GM has made a lot of mistakes, but branding isn’t one of them
Why smart brand management just might save General Motors
By all rights, GM should be suffering right now. This year the company had more than 60 recalls at a cost expected to be more than $1 billion. The company is recalling 26 million vehicles — approximately 10% of the number of vehicles registered in the U.S.
But GM is doing just fine on the stock market. And the company is paying its shareholders a dividend in September.
How can a company that has been in the news all year for extremely negative reasons, continue to be valued on the stock market? Partly it’s a matter of how GM has managed its brand.
I run a brand strategy agency. So I tend to look at the news through a brand lens. I followed the congressional hearings earlier this year about GM’s handling of faulty ignition switches. The hearings exposed a culture of incompetence and/or denial. But three factors are keeping GM alive and aloft:
1. The consumer sub-brands are insulated from the parent: To the consumer, the GM brand is largely invisible. Broadly speaking, GM as a brand doesn’t mean anything except to Wall Street and the UAW. GM is essentially a holding company, one step removed from the customer, whose loyalty and relationships are with GM’s sub-brands. As a result, GM itself is strategically insulated. Good publicity for Chevrolet or GMC stays with the sub-brand, and bad publicity for the parent company doesn’t necessarily trickle down to affect consumer perceptions.
2. The sub-brands are beloved: Most of GM’s consumer facing brands enjoy tremendous brand loyalty. Think of Chevy or Cadillac. These automotive brands have built up loyal fans over decades. And GM has nurtured these audiences by putting out popular models, selling them at the right price point and creating successful advertising and image campaigns. What’s more, during its bankruptcy, GM strategically cut sub-brands — such as Pontiac and Saturn — that didn’t have the same degree of customer loyalty.
3. There’s an opportunity in recalls: As they say in politics, there’s no opportunity like a crisis. A recall can be a brand-building moment. Think about what a recall notice says to your customer — handled correctly it conveys the idea that you’re looking out for them. A recall can actually foster brand loyalty.
GM’s handling of faulty ignition switches and other safety issues was deplorable. But from a branding perspective, some of GM’s decisions are looking pretty smart.