GM struggles to retain customers from defunct GM brands
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Funny but exactly one of the reasons I got scared away from the G8 GXP....what if Pontiac went away....
http://online.wsj.com/article/SB1000...463666954.html
http://online.wsj.com/article/SB1000...463666954.html
Tina Shaw and people like her are a big worry for General Motors Co.
Three times before in the last seven years, the 35-year-old stay-at-home mom bought cars from GM's now-defunct Saturn division. But when she shopped for a new ride a few months ago, the Ft. Worth, Texas, resident didn't bother checking out any GM models.
"We were a Saturn family all the way, but we had to look at other options" after GM discontinued the brand, she said. Ms. Shaw paid $18,000 for a pearl-white Nissan Motor Co. Cube, describing the boxy little car as the closest thing to a Saturn she could find. "I probably wouldn't have considered another kind of GM vehicle."
Ms. Shaw is one of more than three million Americans who are driving vehicles produced by the three GM divisions that were shuttered in the auto maker's 2009 bankruptcy reorganization—Saturn, Pontiac and Hummer.
GM is racing to hold onto those customers. Early results, such as Ms. Shaw's purchase of a rival's small SVU, and similar defections among Ford Motor Co.'s Mercury owners, show the car makers' uphill struggle to retain former customers.
So far this year, about 70% of customers who traded in a Pontiac this year replaced their car with a non-GM model; with Saturn that number rises to 71%. Ford, which killed its Mercury division last year, isn't doing any better. About 65% of the Mercury owners who have bought new cars this year have defected to auto makers other than Ford. Saab, now a subsidiary of Spyker Cars NV, recently halted production while its parent looks for a cash infusion.
In January and February, GM offered extra discounts of $1,000 to owners of its defunct-brands, putting more Pontiac and Saturn owners into other GM brands. Buyers who opted to stay with GM those months climbed, especially for Pontiac, which hung on to 57% of customers who traded in their vehicles, according to Edmunds.com. But the effort was controversial as Wall Street questioned whether the incentives were a sign that GM had returned to the old strategy of pushing market share over profits, which helped push it into bankruptcy court.
GM Roars, but Road Ahead Uncertain
GM reported higher first-quarter results on Thursday but some investors felt it had spent too freely on incentives in North America, resulting in a 3% stock-price drop.
GM North America President Mark Reuss defended the incentives in a recent interview, arguing it threw off competitors and helped hang onto existing customers at a critical time. The move was short-term and strategic, he said, not a return to GM's old ways.
"We fight tooth and nail to retain these customers," he said. "We caught a lot of [rivals] sleeping with" the elevated incentives offered to buyers in January and February.
The effort to retain customers is crucial if GM is going to regain market share in an increasingly competitive U.S. market. In Saturn's case, 23% of owners traded their Saturn for a Chevy, the most popular choice. But Toyota Motor Corp., Honda Motor Co. and Ford combined grabbed 35% of those shoppers, according to Edmunds.com Inc., operator of an auto-industry website.
In addition to incentives, GM works with its dealers to target potential defectors. It sends notices of special deals they can get and reminders encouraging them that GM has new Chevrolet, Buick, Cadillac and GMC models that they could consider when shopping for new vehicles.
GM dealers also are contributing to the effort. At Harry K Chevrolet Buick, in Chamberlain, S.D., every time a Pontiac owner drives in for service, the repair shop called the sales department. A salesperson then arrives to pitch the owner on purchasing a GM car or truck.
"Hopefully with the breadth of the Chevrolet line and new vehicles from Buick, we can bring those owners into the fold," said owner H. Douglas Knust. Even with the effort, he said, keeping customers will be a challenge because Pontiac owners may not find what they want in a Chevy.
Despite the defections, GM's overall sales are rising amid an economic recovery. The auto maker has gained market share so far this year—in large part because it now concentrates on its Chevrolet, Buick Cadillac and GMC brands. In the first quarter of this year, GM had U.S. market share of 19.4%, about flat with the 19.6% it held in January 2009, just before GM announced it would unload its other four brands.
