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General Motors Corporation

General Motors Corporation

300 Renaissance Center
Detroit, Michigan 48265-3000
U.S.A.
Telephone: (313) 556-5000
Fax: (248) 696-7300
Web site: http://www.gm.com

Public Company
Incorporated: 1916
Employees: 326,000
Sales: $185.5 billion (2003)
Stock Exchanges: New York Toronto Frankfurt Euronext Paris London
Ticker Symbol: GM
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 336211 Motor Vehicle Body Manufacturing; 336350 Motor Vehicle Transmission and Power Train Parts Manufacturing; 336510 Railroad Rolling Stock Manufacturing; 421110 Automobile and Other Motor Vehicle Wholesalers; 441110 New Car Dealers; 522220 Sales Financing; 522291 Consumer Lending; 522292 Real Estate Credit; 524126 Direct Property and Casualty Insurance Carriers; 532112 Passenger Cars Leasing

General Motors Corporation (GM) is the world's largest full-line vehicle manufacturer and marketer. Its arsenal of brands includes Chevrolet, Pontiac, GMC, Buick, Cadillac, Saturn, Hummer, and Saab. Opel, Vauxhall, and Holden comprise GM's international nameplates. Through its system of global alliances, GM holds stakes in Isuzu Motors Ltd., Fuji Heavy Industries Ltd., Suzuki Motor Corporation, Fiat Auto, and GM Daewoo Auto & Technology. Other principal businesses include General Motors Acceptance Corporation and its subsidiaries, providers of financing and insurance to GM customers and dealers. In the early 2000s, struggling under the weight of escalating healthcare and pension costs, GM sought to shed some of its less profitable activities. Toward that end, among other moves, the company sold its stake in Hughes Electronics, phased out production of the Oldsmobile, and discontinued the Chevrolet Camero and Pontiac Firebird. Facing a tough economic climate, GM has nevertheless retained its position as the world's leading automaker.

19th-Century Origins

The beginning of General Motors Corporation can be traced back to 1892, when R.E. Olds collected all of his savings to convert his father's naval and industrial engine factory into the Olds Motor Vehicle Company to build horseless carriages. For several years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could produce five horsepower and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. At the turn of the century, Olds had sold more than 1,400 cars.

Also during this time, the Cadillac Automobile Company was established in Detroit, founded by Henry Leland, who built car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was replaced by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Oldsmobile also reached its projected target of manufacturing 4,000 cars in one year. A third player, engineer David Buick, founded his own factory in Detroit during this time as well.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The nephew of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred when many firms manufactured the same product. General Motors Corporation was thus formed, bringing together Oldsmobile and Buick in 1903, and joined by Cadillac and Oakland (renamed Pontiac) in 1909. Positive financial results were immediately seen from the merger, although the establishment of the company drew little attention.

Other early members of the GM family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. GM's other U.S. automotive division, Chevrolet, became part of the corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60 percent interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or "testing" laboratory also was established to serve as an additional protection against costly factory mistakes. GM's system of administration, research, and development became one of the largest and most complex in private industry.

About the same time that GM was establishing itself in Detroit, an engineering breakthrough was taking place in Dayton, Ohio: the electric self-starter, designed by Charles F. Kettering. GM introduced Kettering's invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Kettering's Dayton Engineering Laboratories were merged into GM during 1920 and the laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of GM, in charge of its research and engineering programs.

During World War I GM turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the U.S. automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90 percent of GM's truck production was for the war effort. Cadillac supplied army staff cars, V-8 engines for artillery tractors, and trench mortar shells, while Buick built Liberty airplane motors, tanks, trucks, ambulances, and automotive parts.

It was at this time that Alfred Sloan, Jr., who went on to guide GM as president and chairman until 1956, first became associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million. When Hyatt became part of GM, Sloan joined the corporate management, becoming president in 1923. Overseas expansion soon commenced, with the 1925 purchase of U.K. automaker Vauxhall Motors and the 1931 acquisition of Germany's Adam Opel.

The Depression and World War II Era

GM suffered greatly under the effects of the Great Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect, Sloan was credited with creating not only an organization that saved GM, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operational responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 GM accounted for 44 percent of the total U.S. automotive sales, compared with 12 percent in 1921. In preparation for America's entry into World War II, GM retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that GM had developed were applied with great effectiveness. From 1940 to 1945 the company produced defense material valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. GM's contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons, and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Postwar Expansion

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced GM to concentrate their research in this field; by 1950, all of the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

Company Perspectives:

General Motors' enjoys a long tradition of accountability, integrity, and transparency that has helped establish our reputation as a leader in corporate responsibility. We place a high value on communicating clear, consistent, and truthful information about our performance to our employees, suppliers, dealers, investors, and customers.

During the Korean war, part of the company's production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during World War II). The reallocation reached 19 percent and then leveled off at about 5 percent from 1956 onward. Between 1951 and 1955 the five divisions of GMBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from six to the more reliable 12 volts. Power-assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air conditioning systems. Also during this period GM completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. Americans, however, were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford Motor Company, Chrysler Corporation, and GM had lost some 15 percent in sales while imports were virtually doubling their market penetration. The longer Detroit's automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than 8 percent of U.S. car sales. Although GM promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the company's market share slipped to just 42 percent of 1959's new car sales.

The 1960s were difficult years in Detroit. The 1967 riot in the neighborhoods surrounding GM's facilities forced management to recognize the urban poverty that had for so long been in their midst, and they began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. GM prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13 percent return on investment, and GM's return increased from 16.5 percent to 25.8 percent.

Remaining Competitive in the 1970s80s

Like the rest of the industry, GM had ignored, in large part, the importance of air pollution control. However, new, costly federal regulations were mandated, and GM had to invest in developing devices to control pollution. By the early 1970s, this issue was temporarily overshadowed by the impact of the oil embargo. GM's luxury, gas-guzzling car sales were down by 35 percent in 1974, but the company's compacts and subcompacts rose steadily to attain a 40 percent market share. Ford, Chrysler, and GM had been caught unaware by a vast shift in consumer demand, and GM suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 to meet local, state, and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Under the leadership of President F. James McDonald and Chairman Roger Smith, GM reported earnings declines from 1985 to 1992. The only respite came from an accounting change in 1987, which effected an earnings increase. McDonald and Smith attempted to place these losses in perspective by arguing that they were necessary if GM was to develop a strong and secure position on the worldwide market. Since the start of the 1980s, GM had spent more than $60 billion redesigning most of its cars and modernizing the plants that produce them. The company also acquired two major corporations, Hughes Aircraft, in 1986, and Electronic Data Systems (EDS), in 1984. Though expensive, the EDS purchase provided GM with better, more centralized communications and backup systems, as well as a vital profit center. GM also purchased a 50 percent stake in Saab Automobile AB, a Swedish maker of premium cars, in 1990. That same year Saturn Corporation was created as a subsidiary to produce compact cars in a Japanese-influenced factory in Tennessee; Saturns became popular because of their quality and the no-haggle method employed to sell them.

GM's market share dropped steadily from 1982 to 1992. In 1987 Ford's profits exceeded GM's for the first time in 60 years. From 1990 to 1992, the corporation suffered successive and devastating annual losses totaling almost $30 billion. Problems were myriad. Manufacturing costs exceeded competitors' due to high labor costs, overcapacity, and complicated production procedures. GM faced competition from 25 companies, and its market share fell from almost 50 percent to about 35 percent.

Key Dates:

1892:
R.E. Olds founds the Olds Motor Vehicle Company.
1895:
The first Oldsmobile model is taken on its trial run.
1900:
David Buick founds a factory in Detroit.
1902:
Henry Leland produces the first Cadillac.
1903:
William Durant forms General Motors Corporation, bringing together Oldsmobile and Buick.
1909:
Cadillac and Oakland (renamed Pontiac) join GM.
1912:
GM introduces the electric self-starter in its Cadillacs.
1918:
Chevrolet becomes part of GM.
1923:
Alfred Sloan, Jr., is named president.
1925:
U.K. automaker Vauxhall Motors is acquired.
1931:
Germany's Adam Opel is acquired.
1940:
GM begins producing defense materials.
1950:
All U.S. models are available with an automatic gearbox.
1971:
GM acquires a 34 percent stake in Isuzu Motors.
1984:
GM acquires Electronic Data Systems.
1986:
Hughes Aircraft is acquired.
1990:
Company acquires a 50 percent stake in Swedish carmaker Saab Automobile AB; Saturn Corporation is created as a subsidiary.
1996:
EDS is spun off.
1999:
GM acquires a 20 percent stake in Fuji Heavy Industries, maker of Subaru cars.
2000:
GM gains a 20 percent stake in Fiat S.p.A.'s Fiat Auto S.p.A. unit and takes full control of Saab.
2002:
A majority interest in Daewoo Motor Companylater known as GM Daewoo Auto & Technologyis acquired.
2003:
The company sells its stake in Hughes Electronics to News Corporation.

The 1990s: Regaining Ground

In 1992 Jack Smith, Jr., advanced to GM's chief executive office. He had earned respect as the engineer of GM Europe's late 1980s turnaround, and he quickly applied those strategies to the parent, focusing on North American Operations (NAO). During 1993, Smith simplified the NAO, cut the corporate staff, pared product offerings, and began to divest GM's parts operations. He was also hailed for his negotiations with the United Auto Workers (UAW). In 1993 he pledged $3.9 billion in jobless benefits, which raised the blue-collar payroll costs about 16 percent over three years. At the same time the contract gave Smith the ability to cut 65,000 blue-collar jobs by 1996 in conjunction with the closure of nearly 24 plants. Salaried positions were not exempted from Smith's job-cutting plan; staffing at the corporate central office was slashed from 13,500 to 2,300 in 1992.

