sticker prices long term is not worth the service abuse we get.
Also GM should just as well treat those customers who have product that is out of warranty by reducing the costs at the parts counter
As a thoroughly delighted purchaser of a 2006 Grand Prix GXP, I can say that this car is a steal at the price. Keep up the good work!
When will the employee pricing be coming out on 2006
models
Mark,
I am very encouraged by your new pricing strategy. The Koreans have built their success on the back of low prices and high content value. GM’s high MSRPs and high rebate schemes could only work for so long, and people were always concerned ajd disappointed after thinking they got a “deal” when their resale values tanked each year a new deal was introduced. Value pricing you can count on has worked for Saturn – no reason it can’t work for other GM brands.
GM’s biggest problem right now in my opinion is the number of old platforms and old engines being employed in “all new” vehicles.
The Cobalt, HHR, and G6 3900 GTP with 6-speed manual are great introductions this summer that show GM is serious about competing.
Now please cut the fat and get rid of the old hangers on, like the 3400 engine, the W and G bodies with their long overhangs and 1990’s greenhouses and “bulletproof” but ancient 3800 engines.
And a final question: Where is GM’s mainstream, affordable Overhead Cam V6? It’s what the market apparently wants, even if you and I disagree. While the 3500 is a fine engine for a Chevy, Pontiac deserves more, and Buick buyers shouldn’t be expected to PAY more for a 3.6L DOHCV6 in anything higher up the totem pole than the LaCrosse.
Here’s hoping that you employ the 2.8L V6 in more vehicles across GM’s brand boundaries, and begin planning the phase out of the 3500 family to be retired by 2010.
In the meantime, the 2.4L VVT enhanced Ecotec engine is a great 4-cylinder, and I hope to see it used more as it has equivalent power to many of the V6’s GM used in its sedans in the 1990s.
My recommendation is to offer targeted incentives to select competitors. For example offer $100 to any Toyota/Honda owner test drives a Chevy or Pontiac and then offer them a special $1000 rebate on those same vehicles. That would show confidence in your new products and get the attention of import owners. I think it
s a good idea to keep using your employees in your ad campaigns
Mark,
The employee price for everyone program was obviously a great success and the new value pricing should go a long way towards creating a better “value perception” as the used market should show much less depreciation then in the past. Now, if you can get that message out with the same resonance regarding the cost differential between GM products and the transplants (pension, health care costs, etc.) I think you may find that the public is willing to consider that too. Many people I have spoken with are unaware or don’t understand the cost implications that are involved…(imagine being able to offer an Impala for $1,500.00 less or better yet, with $1,500.00 worth of better materials or engineering at it’s current price.) The lack of understanding is not limited to any social/economic group either. I had a Doctor look at me incredulously when I explained it, but here in Detroit we know the challenges while in much of the rest of the country they don’t get it. I have a few ideas on how to articulate the message and would be happy to share them. The amazing thing is that when I explain it to people, many began to consider it “unfair” to the big three that they are stuck with this burden and the transplants are not… what a potential marketing angle that could be.
Good luck and when I turn in my 2nd CTS in the fall, it will be for a 2006 STS V-8 Luxury/Sport.
Mark
Frankfurt coming
There was plenty of interesting Saab chatter over the weekend. The upshot of it all? ————————————— There are people around, even here in Australia, that don’t necessarily work for GM and yet have access to the soon-to-be-relea…
Yay! It’s about time. I can remember when American cars actually WERE the best, but for a long time now, imports (I mean Japanese) have been viewed as the best quality, best value.
I don’t think it’s going to be easy to snatch the “best quality” crown away from Toyota and Honda, but “quality” in American (particularly GM) cars has improved so much that it should no longer be a threshold disqualifier. Instead, the battle needs to be won on “VALUE.”
For example, for the past several years I have looked (but passed over) the Impala. Here is a car that adds VALUE with its larger body, interior and trunk size; with its larger, torquier engines; and with its great gas mileage. Given those pluses, I can live with pushrod engine technology and with 4 speed (but reliable) automatics instead of 5 or 6 speed automatics (untested). But, every year for the past few years I have passed over the Impala has on the VALUE issue. I want to get the larger size of the Impala and the larger 3.8/3.9 engine for the SAME price as a smaller Camry or Accord, I want the larger engine for the SAME price as the 4 cylinder in the Camry or Accord. To me, THAT would be VALUE. And don’t forget that while you can take it slow on engine and automatic technology, the side airbag and side curtain airbag thing is something we are beginning to pay attention to now, thanks to the Insurance Institute side crash tests.
As for “quality,” I have watched the reports from JD Powers, Consumer Reports etc. for 5 years, and while the QUALITY of the Impala isn’t as good as the Camcord – it’s still pretty darn good on an absolute scale, or compared to 10 years ago, and even beats Mercedes and BMW. THAT amount of quality is good enough for me (although going to 4 years/50,000 miles on the warranty would add additional VALUE).
So get the Impala out there with a Camcord pricing structure, not an Avalon price structure (or 300C pricing structure) to add VALUE. Don’t cheat on side curtain airbags or 4 wheel disc brakes with ABS – that’s VALUE. And don’t think that the sleek interior and exterior updates for 2006 and the stronger engine mean you don’t have to compete as much on price with Camcords as in previous years. You have to compete MORE – the upgrades are making you CLOSER to the Camcords, not better – it is the brute SIZE of the Impala where you have added value. And remember, if you falter now, the 2006 complete refresh of the Camry will make life even tougher if you don’t win early admirers of the revised Impala over with sales NOW.
(As long as I am offering my 2 cents, how about an interior in the Malibu as pretty as the one in the Cobalt – the upholstery in the Malibu looks darn cheap for a 20-23K car).
Now, I think you are going to have to be careful with your value pricing technique. If you value price Saturn, and refuse to discount, that’s ok because it’s part of the Saturn culture. But, for the other brands, you need to allow for the usual dealer negotiation, end of year sale, spring sale, etc.; you definitely want to get away from inflated MSRP’s with corresponding massive rebates, but you still need to leave SOME room for dickering, it’s part of our American culture. Let’s face it, even the Japanese still have dickering (except for Scion).
In other words, don’t try to fool us by saying “reduced MSRP, but that’s it!” (I think the reality is that the Malibu is worth less than a Camcord, due to resale and lower quality, and that an Impala is worth the same – trying to price the Malibu one for one to the Camcord invites future rebates, and pricing the Impala stiffly over the Camcord drives away sales, period.
(As long as I am offering my .04 cents, why don’t you make the 2.4 stock on LT Cobalts, and optional on the LS? The main allure of the Cobalt is that it kicks butt, and with the new 140 hp Civic coming out, I think you should up the ante.)
Finally, let’s value price all models, except maybe the ‘vette and Hummer. Otherwise sales of your “old era” cars are going to suffer.
