New York: Two years ago, General Motors Corp. promised dealers it would do whatever it took to reverse falling sales in the American cities that set the industry’s trends. The slump has only worsened.
Toyota Motor Corp. outsells GM two-to-one in Los Angeles and by a slightly smaller margin in Miami, according to US data compiled by R.L. Polk & Co. In the New York City metropolitan area, where GM had a 4.5% point lead in market share five years ago, Toyota has surged to a four-point advantage.
“In some of these markets, our share has fallen off rather dramatically,” Mark LaNeve, GM’s head of North American sales and marketing said in an interview. “You can almost re-enter the market like you would enter a new country.”
Gaining market share in big cities is important to car companies because, like many other consumer trends, car-buying habits are set there. Without significant presence in places like New York, GM cannot gain the brand awareness to attract affluent buyers and return to profitability.
“If GM wants to be viewed as a cool brand, they’ve got to pay more attention to some of these markets where there are cool, urban people,” said Russell Winer, a marketing professor at New York University’s Stern School of Business. “People in Des Moines want to drive what’s hot in L.A.,” he said.
The company will unveil prototypes of new, small cars at the New York auto show beginning tomorrow. The subcompacts, which can travel 40 miles on a gallon of gasoline, will be a foot shorter than the 12.5-foot Chevrolet Aveo, the smallest GM model.
In 2005 meetings with dealers, GM Chief Executive Officer Rick Wagoner made regaining market share in Miami, Los Angeles and other large cities a priority. He promised more advertising and other resources to boost sales.
Toyota sales have risen 36% in New York, Los Angeles and Miami metro markets since 2002 while GM’s dipped about 20% in those three markets combined, according to data compiled by Southfield, Michigan-based Polk. GM’s best showing was in Miami, where its sales dropped 1.9%.
GM, which lost more than $12.4 billion over the last two years, will increase marketing expenses by 20% to 50% this year, primarily in New York, California, Southern Florida and Washington D.C., LaNeve said.
The automaker spent about $67 million in New York, $58 million in Los Angeles, $11 million in Miami and $25 million in Washington last year, according to TNS Media Intelligence, which tracks advertising spending.
GM will also try localized incentives such as lower lease rates and special consumer events, LaNeve said. He declined to discuss specifics. He said he will also give urban dealers more consideration in distributing popular models.
New York is the media capital of the US, Washington is where government policy is developed, Florida is a concentrated Hispanic market, and Los Angeles is both a trend-setting area and a focus of environmental groups, all populations where GM needs a better image, LaNeve said.
GM will look to new models such as a redesigned Chevy Silverado pickup and the new Saturn Aura sedan to help gain sales in the market.
The company will begin producing a mini-car concept vehicle unveiled at the New York International Auto Show “very soon”. The new vehicle will be launched in Europe and Asia. Although the comapny specific information as to where the cars would be built, there was however the speculation that India and China were “very logical candidates”.
Three concept mini-cars, designed in South Korea and assembled in the US and India, were unveiled at the show on 4 April.