Maybe, but getting back to 3 million sales is an uphill climb It was a snowy, blustery December morning in 1972. Reporters had been summoned to the General Motors Corp. Building in midtown Detroit for a continental breakfast to celebrate a remarkable occasion. Chevrolet was closing in on a phenomenal feat: 3 million sales and an awesome 25.5% of U.S. total car and truck deliveries that year.
The final tally: 3,189,157.
"I set my goal at 3 million," recalls Robert D. Lund, then Chevy's general sales manager. "No one had ever done that before, and I wanted to be the first to do it." Mr. Lund only missed by 15,000 vehicles the prior year, and as sales manager and subsequently the division's vice president, he was to exceed the 3 million mark numerous times, including a four-year string from 1976-'79 during which Chevrolet reached its all-time peak: 3,646,458 in 1978.
Now 80 and retired in Scottsdale, AZ, where he owns the nation's largest exclusive Cadillac dealership, Mr. Lund says he "hopes" Chevrolet can once again enjoy a 3 million year. Shades of the past: That's also a target set by Marketing General Manager Kurt L. Ritter, 50, Chevy's top gun since January 1999. The division last topped 3 million in 1979 when it sold 3.2 million cars and trucks.
Inside forecasts put Chevrolet's objective at 2.7 million this year, including 900,000 cars and 1.8 million trucks. If Mr. Ritter hits the bullseye, 2000 would be the third straight year of Chevy sales gains. The division sold 2.6 million vehicles in 1999, and through July had moved 1.5 million, more than half of all GM sales.
Chevrolet may never be the powerhouse that it once was. Yet with 19 nameplates blanketing the market, a still-powerful 4,300-member dealer group and a spate of new vehicles coming over the next few years, its outlook is brighter today than at any time in the past decade. And as they say: As Chevy goes, so goes GM.
After introducing new Silverado fullsize pickups in 1999, followed by the Suburban and Tahoe and the fullsize Impala and companion Monte Carlo in 2000, the "bowtie" division's biggest news for 2001 is the addition of heavy-duty Silverado models, a 4-door Crew Cab version of the midsize S-10 pickup and a batch of engine and styling upgrades. Silverado also gets a composite pickup box and an all-new diesel engine for '01.
Chevy has been criticized for postponing the scheduled 2001 re-do of its Cavalier small car, introduced in 1995, until 2003 in view of stiff competition from Ford Motor Co.'s all-new Focus, DaimlerChrysler Corp.'s runaway hit, the PT Cruiser, and a horde of new foreign small cars. That doesn't bother Mr. Ritter. For one thing, by carrying over Cavalier, Chevy can keep prices down. Beyond that, the coupe "still has some legs," he says, and Chevy is considering a performance version of the 4-door.
The slow-selling Cavalier convertible was dropped for 2000. "Yeah, we've got some work to do on the low end," Mr. Ritter concedes. "It's just like my house; I don't have everything fixed up yet."
Small cars aside, Chevy is mounting a new-product blitz starting next spring with the versatile, Silverado-based Avalanche, unveiled at this year's North American International Auto Show in Detroit. Dubbed the "ultimate utility vehicle (UUV)," the tough-looking beast can be converted in seconds by one person from a six-passenger truck to three-passenger seating with space for an 8-ft.-long (2.4m) cargo box.
Avalanche is the kind of niche vehicle Mr. Ritter thinks Chevy must deliver in today's crowded marketplace. "We think you can get there meeting and beating your competition, but you're better off over the long haul (if you) avoid your competition and find spots where they can't get you - the sweet spots. But that's tough when you're a full-line manufacturer," he says.
Also coming early in 2001: Trailblazer, a new upscale midsize SUV that will be built alongside the carryover Blazer. Chevy will seek another "sweet spot" in 2003 with the retro SSR pickup, also displayed at this year's Detroit show. GM gave SSR the green light in August. Using cues from Chevy pickups of the '50s, SSR has a retractable top and sporty styling.
GM also confirms that another Chevy concept, the "crossover" Traverse introduced at this year's Chicago Auto Show, is a go for 2004. Built on the S-10 midsize pickup platform, Traverse is engineered to handle like a passenger car - the key to crossover vehicles that otherwise could pass for SUVs.
Beyond that, between now and 2005 Chevrolet will either discontinue, replace or upgrade nearly its entire lineup. Probable fallouts are the rear-drive Astro minivan and Camaro sporty car, although the latter may reappear later.
