No. 924
November 22, 2017
 

About The UjianNasional

Peter M. DeLorenzo has been immersed in all things automotive since childhood. Privileged to be an up-close-and-personal witness to the glory days of the U.S. auto industry, DeLorenzo combines that historical legacy with his own 22-year career in automotive marketing and advertising to bring unmatched industry perspectives to the Internet with Ujian-nasional.info, which was founded on June 1, 1999. DeLorenzo is known for his incendiary commentaries and laser-accurate analysis of the automobile business, as well as racing and the business of motorsports. Author. Commentator. Influencer. The Consigliere. Minister of the High-Octane Truth. DeLorenzo is considered to be one of the most influential voices commenting on the business today.

DeLorenzo's latest book is Witch Hunt (Octane Press  ). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. DeLorenzo is also the author of The United States of Toyota.

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Tuesday
Feb052008

RANTS #431

Wednesday, February 6, 2008

By Peter M. De Lorenzo

Ford’s Edgy Success Exposes GM’s Perennial Achilles Heel.

Detroit. Jean Halliday, writing in this week’s AdAge, points out perceptively that sales of the Ford Edge crossover last year almost equaled that of GM’s vaunted crossover trio led by the outstanding new Buick Enclave (along with the Saturn Outlook and GMC Acadia), falling short by just 6,600 units. Ford mounted a tremendous broad spectrum marketing effort for the Edge to the tune of $179 million that eclipsed GM’s combined divisional expenditures for their crossover trio in U.S. measured media by $50 million.

No big deal, right? The Ford Edge is an excellent crossover effort from Ford, and they spent a ton of money on it, so why shouldn’t they do well with it, right? Yes, the Edge is an excellent product effort from Ford, and they should reap success from a vehicle that they hopefully will continue to hone, refine and make better in the Japanese style of product development. But as with everything these days, there’s much more to this story, and because of Ford’s sales success with the Edge, GM’s ultimate vulnerability - despite its rejuvenated product mojo - has come to the fore once again.

Almost since the very first issue of this publication, I’ve been writing about GM’s hoary divisional structure and how it had started to become obsolete over 25 years ago. My “too many models-too many divisions-too many dealers” mantra became a frequent refrain in this column over the years. The fact that GM has to keep too many balls in the air in order to try to appease its divisions and dealers is and has been a recipe for distraction - if not outright disaster – and the Ford Edge vs. Buick Enclave-Saturn Outlook-GMC Acadia example is just the latest proof of that.

Once upon a time, GM was a company that controlled upwards of 45 percent of the U.S market alone, and it could easily justify and support myriad divisions and do so covering a wide swath of pricing and tastes. But those days have long since passed, and with the onslaught of the burgeoning sales success by its Asian and German competitors in the North American market, GM is now clinging to a 25 percent share of the U.S. market.

In what is now a common scenario for GM, if one particular division’s model gets attention, inevitably something else in their divisional portfolio suffers. The Buick Enclave was obviously the lead launch vehicle for GM’s new crossover architecture, with the Acadia second and the Outlook third, and funny enough, that’s just how they performed in the market. But look at what Ford accomplished with the Edge, coming this close to equaling GM’s effort with three vehicles (actually, as several readers have pointed out this morning, when you factor in the Lincoln MKX sales totals, Ford eclipsed GM).

At what point does GM finally get the fact that this whole “being all things to all people” frame of reference only works across its entire divisional structure and not within each division? What if the Enclave hadn’t been diluted in the market by entries from GMC and Saturn, and GM had just one crossover to focus its marketing efforts on? I’ll answer that for you: The Buick Enclave would have enjoyed the accolades, awareness and success along the lines that the Chevy Malibu is enjoying right now if GM hadn’t been encumbered with trying to throw its GMC and Saturn divisions a crossover bone at the same time. Not that the Enclave hasn’t done well, because it has, but it could be enjoying even higher visibility right now.

If the resurrection of Cadillac taught GM anything, it’s that intense, disciplined focus on the product yields impressive results. And GM has used that as a guide and applied it to every single product that they’ve come up with since, bringing a series of standout cars and trucks to market in a show of momentum that the company hasn’t displayed since its acknowledged heyday that spanned the late 50s to the early 70s.

