GM - Geared Up For Market Success? Or Total Disaster?

In case anyone has just crawled out from underneath a rock, the economic slowdown has well and truly begun. The signs have been rampant in the car business for six months, and it's well documented that this business is usually "first-in" and then "first-out" when it comes to these things. And believe me, we're heading for it, Big Time. I've spoken about how the SUV pendulum is poised to swing back the other way, and many of you took time to email me your feelings of utter derision toward my stance. Well, guess what? The pendulum has not only changed course, but it's headed back the other way at breakneck speed. Big trucks and SUVs are piling up on dealer lots everywhere. The consumer-buying binge of these vehicles is over. And the slowdown that's coming is going to be unlike any we've seen before. Over capacity + high gas prices + changing consumer tastes = Trouble with a capital "T." It's going to get ugly and stay ugly for a lot of automakers, but no one is poised to go in the tank deeper than General Motors. We predict big SUVs of the leviathan class will become as passé as one of last year's "in" lists. Yes, the people who really need them will continue to buy them. But the people who got on the SUV bandwagon and who really had no idea why they were doing it or what, exactly, they were getting themselves into are not going to "re-up" for another stint. And this spells big trouble for GM.

Because in spite of their recent media blitz about how they're going to put their engineering resources to bear on the small car market (just wait until 2004!), as a company, they have converted more of their production capacity to trucks, trucks and more trucks than anybody.

In typical GM fashion, if there is a product movement in the business, they're the last to take advantage of it. Every time. By the time they do get geared up for anything, the market has already moved somewhere else. I saw it time after time when I did my stint on their various advertising accounts. We'd go to ride-and-drives, and they'd sit there and tell us how their new model would compete favorably with cars or trucks already out there, even having the models there for us to try out - while completely ignoring the fact that every competitive model they were "benchmarking" against would be changed for the better in the coming months. And to top it all off, their new model would still be at least eighteen months away from being built. I usually pointed that out at the time but as you can imagine, my comments weren't welcomed.

True to form, before I left Campbell-Ewald in September of '99, all we heard about was truck-this and truck-that. The net-net message of it all to us agency peons was "Boy, by 2002 we're going to just kill in the truck market." Hmmm, that's funny. Once again, their "big push" into a market comes exactly at the worst possible time. Their timing (or lack of same) incredibly and unbelievably is out to lunch - yet again. Only this time, in this downturn, the consequences will be severe. Look at all of their product news for 2001 and 2002. A new, bigger Blazer/Envoy. New, more luxurious versions of GMC full-size trucks and sport utilities. A new Cadillac Escalade based on the newer GM truck platform. And then of course, there's the Chevrolet Avalanche, a "sport truck" (sorry, other than the SVT Ford Lightning, an oxymoron if there ever was one) based on the full-size Silverado that features "enhanced" utility. This truck will get a huge push, complete with substantial allotments of GM marketing money. They're prepared to blow the lid off the truck market with this one, you can just feel it in their speeches and see it in their elaborate "teaser" print advertising.

And guess what? They're going to "kill" in the truck market all right - because they'll be dead in the water with it. It's the wrong-sized vehicle at the wrong time in the wrong market. It's too big. Too expensive (did somebody say $35,000?). And too late. And after all of their pronouncements about having "turned the corner" and "just wait until next year" and "we'll be there with the right products at the right time," they are once again as far out of touch with what's really happening in the market as you can possibly get.

Didn't anyone down at "The Tubes" see it coming?