Still, keeping the orphan-brand owners is critical, Mr. Knust said. "The onus is on us now to convert those owners, or else we're going to lose market share," he said.
Three times before in the last seven years, the 35-year-old stay-at-home mom bought cars from GM's now-defunct Saturn division. But when she shopped for a new ride a few months ago, the Ft. Worth, Texas, resident didn't bother checking out any GM models.
"We were a Saturn family all the way, but we had to look at other options" after GM discontinued the brand, she said. Ms. Shaw paid $18,000 for a pearl-white Nissan Motor Co. Cube, describing the boxy little car as the closest thing to a Saturn she could find. "I probably wouldn't have considered another kind of GM vehicle."
Ms. Shaw is one of more than three million Americans who are driving vehicles produced by the three GM divisions that were shuttered in the auto maker's 2009 bankruptcy reorganization—Saturn, Pontiac and Hummer.
GM is racing to hold onto those customers. Early results, such as Ms. Shaw's purchase of a rival's small SVU, and similar defections among Ford Motor Co.'s Mercury owners, show the car makers' uphill struggle to retain former customers.
So far this year, about 70% of customers who traded in a Pontiac this year replaced their car with a non-GM model; with Saturn that number rises to 71%. Ford, which killed its Mercury division last year, isn't doing any better. About 65% of the Mercury owners who have bought new cars this year have defected to auto makers other than Ford. Saab, now a subsidiary of Spyker Cars NV, recently halted production while its parent looks for a cash infusion.
In January and February, GM offered extra discounts of $1,000 to owners of its defunct-brands, putting more Pontiac and Saturn owners into other GM brands. Buyers who opted to stay with GM those months climbed, especially for Pontiac, which hung on to 57% of customers who traded in their vehicles, according to Edmunds.com. But the effort was controversial as Wall Street questioned whether the incentives were a sign that GM had returned to the old strategy of pushing market share over profits, which helped push it into bankruptcy court.
GM Roars, but Road Ahead Uncertain
GM reported higher first-quarter results on Thursday but some investors felt it had spent too freely on incentives in North America, resulting in a 3% stock-price drop.
GM North America President Mark Reuss defended the incentives in a recent interview, arguing it threw off competitors and helped hang onto existing customers at a critical time. The move was short-term and strategic, he said, not a return to GM's old ways.
"We fight tooth and nail to retain these customers," he said. "We caught a lot of [rivals] sleeping with" the elevated incentives offered to buyers in January and February.
The effort to retain customers is crucial if GM is going to regain market share in an increasingly competitive U.S. market. In Saturn's case, 23% of owners traded their Saturn for a Chevy, the most popular choice. But Toyota Motor Corp., Honda Motor Co. and Ford combined grabbed 35% of those shoppers, according to Edmunds.com Inc., operator of an auto-industry website.
In addition to incentives, GM works with its dealers to target potential defectors. It sends notices of special deals they can get and reminders encouraging them that GM has new Chevrolet, Buick, Cadillac and GMC models that they could consider when shopping for new vehicles.
GM dealers also are contributing to the effort. At Harry K Chevrolet Buick, in Chamberlain, S.D., every time a Pontiac owner drives in for service, the repair shop called the sales department. A salesperson then arrives to pitch the owner on purchasing a GM car or truck.
"Hopefully with the breadth of the Chevrolet line and new vehicles from Buick, we can bring those owners into the fold," said owner H. Douglas Knust. Even with the effort, he said, keeping customers will be a challenge because Pontiac owners may not find what they want in a Chevy.
Despite the defections, GM's overall sales are rising amid an economic recovery. The auto maker has gained market share so far this year—in large part because it now concentrates on its Chevrolet, Buick Cadillac and GMC brands. In the first quarter of this year, GM had U.S. market share of 19.4%, about flat with the 19.6% it held in January 2009, just before GM announced it would unload its other four brands.
Still, keeping the orphan-brand owners is critical, Mr. Knust said. "The onus is on us now to convert those owners, or else we're going to lose market share," he said.
