GM Vice Chairman Bob Lutz sits in front of the Chevy Volt, which got a 230 mpg rating under a controversial proposed mileage standard.
“It’s all about product,” or so goes the old auto industry maxim. But that’s no longer good enough, admits General Motors Vice Chairman Bob Lutz. To make its comeback, the post-bankruptcy automaker will have to produce vehicles that are no only better than its competitors but also convince consumers of that fact.
To help get that message across, the automaker has been staging an unusual series of meetings, this week, including a session that brought 100 American consumers out to its suburban Detroit proving grounds, and another giving scores of journalists a close-up look at an array of the products that will sustain GM’s surviving four North American brands over the next few years.
A total of 33 different Chevrolet, Buick GMC and Cadillac cars, trucks and crossovers were put on display, from the next Chevy small car to a planned Caddy sedan designed to go up against such tough competitors as the BMW 7-Series.
Despite a ban on cameras, the rare peek under the corporate kimono is an unquestionably risky move, company officials acknowledged, but an essential one. GM’s reputation had already been on the wane before it had to go begging for a federal bailout, last December. Even before it emerged from bankruptcy, a month ago, some critics were going so far as to threaten a boycott. But even among the less politically-motivated, the challenge is to win back hearts, minds and, eventually, pocketbooks.
“We have a huge perception gap, today,” acknowledged Lutz, in an interview with TheDetroitBureau.com. “It’s our job to close that gap between perceptive reality and product reality.”
That job won’t be easy, the 77-year-old executive conceded, and will require a multi-pronged effort. Significantly. Lutz traded titles, last month, giving up duties as product development chief and taking on a new role as GM’s uber-marketing executive. He promises to not only increase GM’s marketing budget – relying on funds freed up by the bankruptcy-driven reorganization – but also to shift the way the automaker spends that money.
“You’ll see marked shift in how we go to market with our advertising,” he explained, adding that this will happen “in a matter of weeks, not months.” There’ll be significantly more attention to digital venues, notably including social and viral marketing. But he also stressed that the company won’t abandon more traditional outlets, such as print and television.
There’ll be less of the high concept ad campaigns, such as the TV spot for the new Buick LaCrosse, which is designed to look like a movie set, with the new sedan as its star. The new emphasis, if Lutz has his way, will be on product attributes – and the comparison of GM vehicles with their competition.
The automaker is confident it has plenty of positive attributes to showcase, if the Tuesday tour was any indication. But the 33 production and concept vehicles on display were all developed prior to GM’s unexpectedly brief – 40-day – run through bankruptcy. As significant as they might be in the near-term, the long-term challenges will be at least as tough.
But, with half the number of divisional mouths to feed, GM has the opportunity to shift its cash and manpower resources, company officials said, focusing on fewer – hopefully better — products. Among other things, the company promises to shift away from the “badge engineering” sins of its past, since there will be less duplication from one brand to another.
There are, of course, a lot of ifs, going forward. GM has clearly been able to slash its North American fixed costs – from $40 billion to $23 billion a year, according to CFO Ray Young. And that could translate into anywhere from $5,000 to $7,000 lower cost per vehicle, in North America alone.
“We plan to put a lot of that back into the vehicle,” Young told TheDetroitBureau.com. It has little choice. The battle for skeptical consumers is just beginning for the “new” GM. There’s a high degree of skepticism, and more than a little open hostility in the marketplace. It will take a sizable effort to turn around perceptions, even with the best of products. And if those vehicles don’t measure up, GM has little hope for success.
For an inside tour of what the GM product development operations have coming, Click Here.
For a closer look at the Cadillac “renaissance,” Click Here.
GM CEO Fritz Henderson speaks about GM’s future. Click Here.