In the early 1990s GM began to recapture the automotive vanguard from Japanese carmakers, with entries in the van, truck, and utility vehicle markets and the launch of Saturn. GM also gained an advantage in the domestic market because the weak dollar caused the price of imported cars to increase much faster than domestics. Market conditions along with Smith's strategies effected a stunning reversal in 1993, when GM recorded net income of $2.47 billion on sales of $138.22 billion. Riding the booming economy, the company recorded record profits of $6.88 billion on record sales of $163.86 billion in 1995. Despite the improved financial performance, GM's share of the U.S. car market continued its steady decline, falling to slightly more than 31 percent by 1995. The company's North American operations continued to be criticized by observers for its inability to produce innovative models, the glacial speed of its new product development, and the inefficiencies inherent in running six separate car divisions and a GMC truck division.

The mid-to-late 1990s saw a number of important initiatives in GM's non-automaking operations. In 1994 the renamed Hughes Electronics unit introduced Direct TV, a satellite-based direct-to-home broadcast service. The 1995 sale of the company's National Car Rental business was followed by the spinoff of EDS the following year. One year later, Hughes Electronics was revamped through the sale of its defense electronics operations to Raytheon Company and the merging of its automotive electronics activities (Delco Electronics) into GM's auto parts subsidiary, Delphi Automotive Systems. Hughes began concentrating on digital entertainment, information, and communications services and made a key acquisition in 1999 when it paid $1.3 billion for the direct-to-home satellite business of Primestar. In early 2000 Hughes would make a further divestment of a then noncore unit, selling its satellite manufacturing operations to the Boeing Company for about $3.75 billion. Delphi, meanwhile, would be completely separated from GM through a May 1999 spinoff to shareholders.

GM remained profitable through the end of the decade, but its U.S. market share dipped below 30 percent by 1999; at times GM's share was less than that of the combined share of all Asian automakers, an unprecedented development. While continuing to attempt to reverse the now three-decades-long fall, GM began looking for future growth from Asia, where early 21st-century growth in car sales was expected to surpass both North America and Europe. Instead of attempting to directly sell its own models, GM began assembling a network of alliances with key Asian automakers for its push into that emerging continent, aiming to increase its market share across Asia from its late 1990s level of 4 to 10 percent by 2005. The company already had a 34 percent stake in Isuzu Motors Ltd., which it had bought in 1971, and a 3 percent stake in Suzuki Motor Corporation, obtained in 1981. In 1998 GM increased its stake in Suzuki to 10 percent and agreed to build cars with the Japanese automaker. The following year GM increased its stake in Isuzu to 49 percent; acquired a 20 percent stake in Fuji Heavy Industries Ltd., maker of Subaru all-wheel-drive vehicles; and entered into an alliance with Honda Motor Co., Ltd. involving Honda producing low-emissions gasoline engines for GM and Isuzu producing diesel engines for Honda.

2000 and Beyond

In May 2000 GM, Fuji, and Suzuki agreed to develop compact cars for the European market. Another deal involving Europe was reached in early 2000, when GM agreed to acquire a 20 percent stake in the Fiat Auto S.p.A. unit of Fiat S.p.A., the number six automaker in the world, in exchange for Fiat taking a 5.1 percent stake in GM. Through this deal, GM aimed to grab a larger share of the market for the small vehicles popular in Europe and Latin America but shunned in the United States. In mid-2000 GM and Fiat jointly bid to acquire troubled South Korean carmaker Daewoo Motor Company but were outbid by Ford. Also in 2000, GM acquired the 50 percent of Saab Automobile that it did not already own.

Closer to home, GM began building a factory in Lansing, Michigan, its first new plant in 15 years. In another key early 2000 development, the company agreed to join with Daimler-Chrysler AG and Ford to create an Internet-based global business-to-business supplier exchange, Covisint LLC, that would be open to all suppliers and automakers. This would create the world's largest virtual marketplace. Although the Federal Trade Commission (FTC) quickly opened a preliminary antitrust inquiry into the plan, clearance was eventually gained and the Covisint venture went forward.

In June 2000 G. Richard Wagoner was promoted from president to CEO, with Smith remaining chairman. At the age of 47, Wagoner became the youngest CEO in GM history and faced the daunting task of running what was still considered by many observers to be an excessively bureaucratic and overly complex organization, which was extremely resistant to change and seemingly unable to anticipate most market trends.

The focus on strengthening its foothold in the Asian market continued into 2001. Ford suddenly announced that it was dropping its offer for Daewoo, leaving GM wide open to relaunch its bid. Negotiations began that year and were finalized in 2002. GM ended up acquiring a majority interest in Daewoo Motor, renaming it GM Daewoo Auto & Technology. At the same time, the company purchased an additional 10 percent of Suzuki, increasing its stake to 20 percent, and signed a deal with AvtoVAZ to build sports utility vehicles (SUVs) for the Russian market.

GM chalked up a solid performance during this period. While its competitors struggled with recalls, and quality and merger integration issues, the automaker appeared to have overcome the problems of its past. An April 2002 Fortune article noted that "some of what's driving GM is very basic: improvements in quality and productivity, the pruning of unprofitable vehicles, and frankly, weakness at its crosstown rivals Ford and Chrysler." GM's market share rose in 2001 and by early 2002 had reached 30.9 percent in the U.S. market. Chevrolet had also started to outsell Ford. This was due in part to the successful zero percent financing plans it introduced after the terrorist attacks in September 2001. The financing plan was advertised under the "Keep America Rolling" slogan. Sales of GM cars increased by 31 percent one month after its launch.

The company did face one major hurdle howeverits $76 billion pension fund. Deals struck with the UAW in past years left GM forced to pay out costly health and retirement benefits. The company was the largest purchaser of health care in the United States, spending nearly $5 billion on healthcare alone in 2003. Word spread quickly that GM's pension fund was underfunded by nearly $18 billion at the start of 2003. The company was able to generate cash for the fund by selling off its Hughes Electronics stake to News Corporation in 2003 for approximately $3.1 billion. It also jettisoned its armored vehicles business in a $1.1 billion deal. The sale of its noncore assets, global debt offerings, and income from its automotive operations allowed to the company to fully fund its U.S. salaried and hourly employee pension plans by the end of 2003. Its automotive earnings, however, felt the crunch. Overall, the company's net income for 2003 reached $3.8 billion. The majority of earnings stemmed from its GMAC and Asian operations.

Smith retired in May 2003, leaving Wagoner at the helm. GM's management team continued to focus on controlling costs while phasing out car linesincluding Oldsmobile, the Camero, and the Firebirdand launching such new products as the Cadillac CTS, the Hummer H2, and the Opel Vectra in Europe. GM faced a challenging road ahead. Rising healthcare costs, intense competition, and having to shore up its North American auto sales were just some of its obstacles. GM was, however, in the top position in its industry and was no stranger to adversity.

Principal Subsidiaries

General Motors Acceptance Corporation; General Motors Investment Management Corporation; GMAC Commercial Finance LLC; Saturn Corporation; Holden, Ltd. (Australia); General Motors do Brasil Ltda. (Brazil); General Motors of Canada, Ltd.; Adam Opel AG (Germany); General Motors de Mexico, S.A. de C.V.; Saab Automobile AB (Sweden); Saab Cars Holding Corporation; Vauxhall Motors Limited (United Kingdom).

Principal Operating Units

GM Automotive; Financing and Insurance Operations.

Principal Competitors

AmeriCredit Corporation; Bayerische Motoren Werke AG; Credit Acceptance Corporation; DaimlerChrysler AG; Ford Motor Company; Ford Motor Credit Company; General Electric Capital Corporation; General Electric Company; Honda Motor Co., Ltd.; Hyundai Motor Company; Mazda Motor Corporation; Mitsubishi Motors Corporation; Nissan Motor Co., Ltd.; PSA Peugeot Citron S.A.; Renault S.A.; Suzuki Motor Corporation; Toyota Motor Corporation; Volkswagen AG.

Further Reading

Bary, Andrew, "How to Fix GM," Barron's, July 5, 1999, pp. 1819.

Cray, Ed, Chrome Colossus: General Motors and Its Time, New York: McGraw-Hill, 1980.

Dassbach, Carl H.A., Global Enterprises and the World Economy: Ford, General Motors, and IBM; the Emergence of the Transnational Enterprise, New York: Garland, 1989.

De Lorean, John Z., On a Clear Day You Can See General Motors, London: Sidgwick and Jackson, 1980.

Geyelin, Milo, "Lasting Impact: How an Internal Memo Written 26 Years Ago Is Costing GM Dearly," Wall Street Journal, September 29, 1999, pp. A1+.

Hamper, Ben, Rivethead: Tales from the Assembly Line, New York: Warner Books, 1992.

Jacobs, Timothy, A History of General Motors, New York: Smithmark, 1992.

Keller, Maryann, Collision: GM, Toyota, Volkswagen, and the Race to Own the 21st Century, New York: Currency Doubleday, 1993.

, Rude Awakening: General Motors in the 1980s, New York: Morrow, 1989.

, Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, New York: HarperCollins, 1990.

Kerwin, Kathleen, "For GM, Once Again, Little Ventured, Little Gained," Business Week, March 27, 2000, pp. 4243.

Kerwin, Kathleen, and Joann Muller, "Reviving GM," Business Week, February 1, 1999, pp. 114+.

Kuhn, Arthur J., GM Passes Ford, 19181938: Designing the General Motors Performance-Control System, University Park: Pennsylvania State University Press, 1986.

Madsen, Axel, The Deal Maker: How William C. Durant Made General Motors, New York: Wiley, 1999.

May, George S., R.E. Olds, Auto Industry Pioneer, Grand Rapids, Mich.: Eerdmans, 1977.

Meredith, Robyn, "Can GM Return to the Passing Lane?," New York Times, November 7, 1999, Sec. 3, p. 1.

Miller, Scott, "Open No Quick Fix for GM's 'Mr. Fix It'," Wall Street Journal, June 13, 2000, p. A22.

