By Peter M. De Lorenzo
Detroit. Six weeks ago, in a column entitled “GM’s Other Nightmare” - I opined that while enduring the endless din from the constant drumbeats in the media associated with the recall nightmare, the burgeoning realization was coming into focus that the upper management of the company is so buried in the machinations, logistical issues and political hand-wringing associated with the mess that another nightmare is gaining steam that may even have deeper implications for the company’s health in the future. And that is the fact that the company’s marketing function is in complete disarray, with this festering incompetence absolutely killing its fortunes in the market.
Since I wrote that column, GM has moved to shore-up its wildly underperforming Cadillac division by hiring Johan De Nyyschen - the talented brand marketing expert with the impeccable track record in powering Audi to new heights in the U.S. market and getting Infiniti at least pointed in the right direction – but whether that move signals a new awareness on GM management’s part that what they’re doing simply can’t continue, or it’s an act of desperation, remains to be seen.
But wait a minute - doesn’t GM arguably have the finest product lineup in its history? Yes, it does. As a matter of fact, I don’t think there’s ever been a time – even in GM’s much-vaunted heyday (roughly 1957 to 1977) – that the company has even come close to offering the quality product lineup with the kind of depth and breadth they have on the ground today. Given that then, things aren’t all that bad, right? Is it possible that I might be overstating my doom and gloom assessment of GM just a tad?
Well, let’s take a look at the hard numbers.
Out of the depths of The Great Recession, when the U.S. car market plunged to a seasonally-adjusted annualized selling rate (SAAR) of around 9 million vehicles back in 2009, to where we are today, which will probably end up at a rip-roaring 16.7 million vehicles (even accounting for Marchionne’s drunken sailor, scorched earth incentive spending orgy, it’s an impressive amount of cars), you would think that GM would have made considerable hay with the upturn in the market. After all, this has been one of the greatest – if not the greatest – five-year improvements in the history of the U.S. automobile business.
And what has GM done with this grand opportunity, exactly? When GM succumbed to its humiliating dive into bankruptcy, the company’s retail market share was around 21 percent. Wait a minute - GM was at death’s door yet it still was taking almost one out of every four retail sales in the U.S. market? Yes indeed. It wasn’t the 48 percent juggernaut number that it once achieved back in its glory days, of course, but it was still considerable and noteworthy nonetheless.
And let me remind you of what happened in that now-legendary “quick rinse” bankruptcy. GM was gifted an almost debt free balance sheet, complete with a newly reduced UAW contract. It was allowed to jettison dealers - in some cases without rhyme or reason and to their detriment - and junk divisions right and left. On top of that the company was granted staggering tax allowances that even now are mind-numbing to contemplate.
So essentially the company was granted a new lease on life minus the myriad financial distractions, with a renewed focus on product to boot. And not only was Bob Lutz leading the True Believers in Design, Engineering and Product Development, they even had the media on their side for the most part, wanting them to succeed. Indeed the table was set for a big-time comeback for the once-proud and still-iconic automobile company.
Fast forward to today. So where is GM’s retail share of the market as you read this? It’s hovering somewhere around a scintillating 15.7 percent. Think long and hard about that for a moment. In a market that has skyrocketed up 80 percent in five years, GM has essentially given back five points of market share. And remember, this is a company that is offering an array of some of the finest products ever produced by an American car company. It’s simply mind-boggling to try and grasp.
When I rail against Dan Akerson and GM’s stumblebum board of directors, this is the biggest reason why. Take away his boorish, condescending demeanor and the endless verbal missteps, and he was simply a piss-poor manager masquerading as a CEO, one who was massively ill equipped for an industry that he took great pains to dismiss as an endless backwater of mediocrity. (He did this with resolute glee too, I might add.)
Under Akerson’s misguided “leadership” (Reign of Terror is more accurate) GM simply failed to make serious inroads in the market. The company was gifted a glittering set of new operating parameters that other companies and their CEOs could only dream of, and the result? A stunning loss of five points of market share in a world where a tenth of a point in either direction is a big hairy deal.
But oh how we were forced to sit through the pronouncements and the unmitigated bullshit from Akerson, whose lack of knowledge of the business used to make his underlings recoil and cringe with every peep, leaving them shaking their heads in disgust. (At least the ones who knew the difference anyway.) Akerson insisted to anyone who would listen that the market share improvements were forthcoming before he trotted off to the friendly confines of Private Equity. And for added levity, current sales honcho Alan Batey echoed those same pronouncements.
Instead, the exact opposite happened, with GM being down another six or seven tenths of market share this year despite employing massive incentives to keep up with those profligate spenders out in Auburn Hills.
Which of course begs the multi-billion-dollar question: How is it that a company with the ability to spend almost $2.5 billion in marketing and advertising annually can’t seem to market its way out of a paper bag?
How is it that a company that is producing some of the best American cars ever built is floundering and sputtering in the market, hemorrhaging market share at a prodigious rate?
And to add further insult to injury, how is it that a company of GM’s size is still devoid of a Chief Marketing Officer, when all signs indicate that it is in desperate need of one?
These essential questions get right at the heart of this business. When an automobile company focuses on the product and then executes those products to an exceptional degree, good things usually happen. Building great products not only builds confidence within the organization, it builds confidence with its dealers as well, and a none-too-subtle pattern emerges where confidence breeds success in the market, and it can grow exponentially from there.
And adding great marketing to this equation goes hand in hand. It’s much easier to market products that you can be proud of and not apologize for. It energizes everyone to do better and aim higher.
Not with GM, apparently.
Instead, serial incompetence reigns. In fact, in my estimation no major corporation in automotive history has done so little with so much when it comes to marketing its products.
GM and its recent “leadership” squandered a golden opportunity to make the company competitive for years to come. The market share lost is simply unconscionable and inexcusable, and the reality is that it may never come back.
That’s the High-Octane Truth for this week.