#3
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I still think people are pissed about the bailout with GM and just scared in General of the instability. I am surprised to see the numbers for Ford. They seem to be getting their act together
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Most of the unlucky last owners of Saturn/Pontiac/Olds/Hummer vehicles are stuck with rapidly depreciating crap that only leaves a bad impression about GM.
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My local dealer STILL has a brand-new G5 that has never been sold. They moved it to their used car section since techincally that's what all Pontiacs after Halloween are now, but it's never had an owner.
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That's the problem when you shut down certain brands - what happens to the loyal customers who buy them?
Seems to me as if GM never even considered that scenario (hey, it's GM!) in the first place.
I actually thought Saturn had a lot of potential once they began using Opel-based cars. But with the weak marketing GM threw behind the brand they were doomed to fail. Saturn didn't quite stand for economy car and it certainly appealed to budget-minded youngsters, middle aged and senior citizens alike.
Pontiac had to go, though. There was far to much redundancy between Chevrolet and Pontiac. Before their death, Pontiac wasn't as sporty as they had been in the past. And I think most buyers eventually saw through the farce and simply went with a cheaper and more comfortable (barely) Chevrolet.
I'm happy that Buick and Cadillac are doing well, though. Their newer cars are certainly a huge step towards actually producing quality vehicles.
Seems to me as if GM never even considered that scenario (hey, it's GM!) in the first place.
I actually thought Saturn had a lot of potential once they began using Opel-based cars. But with the weak marketing GM threw behind the brand they were doomed to fail. Saturn didn't quite stand for economy car and it certainly appealed to budget-minded youngsters, middle aged and senior citizens alike.
Pontiac had to go, though. There was far to much redundancy between Chevrolet and Pontiac. Before their death, Pontiac wasn't as sporty as they had been in the past. And I think most buyers eventually saw through the farce and simply went with a cheaper and more comfortable (barely) Chevrolet.
I'm happy that Buick and Cadillac are doing well, though. Their newer cars are certainly a huge step towards actually producing quality vehicles.
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#8
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That's the problem when you shut down certain brands - what happens to the loyal customers who buy them?
Seems to me as if GM never even considered that scenario (hey, it's GM!) in the first place.
I actually thought Saturn had a lot of potential once they began using Opel-based cars. But with the weak marketing GM threw behind the brand they were doomed to fail. Saturn didn't quite stand for economy car and it certainly appealed to budget-minded youngsters, middle aged and senior citizens alike.
Pontiac had to go, though. There was far to much redundancy between Chevrolet and Pontiac. Before their death, Pontiac wasn't as sporty as they had been in the past. And I think most buyers eventually saw through the farce and simply went with a cheaper and more comfortable (barely) Chevrolet.
I'm happy that Buick and Cadillac are doing well, though. Their newer cars are certainly a huge step towards actually producing quality vehicles.![Thumb Up](https://www.clublexus.com/forums/images/smilies/thumbsup.gif)
Seems to me as if GM never even considered that scenario (hey, it's GM!) in the first place.
I actually thought Saturn had a lot of potential once they began using Opel-based cars. But with the weak marketing GM threw behind the brand they were doomed to fail. Saturn didn't quite stand for economy car and it certainly appealed to budget-minded youngsters, middle aged and senior citizens alike.
Pontiac had to go, though. There was far to much redundancy between Chevrolet and Pontiac. Before their death, Pontiac wasn't as sporty as they had been in the past. And I think most buyers eventually saw through the farce and simply went with a cheaper and more comfortable (barely) Chevrolet.
I'm happy that Buick and Cadillac are doing well, though. Their newer cars are certainly a huge step towards actually producing quality vehicles.
![Thumb Up](https://www.clublexus.com/forums/images/smilies/thumbsup.gif)
I've always wondered what did they do with all of those Saturns, Pontiacs, and Hummers. The local Cadillac dealership services all of them, but I don't see any of them still for sale on the lots. It's like they all disappeared.
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Seems to me as if GM never even considered that scenario (hey, it's GM!) in the first place.
![Frown](https://www.clublexus.com/forums/images/smilies/frown.gif)
I actually thought Saturn had a lot of potential once they began using Opel-based cars. But with the weak marketing GM threw behind the brand they were doomed to fail. Saturn didn't quite stand for economy car and it certainly appealed to budget-minded youngsters, middle aged and senior citizens alike.
