Most of us could write a book about life in modern America, business and interrelationships.
One chapter could be about a Northerner who is employed in a auto plant as a union worker, struggling with change, shopping at Wal-mart for Chinese-made $14.95 jeans and contributing to the textile industry's demise in the South.
Another chapter could be about a Southern non-union textile worker buying a Korean-made Kia, contributing to the woes Detroit is experiencing today.
The book could explore their respective lives and thoughts about American business, politics and social change. Entitle it: “My Friend the Hypo” (for hypocrisy).
We have a weak sense of nationalism in our country. We lack the pride to buy American. We are short-term thinkers.
Business CEOs get short-term contracts with big rewards, our President is elected for just four years at a time and we all want immediate gratification and something extra.
People are inversely loyal to how deep they have to reach in their pockets. If we are the low-cost provider, people can feign product or brand loyalty. Ask them to pay a little more and they weigh their options. That is why Kia is winning big in America today.
We are a visual society. Consumers judge automotive quality by a superficial assessment of surfaces, such as the shine of paint, the interior material, appearances under the hood and trunk and the brand of tires on the car.
Their visual inspection and a 10-year warranty gives them the assurance they are looking for in order to switch from (insert domestic or Japanese brand here) to the low-price leader. Today's consumers rationalize their defection from traditional brands to the low-price leader. (It is happening to Sony in the TV business, too).
General Motors has heavily relied on its distribution channel's heritage, owner body and loyalty factor. But no longer can GM build an inferior or uninspired vehicle, and expect its large and talented dealer body to find buyers with ties to the brand and dealerships.
We GM dealers cannot find consumers willing to pay more and get less. We have some awesome vehicles. But we also have some dogs. No longer can GM put an oval grille on a Trailblazer, call it a Buick Rainier and expect consumers to spend $30,000 to get one. This just ain't going to happen on a large scale.
Channeling is important (the alignment of franchises at any one dealership site) and some sub-par dealership points must be eliminated in order to enhance sales and make the remaining dealerships more profitable. The bigger our territory, the greater our revenue and greater the opportunity to advertise, sell and service.
“Stinking thinking” lingers at GM. An example of that is the way Hummer is set up.
Hummer should never have been a stand-alone franchise. Making it that makes it less profitable for dealers. They were asked to build multi-million-dollar facilities. That means GM must support these stores with more and more product. First the H1, then the H2, now the H3. (Will there some day be an H36?)
It means more research and development and the likelihood that GM will re-badge something from another division. If GM had either made the Hummer a GMC product or added it to Buick-Pontiac-GMC alignment, it would have strengthened this channel by giving it something special to sell.
It would have lessened the burden on GM to refresh the product so frequently and avoid the re-badging temptation to satisfy the product expansion needs of stand-alone stores. As it is now, Hummer is a liability for GM.
I am proud to represent GM and proud that Rick Wagoner is CEO. I just wish it sometimes had moved faster and more thoughtfully.
A final point and then I must get back to work: If you build an appealing car (inspirational and aspirational), with a low price point, and give the consumer confidence by backing it with a long-term warranty plan, you will have terrific sales, regardless of the name.
Kurt Von Mechling is the dealer principal of Performance Chevy-Buick-GMC in Seneca, SC.
