G6 proves that product > marketing

Oprah' buzz works no magic for Pontiac G6

Sales of Grand Am replacement 'awful'
March 22, 2005

BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER

So much for Oprah's magic touch.


In September, the woman who made Dr. Phil a household name, launched her own magazine and drove countless books onto the best-seller list gave 276 members of her "Oprah Winfrey Show" audience a new Pontiac G6 -- a move heralded in marketing circles for its wide reach and emotional impact.


General Motors Corp. and marketing experts were abuzz with speculation that Winfrey's powers might cascade through the automotive retail world.


Indeed, Gary Steilen, the marketing manager for the G6, reported that the new midsize sedan, which replaced the 21-year-old Pontiac Grand Am, is "doing very well."


But industry researchers said the G6 -- which has been on the market for six months -- has been a flop, with nothing special to set it apart except, perhaps, the panoramic sunroof. And that's optional.


As evidence of the car's meager performance, auto experts note that the world's largest automaker has dramatically ramped up rebates on the car just to get it selling at modest levels. The automaker offered more than $3,600 in incentives on it last month, and it sold less than half of what the Grand Am was averaging per month.


Ronald Tadross, an auto analyst with the Banc of America Securities brokerage firm, said the disappointing performance of the G6 -- an important piece of the GM portfolio -- doesn't bode well for at least part of the company's financial future.


"I would say it ranks in the top quartile of car products to watch out of GM, and unfortunately, it's been a challenge," he said.


Tadross specifically cited the sluggish performance of the G6 as a "key reason" he warned investors in a report last month to sell their stock in GM, sparking a sell-off on Wall Street that damaged the automaker and local investors. He said he believes sales are "at least 30 percent below" where they need to be to keep the G6 factories running at capacity, which he estimated at 200,000 vehicles a year.


"The thing that is most disappointing is how fast the incentives went up," Tadross said. "And the volume is still below what we think is full capacity."


Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore., agreed, characterizing the performance of the G6 as "awful."


"The reality is, this car was supposed to do something, and it didn't do it," Spinella said. "It just hasn't reached the level they had hoped for. It's not doing as well as it should."


GM's Steilen said he is frustrated with such opinions.


He defended the car's performance, saying that it takes about a year for a vehicle with such high volume projections to ramp up, and he noted that most of the G6 variations, such as the four-cylinder version and convertible, aren't even on the market yet.


"To me, it's anything but a disappointment," he said of the G6's performance.


But the proof may be in the numbers.


Consumers bought an average of 195,949 Grand Ams a year, or an average of 16,329 a month, between its release in 1984 and last year, according to the research firm Autodata Corp. of Woodcliff Lake, N.J.


In February, consumers bought 7,043 G6s, which would translate into about 84,516 in annual sales.


To get those volumes, GM has had to offer substantial incentives, such as cash-back rebates and discounted financing rates. Buyers in this region today can get at least $1,500 cash off of the G6, or $500 off plus special interest rates of 2 percent or less for loans up to 72 months.


Automakers do not publicly report how much they spent on incentives. But according to the consumer Web site, Edmunds.com, one of several companies that estimate incentive spending, GM offered $3,635 in G6 incentives in February, up from $1,291 in October, the month after it was released.


Meanwhile, the average transaction price of the typically-equipped G6 was $22,339 in February -- its lowest since its release. The vehicle has a starting price of $23,486.


Without a doubt, the auto retail market is tougher than it was in 1984, and the G6 is facing a market that now prefers trucks to cars. But the ramp-up of the G6 has been significantly slower than the ramp-up of the Grand Am.


Since Winfrey's media-splash giveaway, consumers have purchased 27,332 G6s. But in the first six months of the Grand Am release, 31,673 cars were sold, according to Autodata. So the G6 is selling about 86 percent as well as the Grand Am did half a year into its launch.