Other newcomers may include a microvan, Impala SS performance version, 4-wheel steering on Suburban, a revamped Venture minivan with all-wheel-drive, a Corvette makeover and rear-drive full-size cars. That's all in the future. And although Mr. Lund remains a Chevy cheerleader, he doubts it will ever return to its pacesetting days of the '70s.
"The market is too splintered now," he says. "We had it all to ourselves; we got 50% of GM and we didn't care about the rest of the competition." In those halcyon days, the Japanese and Europeans were not major factors. Foreign nameplates, even as late as 1980, were accounting for only 23.8% of the U.S. market, and the first Japanese transplant assembly plant was still on the drawing board. Now foreign nameplates grab one of every three sales, the Koreans are becoming more aggressive, and transplant expansion is yet to peak.
Then there's Ford, whose Ford Div. historically has been Chevrolet's chief rival. While GM and Chevrolet muddled through numerous unsettling reorganizations in the '80s and '90s, Ford sailed on with winners such as Taurus (launched in 1985) and Explorer, which arrived a decade later.
For decades the top-selling U.S. nameplate, Chevy was ousted by Ford in 1986 and hasn't come close to its crosstown nemesis since then. During the '90s, Chevy's U.S. passenger-car market share dropped 4.5 percentage points to 10.2%. Ford's car share declined by 1.5 percentage points to 12.7%. On the truck side it was no contest, with Chevy's slice eroding from 26% to 19.8% as Ford held steady in the high 20s and finished 1999 with a 26.7% share.
Thanks chiefly to Silverado, through the first seven months of this year Chevy boosted its truck share to 20.6% from 19.8% in calendar-year 1999. Ford, however, didn't sit still: Its truck share through July was rolling along at 27.4%, up from 26.7% in 1999.
Largely unnoticed is the fact that although the rest of GM still struggles to fend off further market-share erosion, Chevrolet's share is edging upward. In short, without Chevy's contribution, GM would be in deeper trouble. Chevy's sales slipped a bit in July (latest available), but since January they are up 3%, with its market share holding steady at 15.2%. Results are even better for the 2000 model year: sales up 5.6% and market share up to 15.3% from 15.2% a year earlier.
By comparison, GM's total sales since January are up only 1.7% from the prior year, and its market share is down 1.1 percentage points at 28.5%. A 1.4% sales gain since the model year began last October wasn't enough to keep its market share from sliding by 1 percentage point to 28.6% through the first 10 months of the model year.
With so much at stake, it may be instructive to look at where Chevrolet now stands and its competitive posture in that "splintered" market to which Mr. Lund alludes.
Chevy today is totally different from Mr. Lund's day. Like his predecessors, Mr. Lund's reign at the top (1974-'82) meant running the whole shebang - from the plants to engineering, design, marketing and sales - a full-fledged auto company within the GM empire. He could and did name models (Caprice, now defunct, was one he chose, lifting it from Roget's Thesaurus, as a synonym for "jewel").
"I was head of the whole damned operation," he recalls. "Today it's broken into pieces. They haven't had the product, and it has held them back. They're getting some now, and that's what they need: some excitement."
Since the mid-1990s when GM adopted its "brand management" scheme, the once largely autonomous divisions have been stripped of everything except sales, service and marketing. Chevy brand managers - together with vehicle line executives from central engineering - define and engineer future products. Large centralized groups such as powertrain and manufacturing are responsible for delivering the goods.
The idea is to focus the divisions on their specific niches within the GM family and against all competitors, and in Chevy's case the message is "value" for the buck, just as it has been through the decades.
Mr. Ritter is well aware that his mission is far different from most of those who preceded him. The 29-year GM veteran - nearly all at Chevrolet and mostly in sales, except for a three-year stint as Silverado and C/K pickup brand manager before rising to his current job - says his challenge is to make Chevrolet stand out as a specific brand, to make a profit and to assure that "dealers are seriously considered" in everything Chevy does. The division is operating profitably and so are nearly all of its dealers, he emphasizes.
"Do I think this is a different job" than the traditional role of Chevy top honchos? Mr. Ritter asks. "Yeah, it's more marketing-focused. I still have a voice in terms of content to support the brand. Do I wish we could do things faster? The answer is yes.
