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GM losing a lot of “orphans” but sticks to compact plan

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GM losing a lot of “orphans” but sticks to compact plan

Automaker concedes migration to rivals. However company insists it’s meeting targets for growth and sustainable profitability.

Published On Mon May 31 2010

General Motors of Canada is acknowledging the loss of a lot of “orphan” customers to rivals but the company says it remains on track to meet smaller performance goals with its lineup of surviving models and dealers.

GM won’t disclose any internal estimates on how many customers may have migrated away after the elimination of four brands and more than 200 dealerships in a major restructuring to save the automaker last year.

However industry sources say the retention rate is far short of GM’s expectations despite an aggressive internal campaign to keep them.

One source familiar with GM’s dealership network said recently the company had hoped to retain more than 70 per cent of discontinued Pontiac, Saturn, Saab and Hummer customers by attracting them to remaining “core” brands but the number is less than 30 per cent in the first four months of this year.

GM would not comment on whether retention goals and estimates of the size of the migration are accurate.

GM’s overall sales in the first four months fell 11 per cent or almost 9,000 vehicles while the overall market climbed 11 per cent in an industry recovering from its worst downturn in several decades.

In April, the company’s numbers worsened with volumes down 21 per cent. In contrast, the market improved four per cent.

But GM, which received billions of dollars in government aid last year, stresses its core brands - Chevrolet, GMC, Buick and Cadillac - have increased 20 per cent in the first four months and that’s what matters now.

Industry analysts say if most of the displaced customers, whose brands accounted for almost 30 per cent of GM’s sales, had shifted over to the core models, the company’s gains would be a lot higher.

Veteran auto watcher Dennis DesRosiers added in a recent note to clients that GM is clearly not winning over customers who have lost their dealerships and brands.

“There are close to 2 million owners of GM brands that have been orphaned and many are finding lovely homes at competing dealers and brands,” he said.

Earlier, DesRosiers said GM’s moves to shrink the company represented the biggest opportunity ever for rivals in an industry where competition is fierce and relentless.

The loss of brands and overall sales has also taken a toll on GM’s market share which has tumbled from 18.6 per cent to an all-time low of 15 per cent.

In Toronto, the country’s biggest market, one GM dealer who lost his franchise during the store downsizing last year said he has seen internal statistics showing the automaker’s overall local share slid to a dismal seven per cent in the first few months of the year.

“They (GM) cut the network far too deep,” said dealer Marvin Starr, who ran Marvin Starr Pontiac Buick Cadillac GMC for more than four decades and has now joined a group suing the company.

“There has been a lot of migration by orphaned customers because of loyalty to a dealer’s sales and service staff and resentment about the government bailouts.

“There are now only two GM dealers between the Pickering town line and Dufferin Street south of the 401 among hundreds of thousands of people. It’s a lot of inconvenience. Customers end up going to rival stores closer to them.”

Starr released letters from customers who objected to his dealership closing after years of good service. Some of them indicated they would never buy a GM product again.

“This will serve to inconvenience a great number of loyal GM customers who now have to travel much further to either to get service or make a purchase of a new vehicle,” said one customer in a letter to GM who also sent it to Starr.

“I am totally disgusted and shocked that you are closing down Marvin Starr,” said another motorist in a satisfaction survey. “We will never buy GM again.”

Tony LaRocca, GM’s communications director, confirmed part of the customer migration is due to the disappearance of long time dealers and the closer proximity to rival retailers.

He added the loss of the popular Pontiac brand and the lack of comparable models in the remaining GM lineup affected business.

“With the inability to match them elsewhere in our lineup, it would be logical for them to look at other brands,” he said.

Furthermore, LaRocca said the end of production of the Venture and Montana models left GM without a minivan product. The absence of a strong small car, less emphasis on daily rental fleet sales and attractive leasing plus low inventories at stores earlier this year also contributed to the shift and loss of overall sales, he said.

“It’s not a surprise to us and it shouldn’t be a surprise to anyone else,” he said.

GM initiated an aggressive marketing campaign late last year to woo customers losing stores and brands to surviving dealers. It included mailings, e-mails and phone calls.

The company told dealers that “it is important to put yourself in the shoes of the “orphan customer” to realize how they feel.

