GM Claims The Inroads In California

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General Motors Corp. appears to be making inroads in import-loving California with a much-ballyhooed, make-or-break marketing initiative.

The auto marketer had been steadily losing share in a state that represents 10% of all new-car sales in the nation, and on Sept. 23 kicked off a $25 million cross-divisional ad program to run through 1994, an aggressive value pricing package and extensive dealer training.

"We're pretty pleased," said Michael Losh, GM's VP-North American sales and marketing.

Mr. Losh said non-fleet sales in California for the fourth quarter totaled 60,193, a 30.6% gain from the same time a year earlier.

Numbers from J.D. Power & Associates' California Report weren't quite so sanguine. GM's market share including fleet sales was 19.6% for October, up from 17.7% a year earlier. Share was flat (22.3% to 22%) for Novemberbut rose again in December (19.6% vs. 21.8%). How the devastating earthquake that hit southern California early this month will affect auto sales is anyone's guess.

Ann Pattyn, project manager of the GM program, said TV and radio advertising would continue through 1994 aimed at improving the carmaker's image.

"We're communicating that GM is doing business in a new and better way for the long term," Ms. Pattyn said.

The campaign, developed by D'Arcy Masius Benton & Bowles, Los Angeles, is decidedly "un-Detroit-like," actually acknowledging that GM had experienced problems in quality in the past. One spot, for example, is shot at an auto salvage yard with the owner saying he had no trouble getting GM wrecks.

The California initiative involves more than advertising. There's also a big dealer training effort to emphasize customer service, and applying value pricing to a wide range of models.

Under value pricing, a fixed, lowered price is set on a car packaged with attractive options. In part, GM managed the lowered prices by requiring dealers to lower their sales margins.

The pricing effort is an attempt to maximize an advantage that GM and other U.S.-based automakers currently have over Japanese competitors, attributable mostly to the strength of the yen against the dollar.

But pricing alone won't lead hard-core import owners into GM showrooms.

"You have to combine the quality story with value pricing," said Jim Helin, D'Arcy managing director in Los Angeles. ". . . Once you establish both quality and value, you can start selling cars a different way, especially when you have a story to tell."

Despite the effort, GM's California market share still lags behind the rest of the country. For the full year, GM's California market share was 22.9%, compared with 33.4% nationally. Domestic automakers as a whole took 61.4% of sales in California last year, compared with 73.8% nationally.

Based on an informal survey, GM dealers favor continuing the statewide initiative, said Doug Dohring, president of Dohring Co., an automotive marketing and research company.

"The feedback is mixed, but there's more positive than negative," he said, adding that the biggest complaint among dealers was over reduced margins.

GM suffered major production start-up difficulties last summer, leaving it with an inventory of 70,000 fewer units than planned.

Mr. Dohring said one GMC Truck dealer told him he missed out on 30 to 40 sales a month because he lacked inventory.

The inventory problem led to some criticism that GM should have delayed the start of its ad program.

"You have to do some building ahead of time," Mr. Losh said in response. "We would have liked to have had more product, but that was true all across the country."

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