Far from Wall Street's gaze, semi-trucks carry Chevrolet vehicles from village to village in rural China reaching for future car buyers who have never heard about baseball, hot dogs or apple pie.
A year after GM signed a $559-million sponsorship that will put the Chevrolet
name on uniforms of Manchester United beginning next year, the deal is beginning
to attract consumers in China.
The marketing deal drew the ire of investors who thought it was too expensive
and led to the firing of GM Chief Marketing Officer Joel Ewanick after he did
not disclose the full cost of the deal to CEO Dan Akerson.
More recently, Chevrolet has been at the core of rumors in the U.K. that ManU
owner Malcolm Glazer will have GM pay some of a salary offer to lure back star
player Christiano Ronaldo, whom ManU sold in 2009 to Real Madrid.
In China and throughout Asia, where the soccer team has 378 million fans,
according to Kantar Media Compete, Chevy hopes that soccer can do for it in
China what baseball did for it in the U.S.
"The point is for China, this is just a home run," said Richard Choi, director
of Chevrolet marketing in China, in an interview at a Shanghai Chevrolet
dealership. "Not to mix my metaphors."
"One of the reasons we've grown so fast is we have these road shows. It's
essentially an auto show in a truck," Choi said. "We'll go out to these rural
markets and we open up. It becomes like the thing to do in that city that day."
The road show sets up a kicking contest for kids, displays Manchester United
gear and introduces Chevy to consumers who know nothing of GM's recent travails
that culminated in the 2009 bankruptcy.
"You could almost think of it as a form of rebranding to say, 'We're not just an
American brand, we're a global brand,' " said Stephen McDaniel, a University of
Maryland professor who teaches sports marketing. "You have to redefine your
brand to adapt to other markets."
Automakers sold 19.2 million vehicles in China last year, almost 5 million more
than were sold in the U.S. That is expected to reach 30 million annually by the
end of the decade. A large portion of those sales were in the largest cities
such as Beijing and Shanghai.
But most new buyers will come from the country's interior, which is poorer, yet
gradually gaining economic traction. Understanding local preferences and
tailoring marketing accordingly is crucial.
For example, at the Dongchang Chevrolet dealership in Shanghai, customers come
face to face with a huge Manchester United poster splashed across a wall.
Morningstar analyst David Whiston, who tracks GM's financial performance, said
the Manchester United deal could prove to be successful "if you get Chevy
customers onto a website."
But $559 million to get on the cultural radar is a high-stakes bet. Especially
when the expectations of ManU fans are for nothing less than a world
championship every year.
"I don't think it was a complete mistake," Whiston said. "Was it a lot of money?
Yes. I think it still remains to be seen if it was worth the investment. If it
continues to stay popular in China and they keep winning, then that's great for
GM."
China is GM's biggest market, but it was Chevy's third-biggest market in 2012,
behind the U.S. and Brazil. Choi said China would pass Brazil this year.
Chevy's market share in China was steady at 4.1% in 2011 and 4.2% in 2012, up
from 2.4% in 2005, according to GM.
To reach more buyers in developing cities, Chevy is adding 45 dealers in China
in 2013, which will expand the retail network to 665 selling points.
If Manchester United has an excellent year, there may be room for more growth.
