GM’s image boosted by controversial ads on repaying U.S. loans

 

GM’s image boosted by controversial ads on repaying U.S. loans


Automotive News | May 13, 2010 – 9:01 am EST

 

DETROIT (Bloomberg) — General Motors Co. sparked Republican criticism and a regulatory complaint by saying in commercials it had repaid U.S. loans. The ads did succeed in repairing the automaker’s image with some consumers.

Surveys by YouGov Plc, a London company that measures public perception of businesses, showed consumers have a more favorable view of GM since CEO Ed Whitacre’s ad proclaimed repayment “in full, with interest, five years ahead of the original schedule.” It now has a stronger image than Toyota Motor Corp. and has gained ground on Ford Motor Co.

“This could buy GM some goodwill,” Ted Marzilli, managing director of YouGov’s BrandIndex, said in an interview on May 11. “It’s a statistically significant move for GM, and it was largely related to the loan repayment.”

GM’s image retooling has proved a challenge: Whitacre has changed the biggest U.S. automaker’s sales and marketing leadership three times since December. On May 5, he hired Joel Ewanick from the North American unit of Nissan Motor Co. as vice president of marketing, replacing Susan Docherty.

The automaker has been trying to improve its standing since emerging from its U.S.-backed bankruptcy. Some consumers still shy away from its vehicles and the criticism reinforces negative impressions, said Jim Hall, principal of 2953 Analytics, a consulting firm.

“They are working against the perception that they are Government Motors,” Hall said. “GM is still in the marketing mode of overpromising and underdelivering.”

YouGov surveyed 5,000 people daily and combined positive and negative reactions to create an index between 100 and -100. GM’s positive rating had risen to 17 from 12 on YouGov’s BrandIndex after announcing that the company paid off the loans.

Sparking complaints

Ford’s current BrandIndex score is 36, Marzilli said. The rating for Toyota, the world’s largest automaker, was 45 on Jan. 1. News of safety recalls by the Toyota City, Japan-based automaker has dropped its score to -1, Marzilli said.

For GM, “we don’t know if it will last one week or one month,” he said. “It could be the start of something good.”

As the Whitacre ad ran repeatedly across the United States through April 27, at least three Republicans complained that GM was repaying government debt with cash raised from the U.S. Treasury’s acquisition of 61 percent of GM.

GM got $50 billion in aid, mostly from the Treasury Department’s Troubled Asset Relief Program. About $8.4 billion was repaid to the U.S., Canada and Ontario governments and $42 billion was for common and preferred stock.

A ‘lie’

“They’re paying it back with bailout money that they had from the federal government in the first place,” Grassley, an Iowa Republican, said in a video on his Web site.

U.S. Representative Jim Jordan of Ohio and fellow Republican Darrell Issa, a representative from California, criticized as a “lie” Whitacre’s ad in an April 29 letter released to the public. Republicans have expressed opposition to the automaker bailouts.

The Competitive Enterprise Institute, an advocacy group devoted to “free enterprise and limited government,” said it filed a complaint with the Federal Trade Commission, claiming false advertising by GM.

Betsy Lordan, an FTC spokeswoman, said the agency doesn’t comment on whether it’s investigating a specific complaint, or how this case would be handled because it involves claims about a company rather than products.

Steven Rattner, the former head of President Barack Obama’s automotive task force, said May 10 at a conference in Detroit that GM “slightly elasticized things” in its ads. He said the automaker implied federal funds granted in GM’s bankruptcy restructuring had been fully repaid.

GM defends its ad, created with agency McCann Erickson in Detroit. Selim Bingol, a GM spokesman, said it doesn’t say the automaker returned the government’s investment.

“It accurately communicated what we did, which was pay back the loans,” he said, adding that GM’s own research found that consumers responded favorably.

Strategic Vision, a San Diego-based marketing research firm, found the ads had mixed results in its survey of consumers who own or are shopping for a new car. About half said the ads showed the company is making progress, according to Alexander Edwards, president of Strategic Vision’s automotive division.

The other half took a more negative view, saying they didn’t believe GM had paid off the loans or didn’t identify with Whitacre, Edwards said. GM would have reaped an even bigger benefit by focusing on products, he said.

Said Edwards: “If GM is to find success, they need to talk about the cars.”

 

 

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