GM dusts off a familiar brand strategy for China boom
BEIJING (Reuters) - How do you say, "A car for every purse and purpose" in Chinese?
The boom in China's car market has given General Motors Corp a chance to revive the marketing mantra invoked by the company's long-time chief Alfred Sloan -- and to avoid the costly missteps that marked GM's decline in its home market over the past two and a half decades, executives say.
"Certainly, the lessons of the past, we don't forget them when we come here," GM Chief Executive Rick Wagoner said at the Beijing Auto Show this week.
Sloan, who retired in the mid-1950s, is credited for driving GM toward a dominant position in the U.S. market with a brand strategy that started first-time buyers with affordable Chevrolets and dangled Cadillacs as a badge of success at the high-end.
GM's U.S. market share peaked at 45 percent in 1980, before a long-running downturn spurred by quality problems, relentless competition from Japanese rivals such as Toyota Motor Corp and product miscues that made a Chevy almost indistinguishable from a Buick.
But now GM's rise in China under a decade-old joint venture with SAIC Motor Corp has given it a nearly 10-percent share of a market it expects to become the world's largest by 2020. The China market also gives it a rare chance to try to repeat the business past with a happier ending for investors.
After a slow first quarter, GM is only targeting growth only in line with the Chinese market in 2008, which it expects to be up 16 percent. That amounts to an admission that it could lose share since fast-growing Chinese car makers expect to outperform the industry-wide boom and GM's larger rival Volkswagen AG is on a roll.
HISTORY WITH A TWIST
But while some analysts expect Toyota to claim the industry's top spot in China by the middle of the next decade, GM executives believe they have a strategy to keep the Japanese car company from dominating in China as it already does in other Asian markets such as Japan, Australia and Thailand.
The core of that China strategy is readying up to four new models for its Chevrolet brand in the coming years, including a new low-cost car expected to capture sales from first-time car buyers, company representatives said.
The Aveo, which sells for under $10,000, represents the low end of Chevy's China line-up, but GM's head of Asian operations, Nick Reilly, said the automaker needed a car closer to $4,000.
GM introduced Chevy to China just three years ago after concluding its Buick brand was over-extended by a product line-up that had saddled it with everything from a minivan marketed as a kind of executive taxi to a cheaper hatchback.
"We could see Buick was being stretched," Reilly said.
Now GM has almost 200 Chevy dealerships concentrated in major Chinese markets including Beijing and Shanghai and plans for a significant expansion, targeting the dozens of other cities with a population of between 1 million and 10 million.
At Beijing's largest Chevy dealer, owner Lin Min Yu sold 779 cars in 2007, his first year in business. This year, he expects to sell 1,200 cars, with 70 percent of his customers first-time buyers younger than 30 years old. Continued...