Osterland, Andrew, "Al and Me: Why General Motors Will Finally Get Serious About Downsizing," Financial World, December 16, 1996, pp. 3941.

Palmer, Jay, "Reviving GM," Barron's, June 22, 1998, pp. 3135.

Pollack, Andrew, "Paper Trail GM After It Loses Injury Suit," New York Times, July 12, 1999, p. A12.

Ramsey, Douglas K., The Corporate Warriors: Six Classic Cases in American Business, Boston: Houghton Mifflin, 1987.

"Rick Wagoner's Game Plan," Business Week, February 10, 2003, p. 52.

Rothschild, Emma, Paradise Lost: The Decline of the Auto-Industrial Age, New York: Random House, 1973.

Shirouzu, Norihiko, "GM Cracks Japan's Market with Its Wallet, Not Its Cars: Network of Alliances Aids Asia Expansion by Filling Gaps in Product Line," Wall Street Journal, January 26, 2000, p. A17.

Simison, Robert L., Fara Warner, and Gregory L. White, "Big Three Car Makers Plan Net Exchange," Wall Street Journal, February 28, 2000, pp. A3, A16.

Simison, Robert L., Gregory L. White, and Deborah Ball, "GM's Linkup with Fiat Opens Final Act of Consolidation Drama for Industry," Wall Street Journal, March 14, 2000, pp. A3, A8.

Sloan, Alfred, Jr., My Years with General Motors, New York: Doubleday, 1964.

Smith, Roger B., Building on 75 Years of Excellence: The General Motors Story, New York: Newcomen Society of the United States, 1984.

Taylor, Alex, III, "Finally GM is Looking Good," Fortune, April 1, 2002, p. 68.

, "GM's $11 Billion Turnaround," Fortune, October 17, 1994, pp. 5456+.

, "GM Gets Its Act Together," Fortune, April 5, 2004, p. 136.

, "GM: Some Gain, Much Pain," Fortune, May 29, 1995, pp. 7880, 84.

, "GM: Time to Get in Gear," Fortune, April 28, 1997, pp. 9496+.

, "GM: Why They Might Break Up America's Biggest Company," Fortune, April 29, 1996, pp. 7882, 84.

, "Is Jack Smith the Man to Fix GM?," Fortune, August 3, 1998, pp. 86+.

Weisberger, Bernard A., The Dream Maker: William C. Durant, Founder of General Motors, Boston: Little Brown, 1979.

Welch, David, "Has GM Outrun its Pension Problems?," Business Week, January 19, 2004, p. 70.

White, Gregory L., "As GM Courts the Net, Struggling Saturn Line Exposes Rusty Spots," Wall Street Journal, July 11, 2000, pp. A1, A10.

Zachary, Katherine, "Shopping Spree: GM Plunks Down Hard Cash to Add Strength in Asia," Ward's Auto World, February 29, 2000.

Zesiger, Sue, "GM's Big Decision: Status Quo," Fortune, February 21, 2000, pp. 10102, 104.

April Dougal Gasbarre

updates: David E. Salamie and

Christina M. Stansell

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General Motors Corporation

General Motors Corporation

300 Renaissance Center
Detroit, Michigan 48265-3000
U.S.A.
Telephone: (313) 556-5000
Fax: (313) 556-5108
Web site: http://www.gm.com

Public Company
Incorporated:
1916
Employees: 693,000
Sales: $176.56 billion (1999)
Stock Exchanges: New York Chicago Pacific Philadelphia Montreal Toronto Frankfurt Diisseldorf Brussels Paris London
Ticker Symbol: GM
NAIC: 336111 Automobile Manufacturing; 336112 Light Truck and Utility Vehicle Manufacturing; 336211 Motor Vehicle Body Manufacturing; 336350 Motor Vehicle Transmission and Power Train Parts Manufacturing; 336510 Railroad Rolling Stock Manufacturing; 421110 Automobile and Other Motor Vehicle Wholesalers; 441110 New Car Dealers; 522220 Sales Financing; 522291 Consumer Lending; 522292 Real Estate Credit; 524126 Direct Property and Casualty Insurance Carriers; 532112 Passenger Cars Leasing; 334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing; 334290 Other Communications Equipment Manufacturing; 513220 Cable and Other Program Distribution; 513340 Satellite Telecommunications

General Motors Corporation (GM) is the worlds largest full-line vehicle manufacturer and marketer. Its North American nameplates include Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and Saturn. Opel, Vauxhall, Holden, Isuzu, Saab, Buick, Chevrolet, GMC, and Cadillac comprise General Motors international nameplates. Through its system of global alliances, GM holds a 49 percent stake in Isuzu Motors Limited, 20 percent each of Fuji Heavy Industries Ltd. and Fiat S.p.A.s Fiat Auto S.p.A. unit, and ten percent of Suzuki Motor Corporation. Other principal businesses include Hughes Electronics Corporation, a provider of digital entertainment, information, and communications services; and General Motors Acceptance Corporation and its subsidiaries, providers of financing and insurance to GM customers and dealers.

19th-Century Origins

The beginning of General Motors can be traced back to 1892, when R.E. Olds collected all of his savings to convert his fathers naval and industrial engine factory into the Olds Motor Vehicle Company to build horseless carriages. For a number of years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could produce five horsepower and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. Two years later, at the turn of the century, Olds had sold more than 1,400 cars.

That same year, an engineer named David Buick founded a factory under his own name in Detroit. A third factory for the Cadillac Automobile Company also was built in Detroit. This company was founded by Henry Leland, who was already building car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was re-placed by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Oldsmobile also reached its projected target of manufacturing 4,000 cars in one year.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The nephew of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred when many firms manufactured the same product. General Motors Corporation was thus formed, bringing together Olds-mobile and Buick in 1903, and joined in 1909 by Cadillac and Oakland (renamed Pontiac). Positive financial results were immediately seen from the union, although the establishment of the company drew little attention.

Other early members of the General Motors family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. General Motors other U.S. automotive division, Chevrolet, became part of the corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60 percent interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or testing laboratory also was established to serve as an additional protection against costly factory mistakes. General Motors system of administration, research, and development became one of the largest and most complex in private industry.

About the same time that General Motors was establishing itself in Detroit, an engineering breakthrough was taking place in Dayton, Ohio: the electric self-starter, designed by Charles F. Kettering. General Motors introduced Ketterings invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Ketterings Dayton Engineering Laboratories were merged into General Motors during 1920 and the laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of General Motors, in charge of its research and engineering programs.

During World War I General Motors turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the U.S. automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90 percent of General Motors truck production was for the war effort. Cadillac supplied army staff cars, V-8 engines for artillery tractors, and trench mortar shells, while Buick built Liberty airplane motors, tanks, trucks, ambulances, and automotive parts.

It was at this time that Alfred Sloan, Jr., who went on to guide General Motors as president and chairman until 1956, first be-came associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million. When Hyatt became part of General Motors, Sloan joined the corporate management, becoming president in 1923. Overseas expansion soon commenced, with the 1925 purchase of U.K. automaker Vauxhall Motors and the 1931 acquisition of Germanys Adam Opel.

Mid-Century: Surviving the Depression and Contributing to the War Effort

General Motors suffered greatly under the effects of the Great Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect, Sloan was credited with creating not only an organization that saved General Motors, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operational responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 General Motors accounted for 44 percent of the total U.S. automotive sales, compared with 12 percent in 1921. In preparation for Americas entry into World War II, General Motors retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that General Motors had developed were applied with great effectiveness. From 1940 to 1945 General Motors produced defense materiel valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. General Motors contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons, and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Postwar Expansion

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced General Motors to concentrate their research in this field; by 1950, all of the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

Company Perspectives

Vision: To be a world leader in transportation products and related services. We will earn our customers enthusiasm through continuous improvement driven by the integrity, teamwork, and innovation of GM people.

During the Korean war, part of the companys production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during World War II). The reallocation reached 19 percent and then leveled off at about five percent from 1956 onward. Between 1951 and 1955 the five divisions of General MotorsBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from six to the more reliable 12 volts. Power-assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air conditioning systems. Also during this period General Motors completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. Americans, however, were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford Motor Company, Chrysler Corporation, and General Motors had lost some 15 percent in sales while imports were virtually doubling their market penetration. The longer Detroits automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than eight percent of U.S. car sales. Although General Motors promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the companys market share slipped to just 42 percent of 1959s new car sales.

The 1960s were difficult years in Detroit. The 1967 riot in the ghettos surrounding General Motors facilities forced management to recognize the urban poverty that had for so long been in their midst and they began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. General Motors prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13 percent return on investment, and General Motors return increased from 16.5 percent to 25.8 percent.

Declining Fortunes from the 1970s Through the Early 1990s

Like the rest of the industry, General Motors had ignored, in large part, the importance of air pollution control, but new, costly federal regulations were mandated. By the early 1970s, however, the high cost of developing devices to control pollution was overshadowed by the impact of the oil embargo. General Motors luxury, gas-guzzling car sales were down by 35 percent in 1974, but the companys compacts and subcom-pacts rose steadily to attain a 40 percent market share. Ford, Chrysler, and General Motors had been caught unaware by a vast shift in consumer demand, and General Motors suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 to meet local, state^and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Key Dates

1892:
R.E. Olds founds the Olds Motor Vehicle Company.
1895:
The first Oldsmobile model is taken on its trial run.
1900:
David Buick founds a factory in Detroit.
1902:
Henry Leland produces the first Cadillac.
1903:
William Durant forms General Motors Corporation, bringing together Oldsmobile and Buick.
1909:
Cadillac and Oakland (renamed Pontiac) join GM.
1912:
GM introduces the electric self-starter in its Cadillacs.
1918:
Chevrolet becomes part of GM.
1923:
Alfred Sloan, Jr., is named president.
1925:
U.K. automaker Vauxhall Motors is acquired.
1931:
Germanys Adam Opel is acquired.
194045:
GM produces defense materiel valued at $12.3 billion.
1950:
All U.S. models are available with an automatic gearbox.
1971:
GM acquires a 34 percent stake in Isuzu Motors.
1981:
Company purchases a three percent stake in Suzuki Motor Corporation.
1984:
GM acquires Electronic Data Systems.
1986:
Hughes Aircraft is acquired.
1990:
Company acquires a 50 percent stake in Swedish carmaker Saab Automobile AB; Saturn Corporation is created as a subsidiary.
1994:
Hughes Electronics introduces Direct TV.
1996:
EDS is spun off.
1997:
Hughes sells its defense electronics operations to Raytheon and merges its Delco Electronics unit into GMs auto parts subsidiary, Delphi Automotive Systems.
1998:
Stake in Suzuki is increased to ten percent.
1999:
Stake in Isuzu is increased to 49 percent; GM acquires a 20 percent stake in Fuji Heavy Industries, maker of Subaru cars; Delphi is spun off to share-holders.
2000:
GM gains a 20 percent stake in Fiat S.p.A.s Fiat Auto S.p.A. unit and takes full control of Saab; Hughes sells satellite manufacturing unit to Boeing.

