General Motors' Ads to Invite Comparison to Rivals

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In one ad, GM will feature the new Chevrolet Equinox SUV beside a competing Honda (HMC) CR-V. The commercial will show that the Equinox has a longer warranty and better highway fuel economy. Even more brazen, GM will compare the Buick LaCrosse sedan to a Lexus ES 350. Its highway fuel economy is 30 miles per gallon to the ES 350's 27 mpg. The warranty is five years and 100,000 miles for the engine and transmission, compared with six years and 70,000 for the Lexus. And the Buick is about $1,000 cheaper.

Analysts think the campaign could work. "Consumers watching this ad campaign will be intrigued because of GM's bold statement of confidence in its vehicles," says Jeremy Anwyl, CEO of Edmunds.com. "The risk that GM has in buyers returning its vehicles will be very minimal."

If a consumer brings the car back before the 60 days are up, the dealer will buy it back and sell it on the used lot. GM will have to eat the difference. Consumers have to be current on their payments to bring the car back and they can't drive more than 4,000 miles in those two months. Certain buyers won't respond to the ads, but anyone who doesn't hate GM brands might give it a look, Gorrell says. "This is for people who are on the fence, not dyed-in-the-wool Chevy haters," he says.

Winning over consumers will be a huge challenge. Not only are sales and market share down, so is consideration for its brands. Cadillac is arguably GM's strongest brand, and only 2.1% of shoppers on Edmunds.com looked at the brand in July. That's down from 4.3% of shoppers in January 2008, according to Edmunds.

Brands in Front

GM may be bragging about its cars, but once the ads featuring Whitacre are done, none of them will talk about General Motors, Lutz says. It's the last thing the company wants to advertise after going through bankruptcy and getting an unpopular government bailout. Lutz said GM's research shows that most consumers don't associate Buick, Chevy, Cadillac, and GMC with GM: "The brands are exonerated from this unfortunate financial occurrence."

The company won't restrain its spending either. Lutz said that he and CEO Frederick A. Henderson met recently with Whitacre in San Antonio, where the chairman lives. He asked them how they would counter consumer perception. When they described the plan but fretted that funding was limited, he told them, "Spend it," Lutz says. So GM has upped its budget. Measured as a share of advertising compared to the company's market share, GM is buying a bigger voice than the company has ever purchased. Its market share is 19.4% so far this year, down from 21.6% last year. Whitacre has said internally that he wants to see positive sales results in three months or there will be consequences for executives.

Given the depth of GM's brand troubles, if Whitacre is serious about sacking executives, then some may not be around to see if the plan works. It takes years to repair car brands. But the new program could be a good first step. "It's a bit novel," Gorrell says. "This is the kind of trust-creating mechanism that they need."

Welch is BusinessWeek's Detroit bureau chief.

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