One thing I would like to congratulate you on isn’t the success of the program, but the message of the commercials. These where the first commercials I’ve seen where GM has touted their innovation, leadership, and strengths. You talked about your hydrogen powered cars, you talked about best fuel economy, most HP, tightest turning radius, best initial quality (still need long term quality), and 3 great plants. Having a great price is a huge plus, but having a great vehicle is even better, these commercials showed that GM still makes great vehicles. If you keep producing high quality vehicles with cool features, good gas mileage, and bold designs, and then advertise about these specific points people will continue to come to your showrooms at an increasing rate.
“Even if a buyer could save a few $$, why would anyone want a Cobalt?”
You mean the car that just beat the Acura RSX Type-S in a Road & Track comparo?
Quite an accomplishment for such a pathetic vehicle.
Mark,
It’s great to see that there is someone at GM who is finally getting the message. GM is the worlds larget car company. We can beat the competition by offering value oriented products at a great price! Product drives everything..so styling, interior, and powertrains have to be the best in the class in order for GM to get the respect it needs from non believers. What to know how to get back to 40% market share?? Hot styling. Look at what it did for Nissan…
I think its good that GM has stopped with all the rebate gimmicks and just started out with a lower MRSP. The Total Value Promise sounds like a good idea and it should help to get sales up.
As for letting you know what we think about GM, I think I ought to tell you that us Cadillac owners discuss alot of these same issues you bring up at our website (CadillacOwners.com) and most of us think that the GM Employee Pricing for everyone was one of the best things you’ve done in a long time as far as advertising and marketing.
I think that if you keep bringing out nice looking, affordable cars (like the Solstice) and you get rid of cars that make GM look bad (like the Aztek & Cavalier) then you will do fine. ALso, I think that GM really needs to do something about hybrid vehicles, since Ford, Toyota and Honda are already touting them as the next big thing.
Anyway, Good Luck and Congratulations Mark!
Keep employee pricing
going!!!!!.Continue to sell off 2005 models before the value pricing cars arrive in volume..Keep the traffic flowing into the showrooms.Why even risk a slow down ???.It takes so much to create the excitment that we are selling in today!!!I’m GM locked and loaded it’s OK to sell out of your inventory.God knows every vehicle can be replaced.Let the consumer have a crack at every last 2005 GM vehicle currently being sold at employee pricing.Why take the foot off the gas pedal now!!!!!.A customer buying a GM car or truck today is a happy customer,getting a great car at a great deal.On a 2005 what more could you ask for.If the lots are low in inventory on 2005’s thats got to be nothing but great for GM.I guess my point is why not keep the party going!!!.Whats a 2005 models chance of selling in 30 days from now when the 2006’s arrive in numbers!!!
Mark LaNeve,
I look forward to seeing your sales figures go through the roof as sales figures come out tommorrow. Of course we will miss the most successful sales campaign in automotive history. Who wouldn’t except the competition.
You are right, the difference was VALUE. Not only do you get the best price but the best cars as well.
The 16 J.D. Power awards that you showed in the adds really hit home. Please don’t stop running that add look how long you worked to get it.
That is why your add campaign still outshined Ford and Chrysler we will see. And the imports are too embarrased to admit you got it right so they could not copy.
Value pricing works that is why WAL-MART will make more money than Toyota this year and grow even faster.
Still it may take time so give it time to work.
Still the “You Pay What We Pay, Not a Cent More!”
Amazing.
“The Employee Discount, and How GM Got Her Grove Back”
Nobody thought an elephant could dance, an old dog could learn new tricks, the rust belt would churn out so much metal ever again.
But you did it, and I hope there is more to come.
May God continue to bless the Neapolitan.
Most people start the car shopping process because of one of these components: Need, Desire, or Discounts. Value pricing is the right solution for two of the three. Value pricing is key to both the “need” & “desire” shopper for sticker comparisons of competing models and accessories. Product design is key to getting the margins that create the value & desire. However value pricing will have no discount excitement after a few months. That will be the next challenge to draw that group back in. I would use free service for 2 years or 36,000. Cover everything except collision & damage. I would point the campaign towards “It will not cost you a dime to own a GM car”. With low warranty claims & costs this service should cost you less than a typical rebate.
Rene Curry
Xiamen, China & Grosse Ile, Michigan
I agree that it is better to price your cars competitively, rather than always use cash-back strategy to bring in the customers. The problem with too much discounting is that the value of the cars of the customers who bought their cars at normal price immediately falls (not a good feeling for your best customers).
Since people get addicted to heavy discounting, it is difficult to get them out of this addiction. You have to be patient and develop a long term plan, and execute it without losing your nerve (admittedly, a difficult task). If you are successful, then you can periodically use a small amount of cash-back, if necessary, to nudge them over to write a check.
Hope the best for a good August.
I’m glad to hear GM is finally pricing their vehicles more in line with what they are actually sold for, I only hope this will reduce the endless promotions. I understand some will undoubtedly be necessary, but it’s never a good thing for a customer to say ‘I’ll wait for it to go on sale’ – that person rarely returns after they’ve found a better deal elsewhere. Hit them with a great deal in the first place, and you’re much more likely to make the sale.
However, that’s only one piece of the pie, and one of the easier problems to fix. GM has a long way to go in the perceived quality department. I think many have forgotten that quality does not only mean fewer things went wrong, but that it doesn’t feel like something will go wrong either. For example, a cadillac’s glovebox may have a nice solid feel to it – but a buick’s may feel flimsy. it may work perfectly fine, and do the job well, but it is perceived as being cheap, and therefore easily broken. I understand that the buick is not as expensive as the caddy, and therefore some costs must be decreased, but all too often gm cuts a little too much.
The other big problem GM has is badge engineering, as has been stated numerous times. But it was not long ago it was stated that you’d rather have pontiac have 3 or 4 great cars then 5 or 6 mediocre ones. you made a great start with the Solstice. but if you could make the vue and equinox look different, why does the torrent look like the nox with a nose job? even the interiors are identical, right down to the door handles. it seems it at least could have had some styling cues from the solstice, even if it was just the headlights (the existing headlights look like they belong on a gmc). i could go on, but the gist is that i feel pontiac would do much better with a series of lower-volume, high-performance, highly styled vehicles, but still mostly based on existing platforms. but throwing a split grill on a chevy does not a pontiac make. similar goes for other divisions, but i won’t elaborate here, i’m sure this is plenty long.
ps. for what it’s worth, ‘torrent’ is a great name for a pontiac. and would be even better if it had a modern day sibling named ‘tempest’.
Mark LaNeve,
I believe the Employee discount was incredibly valuable lesson for GM. Now I think that it is important for GM to still include the customers in the comercials. I heard this off of C&G I believe, maybe it was camaroz28, but: “You have Said It, and We have Listened, Introducing the all new Value Pricing…” I believe the reason GM got such a boost in sales was due to the phrase “You Pay what We Pay” because as many of us know, the incentives were accually less then the previous month.