“They have lost their brand, their dealership or potentially both,” one note said.

LaRocca said although it is difficult watching any customers go elsewhere, GM is focusing on building a new customer base through the remaining brands, current hot models and the debut of products such as the Chevrolet Cruze compact this summer, the Orlando crossover utility vehicle next year and the Spark subcompact in 2012.

LaRocca said GM is achieving the goals of a more “compact” business plan that is continually profitable for the company and smaller dealer network.

“What would worry us is if we didn’t see sustainable growth of our four core brands.”

link:

http://www.thestar.com/business/article/816918--gm-losing-a-lot-of-orphans-but-sticks-to-compact-plan

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:neenerneener::neenerneener::neenerneener:

... to those who thought Pontiac was somehow dead weight: "He added the loss of the popular Pontiac brand and the lack of comparable models in the remaining GM lineup affected business.

'With the inability to match them elsewhere in our lineup, it would be logical for them to look at other brands,' he said."

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I'm mighty sure that 95% of the people looking elsewhere were shopping around for the cheapest discount, and weren't terribly concerned about red gauges and crazy hubcaps.

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Also, this is a CANADIAN news article. In Canada, Pontiac was popular cause they were cheap and plentiful. In US rental fleets, Pontiacs were popular cause they were cheap and plentiful.

Only conclusion possible. Canadians are actually the spawn of rental car companies.

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Every time I have visited Canada, From P.E.I.to Montreal, Toronto to Nova Scotia, The Pontiac brand was HUGE over there! In fact I remember thinking that the Grand Am was the Canadian Camry. (sales wise, nothing else)

I even remember seeing driveways, esp.in P.E.I. & in Quebec where there ALL the cars wore the Arrowhead emblem. Like 2 Grand Ams & a Firefly, or a Grand Prix & a Trans Sport.

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Booyah, didn't your mama tell you that too much fapping would cause blindness?

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Also, this is a CANADIAN news article. In Canada, Pontiac was popular cause they were cheap and plentiful. In US rental fleets, Pontiacs were popular cause they were cheap and plentiful.

Only conclusion possible. Canadians are actually the spawn of rental car companies.

Most of the people I know that bought a new Pontiac in the last 5 years bought them because they were cheap. All were G5-G6 and Torrents. I know a couple with Solstice and a couple with G8s but the are not as common as the others sales.

Odds were the ones who bought the G5 G6 and Torrents were not going to be repeat customers anyway. They like their cars but are not in love with them or the fact they were Pontiac's. They bought them because the were cheaper than the Malibu's Aura's and the same as the Cobalts.

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Funny thing about Canadians and Pontiacs...of my friends in Denver that moved down from Regina over the last 15 years, I know several that moved to the US driving Pontiacs...a '97 Grand Prix, a Sunfire sedan, a late '90s Bonneville, amongst others that I recall. They took them all back to SK to sell before moving on to Toyotas, BMWs, Audis etc here in the states.

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For those who still insist on hating, Canada's love for Pontiac started a long time ago, many decades ago. This theory that they were buying them on price alone just does not hold water. Learn your history before you go off at the mouth.

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For those who still insist on hating, Canada's love for Pontiac started a long time ago, many decades ago. This theory that they were buying them on price alone just does not hold water. Learn your history before you go off at the mouth.

Everyone wanted Pontiacs long ago but in the last 10 years the buyers became bargin hunters as time went no matter Canadian or American. The last 3 years many bought Pontiacs because of the large discounts on many of them. Sad to say even the G8 was cheap in the last year as I could have bought one for $23,000.

Fleet sales killed the GP in value on the used market.

Even my 04 GP I bought it because I wanted it but I got it much cheaper than a Impala SS I priced. They sold it to me $8,000+ off sticker new.

As time wore on and GM/Pontiac sales slid the prices got cheaper on all but the Solstice for the most part.

The Dealers here in Ohio sold G5-G6 cars for big discounts. They were good cars for the money for people who shop price and reliability.

Edited by hyperv6

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Actually, giving up HUMONGOUS slices of the market share pie to Honda & Toyota is what bankrupt GM more than anything else.

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Hate to say I told you so, but...

