Automakers Hit the Gas on Marketing Spending

General Motors, VW, Hyundai to Put Big Budgets Behind Host of Launches

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Alan Batey, General Motors' VP-U.S. sales, had a big smile on his face at the New York International Auto Show last week.

GM is coming off a 7% sales gain in February, beating the industry's 4% growth, and it's got 13 new models on the way just from Chevrolet. As a result, the nation's largest automaker will jack up ad spending in 2013 to capitalize on what Mr. Batey believes to be a pent-up hunger by consumers for new cars and trucks they couldn't or wouldn't buy during the economic recession.

2014 Z/28 Camaro
2014 Z/28 Camaro

"The average [car or truck] is now over 10 years old. So there a lot of vehicles coming to the end of their useful lives," Mr. Batey said. "We're seeing a really good car environment: good resale values; good access to credit; and very low rates. It's a good time to buy a car and a good time to buy a truck."

He wasn't the only optimistic auto executive as the 10-day show kicked off at the Jacob Javits Center. With the U.S. economy slowly improving, total auto sales rose 13% in 2012 -- the industry's best performance since 2006, according to John Tews of J.D. Power and Associates. And several top automotive executives said they plan to boost advertising and spending in 2013 to take advantage of the moment.

Super Bowl so soon?
"We've got a lot of launch activity. With a lot of launch activity, you tend to have a good budget level," said James Vurpillat, global marketing director of Cadillac, who noted sales are up 32% so far this year. At the show, Cadillac unveiled a sleeker CTS sedan that will take aim at luxury-car-rival BMW. But Caddy's advertising focus for this year will remain on the recently launched XTS and ATS models.

GM's luxury unit has launched an agency review for its creative business that is expected to wrap up this spring. Agencies from Interpublic Group of Cos., Omnicom Group and Publicis Groupe are all vying for the business. Cadillac, a plum account spending roughly $250 million a year in the U.S., currently uses Fallon for creative and Carat for media duties.

Similarly, Kevin Mayer, VP-marketing for Volkswagen of America, said he's eyeing a bigger ad outlay as consumers finally sell or trade in their old vehicles in favor of new ones. Mr. Mayer raved about the work of his ad agency, Deutsch, L.A.

Steve Shannon, VP-marketing for Hyundai Motor America, said he's already thinking about advertising on Fox Sports's telecast of Super Bowl XLVIII from MetLife Stadium in New Jersey. Hyundai works with Innocean in Huntington Beach, Calif.

"We've still got a little homework to do," said Mr. Shannon about advertising on the big game. "But odds are we'd love to come back."

After a big start to the year in January and February, auto sales will remain strong in March, according to a J.D. Power forecast. Dealers are getting higher prices, too. The average new-vehicle transaction price is $28,504, up 3% in March 2013 compared to the same month in 2012, said J.D. Power.

Priced considerably higher than that was the hottest car at the event: GM's 2014 Corvette Stingray. Chevy then surprised attendees by unveiling an ultra-fast new Z/28 Camaro that GM president Mark Reuss described as a "street-legal track car."

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