Pontiac had to go, though. There was far to much redundancy between Chevrolet and Pontiac. Before their death, Pontiac wasn't as sporty as they had been in the past. And I think most buyers eventually saw through the farce and simply went with a cheaper and more comfortable (barely) Chevrolet.
I'm happy that Buick and Cadillac are doing well, though. Their newer cars are certainly a huge step towards actually producing quality vehicles.
![Thumb Up](https://www.clublexus.com/forums/images/smilies/thumbsup.gif)
#10
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Saturn started downhill over 10 years ago, when they turned their back on the bread-and-butter plastic-bodied S-models that made the company the huge success it was in the 90s. Those cars were reliable, innovative (like the spin-off transmision filter), and, of course, rust/dent/ding-resistant. They were replaced by the dreadful Ion and a bunch of Opel and GM-derived clones that completely lost track of what the company was supposed to be. GM's inept management of Saturn after 2000, IMO, bordered on criminal.
#11
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Not to say that these cars were all bad, but if you look at any auto wreckers, you will see dozens of Saturn's, sometimes 10 times more of them than other models that sold in the same numbers for a particular year. They are dreadful cars as they age, and the sub frame rusts horribly. Sure the plastic outer panels don't, but it does no good when the rest of the car rots away. Plus the plastic degrades and cracks, large pieces can fall right off the car. They fair especially poorly in harsh climates, in a mild climate they are reasonably reliable.
#12
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[QUOTE=mmarshall;6385439]That's why GM doesn't dare shut down Buick.
It's bad enough that the loyal LeSabre/Park Avenue/Lucerne buyers will soon have to step down to smaller, less-cushy Buicks....they're p***ed off enough as it is. Of course, the new LaCrosse is attracing some new customers for Buick that weren't there before, as the new Regal is also likely to do.
There is absolutely nothing special about Buick compared to Pontiac or Oldsmobile. Those other brands have the same long history, the same loyal customers, and the same name recognition as Buick. Pulling the plug on Pontiac and Buick hurt the feelings of many longtime GTO, Grand Prix, Firebird, and Cutlass owners, just as it would have hurt the feelings of Buick owners and enthusiasts if Buick died. GM could have pulled the plug on any three brands and it all would have been the same reaction across the board.
As far as I'm concerned, Buick should have been the first to go. They turned into a sad display of fuddy-duddy cars with horrifically outdated interiors. Olds was the only brand with some potential, but the Aurora alone could not keep the company going.
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There is absolutely nothing special about Buick compared to Pontiac or Oldsmobile. Those other brands have the same long history, the same loyal customers, and the same name recognition as Buick. Pulling the plug on Pontiac and Buick hurt the feelings of many longtime GTO, Grand Prix, Firebird, and Cutlass owners, just as it would have hurt the feelings of Buick owners and enthusiasts if Buick died. GM could have pulled the plug on any three brands and it all would have been the same reaction across the board.
As far as I'm concerned, Buick should have been the first to go. They turned into a sad display of fuddy-duddy cars with horrifically outdated interiors. Olds was the only brand with some potential, but the Aurora alone could not keep the company going.
Last edited by Fizzboy7; 05-12-11 at 11:31 PM.
#13
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Originally Posted by Fizzboy
There is absolutely nothing special about Buick compared to Pontiac or Oldsmobile.
Last edited by mmarshall; 05-14-11 at 09:55 AM.
#14
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Year to date thru April the Lucerne is selling pretty decent.
About 11k sold +38% vs. last year. The LaCrosse sold 18.5k and was -5% which was surprising.
Maybe there still is hope for Lucerne if it fits into GM's long term plans?
About 11k sold +38% vs. last year. The LaCrosse sold 18.5k and was -5% which was surprising.
Maybe there still is hope for Lucerne if it fits into GM's long term plans?
#15
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Of course they are pissed. However, and in typical US fashion, give it time and people will completely forget about it. Too many people in this country live scandal to scandal on their televisions, so to speak.