Whatever GM does, they must go about advertising why people should by there cars, speak about the incredible value, talk about the longer warrantys, speak about J.D. power assoicates results (look at what Hyundai did for the 2004 Sonota), GM must make the Cars in the show room the incentive, and with that, GM can get away from several thousand dollar rebates.
“Is GM finally getting it right?” Until every company posted blog provides an update on your hybrid progress, I would have to answer, “no.” There is a hybrid vehicle revolution happening – Hybrids are the biggest status symbol going. The perception is that GM is an also-ran, at best in this area. Don’t brag about how you can cut prices, brag about how you are going to capture a chunk of the paradigm shift into hybrids.
This doesn’t change the fact that your whole business model is not really better cars, but OK cars at good prices. Whats your margin there? Hah. Get the better vehicles out, and hope that people figure out that they’re great before you go out of business.
Please don’t clutter up my car with OnStar gadgetry. I have no intention of ever paying for the overpriced service, so the money GM will spend putting unwanted equipment into my vehicle’s interior represents not only wasted expense, but a customer dissatisfier as well.
And if you want to try something different in a sales promotion idea, consider a program in which a retail sale will trigger a charitable donation to the school of the buyer’s choice. The schools that are constantly inundating students and parents with an array of annoying fundraisers will be highly motivated to promote the plan and GM could get some good press for helping promote education. Just a thought.
Mark,
Interesting comments. It doesn’t surprise me that GM has taken anecdotal information from a short window and ran with it. In the end, I believe you will find out your premise is inaccurate. As a prior consultant with a strong marketing background, this reminds of me a standard data mining story we would tell our clients which shows the trap you may have fallen into.
The old analogy we used to use was when retailers would mine their data and find beer and diapers were common ticket items on a small dollar purchase. With incomplete information the logical assumption is that babies are drinking beer.
I believe the information gleaned from GM’s give away is similar. A few supporting comments to bear this out. 1) GM is not the only auto maker to see increased sales. In fact, the three major Japanese brands all set record sales as well. So, if the six top auto makers in the American market are reporting record sales, what is the chance the consumer is attracted to GM’s product and not the “deal”? It is more likely that you stimulated demand across the board. 2) History repeats itself. You’ve trained the consumer and now you have created a new drug in the addict’s portfolio. Every time GM gets into a pickle, it’s a new “deal”. Zero interest, rebates and now the ludicrous GM employee deal. Or the even more crazy employee deal plus we’ll pay you offered by Ford and Chrysler. 3) The industry sales rate created by this program is totally unsustainable. There is no way the consumer can continue to fund the top six auto makers with double digit growth. The facts are more likely that they are pull ahead orders. 4) 75% of refinancings on home mortgages were “take outs” since your announcement of this give away. That means your customers are likely using their home equity to buy a car. That is totally unsustainable. 5) The consumer is relatively close to being tapped out at this phase of the economic cycle and with interest rates going up for the forseeable future, hence the free money gained by refi’s and variable rate credit vehicles is nearly over if not already over.
So, I suspect the long run sistuation is that GM has made its situation worse by attempting to alleviate a short term supply glut. You’ve created somewhat of a mini-demand bubble which is very likely not sustainable. And you’ve offered the consumer a better deal than they have ever had before so you’ve created an understanding that you’ll cave even further if things get bad enough. And to top it off, you announce that you were just kidding that it was to be over August 1 and extend it. You break every rule of marketing and brand management.
I just don’t understand the infatuation with give aways at GM. It’s a sign of poor brand management, poor designs that won’t sell and being totally out of touch with consumers. I am not aware of any marketing case studies since the beginning of man where your tactics create long term value, brand strength or improved business results. Not only that, but you’ve seemingly drawn inaccurate conclusions or incomplete conclusions and now you are creating your entire pricing structure around this data? Are you kidding? You should know “value” pricing in itself doesn’t work. Look at laggard Saturn. This behavior is a crutch for extremely poor execution across the board.
Frankly, such desperate attempts are additional grounds for a sweep of the corner offices. If you think I’m critical, it’s because GM can do much better but has been mired in nothingness for decades. Your employees and customers deserve better from senior management.
I believe it was Chrysler that offered the first automobile rebate incentives over 20 years ago. Since then incentives have become a much too common marketing practice with the American autos. Consumers have been programmed to wait for, what they each perceive as, the best deal yet. And it’s not just in the auto business. Incentive marketing has spread into almost all durable goods and even into consumables. We have Instant coupons and mail-in rebates on groceries. There’s free shipping, mail-in rebates, on-line rebates and low financing on most every type of product. Office supplies, electronics, appliances, furniture, and power tools to name a few.
No matter how far you drop your prices, it’s going to take a long time to re-program American consumers into making purchases with out incentives.
Mark,
Yes, you proved GM knows how to throw a “sale”. Congrats on clearing dealer lots.
And you learned, as you have with Saturn, most consumers like no-haggle pricing.
NOW GM needs to prove it can launch new models people are jumping up and down for , and willing to pay a premium. I believe you guys can do it!
Yes, more and more GM employees are starting to act like they are responsible for creating successful products than they are about counting their days to retirement. You can’t have one without the other!
Yes, welcome to the new economy; there is no substitute for great (not comparable) product! bring it on…america is waiting to test your wares.
Hello Mark,
Why is it that GM insists on operating as one homogeneous lump? For example, why was the GM Employee Discount applied to all divisions? Cadillac should never see a rebate of any kind ever again. All that does is tarnish the brand, which should be elevated to somewhere between Mercedes and Bentley, and should not sell any vehicle based on an architecture shared with other GM divisions.
Cadillacs, along with Hummers and Saabs, should also not be “value priced” (I’m not saying that they will be). Value Pricing should be applied to Chevrolet and Saturn, which are the everyman’s divisions. A totally rear-wheel drive performance lineup for Pontiac and a vehicle-for-vehicle mirror of Lexus for Buick (based on FWD architectures equipped with AWD) will elevate those brands beyond the need for value pricing.
As for technology, spreading it arbitrarily among brands does not adequately leverage it. For example, how about making the Duramax diesel available in all Hummers? A fully hybrid lineup for Saturn? European diesels for Saab? Available AWD for every Buick? Equip all Cadillac engines with gasoline direct injection, then use the conventional versions of these engines in Buicks. Use the 4.2 liter I-6 as the base engine in Pontiacs. Keep pushrod power in Chevrolets.
Such a strategy would create distinct brands each with its own unique character. The cost would be minimal; the rewards tremendous.
-Peter P
It’s good that GM is finally ending its infatuation with rebates, and pricing the cars at reasonable levels. It eliminates confusion and hopefully will let car buying become more pleasant.
The challange for us customers is to find GM dealers that follow the GM game plan. My guess is Saturn dealers will do the best given their sales practices.
