General Motors and its dealers should prepare for a marketing blitz and even consider lowering prices, analysts say, ahead of the automakers probable bankruptcy exit that may come as early as this week.
Get the people into the showrooms, and give the products a chance. I think theyll be pleasantly surprised, said John Wolkonowicz, a North American automotive market analyst for IHS Global Insight. The public has to realize that this is not the company that screwed them in 1978.
Wolkonowicz said he expected GM to end its current advertisements about the necessity of creating a new company as soon as it exits bankruptcy. On Sunday, Judge Robert Gerber of the U.S. Bankruptcy Court in Manhattan approved the sale of GMs best assets to a new company majority-owned by the U.S. government.
I think the new message will be, Just help us grow, Wolkonowicz said. Come give us a chance and see what weve got, because were going to grow.
GMs bankruptcy has helped the company establish a lower cost structure, said automotive consultant and former analyst Maryann Keller. But bankruptcy cant change management problems or persuade people to buy the products, she said. So GM should go beyond marketing to get people into its vehicles.
It will take General Motors offering some of its more competitive cost structure to the consumer. Theyre going to have to lower prices, she said. What makes them really stand up and take a look is you give them a competitive car at a better price.
Wolkonowicz said some survey evidence shows Americans attitudes shifting toward a new nationalism, especially out West.
Americans are rethinking and saying, Maybe we should give American companies a chance, he said.
He called on dealers to make the sale for the better product ratings GM has received. Most recently, the automakers high-volume Chevrolet brand finished statistically even last month with the Toyota brand in market research firm J.D. Power and Associates Initial Quality Study. And GMs Cadillac brand finished third in the survey of problems during the first 90 days of ownership.
Ed Bozarth, who owns five GM-franchised stores in Kansas, Colorado and Nevada, said he had seen import buyers trickle into his showrooms as theyve heard better reports of GMs quality.
People would rather buy American, said Bozarth, who doubled his advertising 30 days ago to take advantage of what he perceived as the lift in consumer confidence. Were going to open the barn doors and let the product roll out.
Any negative impact on GMs sales occurred well before its June 1 bankruptcy declaration, Wolkonowicz said, as media reports of the possibility of Chapter 11 swirled while GM survived on $19.4 billion in federal loans. GMs monthly U.S. light-vehicle market share sank to 18.1 percent in March before hovering between 20 and 21 percent in the next three months.
Dealer Tom Durant said business has been better at the six GM stores he owns in Texas and Florida ever since the company declared bankruptcy.
The whole atmosphere just changed, he said. Its all about product now.
But the national recession, in its 20th month, and the springtime recovery of GMs market share will prevent sales from making much more of a recovery this year, Wolkonowicz said. IHS Global Insight has forecast 9.8 million units of light vehicle sales this year, up from last months sales rate of 9.5 million units but well below the 13.2 million units sold in 2008 and the 16.2 million in 2007.
Judge Gerber put a four-day stay on the order for the GM bankruptcy sale to allow for any appeals, and a group calling itself the "individual accident litigants" gave notice today in a Bankruptcy Court filing that it will appeal Gerber's ruling to U.S. District Court in New York City.
But in Chrysler LLCs bankruptcy case, appeals that ultimately reached the Supreme Court fell on deaf ears. The automaker exited its bankruptcy June 10 as Chrysler Group.
Reuters contributed to this report