The people you are losing that were buying Pontiacs were like welfare people. The Pontiac buyers for a good while brought in little if anything profit wise to GM. Building and selling cars at great discounts has so little merit. Why work hard to sell a bunch of different models when you can make more profit on half as many? If Pontiac was making so much money do you really think they would have killed them. Would of could of and should of does not work in the real world.

Like it or not it is the boring cars like the new Nox and Bu that have been bringing in money along with the trucks. This is what the market is buying and wants. Get these cars healty then GM can get back to the play cars.

A weak Chevy left you with crap to spend on Pontiac's. If Chevy was healthy then they would have had money to make Pontiac right. At this point Pontiac is like Gary Coleman as sad story and dead. Let them both rest.

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I see, I should just accept the party line with all of its sweeping generalities and shut-up.

No, I don't think so.

The truth is that no analogs exist for the Pontiacs worthy of the name, while that remains true I will stand my ground on this.

Edited by Camino LS6
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Some people have absolutely no clue what they're talking about, yet they keep yammering the same run-on sentences and non-spellchecked drivel day after day on this site. It gets old.

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Pontiac sold in Canada based on price. That is it. We Canadians are cheapskates, and we like our small cars. Pontiac was happy to deliver on both premises. Unfortunately, it wasn't making GM very much money. And with the rise in sales based on fuel prices, Canadians want small cars that offer real quality, comfort, and reliability; Pontiac's offerings just weren't up to par.

Customers that are leaving the 'fold' are only out for better prices from the likes of Kia and Hyundai. Others are leaving because they bought Pontiac's and were disappointed with their purchases. Here's a fact: Ford is the number one seller in Canada. One brand doing the selling.

Here's another: the Mazda 3 and Honda Civic trade blows as the top sellers in Canada. Both cars are far better than the Cobalt and Pontiac G5.

Anyone upset about dealership closures has to realize that GM has far too many dealers in Canada; 75% of Canada's population lives within 200km of the US border, so naturally the other 25% within a country that spans almost a ten million square kilometers will get burned bit, that's life.

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I see, I should just accept the party line with all of its sweeping generalities and shut-up.

No, I don't think so.

The truth is that no analogs exist for the Pontiacs worthy of the name, while that remains true I will stand my ground on this.

You should not accept the party line and be upset. But also it is important to be rational and keep business reality in it.

Pontiac and Mercury are two brands that died for many of the same reasons. Ford for all intents is doing to Mercury what GM is doing to Pontiac. In Fords case they will roll Mercury into the Lincoln line and just skip the middle Buick like brand and offer some lower end Lincolns.

Who knows as quietly as Pontiac went it may permit them to use the name at some point for a few HSV like models.

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Pontiac was certainly more viable as a brand than Mercury was at the end.

I know that GM's condition at the time left them powerless to save Pontiac and Buick, but I still feel like they backed the wrong horse.

For me, I know that they did.

I would have killed Buick instead of Oldsmobile.

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Actually, giving up HUMONGOUS slices of the market share pie to Honda & Toyota is what bankrupt GM more than anything else.

You are both right.

They loss a large chunk of the market. They then were left with a lot of plants that were cheaper to keep open building cars vs closing. That then left them to offer rebates with little profits into a death spiral of Chapter 11. It was a chain of events that led to the fall not just one year or reason.

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Pontiac was certainly more viable as a brand than Mercury was at the end.

I know that GM's condition at the time left them powerless to save Pontiac and Buick, but I still feel like they backed the wrong horse.

For me, I know that they did.

I would have killed Buick instead of Oldsmobile.

In my heart I would have saved Pontiac.

In reality the sales in China left GM with no choice.

They could have rebaged Opels and Holdens as Pontiac but it is cheaper to just keep them Buicks in China and the States. Besides would people have been happy with Rebadged Opels as Pontiac?

At one point Pontiac could have been Olds if they had not had the sales surge in the 80's. People tend to forget how grim it was in 80-82.

Edited by hyperv6

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The "global market" thing just disgusts me.

So many things should have been done differntly over so many years...

Ah well, at least I had a few cars I could enjoy and be proud of.

The future is so bland, I feel sorry for those that missed the individuality that once was.

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