I fear GM may have gotten the wrong message from the resounding success of their GM Employee Discount for Everyone promotion. For one thing, GM has learned that its cars can indeed sell if priced at the level the market perceives to be consistent with their real value.
But what has GM done with this knowledge? They have decided to lower 2006 MSRPs. I, for one, have never had much of a problem with GM pricing. My gripes have been with their products.
I don’t want the same old stuff but cheaper. If GM thinks that is what we customers want and that is the lesson to be learned from this recent successful promotion, they are missing the point.
I want BETTER stuff for the money I’m paying NOW. For example, these days, the best archetypical large American family sedan comes not from GM or any of the Big Three – it comes from TOYOTA! That is simply an outrage! Chevrolet’s response is to lower their prices on Impala. But Chevy wouldn’t have to give the Impala away – they could charge as much for the Impala as Toyota charges for their new Avalon – IF the Impala could be made to match – or preferrably exceed – the build quality, engineering, style and sophistication of the Avalon.
The Impala is a decent car – maybe even a good car. But it lacks polish, it lacks style, and indeed lacks all the things which individually are small details but add up to why people are so willing to pay more for a Toyota Avalon than a comparably equipped Impala.
Some may scoff that Chevy Impala consistently outsells Toyota Avalon. But take away municipal and fleet sales (Fleet sales keep the plants open but they are hardly profit centers.) and Chevy Impala looks much less impressive than Toyota Avalon, which sells for thousands more and Toyota makes a boatload of profit on every one. The real insult is that the Avalon IS BUILT HERE IN AMERICA!
Please don’t ask me to wait for the new, redesigned Impala for 2006. I’ve seen photos. Hertz and Avis will likely love it, but I doubt if very many will be dumping their imports to get one. It looks bland and dated before it even hits the showroom; what a disappointment!
My other fear is that to GM, “value pricing” will mean letting the beancounters out from their cages so they can work their diabolical magic, decontenting and in general nickel-and-diming the cars even further. Base-content, plain-vanilla VW’s offer such niceties as 4-wheel discs, ABS, cruise control, 6 air bags, floor mats, premium cd audio, alarm system, etc.; most of this is optional on Chevies if they are available at all. I shudder to think what the pencil-heads will think to “de-content” from the basic cars that are undercontented already.
Mark Webber elsewhere in this blog wrote: “As long as I am offering my 2 cents, how about an interior in the Malibu as pretty as the one in the Cobalt – the upholstery in the Malibu looks darn cheap for a 20-23K car.”
I say, instead of “value pricing,” shove the beancounters back into their hole and how ’bout making the COBALT interior as pretty as the one in a VW Golf? Then you wouldn’t HAVE to lower the price!
My 2cents:
- gm seems to get the design right for $$ models, they should do the same for less expensive models, nobody likes driving a “plastic” car
- i know employees get a 20-30% pricecut in Europe. this means regular buyers have been paying… right. shame on you gm
- i know of (many) gm-workers that drive non-gm cars. have they no pride in the product they make?
- look at lifeaftertheoilcrash.com. how long will it take gm to have an alternative. we’re talking years, not decades here! (cross checked with other sources, it isn’t looking too good) so have fun with your v8, suv’s…
- the zafira is 1 great car. economic, not too $$, spacy (seats 7), and a huge success.
- yes, i’m a gm-fan
thanks
Has anyone given thought to this “small” gesture – offering free application of GM badges (the ones that you’re going to put on all new models) to any GM product presented to a dealer that was manufactured without one. The GM symbol has a unique, iconic value. It evokes American strength, innovation and patriotic spirit. That sort of thing touches internal chords of pride and bygone-era yearning in all of us Americans, whether it’s conscious or not. I’m not just proposing gingoistic trading on past glory here. Bill it as a bold, in-your-face move to take back the things (ie. auto share, etc.) that we once owned without question. An determined act at times can speak louder than words. Just a thought. Thanks. Tom H. / NJ.
I am the world’s worst negotiator and would rather buy a used car using a consumer price guide book than hassle with salesmen and closers in tiny rooms knowing I will probably get the short end of the deal.
Normally just seeing the sticker plus $2,000 of dealer packs runs me out of the showroom even before I mentally add 10% for T&L.
Is GM finally getting it right? In a word, no.
I’ll second the comment on lowering the OnStar pricing. It’s really a lot more compelling at under $10 per month.
Secondly, the 2.4L engine sounds great- why are we bothering with the 2.2L? It seems we could net more revenue simply standardizing on the 2.4L at a price point mid-way between the 2.2 and 2.4 today, plus I would think we’d gain some volume cost savings in production and service. (Not to mention simplifying our vehicle portfolio somewhat).
Here is something I posted on camaroz28.com, This is something I believe is slowly being addressed.
I respect you for working for GM, I wish some day I will atleast have the oppertunity as well as have the priviledge to be apart of something great at GM. Unfortunatly I am only 20 and have sidelined my schooling efforts for financial and time reasons.
Like I have said time and time again, The road to success, is the vehicles that people drive, the vehicle should be the number one incentive to buy a car, not some lowsy employee deal… The best automanufacture in the world shouldnt need incentives for people to flock to their dealership… Forget the marketing devision, put your money where your mouth is and put that money into the product. Perhaps that would be a cheaper car yet. Maybe if that were the case GM would have given us out f-body by now, maybe not…
Maybe the F-body is really gone, and our delusional mindstate has created mirrages from the plain asphalt.
GM has had some seriously kick ass cars… but when a car just isnt exciting, why should anyone buy it, I guess if “you pay what we pay” then its now an exciting car, and its worth buying because I love GM. But do I really? Do I really like the cars coming out today, Do I really like 2005 GM? or do I like to be Meloncholic and Nostalgic? Do I like GM 10,15,20,40 years ago better then I do today? Probably, Why? because GM was really innovative and created some cars that still today people wish they had. My best friends dad owns his teenage dream car a 1969 SS Chevelle one of the only Chevys to ever outpower the vette for its time, originally white (rarest) but put a primium paint (red with black stripes) and loves it more then his SL55 Mercedies, more than the ferarri he might buy in the next year. He loves GM, when he was a kid. I share with you this about my friend, and his whole family loves Chevys, that is why I love GM.
But Is GM really turned around? Do they even see a U turn sign in sight? or has toyota posted “NO U TURN” Signs up and down the road for the last 15 years? One might assume GM is just crusing down the road to bankruptcy looking for a turn off, unfortunatly like Mark LaVene has said their isn’t a silver bullet that is going to reverse the devistation that has happened since GM got comfy in the Throne of success durring the sixties. And the road to success is in need of construction… Like Joe Girard said, the elevator to success and happyness is out of order, you must take the stairs, one step at a time.