Under the leadership of President F. James McDonald and Chairman Roger Smith, General Motors reported earnings declines from 1985 to 1992. The only respite came from an accounting change in 1987, which effected an earnings in-crease. McDonald and Smith attempted to place these losses in perspective by arguing that they were necessary if General Motors was to develop a strong and secure position on the worldwide market. Since the start of the 1980s, General Motors had spent more than $60 billion redesigning most of its cars and modernizing the plants that produce them. The company also acquired two major corporations, Hughes Aircraft, in 1986, and Electronic Data Systems (EDS), in 1984. Though expensive, the EDS purchase provided General Motors with better, more centralized communications and backup systems, as well as a vital profit center. GM also purchased a 50 percent stake in Saab Automobile AB, a Sweden-based maker of premium cars, in 1990. That same year Saturn Corporation was created as a subsidiary to produce compact cars in a Japanese-influenced factory in Tennessee; Saturns became popular because of their quality and the no-haggle method employed to sell them.

General Motors market share dropped steadily from 1982 to 1992. In 1987 Fords profits exceeded GMs for the first time in 60 years. From 1990 to 1992, the corporation suffered successive and devastating annual losses totaling almost $30 billion. Problems were myriad. Manufacturing costs exceeded competitors due to high labor costs, overcapacity, and complicated production procedures. GM faced competition from 25 companies, and its market share fell from almost 50 percent to about 35 percent.

Mid-1990s and Beyond: Profits Despite U.S. Market Share Erosion

In 1992 Jack Smith, Jr. advanced to General Motors chief executive office. He had earned respect as the engineer of GM Europes late 1980s turnaround, and he quickly applied those strategies to the parent, focusing on North American Operations (NAO). During 1993, Smith simplified the NAO, cut the corporate staff, pared product offerings, and began to divest GMs parts operations. He was hailed for his negotiations with the United Auto Workers. In 1993 he pledged $3.9 billion in jobless benefits, which raised the blue-collar payroll costs about 16 percent over three years. But at the same time the contract gave Smith the ability to cut 65,000 blue-collar jobs by 1996 in conjunction with the closure of nearly 24 plants. Salaried positions were not exempted from Smiths job-cutting scalpel: staffing at the corporate central office was slashed from 13,500 to 2,300 in 1992.

In the early 1990s GM began to recapture the automotive vanguard from Japanese carmakers, with entries in the van, truck, and utility vehicle markets and the launch of Saturn. GM also gained an advantage in the domestic market because the weak dollar caused the price of imported cars to increase much faster than domestics. Market conditions along with Smiths strategies effected a stunning reversal in 1993, when GM re-corded net income of $2.47 billion on sales of $138.22 billion. Riding the booming economy, the company recorded record profits of $6.88 billion on record sales of $163.86 billion in 1995. Despite the improved financial performance, General Motors share of the U.S. car market continued its steady decline, falling to slightly more than 31 percent by 1995. The companys North American operations continued to be criticized by observers for its inability to produce innovative models, the glacial speed of its new product development, and the inefficiencies inherent in running six separate car divisions and a GMC truck division.

The mid-to-late 1990s saw a number of important initiatives in GMs non-automaking operations. In 1994 the renamed Hughes Electronics unit introduced Direct TV, a satellite-based direct-to-home broadcast service. The 1995 sale of the companys National Car Rental business was followed by the spinoff of EDS the following year. One year later, Hughes Electronics was revamped through the sale of its defense electronics operations to Raytheon Company and the merging of its auto-motive electronics activities (Delco Electronics) into GMs auto parts subsidiary, Delphi Automotive Systems. Hughes began concentrating on digital entertainment, information, and communications services and made a key acquisition in 1999 when it paid $1.3 billion for the direct-to-home satellite business of Primestar. In early 2000 Hughes made a further divestment of a now noncore unit when it sold its satellite manufacturing operations to the Boeing Company for about $3.75 billion. Delphi, meanwhile, was completely separated from GM through a May 1999 spinoff to shareholders.

General Motors remained profitable through the end of the decade, but its U.S. market share dipped below 30 percent by 1999at times GMs share was less than that of the combined share of all Asian automakers, an unprecedented development. While continuing to attempt to reverse the now three-decades-long fall, GM began looking for future growth from Asia, where early 21st-century growth in car sales was expected to surpass both North America and Europe. Instead of attempting to directly sell its own models, GM began assembling a network of alliances with key Asian automakers for its push into that emerging continent, aiming to increase its market share across Asia from its late 1990s level of four percent to ten percent by 2005. The company already had a 34 percent stake in Isuzu Motors Limited, which it had bought in 1971, and a three percent stake in Suzuki Motor Corporation, obtained in 1981. In 1998 GM increased its stake in Suzuki to ten percent and agreed to build cars with the Japanese automaker. The following year General Motors increased its stake in Isuzu to 49 percent; acquired a 20 percent stake in Fuji Heavy Industries Ltd., maker of Subaru all-wheel-drive vehicles; and entered into an alliance with Honda Motor Co., Ltd. involving Honda producing lowemissions gasoline engines for GM and Isuzu producing diesel engines for Honda. In May 2000 GM, Fuji, and Suzuki agreed to develop compact cars for the European market. Another deal involving Europe was reached in early 2000, when GM agreed to acquire a 20 percent stake in the Fiat Auto S.p.A. unit of Fiat S.p.A., the number six automaker in the world, in exchange for Fiat taking a 5.1 percent stake in GM. Through this deal, General Motors aimed to grab a larger share of the market for the small vehicles that are popular in Europe and Latin America but shunned in the United States. In mid-2000 GM and Fiat jointly bid to acquire troubled South Korean carmaker Daewoo Motor Co., but were outbid by Ford. Also in 2000, General Motors acquired the 50 percent of Saab Automobile that it did not already own.

In another key early 2000 development, General Motors agreed to join with DaimlerChrysler AG and Ford to create an Internet-based global business-to-business supplier exchange, Covisint, that would be open to all suppliers and automakers. This would potentially create the worlds largest virtual market-place, although the Federal Trade Commission quickly opened a preliminary antitrust inquiry into the plan. The company also began building a factory in Lansing, Michigan, its first new plant in 15 years. In June 2000 G. Richard Wagoner was promoted from president to CEO, with Smith remaining chairman. At the age of 47, Wagoner became the youngest CEO in GM history and faced the daunting task of running what was still considered by many observers to be an excessively bureaucratic and overly complex organization, which was extremely resistant to change and seemingly unable to anticipate most market trends.

Principal Subsidiaries

General Motors Acceptance Corporation; General Motors Investment Management Corporation; Hughes Electronics Corporation; Saturn Corporation; Holden, Ltd. (Australia); General Motors do Brasil Ltda. (Brazil); General Motors of Canada, Ltd.; Adam Opel Aktiengesellschaft (Germany); General Motors de Mexico, S.A. de C.V.; Saab Automobile AB (Sweden); Vauxhall Motors Limited (U.K.).

Principal Divisions

Allison Transmission Division; Buick Motor Division; Cadillac Motor Car Division; Chevrolet Motor Division; Electro-Motive Division; Oldsmobile Division; Pontiac-GMC Division; Pontiac-GMC Truck Division.

Principal Operating Units

e-GM Group; GM Asia Pacific; GM Europe; GM Latin America, Africa and Mid-East; GM Locomotive Group; GM North America; GM Powertrain Group; GM Truck Group.

Principal Competitors

AmeriCredit Corp.; Bayerische Motoren Werke AG; Credit Acceptance Corporation; DaimlerChrysler AG; Ford Motor Company; Ford Motor Credit Company; General Electric Capital Corporation; General Electric Company; Honda Motor Co., Ltd.; Hyundai Motor Company; Mazda Motor Corporation; Mitsubishi Motors Corporation; Nissan Motor Co., Ltd.; PSA Peugeot Citroen S.A.; Renault S.A.; Suzuki Motor Corporation; Toyota Motor Corporation; Volkswagen AG.

Further Reading

Bary, Andrew, How to Fix GM, Barrens, July 5, 1999, pp. 1819.

Cray, Ed, Chrome Colossus: General Motors and Its Time, New York: McGraw-Hill, 1980.

Dassbach, Carl H.A., Global Enterprises and the World Economy: Ford, General Motors, and IBM, the Emergence of the Transnational Enterprise, New York: Garland, 1989.

De Lorean, John Z., On a Clear Day You Can See General Motors, London: Sidgwick and Jackson, 1980.

Geyelin, Milo, Lasting Impact: How an Internal Memo Written 26 Years Ago Is Costing GM Dearly, Wall Street Journal, September 29, 1999, pp. A1 +.

Hamper, Ben, Rivethead: Tales from the Assembly Line, New York: Warner Books, 1992.

