GM: Real Market Demand, Buyer Consideration Chief Concerns

General Motors Co. President and CEO Fritz Henderson says he’s optimistic a slowly improving economy will help mend the ailing auto maker, but he remains concerned about underlying consumer demand for new vehicles.

“We just need to see what happens” over the next 18-24 months, Henderson tells Ward’s during an Internet chat hosted by Fox 2, a Detroit television station.

“We’re optimistic the stimulus coming into the economy will result in, as we come into 2010, a modestly improved environment for cars – not booming,” he says. “But we do anticipate things are going to improve, and I think the level of primary demand remains a key issue.”

GM expects U.S. industry sales in 2010 of between 11.5 million and 12 million units, a forecast that includes some 200,000-250,000 medium- and heavy-duty deliveries.

That would mark a gain on the light-vehicle side from the 10.35 million-unit annual rate the industry is tracking through the first eight months of 2009. But it is down from the 12.5 million total light-, medium- and heavy-duty deliveries the auto maker anticipated earlier this year.

Auto makers this week reported their best seasonally adjusted sales results in 15 months. While manufacturers such as Ford Motor Co., Toyota Motor Sales U.S.A. Inc., and American Honda Motor Co. Inc. witnessed year-over-year gains in August on the strength of “Cash for Clunkers,” GM sales sunk 17%, according to Ward’s data.

GM held share in the government’s incentive scheme – it was No.2 behind Toyota in clunker-related sales – but faced a tough year-over-year comparison with August 2008, when it held an aggressive employee-discount program related to its 100th anniversary. Its deliveries rose some 30% when compared with July.

With the $3 billion Cash for Clunkers program concluded, GM and its competitors now confront a more authentic level of demand. That puts the onus on auto makers, rather than the federal government, to attract buyers, Henderson says.

GM President and CEO Fritz Henderson cautiously optimistic about next 18-24 months.

“The most important thing we can do is get back on the consideration list of shoppers, so that is where we’ll be spending our time and money,” Henderson says.

GM is expected to launch an aggressive marketing campaign later this month, building on recent new-vehicle launches such as the Chevrolet Camaro, Cadillac SRX and Chevy Equinox, while anticipating upcoming rollouts such as the Buick LaCrosse, GMC Terrain and Cadillac CTS Sport Wagon.

Henderson says the marketing campaign will include attractive opportunities for existing GM owners to buy a new vehicle and reason for other consumers to put the auto maker’s products on their shopping lists.

“We’ll be putting lots of media weight behind those launches,” Henderson says during the broadcast.

Vice Chairman Bob Lutz, who heads up all the creative elements of GM’s product and customer relationships, told Ward’s last month the auto maker would be getting more aggressive with its advertising, taking on competitors directly and focusing more on the four core brands than its corporate image.

Lutz also said ad spending this year would be higher than last year, despite jettisoning Saturn, Pontiac, Saab and Hummer. GM historically spends close to $2 billion annually on advertising.

Henderson also speaks highly of his predecessor, Rick Wagoner, who was ousted by the Obama Admin. before GM filed for bankruptcy earlier this year. Henderson calls Wagoner “a great boss, a great mentor.” He also says they are different in many ways, but refuses to elaborate.

“We bring different skills to the table and I’ll leave it at that,” Henderson says.

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