I’m not a accountant, and I’m not an engeneer (yet), I’m not a mechanic (although I fix my own car), I’m not advertisement advisor, but value pricing, starts with a vehicle, not a price. GM must stop looking at the figures and start looking at the customers. Look people like me and my father in the eye and say, “What would make you buy a car.” “What styling cues do you like out of all these examples?” Or perhaps the questions “What is the most importart thing when considering a vehicle model? What would it take for you to trade in that New competators car you have there to get a new GM vehicle?” Instead of adding OnStar, perhaps the car isn’t worth buying in the first place, and because it costs less and has a few extra options, it doesnt make the car a “gotta have”, or as one magazine “the gotta have it factor” Although some were outraged about that comment, look at the sales of the mustang and look at the sales of the GTO, and I guess thats the factor?
Look at the C6, that is some pride in a Chevy line up I’d say. And people grow up all there life idolizing a vehicle like the vette. Wishing from day one they could own one. Why cant GM do that for all there vehicles… Like my friends dad, he loves his Chevelle and protects the car with his life. Thats not a corvette, its not a camaro (he also has a soft top 69′ SS Camaro which is beautiful) My brother grew up idolizing the Viper, got in one at an auto show recently, with the seat all the way forward still couldnt reach the pedals (there goes that dream)
Now what are we all looking on This forum for? We all Love our cars, We all hope for the best for GM, we all want desireable cars to come out in the future, and for the most of us, dont see those cars coming from any other auto manufacture but sees hope in the road that lies in front of GM. We all want the same thing, We all think things need to get better before they get worse. And I dont know about the rest of you, but I beg the question be asked to Bob Lutz or Mark LaVene or Wagooner or whomever wants to respond to me, “What can I do to help?”
“What can any one of us do, to help all of us achive the same goal, the success of GM and the production of overly satisfactory vehicles in our future.”
These are the questions that I ask, These are the questions I hope some of you ask, I dont know about all the bickering and fuss that goes on around here, and I dont know that anything we really do here is productive, and/or counterproductive.
As an individual who has always been a Chevy man, I just hope that Mr. LaNeve’s enthusiasm over the resulting sales from the GM employee discount sale does not result in a false belief that American consumers don’t want to see the return of vehicles such as the camaro. Don’t mistake consumer sales for customer satisfaction.
Total Value Proposition is a corporate philosophy that GM employees from the core need to embrace. However, I continue to see people who complain about GM who work for GM as an employee. If all you want to do is complain, go work for someone else. Make their company miserable and let them pay for you and your benefits. I am sure Wagoner and company isn’t worried about reducing the head count for such worthless babble and unproductive rhetoric. If you have a comment that provides some constructive feedback, great! Other than that- you are wasting resources and need to take a hard look at the value you provide to the organization. I’m positive you won’t find any!
Let me provide an example: I disagree with the simple minded thought process that GM is artificially inflating the price of OnStar. Why would any service oriented company artificially ask a consumer to pay a higher point of entry into an obviously growing market? Everyone knows that a customer base grows as a result of education of a new product or service. You’re right, it would be nice to lower the price on a lot of things we buy and services we subscribe to, but it’s not that simple. You already get 12 months for free on a new GM purchase or lease that is provided to you by General Motors. If OnStar (by GM) had the opportunity to lower the price to increase awareness, it would most certainly lower the price.
Must you be reminded again and again that “Only GM” is willing to offer safety and security after a crash! Name 1 other company who even gives you an option like OnStar and then provides you a similar price point to boot. Going standard with OnStar makes sense and will eventually lower the price of the hardware and the overall process will become more streamlined with time.
If you still don’t understand why people pay for OnStar, go and talk to those who feel it is worth the price and find out why they pay $16.95/month. The answer will surprise you. Those who buy Onstar, use OnStar! These customers find value in having peace of mind. Could it be they like the convenience of the Hands-Free Calling? Maybe! Could it be these individuals might have a reason other than they like to spend money? Maybe! Get a grip on reality! If you don’t use the service- you obviously don’t value it and it is truly obvious why it isn’t on your vehicle. Don’t confuse ignorance with you providing value in the form of an uninformed suggestion.
What I don’t think the uninformed and OnStar illiterate free-lancers realize about the OnStar service is that…. $16.95 a month for your safety, security, convenience, and peace of mind might not be worth it for their lack of use, but for people who really grasp the concept of the “Total Value Proposition” – it is worth it! My mom doesn’t watch tv, so why would she pay for cable? She wouldn’t pay for something she doesn’t value.
I wish some of the liberties that the above GM employees take were addressed. Go back to work and stop making GM out to be this overweight giant that doesn’t listen to what its customers want. I listen to customers wants, I provide positive feedback, I make a difference for the consumer and the company. Most importantly, I believe in General Motors. The reason I believe is simple…..I believe the “Total Value” GM provides me and my family is worth the money.
Would the work truck man at GM please contract me. There are many people out here that work a truck to death. We would like that to be a slow lingering death without too much twitching.
I am a Farrier ( horseshoer). I have a special customized work body on my 2004 GM 3500 weighing in at 9700 lbs. gross. I run 3500 miles a month in the Appalachain Mtns. My truck works harder day in and day out than most. I think my class of working person is ignored in the engineering, design and marketing of trucks. Cute words like “professional grade” aren’t backed up with facts. Why is professional better than city cowboy? I need a professional grade truck that will hold up and is easy on my body to ride in. I would love to have an ongoing relationship with an engineer and a marketing person who I could present my points to. There is a need for a working truck and I know many people who limp by with the best they can find on the market. GM should want to corner that market. Stand on a street corner and count the trucks by manufacturer and age. Gm has the most old trucks out there. They hold up and are resellable. Look to making a more durable, usable truck and GM will own the 2d and 3d hand market. With that kind of faith in your vehilce the first hand purchaser will come back again and again. Mine is GM truck #5 in 40 years. But, there are still a lot of improvements that would make the truck better.
I am also a GM employee and could not be more proud to work for such an honest and open company. I did not grow up a GM kid. My dad sells Fords part time when he can’t be in the fields farming his 800 acres. I came to work for GM 7 years ago and worked hard. I was respected and recognized immediately and promoted time and time again. I have supported my company and our GM dealers by buying 4 GM vehicles in the past 4 years and borrowed several hundred thousand dollars on a mortgage.
I become angry when I see an American driving a Toyota. Do they know what they are doing to this country? Do they think just because the car was “made in America” that they were safe to buy it? The answer is no. Toyota is taking that money they made on that car and putting it in their banks in Japan. The majority of it doesn’t go back into OUR economy. Do they think GM’s quality is in a lower category than Toyota? They are wrong if they think that and that is being proven time and time again. They need to stop and smell the roses. It’s very surprising to me to see the amount of intelligent, successful people driving Toyotas. They say they are die-hard Americans, but hate GM. That just doesn’t go hand in hand in my eyes. Do you know Toyota’s US parts content is only 40% and GM’s is over 85%? Take a look at Lexus. Their US parts content is a measly 4%! Why would anyone want to support another country when we live in this great one?