Detroit Free Press auto critic Mark Phelan saw problems with the G6 coming. He gave the car two out of four stars in a review last year, noting: "They are attractive, comfortable and competent cars, but a high price, iffy interiors and oddly tuned steering leave them well short of sporty competitors."


Spinella said neither GM's marketing department nor Winfrey can be blamed for the market performance of the G6.


"It's one thing to have that kind of a major marketing coup, but you need to back it up," said Spinella, who said he believes that the vehicle is an underwhelming package in a competitive marketplace.


"Even though the G6 is new, it's not new or fresh enough," he said. "It's not a breakthrough design. It's what's forcing Ford to redesign the Five Hundred."


In fact, Spinella said, GM's marketing department should be credited with getting the lackluster G6 so much attention.


CNW's research shows that GM is tops in the marketing department, getting some of the best showroom traffic among automakers. Currently, Pontiac is sponsoring the NCAA men's basketball tournament, giving the G6 a new round of high exposure.


With the G6 not selling as well as the vehicle it replaced, GM continues to lose market share. GM's share of the market was down to 25.1 percent for the year through February, compared with 26.9 percent a year ago and 27.5 percent for all of 2004.


But even though GM's products, marketing and even prices might be good, Spinella said, "You have to be great in order to gain market share."


And that's a hard truth not easily disguised -- even with a little of Winfrey's polish.

 

GM's problem is that they're getting their butts whooped by the Japanese at the higher end of the market, and then they're getting their butts whooped by the Koreans at the lower end of the market. They have no audience left, and according to those press releases lately 1/3rd of GM's sales are to FamilyFirst customers.

GM will recover eventually and make a strong comeback. But not after they take a big fall so that they can do massive restructuring. Then the company will be able to come back leaner and meaner than ever.

And some of the marketing fools at GM need to get their heads out of their butts. I swear, everytime they release a new product they're predicting massive sales numbers and that it's going to change the market. They produce TONS of them in anticipation of the huge sales and then what happens? Nobody buys them, they sit on lots, and on comes the huge incentives for their MSRP prices that are grossly overinflated to begin with. HOW MANY times does this has to happen before they start LEARNING from their mistakes?

I think GM is at least making a good effort on their newer products and they're far more appealing than they used to be, but "good" isn't enough. And people still don't trust them to build a quality product despite what JDPA and CU say about their improved reliability. They're still going to fall apart at > 5yrs.

 

The Pontiac Grand Am was always a POS throughout the years and I never understood why it did so well. GM replaces it with a much better car and now it doesn't sell.
I don't particularly love the G6 but for a Pontiac its decent. The market has certainly changed and GM will have to do better than just "very good". You need to build excellent cars to expect to sell.

 

what kills GM for me, each and every time, are the cheap rattl-ey (is that a word?) interiors...

i mean, the corevette and the cavalier share a freakin steering wheel!

and ti doesnt matter what GM it is, Even the CTS is sub par when compared to a base GS300...

 

Like many GM models, the G6 was quick to jump into rental car fleets across the US. The first ever G6 I saw in person on the streets was a rental car. Go figure.

 

I always thought that was the dumbest marketing slogan ever"The First ever G6".Whoopty-Do,It could be "the First Tutti-Frutti","The first greul-mobile",etc.any new model car is obviously gonna be the first,so what makes the G6 so special??It should be"The first......and last G6".

 

I was asking myself that the other day. They were predicting about 200,000+ sales of the ugly *** LaCrosse. I hear they cant move those also. Go figure.

 

Yeah, the whole 1st ever G=6= who gives a crap to me. Why buy over a Camry/Accord or Altima? No reason. A big roof that will leak and rattle in a year? R they serious?

My dad had a Grand Am as a company car. He bought it outright. A month after he bought it, the damn engine failed. It actually was roomy and we did dig the styling but after years of ownership, the paint fell off, the car rattled and was falling apart. It was pathetic as we had a cheaper and older Nissan Sentra that was still holding up and better built.