And if the hugely successful launch of the Malibu should have taught GM anything, it’s that once you have an outstanding product, that product deserves an intense, disciplined and focused marketing push that does that product justice. The Malibu is enjoying the benefits of just such an effort right now, winning much deserved accolades and awards left and right. (Now granted, GM had to throw the Saturn Aura under the bus in order to ensure the Malibu was a hit, so you can see how the intertwined difficulties of too many models-too many divisions grow exponentially for GM every time it turns around.)

You would think that GM would see the light considering everything that has gone on in recent years, but yet here we are - on the eve of the Chicago Auto Show media days this week - where GM is going to unveil yet another version of its crossover architecture, the Chevrolet Traverse (see it in our GM Chicago Auto Show photo gallery in "On the Table" - ed.). What part of this scenario seems like a good idea? Yes, Chevrolet Dealers and Chevrolet marketing muscle will ensure a strong performance by the Traverse in the market, but even figuring that the Enclave has legs of its own in the luxury crossover segment, what happens with the Acadia and the Outlook?

It should be obvious what will happen in this scenario, because the Acadia and the Outlook will suffer the same fate as that of the Saturn Aura. They will fade into the woodwork and become out of sight and out of mind - and out of marketing money.

Hard on the heels of the Chicago Auto Show is the annual national conference for automobile dealers – the NADA – which takes place in San Francisco beginning this weekend. The conventioneers there will conveniently to try to ignore the fact that 1 out of every 3 dealers in attendance shouldn’t even exist, that’s how far the “too many dealers” scenario has gotten out of whack with the shrinking reality for the domestic automakers in the North American market.

And when reasoned, intelligent dealers get together to discuss the situation (which they will do out there), they will knowingly nod in agreement with the fact that there are too many dealers and agree that the dealer count must be reduced in order for the domestic manufacturers to survive. And those same reasoned and intelligent dealers will support any efforts by the manufacturers to trim their dealer count – as long as it is the other guy’s or gal’s dealership that gets cut.

Yes, GM is hanging on to its antiquated divisional structure partly because it can’t do the wholesale cutting of its dealer body due to the fact that franchising laws in this country are so unyieldingly strict. I get that. But building and marketing four crossovers to prop up GM’s old-timey divisional mindset and appease its dealers is pure folly. That’s the bad old GM rearing its ugly head, and every time I see that I get very concerned.

GM already has the superb Buick Enclave positioned as the class-leading luxury crossover, and I can see Chevrolet getting the more mainstream Traverse - since there’s a dramatic enough difference between the two - but beyond that GM should stop right there. One great luxury crossover along with an excellent mainstream crossover from GM is enough. But even as I write this, there are still rumors of a Cadillac version of this architecture rumbling around somewhere.

As GM continues its rejuvenated product offensive, it must learn to accept the fact that it cannot make all of its new products available to every division if it plans on making serious inroads in this market. And better yet, its dealers are going to have to accept that fact, too, which they have demonstrated repeatedly that they are unwilling to do.

Going back to the resurrection of Cadillac, could you imagine if the CTS had been apportioned out to other GM divisions, like Buick and Chevrolet? I can’t either. It seems that GM can demonstrate discipline with its Cadillac division, but then things fall apart in a big hurry after that.

As much as it would like to, GM doesn’t compete in an idyllic “Pleasant Marketing Valley” where consumers actually understand (or care) about its divisional logic and buy into the subtle differences between an Acadia-Outlook-Traverse crossover (the Enclave’s bold design point of view clearly delineates it from its competitors and stablemates). Consumers, remarkably enough, just want the best-looking vehicle that delivers the best combination of the qualities they’re seeking.

As we’ve seen of late, GM can do excellent work when it puts its mind to it. But unless and until GM controls its ingrained impulse to bury the market in triplicate and quadruplicate models just to appease its dealers or justify its obsolete divisional “ladder” then it will continue to take three steps forward and five back in its pursuit of profitability in the U.S. market.

Thanks for listening, see you next Wednesday