Dear Mr. LaNeve,
On the face of it this marketing program is just the latest thumb in the dyke while TOYOTA puts all the pieces in place for its coming onslaught.
Maybe I don’t understand enough about the auto biz but hasn’t shaving pennies out of interiors, materials and design capabilities brought about enough product discounting and done enough to decimate GM’s margins in its core auto business to give the executives or board members the courage (even if it’s going to be suicidal) to just say no to the bean counters and other factions that have irrevocably ruined the company’s ability to pull together as a team and make “great” cars.
I’ve spoken to opinion leaders in Japan and there’s almost a unanimous feeling that the executives running American car companies must have contempt (they probably really think ineptitude) for the consumer for believing they’d buy “American” cars given what the competition is willing or capable of producing.
It was also interesting to read some of my fellow bloggers sympathizing with GM for its health care and legacy costs. Maybe this is already in the gameplan but, the first step is for the leadership and management at GM to lead by example by subscribing to the same health care plan being proposed to the unions — it won’t save much money but symbolically and for what it will do to boost morale, rebuild trust and get the buy-in needed from the rank and file, will be worth a tremendous amount for the company. It would also make headline news and develop some needed sympathy from the public – maybe enough to bring in more traffic to the dealerships. And if any executives or managers balk at this plan then you’ll know right away who really isn’t committed to restoring General Motors to its former glory – or at least has a willingness to fight on to delay the complete transition of power and preeminence to TOYOTA.
Tanaka
Mr. LaNeve
Sometimes we confuse value pricing with value. GM and others get real excited about volume sales. But, who is excited about quality production. 2001: 0% financing sold a lot of vehicles. 2005: GM family plan sold some of those same people their next vehicle. What do you do in the inbetween years? Those of use that have “work” vehicles that depend on quality, durability, and usefulness need to have some degree of confidence that when we buy during a non-sales event that we are getting a good honest price, not the jacked up so you can dicker down the price. What really makes GM trucks better than Ford. Put it out in the advertising. What makes GMC Professional Grade over Chevy Uraban Cowboy. F150 Ford sells because they are cheap and need replaced frequently. No one that “works” their truck drives one. By working I don’t mean driving it around empty. I drive a GMC 3500 Crewcab with custom utility box. Duramax with 6 speed manual trans. The truck weighs 9700 lbs gross every day of the year. I am a farrier (horseshoer) and log 3000-3500 miles a month in the southern Appalachain mountains. You can’t get 7 years (length for tax depretiation) out of a Ford or Dodge. GM’s claim to fame should be that the second owner can drive with confidence. Many working class people can’t be in the first owner position.
Glen
Dear Mark,
After reading through the blog I realized some good and bad things. First the good: there are people that really do care about what’s happening to your company and have a good grasp of what’s wrong with it. Now the bad: they know it but no one at GM seems to.
And yes, put the beancounters back into their holes, cages or whatever and aptly reward them for the company’s shameful predicament by “decontening” their paychecks.
Tanaka
Doing something is better than nothing. The Total Value Promise is a start. But this needs to be followed up with quality. Quality and value inside and out. A vehicle is only worth what it is perceived to be worth. So keep working at changing everyones perception of GM products and the sales will come.
Another problem and one that is a little out of GM’s hand is the local advertising done by the dealers. The majority of these dealers puch price points, nothing more. This advertising is a large percentage of what is seen by the consumer. Every bit of good that is done for the brand nationally is undone by local dealers screaming about how cheap their cars and trucks are. Take some responsibilty for the dealer network. Help them to show vale and quality also.
You need to get the quality message out there. You use OnStar testimonials in your advertising, why not use real world testimonials from everyday drivers in your advertising? You know they are out there, find them and show the world that it isn’t just a Toyota or a Honda that lasts. I’m so tired of people saying they bought Japanese because they wanted it to last or they wanted to keep it a long time. I watch countless Japanese ads touting quality and insinuating patriotism. How many people know exactly how big your operations are? How many people know how long you have been a “global” company? How can you not respond to a Japanese company advertising their investment in the U.S. when it is a tiny fraction of GM’s contribution to the U.S.?
To Whom It May Concern:
What are the chances of GM designing a mini-van thirty-somethings would like to be seen in? Cool colors, fancy wheels, agressive body styling — We have kids but we don’t want to give up!! Just give us something that is a cool as (we think)we are!!
Thanks.
Jarrod
I dont get it. With Gas going over 3 a gallon whats GM’s response? When I see the Prius which can be modified to get over 200MPG
I have to wonder what is
going on at GM.
The EV was canceled. So now I have to look at the Prius?
I know you are interested in Hydrogen and I think that is the future but I need a new car next year and gas guzzler is LOW on my list.
If common people can modify the Prius to get over 100mpg
arent you at GM embarassed?
If you dont know how to get over 100mpg go to check out Li Ion batteries and people like CalCars.
The cost for the modification
if it were in production is not large.
It seems like GM wants to be last. Why? I ahve bought GM
cars for over 20 years
Buicks, Chevrolet Van and now
I see the US playing catch up?
Did you fire the VP of engineering that laughed at Toyota Prius? Yes I read all about it long ago.
Bob
Mr. LaNeve: After reviewing the pricing and option availability on the 2006 models, I have to say that you have done a great job getting most of the vehicles to the value level they need to be. The Malibu is just about perfect, you have finally created a well equipped 4 Cylinder Malibu to compete with the Camry and Accord; hopefully you will follow this up with both a strong ad campaign and actually having these vehicles on the dealer lots. The new styling is just what it needed, but a few more color choices like Arrival Blue, Emerald Green or Blue Granite would make a looking Malibu. The SS model definitely needs more color choices.
Next year maybe the 2.4L can replace the 2.2L and the long rumored 6-speed automatic will be available.
Some models are still missing value with either equipment that is not available or is packaged in an expensive package, or worse, only available with less fuel efficient engines. You are requiring that potential customers give up 3 to 5 MPG just to be able to see at night or find a comfortable position in a cloth power seat.
Could you please do a fellow ex-Pittsburgh resident a couple of favors?
1. Offer Fog Lights and adjustable pedals on the Impala/Monte Carlo models with the 3.5L engine. My dad (who still lives in Pittsburgh) will buy one, Fog Lights allow him to see while driving along the back roads and he wants the excellent mileage of the 3.5L.
2. Offer adjustable pedals on the Impala/Monte Carlo, LaCrosse and Grand Prix. This feature is available on the lower priced Malibu, but not any of the four higher priced models mentioned.
3. Paint the Side Mirrors on the Monte Carlo – looks like a rental car with black mirrors, especially in White, Gray or Silver. The Impala mirrors are painted why not the Monte Carlo’s?