 

Oprah's free give away probably would have helped out more if GM released the Pontiac right after the show aired. They got so much traffic onto there website and even dealership. But guess what, as soon as they got there, they couldnt buy it. Everyone knows that anything Oprah touches turns into gold if you like it or not, but GM just clearly missed the boat. They had a good thing and they let it slip away. Just think about all the press the Pontiac G6 got because of Oprah. Oprah basically marketed the car for them, and they still managed to mess up.

 

Yup, gotta agree with you on that one. I don't even closely follow GM new product launches, but when I saw that car with that tagline, it made me think all the more "next-gen Grand Am". They tried SO HARD with the marketing to try and separate it from the Grand Am, that it backfired.

 

Saw a sticker price of $27K for a G6 and later an Avalon XL with a sticker of $27K at the auto show. I'll take the Avalon for more HP, room, doors, quality, ..........

 

For one thing, they definitely need to get rid of their "interior designer" Just like what armyofone mentioned, same dam steering wheel in the cheapy car and their top sports car
Look at Lincoln's Navigator vs their Yukon/Tahoe/Escalade/Buick............
At least Ford's interior are getting better

 

Magneto, you nailed it man. I was in the local chevy dealership with my dad yesterday asking about the new Z06 and the fleet manager who is a very cool guy was complaining about the same thing. Anyone remember the SSR commercial where all the kids were saying, "oh sh..." and had bars of soap in their mouths? It was a great commercial and traffic was [retty good in the dealership but guess what, they get there and no SSR! People turned away and didn't come back. Now they have 3 brand new SSRs sitting on the lot. The same goes for the vette convertibles, they haven't even gotten ONE yet and they have a list 20 people long.

GM is really disappointing me becuase I've been a GM guy my entire life. The only products I'd consider over their import counterparts would have to be the Vette, Silverado 3500, CTS-V, and GTO. THAT'S IT. That whole "year of the car" business GM was preaching last year was a waste of breath. I've given up on getting hyped up about their new vehicles and just wait for them to drop their next turd.

James

 

That's a good point. What the hell is up with domestic pricing? Consumers are looking for the bottom-line. And, eventually, that's what they get after the factory rebates, "bonus" cash, and fineggling. Everyone knows that nobody buys the G6 @ 27 grand. I've only completed two years in business school and could tell you that price-discrimination doesn't always work to maximize profits. There are too many variables in the market to set pricing primarily on elementary economic concepts. Pricing plays a role in marketing. And if marketing the vehicle's features doesn't work and you see a sales lag - you've got to hit pricing right away (like I said before - finding the bottom-line is the key). But Pontiac is still blowing thier cash on useless moonroof comercials and front-wheel-drive burnouts.

Meanwhile - people are flocking to Chrysler and the imports. On that note, I wonder how Dodge's new "I got the [insert vehicle here] of my dreams and saved a lot of money" campaign is going. During a lull with stacked inventory - that's the sort of marketing I'd do; less features, more bottom-line.

M.

 

If you guys look at these cars, you will note that BOTH the G6 and the slow-selling GTO are de-cladded. I'm not just being a Monday-morning quarterback.......I mentioned a long time ago that I thought taking the body cladding off of Pontiacs was a mistake.....that they wouldn't sell to a public used to seeing it on Pontiacs and that expects it, even though you guys and I both know the cladding was poorly-made, poorly-applied, and tacky. Still.....it SOLD. The new de-cladded cars aren't selling...at least without BIG rebates. In fact, while I personally don't think the new GTO looks bad at all the way it is, the chief complaint about this car by the public has been the too-plain styling and the LACK of cladding.
Looks like we are seeing the same thing with the G6....it seems to be just too plain-looking.

True, the auto-enthusiast mags like R&T , C&D, Automobile, etc..... have never liked the Pontiac body cladding, but the public themselves clearly disagreed....until now, they bought up the old Grand Am and Grand Grix in droves.