Today’s conference call with GM’s Susan Docherty and Mark Reuss made one thing crystal clear: the company is moving away from the production approach and embracing the marketing concept.
While that may seem very rudimentary and simple (if not slightly offensive – how can a company exist in the 21st century without having done so), here’s the deal: for the last few decades, GM focused on producing as many vehicles as possible and then using a whole bunch of incentives to move said vehicles off dealer lots and into customers’ hands. The New GM is having none of that: the attention now is to design, engineer, and build cars that people want to buy based on their attributes and qualities, and to match the supply (and production) to the demand.
Doing so would rid GM of using incentives, which
- Diminish profitability
- Reduce brand value/equity
- Focus the consumer’s attention on the price rather than the value
To execute on the plan, GM plans to continue making its product the focal point of the company and building the health of its four core brands in the U.S., made up of Chevrolet, GMC, Buick, and Cadillac. Also, The General plans to continue and accelerate its leadership in technology engineering and development, something that should prove very successful – seeing that Mark Reuss, the newly-appointed president of GM North America, is an engineer by trade.
One of the examples brought up during the conversation was the U.S. launch of the upcoming Chevrolet Cruze compact sedan, which replaces the aging Cobalt in Chevy’s lineup. Susan Docherty said that rather than overproducing the vehicle and then having to over deliver on incentives for an outdated model, GM will more closely match the supply of the outgoing Cobalt on dealer lots and wind down its production more responsibly.
The GM Authority Take
We’ve been long-time proponents of the idea that GM must deliver the best products in the marketplace, no questions asked; it needs to stop being the incentives leader. So to us, this is good news – finally the focus is on the product rather than on the sales (and incentives).
There isn’t much else to say here – this is the marketing strategy/approach, plain and simple. We’re surprised it wasn’t implemented much earlier.
We discussed the conference call in detail on today’s GM Authority podcast. Look for it shortly on our podcast page here.