Other GM brands face Olds issues

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General Motors Corp., which admitted defeat last week by finally pulling the plug on its struggling Oldsmobile Division, still has a long road ahead as it retools other vehicle divisions. But GM has big plans for Cadillac, Buick and Saturn.

Saturn Corp. will carry the full weight at GM to attract customers leaning toward imports since it already does well in that area, said Ronald Zarrella, president of GM North America. "Our plan is to significantly back Saturn," he said. Indeed, earlier this year, GM announced a $1.5-billion investment in Saturn to add four new vehicles, including its first sport utility vehicle due next year.

Both Oldsmobile and Saturn are losing money. Under GM's brand management system, started in 1996, Oldsmobile's mission was to attract younger, import intenders to lower the brand's then-average 62-year-old owner.

GM expects new vehicles at Cadillac, Buick and Saturn to attract more buyers. GM's Chevrolet, Pontiac and GMC divisions, on the other hand, have pretty defined brand images and aren't seen as problem children at GM.

Industry experts noted GM in recent decades hasn't done well executing strategies.


The auto marketer has "generally struggled to improve its products," said John Casesa, an auto-industry analyst at Merrill Lynch. One product-line success is GM's full-size pickups, including the Chevrolet Silverado, and its sport-utility derivatives.

Mr. Casesa applauded GM's move to phase out Oldsmobile, but said the verdict is still out on whether and how well GM deploys that division's freed-up resources to more-promising parts of its business. He said he's surprised GM doesn't plan to permanently reduce production capacity in North America to reflect the Oldsmobile exit. There's already overcapacity in the industry.

Mr. Zarrella said the automaker's decision to phase out Oldsmobile will allow it to "strengthen and grow our remaining GM brands." The biggest part of incremental savings at Oldsmobile is its advertising, he said, adding brand advertising will cease in favor of promotional advertising.

GM's most challenging repositioning will be Buick, which Mr. Zarrella dubbed "one our most profitable brands." Buick will face the same demographic challenges as Oldsmobile, Mr. Casesa said.

Buick's first sport utility, the Rendezvous, will be a hit next year, predicted Jim Hall, VP-industry analysis at consultancy AutoPacific. Buick's challenge, he said, will be to have new products ready when Rendezvous buyers are ready for another vehicle to keep them loyal to the brand. "If not, Buick will be in the same situation as Oldsmobile," said Mr. Hall. McCann-Erickson, Troy, Mich., handles Buick.


Rendezvous' sister vehicle, the Pontiac Aztek, has failed to meet GM's sales' expectations.

Saturn's test will be to retain the import intenders it has attracted, he added. Saturn bungled the launch of the L Series midsized sedan in summer 1999, forcing Saturn and Publicis & Hal Riney, San Francisco, to retool advertising last February.

Mr. Hall said Cadillac will be easier to reposition than Oldsmobile because it still has brand equity as a luxury line.

What about Cadillac's unsuccessful attempt to attract younger, sophisticated, educated buyers with the 1996 launch of the entry-lux Catera sedan? "One reason it flopped," said Mr. Hall, "was it had absolutely incompetent advertising with a [cartoon] duck that was the opposite of the target."

The duck's role in ads from D'Arcy Masius Benton & Bowles, Troy, Mich., with the tag "The Caddy that zigs," was significantly reduced to a cameo in TV spots in fall 1997.

Tom Kinnear, a marketing professor at the University of Michigan, said Cadillac must have a strategy that makes sense and have the courage to stick to it if it wants to be successful at repositioning itself. He said Cadillac should still keep its core of loyal, older buyers while making the transition, something Oldsmobile didn't do when it discontinued its full-size Eighty Eight and Ninety Eight sedans.

Oldsmobile was far from being GM's only problem. The automaker has been losing market share for several decades. GM's market share

in the month of November slipped to 25.9% vs. 27.2% in November 1999, according to Automotive News. GM's market share for the first 11 months of 2000 is also down compared to a year ago, to 28.4% from 29.3%. GM's share stood at 45% just 20 years ago.

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