Olds suffers sales slide, dealers' dissatisfaction

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What's wrong with Oldsmobile?

That's the question that Olds' new ad director, expected to be named today, will face. Despite a freshened vehicle lineup, the General Motors Corp. division is in a sales slump. Its ad budget is said to have been cut by 15% in the first quarter. The division is now running a "zero down, zero interest, zero payments for a year" promotion that an Olds dealer who asked not to be identified called a desperation move. And at least five dealers contacted by Advertising Age said they're unhappy with Oldsmobile's ads from Leo Burnett USA, Chicago, claiming the agency's work doesn't clarify the brand's new positioning.

`NOT OVERWHELMINGLY HAPPY'

"It's pretty universal among the dealer body that they're not overwhelmingly happy with our advertising," said Eddie Gomez, the executive manager of Ferman Oldsmobile, Tampa, Fla.

Gus Buenz, director of Oldsmobile communications, declined to comment directly on dealer reactions to the ads. But he said, "We are redoing all our marketing and advertising now with a more divisional flavor to it." That work is due in January. He also voiced support for the division's agency, saying, "We are not replacing Burnett."

The current divisional ad tag, "Start something," was developed by Karen Francis and Mike Sands, who left GM as general manager and advertising director, respectively, earlier this year.

Mr. Buenz declined to discuss a report from an executive close to GM that Olds' ad budget was trimmed in the first quarter, with the funds shifted to GM's online unit. He did confirm that Intrigue, launched as a new model in 1997, hasn't had national ad support in more than a year. According to Competitive Media Reporting, however, Intrigue in 1999 received $54 million in measured media support, vs. $9 million in the first half of 2000.

SPENDING PLUMMETS

Olds was supported by $330 million in measured media advertising in 1999, but spending in the first six months of this year totaled just $92 million, according to Competitive Media Reporting.

To spark traffic, Oldsmobile kicked off an ad campaign earlier this month for an aggressive new incentive deal. The so-called triple-zero deal lets buyers of all 2000 and '01 models pay nothing down with no payments and no finance charges for a year. The offer, which started Oct. 3, is available through Jan. 2. Burnett created TV, print and radio ads for the campaign, which will run through early January.

Dealers said the ads have already generated showroom traffic. Mr. Buenz said 19% of buyers in four earlier test markets took the triple-zero deal, and sales in those markets rose by 34%.

But with the promotion, "We are destroying the credibility of the car business," said the dealer who requested anonymity, adding that when monthly payments finally do hit, they are higher than if a customer bought today without the deal.

TARGET: IMPORT INTENDERS

Under brand management at GM, Olds' mission is to attract so-called import intenders and to be the step-up brand from GM's Saturn. Oldsmobile abandoned its loyal "white-hair" buyers when it quit making the Cutlass and Ninety Eight, said the dealer who asked not to be named.

Olds sold 224,637 vehicles in the first nine months of 2000, down 20% from the same period a year ago, according to Automotive News.

Mr. Buenz said Oldsmobile has maintained the same sales volume as it did in each of the past several years. But sales numbers for the Cutlass and Ninety Eight car models, discontinued after the '98 model year, must be subtracted from the tallies. "We only sell five brands now; we had seven in 1999," he said.

"Oldsmobile doesn't offer a compelling reason for buyers to abandon the franchise they're already in," said Susan Jacobs, president of consultancy Jacobs & Associates. "Oldsmobile needs a unique product you can't get anywhere else. That's impossible to do with a sedan."

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