Jacobs, Timothy, A History of General Motors, New York: Smithmark, 1992.

Keller, Maryann, Collision: GM, Toyota, Volkswagen, and the Race to Own the 21st Century, New York: Currency Doubleday, 1993.

______, Rude Awakening: General Motors in the 1980s, New York: Morrow, 1989.

______, Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, New York: HarperCollins, 1990.

Kerwin, Kathleen, For GM, Once Again, Little Ventured, Little Gained, Business Week, March 27, 2000, pp. 4243.

Kerwin, Kathleen, and Joann Muller, Reviving GM, Business Week, February 1, 1999, pp. 114-K Kuhn, Arthur J., GM Passes Ford, 19181938: Designing the General Motors Performance-Control System, University Park: Pennsylvania State University Press, 1986.

Madsen, Axel, The Deal Maker: How William C. DurantMade General Motors, New York: Wiley, 1999.

May, George S., R.E. Olds, Auto Industry Pioneer, Grand Rapids, Mich.: Eerdmans, 1977.

Meredith, Robyn, Can GM Return to the Passing Lane?, New York Times, November 7, 1999, Sec. 3, p. 1.

Miller, Scott, Open No Quick Fix for GMs Mr. Fix It, Wall Street Journal, June 13, 2000, p. A22.

Osterland, Andrew, Al and Me: Why General Motors Will Finally Get Serious About Downsizing, Financial World, December 16,1996, pp. 3941.

Palmer, Jay, Reviving GM, Barrens, June 22, 1998, pp. 3135. Pollack, Andrew, Paper Trail GM After It Loses Injury Suit, New York Times, July 12, 1999, Sec. A, p. 12.

Ramsey, Douglas K., The Corporate Warriors: Six Classic Cases in American Business, Boston: Houghton Mifflin, 1987.

Rothschild, Emma, Paradise Lost: The Decline of the Auto-Industrial Age, New York: Random House, 1973.

Shirouzu, Norihiko, GM Cracks Japans Market with Its Wallet, Not Its Cars: Network of Alliances Aids Asia Expansion by Filling Gaps in Product Line, Wall Street Journal, January 26, 2000, p. A17.

Simison, Robert L., Fara Warner, and Gregory L. White, Big Three Car Makers Plan Net Exchange, Wall Street Journal, February 28, 2000, pp. A3, A16.

Simison, Robert L., Gregory L. White, and Deborah Ball, GMs Linkup with Fiat Opens Final Act of Consolidation Drama for Industry, Wall Street Journal, March 14, 2000, pp. A3, A8.

Sloan, Alfred, Jr., My Years with General Motors, New York: Doubleday, 1964.

Smith, Roger B., Building on 75 Years of Excellence: The General Motors Story, New York: Newcomen Society of the United States, 1984.

Taylor, Alex, III, GMs $11 Billion Turnaround, Fortune, October 17, 1994, pp. 5456 +.

______, GM: Some Gain, Much Pain, Fortune, May 29, 1995, pp. 7880, 84.

______, GM: Time to Get in Gear, Fortune, April 28, 1997, pp. 9496 +.

______, GM: Why They Might Break Up Americas Biggest Company, Fortune, April 29, 1996, pp. 7882, 84.

______, Is Jack Smith the Man to Fix GM?, Fortune, August 3, 1998, pp. 86 +.

Weisberger, Bernard A., The Dream Maker: William C. Durant, Founder of General Motors, Boston: Little Brown, 1979.

White, Gregory L., As GM Courts the Net, Struggling Saturn Line Exposes Rusty Spots, Wall Street Journal, July 11, 2000, pp. A1, A10.

Zachary, Kamerine, Shopping Spree: GM Plunks Down Hard Cash to Add Strength in Asia, Wards Auto World, February 29, 2000.

Zesiger, Sue, GMs Big Decision: Status Quo, Fortune, February 21, 2000, pp. 10102, 104.

April Dougal Gasbarre

updated by David E. Salamie

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General Motors Corporation

General Motors Corporation

3044 West Grand Blvd.
Detroit, Michigan 48202
U.S.A.
(313) 556-5000

Public Company
Incorporated: 1916
Employees: 750,000
Sales: $138.22 billion
Stock Exchanges: New York
SICs: 3711 Motor Vehicles and Car Bodies; 3714 Motor Vehicle Parts and Accessories; 3812 Search and Navigation Equipment; 3761 Guided Missiles and Space Vehicles; 3663 Radio and TV Communications Equipment; 6141 Personal Credit Institutions; 3743 Railroad Equipment

General Motors Corporation is the worlds largest full-line vehicle manufacturer and marketer. Its American nameplates include Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, GMC Truck, and Saturn. Opel, Vauxhall, Saab, and Isuzu comprise General Motors international nameplates. The companys Automotive Components Group Worldwide brings vertical integration to General Motors manufacturing, and also supplies components and systems to every major automotive manufacturer. Other principal businesses include GM Hughes Electronics Corporation, a manufacturer of automotive electronics, commercial technologies, telecommunications, and space and defense electronics; Electronic Data Systems corporation, a global information technologies company; and General Motors Acceptance Corporation and its subsidiaries, providers of financing and insurance to GM customers and dealers.

The beginning of General Motors can be traced back to 1892, when R. E. Olds collected all his savings in order to convert his fathers naval and industrial engine factory into the Olds Motor Vehicle Company to build horseless carriages. For a number of years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could produce five horsepower and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. Two years later, at the turn of the century, Olds had sold over 1,400 cars.

That same year, an engineer named David Buick founded a factory under his own name in Detroit. A third factory for the Cadillac Automobile Company was also built in Detroit. This company was founded by Henry Leland, who was already building car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was replaced by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Oldsmobile also reached their projected target of manufacturing 4,000 cars in one year.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The son of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred as many concerns manufactured the same product. General Motors was thus formed, bringing together Oldsmobile and Buick in 1903, and joined in 1909 by Cadillac and Oakland (renamed Pontiac). Positive financial results were immediately seen from the union, although the establishment of the company drew little attention.

Other early members of the General Motors family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. General Motors other U.S. automotive division, Chevrolet, became part of the Corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60 percent interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or testing laboratory was also established to serve as an additional protection against costly factory mistakes. General Motors system of administration, research, and development became one of the largest and most complex in private industry.

About the same time that General Motors was establishing itself in Detroit, an engineering breakthrough was taking place in Dayton, Ohio: the electric self-starter, designed by Charles F. Kettering. General Motors introduced Ketterings invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Ketterings Dayton Engineering Laboratories were merged into General Motors during 1920 and the Laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of General Motors, in charge of its research and engineering programs.

During World War I General Motors turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the American automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90 percent of General Motors truck production was for the war effort. Cadillac supplied Army staff cars, V-8 engines for artillery tractors, and trench mortar shells, while Buick built Liberty airplane motors, tanks, trucks, ambulances, and automotive parts.

It was at this time that Alfred Sloan, Jr., who went on to guide General Motors as president and chairman until 1956, first became associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million. When Hyatt became part of General Motors, Sloan joined the corporate management.

General Motors suffered greatly under the effects of the Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect, Sloan was credited with creating not only an organization which saved General Motors, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operational responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 General Motors accounted for 44 percent of the total U.S. automotive sales, compared with 12 percent in 1921. In preparation for Americas entry into the Second World War, General Motors retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that General Motors had developed were applied with great effectiveness. From 1940 to 1945 General Motors produced defense material valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. General Motors contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons, and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced General Motors to concentrate their research in this field; by 1950, all the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

During the Korean war, part of the companys production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during the Second World War). The reallocation reached 19 percent and then leveled off at about five percent from 1956 onwards. Between 1951 and 1955 the five divisions which today form General MotorsBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from six to the more reliable 12 volts. Power assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air-conditioning systems. Also during this period General Motors completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. However, Americans were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford, Chrysler, and General Motors had lost some 15 percent in sales while imports were virtually doubling their market penetration. The longer Detroits automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than eight percent of U.S. car sales. Although General Motors promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the companys market share slipped to just 42 percent of 1959s new car sales.

The 1960s were difficult years in Detroit. Riots in the ghettos surrounding General Motors facilities forced management to recognize the urban poverty that had for so long been in their midst and they began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. General Motors prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13 percent return on investment, and General Motors return increased from 16.5 percent to 25.8 percent.

Like the rest of the industry, General Motors had largely ignored the importance of air pollution control, but new, costly federal regulations were mandated. However, by the early 1970s, the high cost of developing devices to control pollution was overshadowed by the impact of the oil embargo. General Motors luxury, gas guzzling car sales were down by 35 percent in 1974, but the companys compacts and subcompacts rose steadily to attain a 40 percent market share. Ford, Chrysler, and General Motors had been caught unaware by a vast shift in consumer demand, and General Motors suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 in order to meet local, state, and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Under the leadership of president F. James McDonald, and chairman Roger Smith, General Motors reported earnings declines from 1985 to 1992. The only respite came from an accounting change in 1987, which effected an earnings increase. McDonald and Smith attempted to place these losses in perspective by arguing that they are necessary if General Motors is to develop a strong and secure position on the worldwide market. Since the start of the 1980s, General Motors had spent over $60 billion redesigning most of its cars and modernizing the plants that produce them. The company also acquired two major corporations, Hughes Aircraft and Electronic Data Systems (EDS). Though expensive, the EDS purchase provided General Motors with better, more centralized communications and backup systems, as well as a vital profit center.

General Motors market share dropped steadily from 1982 to 1992. In 1987 Fords profits exceeded GMs for the first time in sixty years. From 1990 to 1992, the corporation suffered successive and devastating annual losses totaling almost $30 billion. Problems were myriad. Manufacturing costs exceeded competitors due to high labor costs, over capacity, and complicated production procedures. GM faced competition from 25 companies, and its market share fell from almost 50 percent to about 35 percent.