4. Offer Fog Lights on the LaCrosse with the 3.8L engine.
5. Offer at least (4) color choices (Red, White, Green and Blue) for Pontiac Dash Lighting – Ford offers over 100 colors in the Mustang, why can’t Pontiac offer four?
6. Offer the Sierra Denali Pickup in Stealth Gray and/or Steel Gray
7. Offer Chrome side mirrors and Door Handles on the Denali Pickup
8. Offer a 6-way Cloth Power seat in the Cobalt LS along with a console arm rest.
9. Offer a Folding Passenger Front seat in the Monte Carlo and Impala, the Grand Prix has it.
10. Offer an 6 or 8 way power seat in Cobalt LT and LTZ models
11. Offer a 6 or 8 way Cloth power seat in the G6 Model
12. Create a well equipped 2.4L G6 model with Fog Lights and Cloth power seat, a G6 SE maybe.
13. Bring back the Cornering Lights for the LaCrosse; it is one of my favorite features on my Regal GS.
14. Offer an air filter on the HVAC system on the Malibu/G6.
15. Offer the Silverado/Sierra HD in a short box 5′8″ Crew Cab version.
16. Return the Quadra-Steer option to the Silverado/Sierra Ext Cab and Crew Cab and expand it to the Short Box Crew Cab – but market it more for maneuvering through parking lots than towing.
17. Offer a lowered 2″/3″ suspension on the Silverado/Sierra – most buyers would like the easier entry.
18. Return the Quadra-Steer option to the Suburban/Yukon XL, but for all models.
Personally, I would trade my Silver Birch ‘04 Sierra SLT for a Sierra Denali in Stealth Gray or Steel Gray with Chrome mirrors and door handles; I miss the chrome mirrors and Pewter paint of my ‘01 Sierra SLE. These seem like trivial reasons to buy a vehicle or not, but as you know, most buyers do not “Have” to buy a vehicle when they are looking at them at dealerships. It is the little things that turn “lookers” into “buyers”.
Keep up the good work and remember that Pittsburgh still is “Someplace Special”.
I’m sorry but to me the GM Employee Pricing program reeks of a clearance/fire sale. Many of these are obviously pull-ahead buyers and few are import buyers. You’ll be paying for this in a couple of months with lower sales.
Comparing starategies your business model (mediocre products, rebates, incentives, great deals, low price, excessive cost pressure, labor problems, suppliers in Chapter 11, etc…) does not produce any desirable results.
What has it gotten you? Stockholders are not getting a return on their investment and you continue to lose market share.
Record number of recalls – over 10 million vehicles last year alone! Is this cost measured against your purchasing successes?
You cannot cost-cut your way out of this problem. The more market share you lose the more cost pressure you put on your employees, the union and suppliers.
Toyota, BMW, Nissan are all winning on product. Winning with product produces a better profit, gains market share, improves customer perception, generates more R&D dollars and creates real shareholder return.
While you claim things are getting better you are actually getting smaller. You are putting too much emphasis on cost cutting and too often it shows in the product.
You should concentrate all efforts and resources on the products you design and build. Where are the hybrids? Where are the manual transmissions? Where are the diesel engines? Besides a few products – Solstice, Hummer, Cadillac – where are the class winning products?
Well, GM seems to be toying around with a discovery made by the good folks at Zenith decades ago. That is, if you lower the price per unit and take a smaller per unit profit, more people can afford your products and will buy them. That leads to a higher overall profit in the long run. The big question here is: Will the good folks at GM take that lesson to heart?
It is way to easy to price things as high as possible and hope the market will bear it. In some cases it does, but in most that just doesn’t work out so well. Just look at the rediculous escelation in the number of leased vs financed vehicles. That should suggest that perhaps the prices of certain vehicles might be getting a bit out of line with what their buyers can afford.
The other thing that I wanted to mention is that, while Mr Lutz is very good at what he does, his efforts might be getting diluted by people who just are not on the same page as him. The people at GM, particularly the management, needs to collectivly admit that GM is in the business of building and selling cars and trucks. This is what you do. No more pathetic justifications about making trash cans of the profits would be higher. You all know that GM just isn’t going to do that. GM is also not all about marketing. The cars and trucks coming out of GM need to be of high quality, very good fit and finish, and designed to make people look at them and say to themselves “I want that” then they open the door and see a very well done interior and they say “I really want that” then they take it for a test drive and are wanting it even more. When they finally look on the window sticker and they see that they can afford it, guess what? They’ll probably buy it. It happened with Chrysler back in the 90’s. It can happen at GM now. GM is already building better, more reliable cars and trucks than most people think. The only way to get the word out is to go back to making automotive styling an art form. It really shouldn’t be that hard to remember how. The Camaros and Firebirds of the late 80’s were beautiful cars. People saw them, and wanted them. They sold quite well because of it.
It’s an interesting perspective but still doesn’t address GM’s fundamental problem. Yes, people like GM vehicles BUT only if GM cuts the price to a point that it can’t possibly make a profit. That’s a pretty serious qualifier and it certainly doesn’t mark the “employee pricing” program a success in my book.
GM needs to do two things. First, it must get its costs in line with its competitors. This means that it has to rid itself of the dead weight of its UAW contracts and pension obligations before they drag it to the bottom. Say it with me, “bankruptcy is our friend.” Repeat.
The second part is tougher. You’ve got to fix your product line, which remains seriously broken. People need to want GM vehicles even when there is no fire sale. There are a lot of elements to this and only one is easy.
The easy part is stop morphing every platform into a version for every nameplate. I mean really, does GM truly need a Trailblazer dressed up as a Chevy, a GMC, a Saab, a Buick, a Saturn and a Hummer? Why does each marque have to feature a full line of vehicles — small SUV, large SUV, minivan, full-size sedan, pick-up truck, etc., etc. — that competes toe to toe with other GM divisions? Are these marques supposed to mean ANYTHING? The GM family tree is so convoluted, interbred, hybridized and cross-pollinated that I couldn’t possibly figure out why I should choose a Torrent over an Equinox or an Impala over a Lucerne (or should that be a LaCrosse?). The result? Let’s go see what Toyota’s got.
Smearing every platform across every division only makes each division meaningless and generic. For God’s sake, figure out what each marque is supposed to represent and STICK TO IT! Is Pontiac going to be a domestic BMW fighter? Then where do the Vibe and SV6 fit in? Get rid of ‘em! How is the Saturn line different from Chevy’s? If you can’t explain it, dump it! Why does Chevy’s truck line-up mirror that of GMC? Does anyone really believe a Tahoe is different from a Yukon? Either get GMC completely out of the consumer truck business and leave those models to Chevy, or make Chevy stop selling trucks and SUVs.
Folks, some serious chainsaw work is in order here. Make the Yukon the the best large SUV out there — AND THE ONLY ONE GM SELLS! Hand Corvette over to Pontiac and make Chevy the domestic equivalent of Toyota, specializing in high-quality but still affordable passenger cars. Define and ruthlessly enforce the turf of each particular division but then give each the autonomy it needs to compete with their — for once — non-GM counterparts in the marketplace!
