Zero gives new life to domestics in West

Big 3 are devising plans to keep up momentum

California nightmare
The Big 3 have lost California market share over the past 5 years to an increasing number of products from competitors.
1996 427,171 462,435 1,510,909 58.90%
1997 423,093 479,600 1,545,898 58.4
1998 401,035 523,484 1,636,039 56.5
1999 399,458 578,707 1,812,695 54
2000 426,341 634,259 2,083,455 50.9
Source: R.L. Polk & Co.

Through 0 percent financing, the Big 3 believe they have opened a window to the West Coast.

Domestic vehicles are popping up on the radar screens of consumers there, who are inclined to buy imported vehicles.

  • For October, General Motors' West regional sales, made up of 16 states, rose 51.2 percent over last year - from 46,549 to 70,364.

  • The Chrysler group's October sales increased 12.9 percent over last year, from 27,587 vehicles to 31,135 in the West region, which Chrysler counts as 14 states.

  • Ford Division does not break out sales for the West region. But its California sales for October increased 25.2 percent over last year, from 25,633 vehicles to 32,095.

    GM, Ford Motor Co. and Chrysler are making plans to keep momentum going in the West, from increasing dealer ad budgets to developing marketing programs to reach the varied multicultural audiences on the West Coast.

    Dealers are pumped.

    "We're seeing more high-end import buyers, but we're also seeing more of everybody," said Howard Drake, co-owner of Casa de Cadillac in Sherman Oaks, Calif. "The seaboards are highly leasing intensive, so I was skeptical that zero percent would help us. It has helped us way more than I thought it would."

    For October, Casa de Cadillac sales set a record for the dealership's first record month in about 10 years. Sales were up 38 percent over October 2000, from 50 new vehicles to 69.

    Elusive West

    Domestic automakers have struggled in the West, where imports dominate in car sales and are gaining in trucks.

    According to R.L. Polk & Co. of Southfield, Mich., the domestics this year through September captured 48.4 percent of California's retail market, down from 51.5 percent the same period last year. Ford Division, because of truck sales, leads all makers in California sales, with a 19.3 share in California, while Toyota Division is gaining with 16.9 points.

    The Big 3 had 50.9 percent of California's market in 2000, down from 58.9 percent in 1996. They think 0 percent and other consumer-oriented marketing programs will help them regain some of that share.

    "Our goal is to get increased share in cars and trucks by making decisions closer to market and being more targeted," said Steve Shugg, director of the Chrysler group's West business center. "We are planning some partnership marketing strategies, as well as some experiential strategies, for California and throughout the West."

    What to do after 0

    The domestics are offering 0 percent financing through Nov. 20. Not one has said what it will do to prevent a huge sales falloff after 0 percent, though Chrysler has beefed up its warranties.

    One of the keys to regaining market share is local dealer ad groups, said Doug Herberger, general manager of GM's West region. After abandoning the groups nationwide early in 1999, GM brought them back in February. The company is encouraging dealers to pool money and buy local advertising for a bigger share of voice.

    Herberger attributes GM's gain in West market share this year to the more than 70 ad groups in his region.

    He had set a goal of gaining one market share point this year in the West. Last year the company's share was 18.1 points, he said, and this year through August it was 18.8 points. GM's West sales for January through August were up from 458,941 to 479,711.

    In California, GM has achieved the 1-point goal, increasing its share from 15.1 points to16.1, Herberger said. For January through October, sales in the state rose 1.5 percent, from 225,521 to 228,921.

    Herberger plans to gain another half to one point next year in the West.

    "We have to build awareness, leverage conquest opportunities and use more expensive, longer-term programs like Auto Show in Motion," Herberger said. "We have to get a specific focus on diversity marketing and youth marketing."

    Targeting demographics

    The Big 3 agree that to regain market share, they must connect with West Coast consumers in their communities. In particular, they are trying to reach Hispanics and Asians.

  • GM shifted 10 percent to 15 percent of what it had targeted for general-population marketing to diversity and youth marketing.

  • Ford Division for the first time is translating newspaper ads into Mandarin, Korean and Cantonese.

  • This year in California, the Chrysler group for the first time will offer a couple of its longstanding events, Jeep 101 and Chrysler Proving Grounds, in Asian languages and Spanish.
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