In 1992 Jack Smith, Jr. advanced to General Motors chief executive office. He had earned respect as the engineer of GM Europes late 1980s turnaround, and quickly applied those strategies to the parent, focusing on North American Operations (NAO). During 1993, Smith simplified the NAO, cut the corporate staff, pared product offerings, and began to divest GMs parts operations. He was hailed for his negotiations with the United Auto Workers. In 1993 he pledged $3.9 billion in jobless benefits, which raised the blue-collar payroll costs about 16 percent over three years. But at the same time the contract gave Smith the ability to cut 65,000 blue-collar jobs by 1996 in conjunction with the closure of nearly 24 plants. Salaried positions were not exempted from Smiths job-cutting scalpel: staffing at the corporate central office was slashed from 13,500 to 2,300 in 1992.

In the early 1990s GM began to recapture the automotive vanguard from Japanese carmakers, with entries in the van, truck, and utility vehicle markets and the launch of Saturn Corp. GM also gained an advantage in the domestic market because the weak dollar caused the price of imported cars to increase much faster than domestics. Market conditions along with Smiths strategies effected a stunning reversal in 1993, when GM recorded net income of $2.47 billion on sales of $138.22 billion. The CEO noted his corporations strategic advantages: a large customer base; a large and excellent car and truck dealer network; strong brands; a global presence in engineering, manufacturing, and marketing; a management team with broad international experience; and, most of all, a worldwide team of diverse, capable, and motivated employees.

Principal Subsidiaries:

Electronic Data Systems Corp.; GM Hughes Electronics Corp.; General Motors Acceptance Corporation; Saturn Corp. The company also has subsidiaries in the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, England, Finland, France, Greece, Ireland, Italy, Japan, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Portugal, South Africa, Sweden, Switzerland, Uruguay, Venezuela, Germany, and Zaire.

Further Reading:

Cray, Ed, Chrome Colossus: General Motors and Its Time, New York: McGraw Hill, 1980.

Dassbach, Carl H. A., Global Enterprises and the World Economy: Ford, General Motors, and IBM, the Emergence of the Transnational Enterprise, New York: Garland, 1989.

De Lorean, John Z., On a Clear Day You Can See General Motors, London: Sidgwick and Jackson, 1980.

Hamper, Ben, Rivethead: Tales From the Assembly Line, New York: Warner Books, 1992.

Jacobs, Timothy, A History of General Motors, New York: Smithmark, 1992.

Keller, Maryann, Rude Awakening: General Motors in the 1980s, New York: Morrow, 1989.

______, Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors, New York: HarperCollins, 1990.

Kuhn, Arthur J., GM Passes Ford, 1918-1938: Designing the General Motors Performance-Control System, University Park: Pennsylvania State University Press, 1986.

May, George S., R.E. Olds, Auto Industry Pioneer, Grand Rapids, MI: Eerdmans, 1977.

Ramsey, Douglas K., The Corporate Warriors: Six Classic Cases in American Business, Boston: Houghton Mifflin, 1987.

Rothschild, Emma, Paradise Lost: The Decline of the Auto-Industrial Age, New York: Random House, 1973.

Sloan, Alfred, Jr., My Years with General Motors, New York: Double-day, 1964.

Smith, Roger B., Building on 75 Years of Excellence: The General Motors Story, New York: Newcomen Society of the United States, 1984.

Weisberger, Bernard A., The Dream Maker: William C. Durant, Founder of General Motors, Boston: Little Brown, 1979.

April Dougal Gasbarre

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General Motors Corporation

General Motors
Corporation

300 Renaissance Center
Detroit, MI 48265-3000
(313)556-5000
http://www.gm.com

Over the course of nearly a century, General Motors (GM) has weathered more ups and downs and gone through more fundamental changes than most companies. GM has been the world's largest vehicle manufacturer since 1931, producing such brands as Buick, Cadillac, Chevrolet, GMC, Pontiac, Saab, Saturn, and Oldsmobile. From the 1950s into the 1970s, the automaker led the industry in building millions of low-cost cars, achieving nearly 60 percent of U.S. auto sales. Along the way, its Chevy Corvette convertible sports car became an American icon and a symbol of the laid-back West Coast lifestyle. Today, General Motors has about 30 percent of the auto market and faces new challenges, such as decreased productivity, rising costs of employees health benefits, and the demand for cleaner, safer, and more fuel-efficient vehicles.

From Carriages to Cars

General Motors traces its history back to the late 1800s, when William "Billy" Durant (1861-1947) was leading the horse-drawn carriage market in Flint, Michigan. A natural born salesman with his finger on the pulse of new markets, he realized the future was in the "horseless" carriage. In 1904, Durant took over Flint's failing Buick Motor Company. He quickly turned Buick around, and by 1907, was producing over four thousand cars per year. In 1908, with Durant at the helm, the company was the number-one automaker in the United States, outselling rivals Cadillac and Ford Motor Company (see entry).

Spurred by his success, Durant set out to take control of the auto industry. He attempted to buy Ford Motor Company in 1907, but was unable to obtain a $9.5 million bank loan. Instead, he formed the General Motors Company, with headquarters in Detroit, Michigan, and began adding other new divisions. In 1908, Durant purchased Olds Motor Works, which had been formed in 1899 by Ransom E. Olds (1864-1950). In 1909, he acquired the Oakland Motor Car Company, which eventually became the Pontiac division in 1932. Rapid Motor Vehicle Company, the predecessor of the GMC truck, was purchased soon after. By 1910, Durant had gobbled up so many companies that GM was deeply in debt and on the verge of financial collapse. Several banks stepped in with loans to help out the struggling automaker on the condition that founder Durant be replaced as company head. After losing control of GM, Durant started the Chevrolet Motor Company in 1911.

General Motors at a
Glance

  • Employees: 362,000
  • CEO: G. Richard Wagoner Jr.
  • Subsidiaries: Adam Opel AG; Allison Transmission Division; Covisint, Inc.; Daewoo Motor Company Ltd.; General Motors Acceptance Corporation; GMAC Insurance; GM Locomotive Group; Hughes Electronic Company; Isuzu Motors Ltd.; New United Motor Manufacturing, Inc.; OnStar Corporation; Saab Automobile AB; Saturn Corporation; Vauxhall Motors Ltd.
  • Major Competitors: DaimlerChrysler AG; Ford Motor Company; Toyota Motor Corporation; Honda
  • Notable Products: Buick: Regal, Century, LeSabre; Cadillac: Seville, El Dorado, Escalade; Chevrolet: Blazer, Camaro, Corvette, Prizm, Silverado, Cavalier, Impala, Suburban, Tahoe; GMC: Sierra

The General Motors board of directors elected Pierre S. du Pont (1870-1954) its chairman in 1915, a position he retained for nearly fourteen years. Durant, however, remained on the board and embarked on a GM stock-buying spree. By 1916, he had purchased 54.5 percent of GM stock and with a controlling interest, took over as president of GM, ousting Charles W. Nash (1864-1948) who had served in that role since 1912. Power shifted again in 1918, when General Motors took over Chevrolet.

Timeline

1897:
Olds Motor Vehicle Company is started by Ransom E. Olds.
1903:
David B. Buick founds the Buick Motor Company.
1908:
General Motors Corporation is formed, incorporating Buick and Olds.
1909:
CM purchases Cadillac Automobile Company.
1918:
GM buys the Chevrolet Motor Company.
1923:
GM opens its first European assembly plant in Copenhagen, Denmark.
1932:
Pontiac division is established.
1936:
Workers at two Michigan assembly plants stage a sit-down strike.
1937:
Workers' strike is settled when GM recognizes the United Auto Workers (UAW) union.
1942:
All GM plants convert to producing military supplies until the end of World War II.
1953:
GM introduces the Chevy Corvette.
1956:
Chevrolet unveils the Corvair.
1965:
Ralph Nader publishes the book, Unsafe at Any Speed, critical of GM and its Corvair.
1969:
GM-made guidance and navigation systems are used in Apollo 11 Moon landing; Corvair is discontinued.
1985:
GM acquires Hughes Aircraft Company.
1986:
GM announces plans to close eleven U.S. plants.
1990:
The Saturn line of cars is introduced.
1991:
GM chairman Robert Stempel resigns amid financial crisis.
1999:
Assembly plant is opened in Shanghai, China.
2000:
GM announces it will discontinue its Oldsmobile line.
2002:
Company announces that eighty-seven new models will be introduced over the next four years.

Empire Thrives

General Motors expanded into Canada in 1918, merging the McLaughlin Motor Car Company Ltd. and Chevrolet Motor Company of Canada Ltd. into General Motors of Canada Ltd. It also made an attempt to get into aircraft manufacturing when it purchased the Dayton Wright Company in 1919. Ten years later, it sold the company to Fokker Aircraft Corporation. A more successful acquisition that year was of the Guardian Frigerator Company, which was renamed Frigidaire Corporation. It soon became the best-selling refrigerator in the country.

The 1920s and 1930s saw General Motors continue to expand by purchasing smaller companies and moving into foreign markets. It opened its first European assembly plant in Copenhagen, Denmark, in 1923. The first GM vehicle assembled outside the United States and Canada, a Chevrolet utility truck, rolled off the assembly line on January 7, 1924. Manufacturing plants were also opened in Buenos Aires, Argentina, in 1925, followed by plants in Australia and New Zealand in 1926. GM's acquisitions included Vauxhall Motors Ltd. of England, Fisher Body Company of Detroit, and Adam Opel AG of Germany.

In 1923, Alfred P. Sloan Jr. (1875-1966) became president of the ever-expanding GM. His priority was to make sure all the various divisions of the company were functioning efficiently. As part of this vision, Sloan structured General Motors so that its many parts worked together to produce maximum profits. At the same time, he wanted each of the divisions to retain its own unique identity. This was no easy task since GM produced a wide range of products, including Cadillac limousines, earthmoving equipment, buses, refrigerators, spark plugs, and roller bearings. For much of Sloan's long tenure, which lasted from 1923 until 1956, General Motors was the largest and most profitable manufacturing company in the world.

