News Column

GM to Stay the Course on Marketing, Despite 6.4% Drop in Sales

August 3, 2012

Nathan Bomey

General Motors' sales slipped 6.4 percent in July, but the automaker has no plans to abandon its U.S. marketing strategies after its global chief marketing officer exited abruptly Sunday.

The company's marketing chief, Joel Ewanick, designed several key marketing initiatives, including a campaign that launched July 10 and offered a 60-day return guarantee for new Chevrolet buyers.

But Ewanick was ousted Sunday, reportedly after questions were raised about a European soccer marketing deal. Some wondered whether the automaker was ready to shift strategies.

Alan Batey, GM's new interim chief marketing officer who was also recently named vice president of U.S. sales and service, gave a definitive answer Wednesday in a conference call with analysts and reporters.

"There is no change in direction, there is no change in priorities," he said. "The team is focused on executing."

He added: "This has nothing to do with our strategy. ... You shouldn't read anything into this that we didn't announce."

GM said its July sales decline was partly related to a 41 percent decline in sales to car rental companies. But excluding all fleet sales, including a 115 percent increase in government purchases, retail sales were down 3.2 percent.

"We knew going in that July would be a challenging month. We face tough comparisons from July 2011, when production was disrupted particularly at our Japanese competitors," said Kurt McNeil, GM's vice president of U.S. sales operations. But "we feel that we are very much on plan."

One bright spot was Cadillac. The luxury brand's sales rose 20.7 percent, powered by the arrival of the new XTS large sedan, which sold 1,739 units. And GM's Lansing Grand River plant started production last week on the new Cadillac ATS compact sedan.

But Chevrolet, GM's largest brand, reported a 6.8 percent overall sales decline, including a 5.4 percent decline in retail sales.

To lure more buyers, Chevrolet launched the "love it or return it" guarantee as part of the "Chevy Confidence" campaign.

Chevy Confidence will pay off in August, said Don Johnson, Chevy's U.S. sales chief. He said GM hadn't invested much in advertising the offer until late July.

"Momentum is building," Johnson said. "Certainly we are always anxious and everybody's always a little impatient."

Sales of the Equinox crossover rose 16.5 percent to 19,906 units, and the Volt posted its second-best month of the year at 1,849 units.

But GM reported a 39.3 percent decline in sales of the Malibu to 12,345 units and a 59.8 percent decline in sales of the Traverse crossover to 5,746 units as dealers sell the last remaining 2012 models and production starts on 2013 models.

Sales of the Cruze compact sedan, which flourished in 2011, fell 39.3 percent to 14,954 units.

In July 2011, fleet sales represented 26 percent of Cruze sales, Johnson said. In July 2012, it was about 70 units.

"This is going to pay long-term dividends to Cruze's brand image and resale value," McNeil said.

Johnson said the Cruze's average transaction price is about $2,000 higher than its competitors. Its predecessor, the Cobalt, sold for $2,000 less than the market average.

"We're quite comfortable with where we are" with the Cruze, Johnson said.

In July, GM truck sales fell 12 percent as some consumers held off on big purchases due to economic uncertainty. GM has 136 days of inventory of full-size pickups, compared to 62 for cars and crossovers.

But GM said it expects truck sales to rebound quickly as the housing market shows signs of life.

GM lowered its spending on incentives 0.3 percent from a month earlier, although its incentives rose 5.5 percent from a year earlier, according to auto research website Edmunds.com.



Source: (c) 2012 Detroit Free Press Distributed by Mclatchy-Tribune News Service.


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