GM Taking a Strategy From the Luxury Segment

Right now Detroit crosstown rivals Ford (NYSE: F  ) and General Motors' (NYSE: GM  ) luxury brands are about as opposite as can be. According to AutoNews, Cadillac has had its best surge since 1976 while Lincoln has definitely seen better days – or decades. While Ford is toning down Lincoln's complimentary maintenance program from four years to two, Cadillac is maintaining its complementary service for four years or 50,000 miles. GM is now taking it to another level; it's taking a page from its luxury strategy and bringing it to its standard models.

GM to lure consumers
GM recently announced it would be including free maintenance for two years or 24,000 miles for all of its 2014 Chevrolet, Buick, and GMC models. It's a smart move by CEO Dan Akerson and will help on two fronts that GM is currently struggling in – market share and consumer loyalty. 

In the first quarter this year something happened that we haven't witnessed in two decades – all three Detroit automakers gained share in the U.S. market. That doesn't tell the whole story for GM though, as it currently sits near historic record lows of market share.

GM has no one to blame but previous management that refused to acknowledge it was producing vehicles very few desired to buy. Eventually these poor decisions forced GM, as well as Chrysler, into bankruptcy. The lingering aftereffects of bankruptcy and the abrupt sales decline during the recession left little cash for GM to revamp its vehicle lineup.

Now as the company gains financial stability and has cash to spend, it plans to completely revamp 90% of its vehicle lineup by 2016 by refreshing, completely redesigning, or scrapping the vehicles offered. This alone should have a positive influence on GM's market share, but for those shoppers still on the fence the additional comfort of a two-year or 24,000 miles complementary free maintenance package could be just enough to seal the deal.

For those that were going to buy a GM vehicle regardless, this move still has a positive effect on GM's consumer loyalty. There's no doubt GM has a damaged brand image, while rival Ford is the public champion. It will take time and money, such as this extra incentive, for GM to earn back its consumers.

"We know that customers who service their vehicles at our dealerships are much more likely to purchase another GM product down the road," said Akerson in a press release. "It's all the more important to bring customers to our service facilities for routine maintenance to further enhance the quality and reliability of their GM vehicles."

Bottom line
The 2014 Silverado is hitting the showrooms and its effect can't be underestimated. It's GM's most profitable vehicle in one of the industry's hottest segments. It has a year head start on Ford's F-150 and needs to increase its sales lead over Chrysler's Ram. This maintenance fee needs to be enough incentive to lure consumers that might be waiting for Ford's next-generation truck, and keep consumers from testing Chrysler's Ram truck.

The next 18 months for GM will be filled with vehicle launches and tough decisions. This is but one step GM needs to take full advantage of newer models while auto industry sales surge, and only time will tell if it pays off in terms of market share and consumer loyalty. For current and potential GM investors, the next 18 months will be make or break for the company.

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  • Report this Comment On June 11, 2013, at 3:20 PM, NineD930thTA wrote:

    We just got our first 2014 Sierra pickup truck in today and let me tell you it doesnt matter if someone test drives the Ram. In fact if they do go test drive the Ram they will be in a GM pickup truck. These trucks are unreal and nothing Ford or Ram has even deserves to be in the same conversation as the GM trucks.

    Ford will have its hands full trying to upscale these trucks if they even can. Their Ecopoop motor wont be the swaying vote to get sales seeing how the V-8 GM has gets better gas mileage, produces similar HP and torque numbers (without a turbo which creates most power at high rpms not low where its needed to tow), and outtows everything on the market.

    Fords sales crown will fall to GM.

  • Report this Comment On June 11, 2013, at 3:31 PM, TMFTwoCoins wrote:

    That's a strong statement! I'm gonna hold you to that, ha.

    In all seriousness, Ford does have its work cut out for the next year, but I can guarantee that the 2015 F-150 won't be getting worse gas mileage than the V-8 GM. And for the record, it's only a 1 MPG improvement as it stands today.

    I believe you're correct though, the Silverado is a vastly improved truck, and is more than meets the eye. It's too bad it caught a bad rap for its lack of design upgrade -- but that won't matter for long.

    It's shaping up to be quite an interesting year for competition in Detroit.

  • Report this Comment On June 11, 2013, at 6:04 PM, chronarch wrote:

    GM has to do something about the lack or rear seat cooling in the new 2014 Silverado. I test drove one and the kids in the back seat were burning up. There is no rear AC and the front cooled leather seats blew hot air all over the kids from the vents in the seat backs. GM has to fix this problem if they want to sell to customers with kids. Did anyone even sit in the back seat when this truck was designed?

  • Report this Comment On June 11, 2013, at 6:33 PM, wamck wrote:

    I find that servicing a car at the dealership to be a gross pain in the neck. We have a 2012 Prius and have never taken it back to Toyota because I can the oil changed in 20 minutes at the local places and it take 1/2 a day to do it at the dealership.

    I don't think that free service for even 50,000 miles is worth anything meaningfull, given the service intervals.

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