ST. LOUIS - A shiny 1994 Buick Park Avenue with 48,000 miles took its place last week among new 1997 Park Avenues and Rivieras in Lou Fusz's showroom.
The window sticker price: $17,995. A large red, white and blue banner trumpeted the car as a 'GM Certified Used Vehicle.'
Lou Fusz Buick West spent about $800 to spiff it up, giving it new tires and brake pads and buffing the paint. That's more than twice what the dealership would normally pay to recondition a used car, said Thomas Williams, general manager of the Ellisville, Mo., store.
General Motors and dealerships like Lou Fusz believe customers will find the extra investment worthwhile. The Park Avenue, adorned with a special banner and price sticker generated by GM, is part of a new class of certified vehicles GM has added to its stable of brands.
The dealership was one of two St. Louis-area stores GM chose as a backdrop to unveil the marketing campaign for its Certified Used Vehicle program last week.
ONLY 500 SIGNED UP
The marketing launch comes six months after GM began the program. Only 500 of the roughly 8,000 eligible dealerships (not including Saturn and stand-alone Cadillac stores) have signed up, and some have complained that GM has been slow to give them the advertising support they need. GM responds that it wanted to work out the kinks before rolling out the program.
Loretta Seymour, director of auto sales research at J.D. Power and Associates Inc. in Agoura Hills, Calif., said GM faces a challenge in getting more dealers signed up. Some dealers, she said, have yet to be convinced of the need for a corporate certification program.
But with used-car prices softening and signs pointing to supply overtaking demand in the auto market, more dealers may get interested in the GM program, she said.
The program is designed to create a special class of vehicles on GM dealer lots by giving the cars extended warranties, roadside assistance, 110-point inspection checks and other features designed to add a level of trust and confidence.
The corporation views the program as its direct response to used-car superstore chains like CarMax and AutoNation USA. By putting its marketing muscle behind used cars, GM has shown it recognizes how critical the used-car market is.
'We want to be the first national brand to truly address the used-vehicle needs of the consumer in all markets,' said Roy Pikus, director of the GM Certified Used Vehicles Brand. The program covers Buick, Chevrolet, GMC, Oldsmobile and Pontiac. Cadillac and Saturn already have their own certification programs.
In addition to being reconditioned, the cars come with warranties, roadside assistance and other programs already made popular by Saturn and the superstores. What customers won't get is the child play centers and cappuccinos that the superstores offer.
GM and its certified dealers are betting customers will be willing to pay a little more for cars like this Park Avenue, giving dealers extra profit and propping up used-car resale values in the process. They hope customers will see GM Certified Used Vehicles as a new brand in the GM lineup.
NEW BRAND TEAM
At GM, groups called brand teams define and promote all GM vehicle lines. A similar group will manage the GM Certified effort.
GM believes it can go the superstores one better by focusing on the experience the customer has not only at the time of purchase, but throughout ownership of the vehicle, said Pikus.
'GM's approach focuses on a hassle-free, manufacturer-backed ownership experience and a customer-friendly buying process,' said Pikus, who had been general director of automotive marketing and sales for the GM Credit Card before this assignment. 'That is quite different from the used-car superstores that primarily tout the facility and the sales process, not the long-term experience.'
CarMax and AutoNation USA initially put little emphasis on service. But both have come on strong with service programs.
Jim Butler Certified Used Vehicles in Crestwood, Mo. - the first stand-alone GM Certified store in the country - also was a backdrop for the launch.
Butler said the dealership, which opened in January, has been profitable five of its six months.
Butler's used-car volume has increased about 80 percent since he opened the certified store. He still sells used cars at his Jim Butler Chevrolet lot about a mile down the road.
Rick Strifler, 26, general sales manager for Jim Butler Certified Used Vehicles, came to the store from a Saturn store.
Saturn 'is the only world I've known,' he said. 'I came right out of college and worked for Saturn.'
The Saturn influence is obvious in the GM Certified program. A number of the trainers, who are working with dealers to learn the program, came from Saturn or Saturn stores.
Raymond Wages, national training manager for the GM Certified program, said GM has encouraged the trainers to study the Saturn model, but to feel free to develop their own techniques.
Trainers and program officials held a series of 12 meetings around the country to explain the advertising and the rest of the program to dealers.
Salespeople at a GM Certified store will not haggle with customers on price. But if a car is not selling at its sticker price, a dealer is free to adjust the price. To do that, the dealer must fax a request for a window sticker to GM. GM, in turn, express mails the sticker back with the adjusted price. GM refers to this as 'market-based pricing.'
At Lou Fusz Buick, the GM Certified program has been partially responsible for bringing about a change of philosophy. The dealership now uses what it calls 'upfront pricing,' meaning the price is listed on all cars, new or used, and is not negotiable.
Williams said the dealership experienced problems with sales consultants shifting gears, negotiating prices on some cars, but not on certified used cars.
BIGGEST, BUT NOT FIRST
GM is not the first company to try to create a used-vehicle brand. Lexus and Saturn are among those to have advertised their programs. But the GM undertaking is the first to try to blanket such a large group of brands under a single banner.
Some dealers, while acknowledging the program has been a good one, have said GM has not supported them sufficiently with advertising so far.
'They ran to get the program going, but they never provided any advertising until six months after the program started,' said Larry Cummings of Larry Cummings Oldsmobile in Crawfordsville, Ind. 'To this date I have no advertising slicks. The only way the Certified Used Vehicle program is going to have value is to have the customer know it's a GM program, and that Larry Cummings is the delivery point.'
Pikus took responsibility for that delay. GM did not want to roll out the advertising until the bugs were worked out of the program and the positioning was just right, he said.
'I wanted to make sure we got out of the blocks correctly,' he said. 'First impressions are lasting ones.'
GM will aim its advertising campaign at adults 25 to 49 with household income of $40,000. Ads will appear on cable TV channels such as USA, TNT and A&E, and in national magazines such as Sports Illustrated, said Joseph Grimaldi, chief operating partner of Mullen, the Wenham, Mass., advertising agency GM selected to handle the campaign.