Susan Docherty has seen it before: the double-digit sales slides, cash for clunkers programs, and the GM bankruptcy. That was in 2009, when she was the Vice President of sales at GM North America, and then the head of the region’s marketing. Now, she’s in charge of Chevrolet and Cadillac in Europe — a region where both brands are particularly (and perhaps even notoriously) weak.
Of course, the industry-wide 6 percent decline in automotive sales so far this year and the 8 percent drop seen in 2012 aren’t signs of an easy road ahead — so Docherty seems to have her work cut out for her. Interestingly, she refuses to join fellow European carmakers in the race to slash prices — a strategy that emulates GM’s methodical approach to growing Cadillac. Both aren’t as easy as they may seem, given that some automakers in Europe are offering huge discounts (to the tune of 7,000 euros, or roughly $10,000) per vehicle. Meanwhile, some European nations are contemplating offering scrappage schemes similar to the cash-for-clunkers program — making it difficult to plan production. So, how does Docherty plan to get through the European slump?
“I know the market will bottom out, and I know that it’s going to come back,” Docherty told Auto News. “It’s easier the second time around because you have the benefit of knowing which of the levers you pulled that worked.”
Before coming to Zurich in the beginning of 2012, Docherty spent 18 months heading up sales and marketing for GM International Operations (GMIO) in China — one of The General’s few geographic business units that is seeing steady and oftentimes significant increases in year-over-year sales.
To start, Docherty will manage Chevy and Caddy through the European crisis using a somewhat different approach.
“I’m not panicked about it,” Docherty says. “What you have to do is manage through this and watch your inventories like a hawk and understand what’s going on uniquely in every single different country.”
Aligning inventory to market demand is a crucial aspect of the way in which the New GM conducts business, a quality that the Old GM wasn’t known for. Chevrolet started 2012 with high stocks of inventory, which cost money to clear in the form of profit-sapping incentives. By contrast, inventory was 32 percent lower at the start of 2013.
Helping Docherty on the inventory front is Jim Bunnell, who previously headed up GM’s U.S. dealership network. Docherty appointed Bunnell as Vice President of sales as of December 1st, and the pair has “gone back and looked at some of the techniques, the short-term tactics, that we ned to keep the business moving” during the U.S. recession.
For instance, Chevrolet has begun offering three years of maintenance in Scandinavia and the Baltic region — a strategy that should attract (or at least speak to) those concerned about decreasing wages or losing their jobs. These consumers won’t have to worry about spending money on oil changes and tire rotations. Docherty ran a comparable campaign during the recession in the U.S.
Chevy Europe will also curb fleet and rental sales due to deteriorating prices. On the other hand, retail sales have become extremely difficult as unemployment rises. In response, Chevy is offering 0 percent financing, but is avoiding discounting its vehicles.
“There is a price war. Everything is about ‘deal, deal, deal’ and ‘price, price, price,” said Docherty. “That doesn’t make sense.”
At the end of the day, it’s a solid possibility that Chevy will lose market share in 2013 in key markets like Germany and Spain. But it will do so while not having marked down its prices to the levels of the competition.
In 2012, Chevrolet sold 195,000 cars in Europe, earning it a 1.4 percent market share — slightly higher than Buick’s share of the U.S. market The 2012 growth marked the fourth consecutive year of market share gains for Chevy in Europe and Docherty said she will be “cheering” if the brand’s market share grows in 2013. But without lowering prices that would hurt the brand’s reputation in Europe, that might prove to be a difficult feat.
“That’s the better way to manage the business,” she said, “until the market comes back.”
The GM Authority Take
Sounds like Ms. Docherty’s strategy involves not giving away the car, the factory, and the house — which is encouraging, to say the least. But we wonder if Chevy’s reputation in Europe would actually suffer if GM were to incentives sales with a few discounts here and there. If nothing else, The General should make it its top-most priority to grow Chevrolet and Cadillac in Europe… because that is one market in which one does not want to be seen as “weak”.