GM Orphans Up for Adoption
November 23, 2009
General Motors last week began sending out 1.8 million pieces of direct mail to what the GM logo - 119.JPG automaker calls its "free-agent customers" -- customers orphaned by the wind-down of Pontiac and Saturn and the proposed sell-off of Hummer and Saab.
In this first of promised multiple mailings, GM is offering discounts of up to $2,000 on certain models to the nearly 1 million customers of closed GM dealerships, if they go to the next closest dealer by Jan. 4. The automaker also is giving customers of closed dealerships a vehicle inspection and tire rotation at remaining dealerships through May.
"The challenge for us is to grab those customers by the hand and make sure they know where to go," Susan Docherty, GM's vice president of U.S. sales, said in a media conference call last week.
But GM's competitors also are eyeing those up-for-grabs customers.
All in the Family
Keeping GM orphans in the family is critical for GM to meet its market share goals. GM's post-bankruptcy plan calls for the automaker to achieve 19 percent plus market share to be profitable.
In October, GM's market share matched a high for the year of 21.1 percent with all eight brands counted. Of the total, 19.3 came from the four brands GM is keepin; 1.8 percent came from the brands GM is shedding. That roughly 2 percent of market share could make the difference between profitable and not profitable.
Competitors Eyeing Orphans
While it does what it can to hang onto the free agents, GM has some competition for them. In particular, Ford, Toyota, Nissan and Honda have a good shot at nabbing them. And Hyundai/Kia, on an aggressive march for market share this year, can't be counted out.
Ford's Jim Farley, group vice president of global marketing, told AutoObserver last week that the automaker has no specific marketing aimed at going after GM's orphan customers. But, in the local trenches, Ford dealers are appealing directly to those customers in their marketing as well as by hiring salespeople and fleet managers from defunct GM dealerships, he said.
In October, Edmunds.com cross-shopping data showed:
- Chevrolet was the most cross-shopped brand with Pontiac, Saturn and Hummer shoppers.
- Ford was the most cross-shopped non-GM brand with Pontiac and Hummer shoppers; second with Saturn shoppers. Toyota edged out Ford with Saturn shoppers.
- Nissan and Honda rounded out the list of top five cross-shopped brands for Chevrolet and Pontiac. Toyota, BMW and Jeep rounded out the Hummer top five cross-shops.
- Saab owners could be lost too all import brands as Volkswagen, Audi, BMW and Honda, respectively were the most cross-shopped in October.
October's cross-shopping trend represents a snapshot in time. Cross-shopping can fluctuate from month-to-month depending on new vehicle launches and incentives.
Finding Another Dealer
In addition to eliminating four brands, GM is slashing about a quarter of its dealers. To customers of closed dealers in the family, GM, in its Nov. 16 mailing, is offering discounts up to $2,000 to 950,000 customers of the closed dealerships. It is also offering discounts of between $1,000 and $2,000 on certain models, depending on the customer's "likelihood to purchase a GM vehicle and the relative distance to the next closest dealer," according to a copy of a GM letter to dealers obtained by Automotive News. The sale runs through Jan. 4.
"This is our way of trying to keep our current customers in the GM family by making it easy for them to get back into a dealership," a company spokesperson told the trade journal.
GM assures there will be more chapters to this story, including a wave of incentives to include orphaned Saturn customers early next year. Docherty said GM's strategy to keep customers of its eliminated brands and closed dealerships would be detailed later.
Closed Dealers Angry
Automotive News reports some dealers who are fighting their closure by GM aren't happy about the incentives being offered to their customers to shop elswhere.
"This is an inappropriate time to take such an aggressive measure," Tamara Darvish, a leader of the Committee to Restore Dealer Rights, a group of rejected dealers that is in talks with GM to keep dealerships open, told the publication. "If in fact dealer rights are to be restored, why would GM go in and move all those customers?" -- Michelle Krebs, Senior Analyst and Editor at Large