"Brand is a simple idea, but it can be evasive," he says. "You've got to manage it every day." His goal is nothing if not lofty: Capturing an 18% share of the U.S. market, or nearly three tough percentage points - more than a half-million vehicles at today's annual sales rate. "It's in the cards," he tells WAW. "There's no time frame; it's a vision of mine and the dealers."
Moreover, he's not over-awed by Ford's recent domination. "There are all kinds of No.1 in this world, but if consumers are asked if No.1 status has a whole lot of value to them as an advertising claim, they'll say `No, it doesn't.' We found that out back in '91. Over a period of time, No.1 can lead people to do stupid things, and that's not something we're going to engage in."
His strategy wins support from automotive analyst David E. Cole, whose late father was the legendary Ed Cole, Chevy's general manager from 1956-'61 and later GM president. "What Chevy tried to do was to be what Ford was - covering the whole range. Rather than match up product-for-product, it now has a more disciplined approach," he says.
Brand management has reduced overlap among GM's divisions, says Mr. Cole. "There's more differentiation now; they're less likely to be in each other's knickers. But the next two or three years are crucial for GM and Chevrolet. Are they going to compete in emerging markets? If not, they are going to lose more market share."
Another longtime industry observer and GM watcher, Automobile Magazine Founder/Editor David E. Davis, thinks Chevy "will stabilize and come back, but they're never going to be the big dog they once were. They'll come close to catching Ford, but I doubt they'll do it.
"Chevy has demonstrated it can make money, and even if they make a spectacular comeback they'll make money, but not some huge percentage gain in market share," he adds. Like Mr. Lund, Mr. Davis thinks Chevy needs more product spark. As a copywriter for Chevy's advertising agency, in the early 1970s Mr. Davis created one of its most memorable taglines: "Baseball, hot dogs, apple pie and Chevrolet."
Meanwhile, Mr. Ritter looks to the future.
In a wide-ranging interview with Ward's editors, he sizes up where Chevrolet, now in its 90th year, is heading.
MOMENTUM: "It's important in this business to have momentum. When you have it you can do great things, and it's important not to lose it, and Chevy has momentum now. We've gained market share at retail (compared to fleet business), which is what I consider the most profitable and most sustainable piece over time. We have closed the gap to Ford relative to market share, we are making money on cars and we are contributing in a healthy way to General Motors."
PRODUCTS: "I think we've had some successful launches (Silverado, Impala, Monte Carlo) and in this business it is very difficult to re-launch; re-launches are extremely expensive and the antithesis of momentum."
WORRY POINTS: "We worry about the changing demographics of America. Chevy is Main Street America. That's been our customer base, but Main Street is changing; it's becoming more diverse. So we need to make sure we are relevant in our communications and product offerings to a diverse America as it changes out there."
FORD: "We are not matched up unit for unit, body style for body style today, so when one of us makes a change I'm sure we account for that in our future planning and thought process. (But) you can't shoot yourself in the foot to have one of theirs."
On Ford's new Escape small SUV: "Escape has gotten some good press. Can Tracker compete effectively? Yes (because) it's not the same vehicle. It's going to solve slightly different needs, and certainly price and capability are going to be Chevy allies."
DEMOGRAPHICS: "We're right on the baby boom. Being a big-box brand, it shouldn't surprise anyone that our average age is pretty much the average age of America today: 47. Inside that number are some pretty surprising demographics. We're No.1 in first-time buyers and No.1 in sales (of vehicles) over $35,000. So we have a pretty diverse portfolio. Cavalier is the youngest (buyer) and the 2-door Blazer is right up there."
BRAND MANAGEMENT: "On the car side I think we kind of lost our way in the late '80s and early '90s. There will never be a Corsica (a midsize car replaced by Malibu in 1997) car club, and there shouldn't be. It wasn't what I would call fun or aspirational. If you go back in time when Chevy was a great car brand, it had pride in it. It had dignity. It had performance. It captured a spirit. We have to recapture that." (Mr. Ritter is asked if Chevy these days is "not very cool - sort of a K Mart of the car market"). "I understand your criticism. It isn't anything that offends me. It's something that inspires me - to know that what we were good at, what we were great at, we can also reinvent and come back with."
Mr. Lund would only agree. "When I was there, we stood tall. You could spot a Chevrolet guy a mile away. He was a proud guy. If you asked him to climb a mountain, he'd ask `How high?' and then climb it."
That's an old trooper talking, of course. For Mr. Ritter, it remains a tough uphill climb.