The hard part comes next. Now that GM is actually understandable to an average consumer, it’s time to prove that GM quality is on par with the best that its competition has to offer. It’s said that a bad reputation is easy to get to and hard to get rid of and unfortunately, GM has spent many years building up negative brand equity in the minds of discriminating consumers of automobiles. Even if its overall quality level was somehow magically raised to Lexus caliber overnight, it would take a long time for that fact to seep into the general consciousness. My impression is that GM quality has improved greatly in the past 10 years and it has to continue to improve over the next 10. And 20. And 30. If this happens, GM won’t have to rely on the “my only concern is that it get me from point A to point B” market for its bread and butter and can actually start selling a significant number of vehicles to buyers who really care about cars. And who are willing to part with some serious change for their ride.
Last, GM might start taking some chances. Get rid of the cheesy model airplane plastic that is slathered on the interior of everything from an Aveo to an Escalade. (You know, buyers really do notice this stuff!) Make seats that are comfortable to sit on. Come up with some designs that raise pulses and cause wallets to spring from back pockets like magic.
The Solstice is a great start (even though it fairly screams for a V-6 with at least 250 hp). Spread some of that magic across the rest of the product line and you’re golden.
There’s the plan. Now EXECUTE!
You’re kidding us right? Now that September’s sales figures are in. It’s obvious that your “summer clearance sale” did not attract any new or import buyers. Rather you pulled more leases and current GM owners in instead.
As a metro Detroit resident I am extremely disappointed in GM’s leadership. The botched Fiat purchase – for 4.4 billion dollars you got some diesel engines – the market share losses – it is about the product – and now your loss on the sale of Subaru.
Management is responsible for the market share losses not UAW members. UAW members did not design and approve the Aztec. These decisions are costing middle class people their jobs. At some point there needs to be some accountability in management.
It would be nice to see less spinning (now even Bob Lutz spins – “the GTO is sold out for the year!” 18K a year is nothing to brag about when the new Mustang is selling 190K a year) and better upper management performance. You cannot cost cut your way out of this without filing for chapter 11. You need more product like the Solstice where you can get sticker price for it. Your pricing and rebate strategy may have worked for awhile, however, it has also damaged your brand equity. Vehicles that sell themselves provide better shareholder return than vehicles purchased becuase of your rebate/financing offers.
If you had the best products and you were losing market share than I would believe you. A Toyota Camry has a better interior than a Cadillac CTS. Explain that one?
Why not drop your ho-hum advertising and star off with a blank page approach.
I am a designer and not a advertiser, but I am sure I could come up with much better stuff than your people have been doing.
Oh, another thing is, spending 50k a page on a 15 page spread in Road and Track is annoying. I see stupid pictures, lame print, and a huge waste of money that could have been saved if you made better products in the first place, AND made them available to the press to fully flog.
As far as I am concerned GM is a cheap, tacky, third-rate auto firm. All that comes to my mind regarding your new vehicles is used vehicles. There is nothing about GM that reminds me of a wonderful, new and exciting vehicle. It already sounds old and used. My parents had trouble with your dealerships. Of couse, my parents knew nothing, and they knew everything, although my parents were right about what was wrong with their brand new car. They were also charged by the dealer for what should not have been done. My parents should have been reimbursed for their mistake. My parents got sick of GM altogether, and they now own two foreign cars, and they are both satisifed. Bad quality and poor customer service caused you not just their business, but mine and my sister’s. I will never own a GM vehicle, nor do I have any intention of entering a GM showroom again. I was looking at two of your vehicles, but it was the same old story at the showroom, to push the deal,instead of talking to the customer about certain issues I wanted clarified. I am only 26 years old, so I will be buying many vehicles in the future, so will my sister, and my parents are still young enough to each buy one more, but they won’t be GM vehicles. GM never learns that the customer is the most important element. We cause you to make or lose money by deciding on whom we buy from. Right now GM is losing billions, and if GM was serious about the customer, one would think that someone in this firm would have had gotten the message by now. I think the dealer did me a favor anyway because I did have concerns about buying from GM with the specter of bankruptcy hovering over it. I bet these blogs are just another marketing ploy to make people think that GM cares about its potential customers. I really doubt that they are read or taken seriously. I have read many, and GM could learn something. Any company in GM’s condition, should read these and learn from the customer, who is GM’s only hope of survival.
As a metro Detroit resident I am extremely disappointed in GM’s leadership. The botched Fiat purchase – for 4.4 billion dollars you got some diesel engines – the market share losses – it is about the product – and now your loss on the sale of Subaru.
It would be nice to see less spinning (now even Bob Lutz spins – “the GTO is sold out for the year!” 18K a year is nothing to brag about when the new Mustang is selling 190K a year) and better upper management performance. You cannot cost cut your way out of this without filing for chapter 11. You need more product like the Solstice where you can get sticker price for it. Your pricing and rebate strategy may have worked for awhile, however, it has also damaged your brand equity. Vehicles that sell themselves provide better shareholder return than vehicles purchased becuase of your rebate/financing offers.
As a metro Detroit resident I am extremely disappointed in GM’s leadership. The botched Fiat purchase – for 4.4 billion dollars you got some diesel engines – the market share losses – it is about the product – and now your loss on the sale of Subaru.
Bottom line, GM is going to have to offer greater incentives to move the metal. the cars are way behind the japanese, no matter what the reason, healthcare,pension, high wages, they are just not where they need to be to meet the competition. Recalls are one thing, when you make a car like the equinox and o6 pontiac torrent with rear wheel drums on the fwd models, an inefficent engine that is I don’t how old, no electronic stabilization with tip up problems and the steering needs an adjustment you just can’t compete with the japanese vehicles. the only way to move them is to bring on the higher incentives and rebates, bring them down to a price where they should be in relation to the competition and you will sell them off the lots and be able to bring in the 07’s. I can’t believe that GM will forgo the incentives and leave all those 06’s on the dealers lots. Get rid of them and move on and bring on the goodies.
We have been part of the GM family for years. My first car was a new Iroc Z camaro. LOVED it. I was 16. Ttops, baby blue. I miss that car!! We now have a Cadillac DTS and are waiting for the new suv hybrids to come out. I read someone complaining about your onstar prices. To me OnStar is a safety blanket. 16.95 a month is good for me. The safety of it has saved us many times. We have always used onstar for things from getting hotel rooms to finding a vet to save our golden retriever who got sick when we were traveling. We also love the option of hands free calling. We have it added to verizon sharing our family plan. It works great. I will NOT own a vehicle unless its gm and it has to have onstar. Its a life saver. For under 20 bucks a month. YES its VERY worth it! Thank you for making such a great line of vehicles and for the safety of onstar. Cant wait for the new camaro!!!! Bring back the Trans Am also…