GM’s Poor Brand Loyalty Complicates Chances of Survival
By Alan Stewart Carl | Related entries in Business, Economy
As General Motors struggles to survive, the Democratic Congress is considering a bailout. While we can debate whether or not a Chapter 11 bankruptcy filing would be more beneficial, there’s one good reason why GM might be eager to avoid such a scenario: their brand loyalty is very poor.
In fact, national branding expert Robert Passikoff of Brand Keys, points out that surviving bankruptcy is much harder when a company’s brand is as poorly regarded as is GM’s. Customers who are already predisposed to have negative views of a brand’s quality may treat a bankruptcy as a sign that they should abandon the brand altogether.
How bad off is GM’s brand within the car market? Passikoff provides this list of brand loyalty among the major car companies:
1) Toyota
2) BMW / Mercedes
3) Honda
4) Nissan
5) Saab / Subaru
6) Chevrolet
7) Jeep
8) Volkswagen
9) Hyundai
10) Chrysler / Volvo
11) Ford
12) Kia
13) General Motors
Not a pretty picture. I can see why GM would be wary of bankruptcy. But, really, wouldn’t a bailout (which is likely to be unpopular with many taxpayers) also damage the brand? The one bright spot is that Chevrolet apparently has the most brand loyalty of the American-made cars. Maybe GM could focus on that line and abandon all the poor performing models that have all but ruined the company’s image?
Whatever happens with GM’s current struggles, I think it’s clear that neither Chapter 11 nor a large cash infusion will guarantee the company’s long-term survival. We have to be very careful not to waste money prolonging the inevitable. Controlling the collapse may be our best option. But how we do that is still open for debate.
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November 13th, 2008 at 4:46 pm
GM has lower brand image than Kia?! Oh my, that’s bad.
November 13th, 2008 at 6:11 pm
You do know, of course, that Chevy is a GM brand, right? Still not great, but better than brand stalwarts Volvo and VW…
November 13th, 2008 at 6:14 pm
And of course SAAB, which is also a GM brand.
Given this list, one would argue that GM is the one American company to save, not let go into bankruptcy…
November 13th, 2008 at 6:19 pm
Kill the beast! Don’t save GM, it’s not worth saving. I feel sorry for the multitudes of people employed by the giant failboat, but keeping it afloat is a handicap on the rest of the country and it’s future. There’s a reason why it fails all the time, pssst, it’s because they make sucky cars.
November 13th, 2008 at 6:27 pm
Wow! I’m very surprised GMC is last on that list, even behind Chrysler - after the break with Daimler and all those gas guzzlers they’re still making? And behind KIA? Geez! - that’s embarrassing.
What surprised me so much is that I thought GM had really made a turn around the last few years. Their Silverado Truck line has really come on strong and surpassed Ford as the #1 full sized workhorse, I thought. I guess it shows that the damage done in the ’80’s and 90’s to the brand is difficult to overcome.
We rent cars all the time and I’ve been impressed with so many of the GM vehicles; Malibu, Impala, Cadillac, and the smaller SUV’s are all good on gas but not lacking in power. Autoworld’s chief editor was recently on CNBC and that was his sentiment as well. He spoke about the great improvements GM has made, but that it may simply have been too late when the economic factors complicated things. That’s a shame. Sounds like a tragic shame, actually. Maybe we could’ve helped GM with their come back, if they deserved another chance - if only we could afford to buy a new car!
November 13th, 2008 at 6:56 pm
empty: I addressed Chevy in the post. It’s clearly the company’s best-viewed brand. BenG mentions Silvarado which is a Chevy model that prooves GM can, in fact, make popular vehicles. I would imagine in any scenario, the Chevy brand would probably survive. I don’t imagine this is an all or nothing situaiton.
November 13th, 2008 at 8:33 pm
We had a name for people like Robert Passikoff back when I was in the newspaper biz….dial a quote. His opinion is no more valuable then–probably less so–then anyone posting here.
I read his methodology but unless I see his figures I can’t put a lot of stock in his findings.
November 13th, 2008 at 10:07 pm
you know, i can now tell it is your post w/o seeing who the author is.
i agree GM should be let go. Lets let these ppl go on to fill more productive positions in society.
i am pure democrat but lets keep our country nimble and flexible.
November 13th, 2008 at 11:02 pm
NO LOANS – BUT DON’T KILL THE HEARTLAND
It depends on HOW a bailout is structured, but one should be attempted.
BAILOUTS ARE COMPLEX BEASTS, but Try something outside the box like this to save the U.S. Auto Industry - - -
http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html
Toyota and Honda also depend on the same suppliers who feed GM and FORD. No need to let “Detroit” disappear.
There is also much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW.
November 13th, 2008 at 11:16 pm
GM cars are not bad. Chrysler’s ok too. I drive a 10 year Jeep Cherokee and I love it. I’ll probably buy another one. This isn’t about bailing out GM, Ford, and Chrysler. Its about bailing out the UAW.
While the big three lose share and billions every month, Honda, Toyota and Kia are building plants and creating jobs in states all over America. Bankruptcy would let the big three restructure, get out from under the union contracts and compete effectively with a rational cost structure. If they get a bailout, it’ll just get be burned up in a few months and we’ll be right back in exactly the same situation, well - except your kids will owe China another $50 Billion or so.
But… the Dems owe the UAW and Michigan for this election. It’s payback time. So…
Done deal.
November 14th, 2008 at 6:51 am
MW,
Gosh dangit, I was with ya right up till the last line; “But… the Dems owe the UAW and Michigan for this election. It’s payback time. So…”
According to the Obama folks, they owe THE AMERICAN PEOPLE for this election - the one’s who rallied behind their cause, that is. And even though the UAW is a few percent of that group, it’s much less of a power base then it once was. I’d be curious to see the numbers if anyone has them but, to the extent that this is true, Obama owes a much broader group of voters for this election more than any single group.
It will be interesting to see how he backs his promises. Will he promote the future economy that our college grads will face tomorrow? Or will he check off to Pelosi and Reid who anti up to the old power base of the unions, which include teachers, utility co’s, skilled laborers, etc, etc…