In 1936, amid the harsh economic climate of the Great Depression, employees at two GM plants in Flint staged sit-down strikes. Like many workers across the United States, they demanded higher wages, more benefits, and the right to be represented by a union. The strikes ended after about six weeks when GM recognized the United Auto Workers (UAW) union. Through the union, autoworkers could negotiate with their employees for improved working conditions, wages, work hours, and benefits.

On January 11, 1940, General Motors produced its twenty-five millionth vehicle but entered the decade under the dark cloud of World War II (1939-45). GM Japan ceased operation in 1941, the year the Japanese bombed Pearl Harbor. In 1942, GM converted all production at its assembly plants to the war effort, churning out $12.3 billion worth of goods, including airplanes, airplane engines and parts, trucks, tanks, guns, and ammunition shells. Vehicles included the 6x6 Army truck that carried troops and supplies and the DUKW, known as "the duck," which could carry fifty troops on land or water.

GM Tangles with Federal Government

With the war over, GM again turned to producing cars, bringing out several dozen new models in the 1950s and 1960s. An American legend was born in 1953 when GM introduced the Chevrolet Corvette, the first mass-produced sports car and the first with a plastic body. The company introduced new, smaller models during the 1960s, including the Buick Special, Oldsmobile F-85, Chevy II, and Pontiac Tempest.

The decade also found GM embroiled in several battles with the federal government. In 1961, the U.S. Department of Justice accused the company of using unfair practices to try and control all aspects of the diesel electric locomotive market. A federal judge dismissed the charge three years later. In 1962, the Justice Department filed charges against GM and three Chevrolet dealer trade associations. It accused GM of restricting Chevrolet sales in Southern California by refusing to sell to " discount houses," which are independent car dealers that buy vehicles in bulk and resell them to the public, usually at lower prices. A federal court ruled against GM in 1966, ordering it to stop restricting sales of Chevrolets to discount houses.

The company's image was further tarnished in 1965 with the release of Unsafe at Any Speed, a landmark book written by consumer advocate Ralph Nader (1934-). In his book, Nader was highly critical of GM and its Corvair model, which resulted in a publicized ongoing disagreement between the advocate and the automaker. In 1966, Nader accused GM of harassment, and the U.S. Senate committee investigated the situation. Company president James M. Roche acknowledged the harassment and apologized to Nader on behalf of GM. In 1969, GM's Chevrolet division announced it was discontinuing Corvair production.

Beetle Invasion Spurs Ill-fated Corvair

In the mid-1950s, the Volkswagen Beetle was a big hit in the United States and GM's Chevrolet division decided it needed a car to compete with it. Chevy designers were told to come up with a car that was small, got good gas mileage, was easy to manufacture, and had a European look. The result was the Corvair, which debuted in 1960, and was available as either a two-door coupe or a four-door sedan. In appearance, it was not at all like the Beetle. It had a boxy shape compared to the VW's half dome look. It also had more interior room. It did, however, incorporate many of the basic components of the Beetle, including an engine located in the rear of the vehicle.

By 1965, more than 1.2 million Corvairs had been sold when the car ran head-on into a wall of bad publicity. That year, the book Unsafe at Any Speed by consumer advocate Ralph Nader (1934-), was published. It claimed the Corvair would sometimes malfunction, causing the car to go out of control and roll over. GM denied there was a safety problem and in 1972, the National Highway Safety Administration investigated the situation and found that the Corvair was safe. The ruling, however, came too late. In 1965, Chevrolet produced 237,000 Corvairs; that number dropped to 103,000 in 1966. In 1969, the last year the car was built, only 6,000 Corvairs came down the assembly line. Over one million snazzy Corvairs were produced between 1960 and 1969; an estimated 300,000 Corvairs were still in use in 2002.

The 1970s brought a whole new set of problems. With the start of the environmental movement, public pressure was placed on the U.S. government to reduce air pollution. As a result, federal laws were created that required Detroit to build "cleaner" cars. In 1971, GM introduced engines that ran on unleaded or low-leaded gasoline, which burned cleaner than fully leaded gasoline. Prior to that time, all cars ran on leaded gas. In order to comply with the Federal Clean Air Act, GM began installing catalytic converters on all its cars sold in the United States and Canada, beginning with 1975 models. Catalytic converters help clean harmful exhaust fumes emitted by cars. It also began to build smaller cars that used fuel more efficiently, a trend that continued through the 1980s. That trend was reversed in the 1990s with the rise in popularity of bigger vehicles, particularly minivans and sport utility vehicles (SUVs).

Company Heads for Financial Collapse

By the start of 1980, the United States economy was in trouble. As a result, auto sales plummeted and carmakers suffered. GM posted an annual financial loss that year, its first since 1920. The loss came at a time when the company was spending billions of dollars to modernize aging assembly plants in the United States and abroad. Its finances were also weakened by a string of acquisitions made during the decade, including Hughes Aircraft Company, a defense electronics firm, and Electronic Data Systems, a data processing and telecommunications company. These factors led GM to close eleven plants worldwide, including several much publicized closings in Flint, Michigan, the city where the company began. All told, thirty thousand jobs were eliminated. The cost-cutting moves seemed to have paid off when in 1988, GM reported a $4.9 billion profit on record sales of $110.2 billion.

The sweeping and painful cuts were put in place by GM head Roger B. Smith (1925-), the longest-running CEO since Sloan. Smith was a colorful but controversial person who added an interesting chapter to the history of GM. Named CEO in 1981, he became known for his extraordinary vision and business savvy. He was also considered to be a blunt, quick-tempered loner. Smith expanded GM's overseas operations and improved the quality of GM cars. He served as CEO until he retired in 1990.

The 1990s, like the 1980s, was a decade of turmoil for General Motors. As revenues once again dropped, GM chairman Robert Stempel (1933-) announced he would close twenty-one North American production plants and eliminate seventy-four thousand jobs over four years as a cost-cutting measure. But the cuts failed to impress GM's board of directors, which demanded and received Stempel's resignation, giving the job of CEO, and the daunting task of rebuilding the company, to John F. "Jack" Smith Jr. The bright spot of the decade for GM was the introduction of the Saturn line of autos, built in Tennessee. The Saturn was designed to compete against small import cars, which it did with great success. Part of the success was due to Saturn dealerships not employing high-pressure sales techniques and its excellent customer service.

On the Upswing

After twenty years of declining market share, General Motors started the twenty-first century with a shakeup of its top management. Its board of directors named G. Richard Wagoner Jr. as its CEO in 2000, replacing Smith, who remained as chairman of the board. Some industry analysts suggested GM would have been better off hiring a more dynamic leader from outside the company. According to Irene Gashurov writing for Fortune magazine in 2000, "Despite constant reorganization over the past decade, [GM] remains complex, bureaucratic, and highly politicized. The question is not so much, Can Rick Wagoner run GM? He can. The questions are these: Can Rick Wagoner make GM hum? Can he turn it once more into the heartbeat of America? Can any insider?"

Roger & Me

The closing of GM plants in Flint, Michigan, led to the 1989 controversial movie Roger & Me by Michael Moore (1964-), a novice filmmaker and son of a Flint GM worker. The film features Moore relentlessly pursuing Roger B. Smith (1925-), CEO and chairman of General Motors, to try and get him to visit Flint, which was devastated by the shutdown of the GM factories. Funny in parts and deeply moving in others, the movie tells the story of a working-class city in the Midwest that depended on the auto industry.

Two years later, those questions were at least initially answered. By 2001, after several decades of decline, GM controlled 30.9 percent of the U.S. auto market, up slightly over 2000. That same year, the company reported a profit of $1.5 billion on global sales of $177.3 billion. Some of the biggest news came in 2002 when, for the first time in eleven years, Chevrolet vehicles outsold Ford. Some industry analysts credited the upswing to improved vehicle quality, increased worker productivity, and getting rid of unprofitable vehicles. GM also unveiled plans for introducing more models than ever before, with eighty-seven new car models to roll out between 2002 and 2006. The success of GM will likely hinge on how popular these new models become.

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General Motors Corporation

General Motors Corporation

3044 West Grand Blvd.
Detroit, Michigan 48202
U.S.A.
(313) 556-5000

Public Company
Incorporated:
October 13, 1916
Employees: 748,000
Sales: $102.814 billion
Market Value: $24.952 billion
Stock Index: New York

The beginning of General Motors can be traced back to 1892 when R.E. Olds collected all his savings in order to convert his fathers naval and industrial engine factory into the Olds Motor Vehicle Company, where the new horseless carriages known as automobiles were to be built. For a number of years, however, the Oldsmobile (as the product came to be known) did not get beyond the experimental stage. In 1895 the first model, a four-seater with a petrol engine that could develop 5 hp and reach 18.6 mph, went for its trial run.

Olds proved himself not only an innovative engineer but also a good businessman and was very successful with his first model, of which a relatively few were built. As a result of his success, he founded the first American factory in Detroit devoted exclusively to the production of automobiles. The first car was a luxury model costing $1,200, but the second model was introduced at a list price of $650 and was very successful. Two years later, at the turn of the century, Olds had sold over 1,400 cars.

That same year, an engineer named David Buick founded a factory under his own name in Detroit; and a third factory was also built in Detroit, the Cadillac Automobile Company. This company was founded by Henry Leland, who was already building car engines with experience gained in the Oldsmobile factory, where he worked until 1901. By the end of 1902 the first Cadillac had been produceda car distinguished by its luxurious finish. In the following year, tiller steering was replaced by the steering wheel, the reduction gearbox was introduced, and some cars were fitted with celluloid windscreens. Olds-mobile also reached their projected target of manufacturing 4,000 cars in one year.

