GM's new pitch: an apology

After 25 years of struggling to slough off the image of mediocrity, automaker General Motors is recrafting its message to consumers.

Its new pitch: "We apologize."

In an advertising campaign launched earlier this month, GM sketches an image of itself as a once-wayward company chastened by customer disaffection.

"Thirty years ago, GM quality was the best in the world," the print ad begins, "Twenty years ago, it wasn't."

Much of the shift resulted from competition with Japanese automakers, whose cars, many observers and drivers agreed, were better built and more fuel efficient.

The fallout: By 1995, the percentage of prospective car buyers who considered purchasing a GM vehicle was 22 percent - a 50 percent drop since the early 1970s, according to CNW Market Research, an auto-industry consultant in Bandon, Ore.

But GM now claims that it has changed directions. "The road to redemption has no finish line," the ad concludes, "But it does have a corner. And it's fair to say we've turned it."

The statement by the world's largest automaker that it has essentially been making a poor product for two decades is an unlikely admission in an ad - a format almost always reserved for positive statements, even if they are highly subjective.

It's a desperate move, say observers.

"GM is very concerned about the low standing they have among new buyers, and they have never quite said they've done things wrong like this," says Mike Flynn, director of the Office for the Study of Automotive Transportation at the University of Michigan in Ann Arbor.

But it might be necessary. Despite evidence that they have significantly improved vehicle quality over the past 10 years, American carmakers, and GM in particular, are still losing customers to foreign-made models.

GM's move to directly address its negative reputation in the most public of ways shows the uphill battle US automakers face in persuading American drivers to take another look at their product.

"The Big Three American manufacturers have closed in on the Japanese, but most consumers still think they are way behind," says Mr. Flynn.

Trouble for US automakers began in the 1970s, when a critical mass of consumers began buying Japanese cars. Many soon found that the cars were relatively trouble free. At the same time, inflation and a national energy crisis prompted Americans to sacrifice long held allegiances in favor of frugality.

That mind-set shift didn't help GM. "They relied almost exclusively on loyalty to their brand for dominance of the auto industry. They never produced better vehicles," says Art Spinella, an analyst with CNW Market Research.

Young Americans began driving used Hondas and Toyotas as their first cars. As a result, they were less likely to buy one from GM later in life.

GM's negative reputation has endured for so long, say experts, because consumers tend to equate their own identity with that of their car. GM brands like Cadillac and the recently retired Oldsmobile, became associated with senior drivers - a link that turned off young and middle-aged consumers..

But the carmaker believes people will form a new impression of GM once they drive a new model.

Statistics support the claim. Domestic automobile brands took three of the top six slots in J.D. Power & Associates annual Initial Quality Study released last month. GM's Cadillac finished second - seven slots above Toyota. The other top US finishers include Mercury and Buick.

Partly due to the popularity of SUVs, a GM specialty, 36 percent of prospective car buyers now consider a GM brand before they buy, according to CNW Market Research. "When you look at the cars on their lineups, there really has been a vast improvement," says Gilbert Harrell, a marketing professor at Michigan State University in Lansing.

But the company is having problems translating improvements into increased sales. GM's market share continued a long-term decline last year, dropping to 27.2 percent from 28.6 percent in 2001. And the company has seen a drop in the number of middle-income consumers who buy its cars - a sign that it may be losing its grasp of mainstream drivers.

While many experts agree that GM's new ad campaign is well timed and makes accurate claims, they are skeptical it will do much to change attitudes shaped by more than 20 years of weak performance. "I think any time you say something good about yourself it is always suspect," says Al Ries, chairman of Ries & Ries Consulting, a brand-strategy firm in Roswell, Ga.

Yet other auto manufacturers have been able to recast their reputations in only a few years. Chrysler's resurgence in the 1980s, for example, was not considered to be the result of better quality cars, but of CEO Lee Iacocca's charisma and the advent of the minivan in 1983.

Hyundai, alternatively, improved its cars' quality and let word of mouth follow. "Every company has taken a different way of doing it," says Mr. Spinella.

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