Recently Automotive News covered a proposed plan by GM to encourage the creation of superstores in major metro areas that would carry groups of GM brands under one roof.
The idea, which could only be encouraged - but not mandated - since franchisees would actually have to buy in, would be to create 4 consolidated dealer channels to market at current metro dealer sites and to move existing service operations outside of town to make room.
The channels would be as such:
1. Chevrolet
2. Buick-Pontiac-GMC
3. Saturn
4. Cadillac-Hummer-Saab.
This announcement was rumored to be planned for the annual NADA convention in San Francisco in February, but no sooner was the plan leaked than it was retracted. As the website The Truth About Cars reported,
"[Mark LaNeve, GM's VP of Vehicle Sales, Service, and Marketing] sent a polite message to dealers (and Automotive News) stating "there will be no announcements of any kind regarding any new initiative or change to our channel strategy." In classic GM what-you-thought-you-heard-wasn't-what-I-should-have-said style, LaNeve claimed that the Automotive News story "gave the impression of a major policy announcement of shift in strategy."
The curious thing about this entire move is that GM would be making such bold announcements before its suppliers had bought in to the plan. It looked as if GM had either 1) forgotten that it did not own the channel to market, or 2) tried to play a Jedi Mind Trick on its dealers. Can't you hear Rick "Obi-Wan" Wagoner saying, "These are not the dealerships you are looking for."
This frustrating and embarrassing impasse for GM is just one of many examples of its entrenched difficulties in improving its channel to market. Basically GM suffers from brand erosion due, in part, to a scattered, piece-meal dealership structure. Get this: Where Toyota has 1,200 dealerships, GM has over 14,000, and yet Toyota outsold GM in 2007!!
Perhaps consolidation is the medicine needed to fix eroding sales, perhaps not?
Perhaps GM could convince its franchisees to agree with that position, perhaps not?
Perhaps there is some other plan that GM can pull out of a hat to stem declining market share, or maybe the negative brand equity is too powerful?
I don't know if anyone knows the answer to any of these questions. I, for one, would not like to be the one responsible for answering them.
Tuesday, January 29, 2008
GM new approach to branding - or not
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1 comments:
To clarify, in this case it was the "buyers" (dealer = customer) not the "suppliers" that the OEM needed buy-in from. Restructuring its 1930s era dealer network requires consolidation, which can only be executed by the dealers (high power/protection). However, OEMs can assist considerably through:
1.) Training OEM field reps to boost lower performing dealers (individual assessment and local marketing) and share best practices from the Top 10% of dealers
2.) Incenting top-performing dealers to take over management of lower performing dealers (consolidation) through financing/deal-making/granting additional franchises. Dealers larger than 750 cars/yr generate higher and more consistent results (e.g. AutoNation, UnitedAuto Group, Sonic, Group One)
3.) Planning and reviewing business performance with dealers to respond to competitive threats
4.) Assist with talent management so that structured recruiting processes, long-term incentives, and training help to reduce employee turnover
5.) Encourage dealers to increase customer loyalty through tours of service facilities, repeat visits, and streamlined service departments
OEMs must be very careful though because angry dealers can cut back investments on facilities, push competitor brands, and pursue fewer, but higher margin, sales at the expense of manufacturer's volume goals - hence GM's latest retraction
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