Detroit's Big 2? What a Combined GM/Chrysler Means for Marketing

Company Would Likely Shed Brands, Merge Agency Accounts

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DETROIT ( -- If you're wondering how much the U.S. auto industry has fallen, consider this: If merger talks between General Motors Corp. and Chrysler actually came to fruition, the combined company would hold only a 30% market share -- well below the half GM alone owned in this country some 40 years ago. And the two auto giants together would not rank as the country's largest advertiser.

Instead, their mingled measured and unmeasured media outlay, at $4.75 billion last year according to Advertising Age estimates, would still trail the $5.23 billion outlay of No. 1 Procter & Gamble Co.

What would happen in the event of a merger? Brands would be ditched (the Chrysler marque is seen as the most vulnerable) and agency assignments consolidated. With a coupling, GM -- which experts maintain has too many vehicle brands already -- would inherit three more: Dodge, Jeep and Chrysler.

But the pundits don't expect GM to keep them all, partly due to glaring model overlaps such as the Dodge Ram and Chevrolet Silverado. The full-size pickups are the top sellers for each company in a segment that is declining.

"GM has already got five brands it doesn't need," said Kevin Tynan, auto analyst at Argus Research, who suggested GM jettison Buick, Hummer, Pontiac and Saab and keep Chevrolet, Cadillac and GMC. "Exiting brands is not so simple and would require GM to accept 14% [U.S.] market share, but GM is not ready to do that."

Selling off
Mr. Tynan said GM could raise more cash if it flipped some or all of Chrysler's vehicle brands, which do some 90% of their business in this country. The most likely buyers would be from China, Russia or India, because it would provide "instant penetration" into the U.S. with an already-established dealer network.

Doug Scott, senior VP of auto consultant GfK Automotive, said he believes the Chrysler vehicle brand is the company's weakest and most likely to go. But he'd like to see the slick Chrysler 300 sedan replace the Chevrolet Impala. GM should eliminate its GMC truck brand, merging part of its lineup into Chrysler's Jeep all-SUV brand, he recommended.

Experts give GM the upper hand in a combination, noting that when it comes to marketing prowess, it is by the stronger one. GM spent $3.01 billion on U.S. marketing last year compared with Chrysler's $1.74 billion, according to Ad Age estimates.

Mr. Tynan said not only has GM "always been more aggressive" with its ad budget than Chrysler, but the auto giant's messaging is clearer. Mr. Scott cited GM's successful "core-model strategy" using the redone Chevy Malibu and Cadillac CTS to carry the banners for their brands in the past year. GM maintained marketing for those two models over many months in a tough market, didn't slap too many incentives on them and still made big inroads against tough rivals, he said.

Gary Topolewski, a veteran car creative who worked on Jeep and Cadillac, also picked GM over Chrysler in the marketing arena. Chrysler has changed direction too many times since Daimler bought it in 1998 before selling a controlling stake to Cerberus last year, he said. Mr. Topolewski, partner of small agency Topolewski, Ferndale, Mich., said Jeep ads now position the brand as toy-like instead of invincible; Dodge has softened its bold, somewhat macho positioning to woo more women to its cars; and the Chrysler brand is still trying to find its niche.

Odds on LaNeve
Mr. Topolewski, who said he is doing some GM work, said GM's Mark LaNeve, VP-sales, service and marketing in North America, has one of the longest tenures of any car exec and brings stability to communications and branding strategies. Experts say it likely would be him, rather than Deborah Wahl Meyer, Chrysler's VP-chief marketing officer, who would come out on top in a merger. In Ad Age's recent Power Players rankings, Ms. Wahl Meyer was No. 12, while Mr. LaNeve was No. 6.

Another question is what agencies would win out. Omnicom Group is aligned with Chrysler, while Interpublic Group of Cos. and Publicis Groupe work with GM.

Joe Phillippi, founder of Auto Trends Consulting, said he expects GM to leverage its existing creative and media agencies in the event of a deal -- at the expense of Chrysler's. Omnicom's BBDO, New York, and Troy, Mich., handles national and regional creative for the Chrysler and Dodge brands. Jeep is handled by sibling Cutwater, San Francisco; media by PHD; and digital by Organic.

But auto consultant Gordon Wangers said although one would expect GM's agencies to have the inside edge, he doesn't rule out BBDO, saying the agency knows how to battle with good creative and politicking to win or keep accounts. Another auto expert, who asked not to be named, said GM could very well stick with BBDO -- and give it more business -- after evaluating the work, cost and performance.

Charlie Hughes, founder of consultant BrandRules and an auto-industry veteran, said a merger is a bad idea; GM is struggling with its eight vehicle brands and adding three more won't help. "You'll get more of what you already have too much of: too many brands, too many duplicate car lines, too many dealers and, most of all, too few customers."
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