Despite fears about bankruptcy, consumers have been snapping up the new Chevrolet Camaro. Now, a new CNW study suggests potential buyers see "a leaner, meaner" GM, rather than a "bloated has-been," and could head back to showrooms.
Folks may be willing to dine at a bankrupt restaurant chain, and they’ll even fly on a bankrupt airline? But will they buy a car from an automaker in Chapter 11? That’s a question lots of folks are trying to answer as General Motors files a motion to reorganize itself in court. But a new study suggests the impact may be less serious than most had anticipated.
Early evidence indicated buyers would steer clear, worrying about dealing with a maker who might not be around to service their cars. “I’m just not sure I want to take the chance,” said Carol Browning, a Los Angeles businesswoman who was thinking about buying a new Chevrolet Equinox for her daughter, just graduated from college and now looking for a job.
President Barack Obama tried to quell concerns, in March, when he announced the formation of a government-backed warranty program that would ensure protection for GM and Chrysler buyers, even if they failed to emerge from bankruptcy. But potential buyers also expressed worried about residuals – or trade-in values – and the availability of dealers, what with the two makers planning to eliminate thousands of retail points.
“We know that automobile companies that go into bankruptcy have lower sales,” cautioned GM Vice Chairman Bob Lutz, “one of the reasons you want to get in and out as quickly as you can.”
But with Chrysler showing that the bankruptcy process can go smoothly and surprisingly quickly, and with most observers predicting a relatively similar fate for GM, might buyers be willing to put the two makers back on their shopping lists.
“Last July when CNW first asked new-car intenders if they would consider buying a vehicle from a bankrupt automaker, about 90 percent said they would not,” said CNW Marketing’s founder and chief analyst, Art Spinella.
But the number of nay-sayers has been dropping, month-by-month, according to the firm’s research. By January, the number of so-called “new-car intenders” who said they would not buy a GM product had fallen to 51 percent.
And last week, as the details of the automaker’s restructuring began to become clear, the numbers have fallen, again, to just 37%, which, Spinella noted, is actually not much different from the percentage of American car buyers who typically say they wouldn’t consider a GM product, typically 28% to 31%, in recent years.
What seems to be helping the automaker, is that the tenor of the discussion about the automaker has shifted. The “new General Motors” is now being “framed as a leaner, meaner GM rather than a bloated has-been.”
Chrysler, reported Spinella, is seeing a similar decline in its negative numbers.
The two makers could certainly use some positive momentum. Through April of this year, GM’s sales were off 45%, compared to the first four months of 2008. Chrysler’s volume was off 46%. The U.S. auto industry, as a whole, was down 37%.
Based on mid-May numbers, Deutsche Bank estimated that GM would see a decline of around 40% for the month, overall, about the same as its Japanese arch-rival, Toyota, and actually, a few points less than Honda, for which the firm forecast a 42% decline for May.