Can GM Recapture Car Buyers?

DETROIT, Jan 5, 2004; Michael Ellis writing for Reuters reported that General Motors Corp. will have trouble getting Japanese car buyers to take a second look at the American automaker due to its past poor quality, even as it launches a number of new cars, a top GM official said on Monday.

"We have a perceptual hurdle to overcome that's going to take some time," GM Vice Chairman Bob Lutz told reporters on the sidelines of the Detroit auto show, where GM unveiled three new cars that go on sale over the next two years.

"I think it's going to be tough, because just like the Japanese have had a tough time luring Americans out of U.S. pickup trucks because the owners are so satisfied, it's going to be tough for us to get Camry and Accord buyers come back to look at American cars," Lutz said.

However, a second GM official said he was optimistic that GM could carry its momentum of stronger market share figures from the second half of 2003 into 2004.

GM boosted its U.S. market share in the second half of 2003 to about 28.7 percent, up from about 28 percent for the entire year, said John Smith, head of North American vehicle sales, service and marketing.

"We're creeping up at a faster rate in the second half of '03, and hopefully we'll be able to sustain that rate," Smith said. "I'd settle for 28.7 (percent) for all of '04," added Smith, who wears a pin with '29', the automaker's "stretch" goal for U.S. market share.

A poor start to 2003 sales, due to the Gulf War and some hangover from a strong end to 2002, spoiled GM's chances of gaining U.S. market share for a third straight year.

To change opinions, GM has launched some marketing programs which get consumers to try its vehicles, including its 24-hour test drive program, which allows consumers to take home a GM vehi1cle overnight. On Monday, GM launched its "Hot Button" $25 million giveaway of 1,000 vehicles to consumers who visit GM dealerships over the next two months.

About 40 percent of U.S. buyers do not consider buying GM vehicles, GM officials said in May last year, when the automaker launched its "Road to Redemption" ads, which acknowledged GM's past quality problems while asserting that its new vehicles deserve a closer look.

But some perceptions are slowly changing, as demonstrated by GM's luxury Cadillac brand, which a few years ago was widely regarded as a dying brand.

On Monday, Cadillac reported its best annual U.S. sales tally since 1990 with an 8 percent gain in 2003 to 216,090 vehicles.

"(Cadillac) is getting a more youthful, more affluent customer who has driving BMWs in the past," said Joe Ivers, a partner with automotive industry research firm J.D. Power and Associates.

On the other hand, GM's Pontiac brand ended 2003 with U.S. sales under 500,000 for the first time in 21 years. But with the unveiling of two new Pontiacs at the Detroit auto show this week, the G6 mid-size car and the Solstice roadster, the sporty car brand expects sales to grow past 600,000 in the next few years.