DETROIT -- At the start of the year, General Motors executives faced a dilemma.
Their market share had dipped in 2003. They expected an onslaught of new products from the competition. And their key weapon - incentives - didn't pack the punch anymore.
In January, John Smith, vice president of vehicle sales service and marketing, said GM's strategy was to seek sales promotions that shake up the market.
"We intend to be disruptive," he said.
Some promotions succeeded. For example, a 72-hour sale that offered six-year, 0 percent loans. But others bombed, such as the Lock 'n' Roll campaign.
GM needed to experiment, Smith says. And promotions during the second half of the year weren't expensive.
"This is an over-supplied market," he says. "So we look to things like 72-hour and Lock 'n' Roll as ways of drawing attention to our new products."
Here's a summary of GM's major incentive programs in 2004.
Background: GM had a strong sales year in 2003 - minus the first three months, which cost them a "three-peat" of gaining market share. To avoid a slow start in 2004, the automaker began the year with "Hot Button." The company hoped it would pull more than 5 million potential customers into dealerships.
Duration: Jan. 5-Feb. 29
Description: Customers had to visit a GM dealership to push an OnStar button to find out if they won a new car or truck. GM gave away 1,000 vehicles.
Dealer reaction: "Hot Button pulled in a lot of traffic," says Bill Estes, owner of Estes Chevrolet in Indianapolis. "But we didn't sell a lot of cars."
Analyst reaction: "With any kind of giveaway, you're going to get some traffic," says Jesse Toprak, director of pricing and market analysis for Edmunds.com. "The question is whether you get your money's worth. There's no question it created hype."
GM's view: In May, General Motors North America President Gary Cowger told Automotive News: "Hot Button drove a lot of traffic. I think we had 2 million-plus pushes on the button. But it didn't close a lot of sales."
Results: Sales went up year-over-year by about 35,000 units in January and 60,000 units in February. GM had a share increase of 0.4 percent for Jan. and 0.2 percent for February.
CBS broadcaster and former NFL quarterback Boomer Esiason kicked off GM's Hot Button promotion in January.
$250 Test Drive
Background: GM was confident that all it had to do to boost sales was get people in its vehicles. So the automaker tweaked its long-running 24-hour Test Drive program.
Description: GM offered $250 to anyone who test drove a GM vehicle, then bought a competitor's vehicle.
Dealer reaction: "The program didn't pull anyone in the store," says John Wiesner of John Wiesner Inc. (Pontiac, GMC) in Conroe, Texas.
Analyst reaction: Art Spinella, analyst for CNW Marketing/Research in Bandon, Ore., says the $250 Test Drive promotion was unmemorable, but the overall 24-hour Test Drive program worked well. "It was easy to understand, and consumers caught on instantly, he says." Toprak says the only people the $250 Test Drive program pleased were those buying competing vehicles.
GM's view: "I'd say the $250 Test Drive was on the bottom half of our programs," Smith says. "We paid for those test drives, but you can easily spend up to $300 or $400 per test drive for day-long events.
"Would I do it again? Probably not."
Results: Share dropped 0.9 percent, but sales were up about 44,000 units.
Background: GM needed to clean out large inventories of 2004 models.
Duration: Sept. 28-30
Description: GM offered no-interest 72-month loans on all remaining 2004 Chevrolet, Buick, Pontiac, GMC and Oldsmobile vehicles.
Dealer reaction: For Wiesner, the 72-Hour Sale did a great job of getting people in the doors. "Zero-for-72 made the month for us," he says.
Analyst reaction: According to Toprak, this promotion worked the best. "The program created a sense of urgency," he says. "Customers haven't had that."
GM's view: Smith says the company succeeded by giving dealers adequate advance notice. "With 72-Hour, we gave dealers a week of advance notice," he says. "We learned from earlier programs that it was key to tell people."
Results: Sales were up about 130,000 units year-over-year in September with a share increase of 1.7 percent.
Lock 'n' Roll
Background: Hoping to ignite a strong sales finish, GM offered Lock 'n' Roll. Smith says research that showed consumer anxiety over likely interest-rate increases inspired the program. It was supported by TV commercials featuring investment guru Suze Orman.
Description: Customers who purchased a 2005 GM vehicle financed through GMAC between Nov. 10 and Nov. 30 locked in the interest rate used their first purchase on their next GM vehicl e for 10 years. Rates varied from 0 percent on 36-month loans to 3.9 percent for 60 months.
Dealer reaction: "We didn't get the business we were hoping for," Estes says.
Kevin Bilski, new-car sales manager at Saturn of Warren in Warren, Mich., says: "It wasn't enough enticement to buy a car. People wanted more instant gratification. I give GM credit for thinking outside the box and trying something different. But people didn't come in the door asking about that. It didn't drive people here."
Analyst reaction: Toprak says it was a tough sell because car buyers don't think long-term.
"However, GM isn't going to spend a whole lot on it," he says.
Lock 'n' Roll didn't work, Spinella says.
"The biggest problem was that nobody understood it, at least in the key markets," he says. "On a scale of one to 10, it scaled a two in terms of effectiveness."
GM's view: Paul Ballew, GM's executive director of global market and industry analysis, admits Lock 'n' Roll did not meet expectations.
"We didn't get the take rate we wanted with the program," Ballew says.
When asked if we would see the promotion again, Smith said a revised version of the program could appear.
Results: Sales were down 60,000 units year-over-year with a share drop of 3.5 percent to a 25 percent share of the U.S. market.
Jason Stein contributed to this report
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