Resurgent GM Needs to Keep 1.6 Million Customers Who Now Own "Orphan Brands"

The stunning news that General Motors’ new board had voted to retain its Germany-based Opel operations (because a European foothold is essential for a global strategy) didn’t make it into an October 2009 sales call the company held for the media and analysts this week. Instead, GM’s new U.S. sales chief Susan Docherty talked about the company’s plans to communicate with the 1.6 million “free agents” it created when it whittled down from eight brands to four. Say goodbye to Pontiac, Saturn, Saab and Hummer.

“Those brands are winding down,” Docherty said. “We are reaching out to Pontiac and Saturn owners, telling them we will meet their service needs going forward, and that we value them as customers and will do everything we can to retain them.”

Docherty said that Saturn has 9,400 unsold Saturns it is trying to move, which means this might be a good time to buy one—provided you believe what she says about service and parts continuing to flourish. Docherty says GM will launch a print campaign aimed at selling Saturns, and she says she’s not worried about cleaning out the back lots. 

Pontiac decommissioning is also well underway. The company delivered 18,000 of them in August, but expects to be out of inventory on this venerable brand (the first one was made in 1926) by the end of November or early December.

Good news for General Motors, says GM senior analyst Mike “Mickey” DiGiovanni, is that in October the company enjoyed its first month-over-month sales increase in 21 months (back to January 2008) with a 4.7 percent gain. And it also enjoyed a modest U.S. market share gain, to 21 percent, in part due to dismal results at stagnant Chrysler (without any new models in October, company month-over-month sales fell 30.4 percent compared to 2008).

While GM couldn’t boast of third quarter profitability, as Ford did, it highlighted the fact that 95 percent of its business is now in the “core brands”—Chevrolet, Buick, Cadillac and GMC—compared to 85 percent in July. “Sales are showing signs of momentum,” said DiGiovanni, who nonetheless cautioned about stubbornly high unemployment levels and cautious bank lending as eroding the market picture and affecting consumer confidence.

With Saturn and Pontiac relegated to the history books, GM will have something to prove to those 1.6 million customers who now own orphan brands. The sleeked-down, government-controlled entity needs to demonstrate it’s still a strong company with new products going forward.

Camaro is definitely a bright new product for GM—its sales have beaten the Ford Mustang for the sixth consecutive month, Docherty said. Other good results are the Chevy Equinox crossover, the Cadillac SRX and the Buick LaCrosse—which Docherty said has had success attracting both new customers to GM and under-55 buyers. Sales of the LaCrosse were up 36 percent from September. The company retains 20-day inventories of the SRX. “Many are pre-sold at Cadillac dealers,” Docherty said.

Chrysler is announcing its comeback strategy today, and is poised to offer a plethora of Fiat and Alfa-Romeo-based models in the near future. So GM may have to contend with a revitalized rival. And it will have to go a long way to match the momentum that Ford is building.

 
Flickr photo