The Big 2.8: Bury My Brand at Wounded Knee

Robert Farago
by Robert Farago

The automotive press is obsessed with new cars, and the automakers know it. As The Big 2.8 flounder on the shoals of their broken branding, badge engineering and bloated dealer networks, they highlight the latest bright shiny object as proof of future salvation. Jerry Flint: “The best news from the domestic industry is that the product, particularly at GM but also at Ford, is getting better.” Meanwhile, car hacks are ignoring the fact that the domestics' business is collapsing, as startling new data from J.D. Power illustrates.

For the first time ever, J.D.’s mob has combined customer loyalty and conquest survey data to create their “Customer Ratio” index. Speaking at the recent National Automotive Dealers Association (NADA) conference, J.D. Power's executive director of automotive research said a car brand must strike an ideal balance between customer loyalty (existing owners re-upping) and new-to-the-brand business. “When below-average loyalty makes up more than half your sales,” Steve Witten pronounced. “That's a brand in trouble."

According to the J.D. Power, Ford's in trouble. Roughly 53 percent of Ford owners buy another Blue Oval model. On the face of it, that's a good thing. But it's a bad thing. These loyal customers represent 72 percent of the brand's retail sales. Translation: FioMoCo is losing twice as many existing Ford owners to rival brands as it’s winning from rival brands. Not to put too fine a point on it, the Ford brand is dying.

According to the survey, Chrysler, Jeep and Dodge also show “weak loyalty numbers.” What’s worse: Chrysler's three brands "mostly conquest sales from each other, while leaching sales to non-Chrysler brands.” Ominously, but not unexpectedly, “something similar is happening at Mercury, Pontiac and Buick.”

Only 13 percent of Saturn’s sales come from customers leaving transplant brands (Toyota, Honda, etc.). The majority of Saturn's new customers come from Chevrolet, Pontiac and Ford. And when Saturn owners leave the brand for other makes, they tend to migrate to Toyota, Honda and Nissan. As Witten remarked at the conference, the data shows that Saturn has utterly failed to fulfill its original remit as an "import fighter"

The study also reveals that GM and Ford’s so-called luxury brands are failing to compete with the German and Japanese luxury marques. Cadillac, Saab and Volvo are not even in the same ballpark as Mercedes, BWM, Audi and Lexus. Caddy, Saab and Volvo are gaining most of their customers from– and losing most of their business to– Toyota, Honda, Ford and Chevrolet.

As this index demonstrates, Detroit’s biggest and most lethal mistake has been its chronic neglect of its branding. While Motown makes a number of terrific new cars, while the majority of these machines are now mechanically reliable, Ford, GM, and Chrysler have done nothing to protect, resurrect, redefine and "save" their brands. They continue to piss on whatever brand equity remains in their stable. When GM Car Czar Bob Lutz infamously described Pontiac and Buick as "damaged brands," he was guilty of epic understatement. Virtually all of Detroit's car brands are terminally ill.

Hummer is the exception that proves the rule. Last year, Hummer sold 55,986 new vehicles, down 21.7 percent from the year previous. The rising price of gas, Hummer’s negative image amongst the chattering classes and the contraction of the SUV market don’t bode well for the brand’s future. BUT J.D. Power says existing customers account for just 16 percent of Hummer's total sales. In other words, despite falling sales, Hummer is drawing in a large number (at least percentage wise) of new customers. In fact, of all GM’s eight brands, Hummer is the strongest.

Well of course it is. Hummer sells a limited line of vehicles that are all instantly recognizable as family members that all do roughly the same thing in roughly the same way. Their national advertising may be a joke to anyone with an environmental conscience, but Hummer's branding is focused, coherent and memorable. You could even say that the environmental blow-back has helped Hummer, setting it apart from the increasing diluted (but still relatively strong) Jeep brand.

Contrast Hummer’s tightly-gathered product line and brand focus with Saab, Pontiac, Buick, Chevrolet, Saturn, GMC, Cadillac, Ford, Lincoln, Mercury, Chrysler and Dodge.

If you really want a fright, contrast those weak, customer-leaking and fraternal brand-swapping car companies with Toyota. According to J.D., Toyota is “bringing in nearly three times as many new customers as it has old ones staying put. Toyota's 65 percent loyalty rating is the industry's best, yet represents just 41 percent of total sales. Its conquest sales are huge. Honda shows similar strong numbers.”

TTAC, the general public and the millions of people dependent on The Big 2.8’s health are not privy to the full data provided by J.D. Powers’ Customer Ratio survey. But even this snapshot provides a horrifying glimpse of a domestic industry in terminal decline. Never mind cost cutting. Why hasn’t Detroit fixed its broken brands?

Robert Farago
Robert Farago

More by Robert Farago

Comments
Join the conversation
2 of 48 comments
  • Kwik_Shift Brands that were considered from China include BYD, Dayun, Great Wall Motors, Maxus, Nio, Omoda/Chery, Seres, XPeng, and Zeekr. KG Mobility from South Korea also made the list of candidates.That's a lot of car companies from there ready to head here.
  • Analoggrotto Clean sweep and unanimous victory for the world affluence engine of 22nd century : Hyundai/Kia/Genesis. Toyota and Lexus, for 120 years of history have not been able to capture the zenith superlative status of Hyundai Motor Corporation the most awarded, decorated and revered automotive corporation in the history of historical. Featuring best ever, first ever and greatest ever e-ATPs the Hyundai Genesis Kia lineup is posed to become the envy of every country club, ivy league college and fortune 500 corporation in the world. I've been taking a roadtrip in my loaner Elantra N, visiting colleges from east to west, elite universities of higher learning to inspect their parking lots. WHat did I find? Leagues of Genesis models, outnumbering Lexus 3 to 1. When I interviewed faculty and staff at these places of greater learning, their response was unanimous : they chose HMC for the ATPs.
  • Mikey 2019 Chevy Impala Premier FWD with 20 inch factory Bridgestones. I'm looking at replacing tires at the 65,000 KLM's (40,000 miles ) mark ....It doesn't thrill me .. I'm pricing Michelin Cross Climate 2 tires ouch !! ..Up here in Canuckastan ....Big $$$$$
  • ToolGuy Honda was robbed.
  • ToolGuy "Honey, someone is trying to cross the moat again"
Next