By 1903, a time of market instability, so many different manufacturers were operating that the financially weakest disappeared and some of the remaining companies were forced to form a consortium. William Durant, a director of the Buick Motor Company, was the man behind the merger. The son of a Michigan governor, and a self-made millionaire, Durant believed that the only way for the automobile companies to operate at a profit was to avoid the duplication that occurred as many concerns manufactured the same product. General Motors was thus formed, bringing together Oldsmobile and Buick, and joined in 1909 by Cadillac and Oakland (renamed Pontiac). Positive financial results were immediately seen from the union, although the establishment of the company drew little attention.

Other early members of the General Motors family were Ewing, Marquette, Welch, Scripps-Booth, Sheridan, and Elmore, together with Rapid and Reliance trucks. General Motors other U.S. automotive division, Chevrolet, became part of the Corporation in 1918. Only Buick, Oldsmobile, Cadillac, and Oakland continued making cars for more than a short time after their acquisition by GM. By 1920 more than 30 companies had been acquired through the purchase of all or part of their stock. Two were forerunners of major GM subsidiaries, the McLaughlin Motor Company of Canada (which later became General Motors of Canada Limited) and the Fisher Body Company, in which GM initially acquired a 60% interest.

By 1911 the company set up a central staff of specialists to coordinate work in the various units and factories. An experimental or testing laboratory was also established to serve as an additional protection against costly factory mistakes. General Motors system of administration, research, and development is one of the largest and most complex in private industry.

About the same time that General Motors was establishing itself in Detroit, an engineering breakthrough was takin place in Dayton, Ohiothe electric self-starter, designed by Charles F. Kettering. General Motors introduced Ketterings invention in its 1912 Cadillacs, and with the phasing out of the dangerous and unpredictable hand crank, motoring became much more popular. Ketterings Dayton Engineering Laboratories were merged into General Motors during 1920 and the Laboratories were relocated in Detroit in 1925. Kettering later became the scientific director of General Motors, in charge of its research and engineering programs.

During World War I General Motors turned its facilities to the production of war materials. With no previous experience in manufacturing military hardware, the American automobile industry completed a retooling from civilian to war production within 18 months. Between 1917 and 1919, 90% of General Motors truck production was for the war effort. Cadillac supplied Army staff cars along with V-8 engines for artillery tractors and trench mortar shells, and Buick built Liberty airplane motors, tanks, trucks, ambulances and automotive parts.

It was at this time that Alfred P. Sloan, Jr., who went on to guide General Motors as president and chairman until 1956, first became associated with the company. In 24 years, Sloan had built a $50,000 investment in the Hyatt Roller Bearing Company to assets of about $3.5 million.

When Hyatt became part of General Motors, Sloan joined the corporate management.

General Motors suffered greatly under the effects of the Depression, but it emerged with a new, aggressive management. Coordinated policy control replaced the undirected efforts of the prior years. As its principal architect Sloan was credited with creating not only an organization which saved General Motors, but a new management policy that was adopted by countless other businesses. Fundamentally, the policy involved coordination of the enterprise under top management, direction of policy through top-level committees, and delegation of operation responsibility throughout the organization. Within this framework management staffs conducted analysis of market trends, advised policy committees, and coordinated administration. For a company comprised of many varied divisions, such a system of organization was crucial to its success.

By 1941 General Motors accounted for 44% of the total U.S. automotive sales, compared with 12% in 1921. In preparation for Americas entry into the Second World War, General Motors retooled its factories. After Japan struck at Pearl Harbor in 1941, the industrial skills that General Motors had developed were applied with great effectiveness. From 1940 to 1945 General Motors produced defense material valued at a total of $12.3 billion. Decentralized and highly flexible local managerial responsibility made possible the almost overnight conversion from civilian production to wartime production. General Motors contribution included the manufacture of every conceivable product from the smallest ball bearing to large tanks, naval ships, fighting planes, bombers, guns, cannons and projectiles. The company manufactured 1,300 airplanes and one-fourth of all U.S. aircraft engines.

Car manufacturing resumed after the war, and postwar expansion resulted in increased production. The decade of the 1950s was characterized by automotive sales records and innovations in styling and engineering. The public interest in automatic gears convinced General Motors to concentrate their research in this field; by 1950, all the models built in the United States were available with an automatic gearbox. Car body developments proceeded at the same time and resulted in better sight lines and improved aerodynamics.

During the Korean war, part of the companys production capacity was diverted into providing supplies for the United Nations forces (although to a smaller extent than during the Second World War). The reallocation reached 19% and then leveled off at about 5% from 1956 onwards. Between 1951 and 1955 the five divisions which today form General MotorsBuick, Chevrolet, Pontiac, Oldsmobile, and Cadillacall began to feature a new V-8 engine with a higher compression ratio. Furthermore, the electrical supply was changed from 6 to the more reliable 12 volts. Power assisted steering and brakes appeared on all car models and the window dimensions were increased to further enhance visibility. Interior comfort was improved by the installation of the first air-conditioning systems. Also during this period General Motors completely redesigned its classic sedans and introduced front seat safety belts.

The period between 1950 and 1956 was particularly prosperous in the United States, with a rise in demand for a second car in the family. However, Americans were beginning to show real interest in smaller European cars. By 1956, a year of decreasing sales, Ford, Chrysler and General Motors had lost some 15% in sales while imports were virtually doubling their market penetration. The longer Detroits automobiles grew, the more popular imports became. In 1957 the United States imported more cars than it exported, and despite a recession, imports accounted for more than 8% of U.S. car sales. Although General Motors promised that help was on its way in the form of smaller compact cars, the new models failed to generate much excitement; the companys market share slipped to just 42% of 1959s new car sales.

The 1960s were difficult years in Detroit. Riots in the ghettos surrounding General Motors facilities forced management to recognize the urban poverty that had for so long been in their midst and began to employ more workers from minority groups. Much of the new hiring was made possible by the expansionist policies of the Kennedy and Johnson administrations. General Motors prospered and diversified; its interests now included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s after-tax profits for the industry in general reached a 13% return on investment, and General Motors return increased from 16.5% to 25.8%.

Like the rest of the industry, General Motors had largely ignored the importance of air pollution control, but new, costly federal regulations were mandated. However, by the early 1970s, the high cost of developing devices to control pollution was overshadowed by the impact of the oil embargo. General Motors luxury, gas guzzling car sales were down by 35% in 1974, but the companys compacts and subcompacts rose steadily to attain a 40% market share. Ford, Chrysler and General Motors had been caught unaware by a vast shift in consumer demand, and General Motors suffered the greatest losses. The company spent $2.25 billion in 1974 and 1975 in order to meet local, state, and federal regulations on pollution control. By the end of 1977 that figure had doubled.

Under the leadership of its current president, F. James McDonald, and current chairman, Roger Smith, General Motors has reported earnings losses since 1985. Managements strategy is to pursue strategic initiatives that reflect the kind of foresight that was missing in previous years. McDonald and Smith have attempted to place these losses in perspective by arguing that they are necessary if General Motors is to develop a strong and secure position on the worldwide market. Since the start of the 1980s, General Motors has been in the process of redesigning most of its cars and modernizing the plants that produce them. Between 1980 and 1986 this program cost over $60 billion. In addition, the company recently acquired two major corporations, Hughes Aircraft and Electronic Data Systems. The purpose of these expensive takeovers is to provide General Motors with the best technology in advanced computer services, micro electronics, and systems engineering. Despite these important moves, however, many industry analysts believe that the future of General Motors will depend even more on decisions that the U.S. government makes and has made with regard to the tax code, and trade and budget deficits.

Principal Subsidiaries

General Motors Electronic Data Systems Corp.; General Motors Commercial Corp.; General Motors Development Corp.; General Motors Export Corp.; General Motors Interamerica Corp.; General Motors Overseas Corp.; General Motors OI Leasing Corp.; General Motors Hughes Electronics Corp.; Delco Electronics Corp.; Hughes Aircraft Corp.; General Motors Trading Corp.; Saturn Corp. The company also has subsidiaries in the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, England, Finland, France, Greece, Ireland, Italy, Japan, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Portugal, South Africa, Sweden, Switzerland, Uruguay, Venezuela, West Germany, and Zaire.

Further Reading

My Years with General Motors by Alfred P. Sloan, Jr., New York, Doubleday, 1964; Paradise Lost: The Decline of the Auto-Industrial Age by Emma Rothschild, New York, Random House, 1973; R.E. Olds, Auto Industry Pioneer by George S. May, Grand Rapids, Michigan, Eerdmans, 1977; The Dream Maker: William C. Durant, Founder of General Motors by Bernard A. Weis-berger, Boston, Little Brown, 1979; Chrome Colossus: General Motors and Its Time by Ed Cray, New York, McGraw Hill, 1980; On a Clear Day You Can See General Motors by John Z. De Lorean, London, Sidgwick and Jackson, 1980; The Corporate Warriors: Six Classic Cases in American Business by Douglas K. Ramsey, Boston, Houghton Mifflin, 1987.

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General Motors Corporation

GENERAL MOTORS CORPORATION


Founded in 1908, General Motors Corporation (GM) is the largest industrial company in the United States. Known primarily as a manufacturer of American cars and trucksincluding such standard nameplates as Buick, Chevrolet, Oldsmobile, Pontiac, GMC, and SaturnGM also takes part in the manufacturing and marketing of Isuzu, Saab, and other foreign and domestic vehicles. In addition to its vast interests in the automobile industry, GM produces locomotive components, products and services for telecommunications and space, consumer electronics, and financial and insurance services.

The history of GM begins in 1892, when Ransom E. Olds raised enough capital to start a business building horseless carriages, working in a converted factory that belonged to his father. Within two years Olds' facility had become the first American factory in Detroit, Michigan, involved exclusively in the manufacturing of automobiles. It was not until 1901, however, that this business, the Olds Motor Vehicle Company, introduced its first model: the curved-dash Oldsmobile buggy. Meanwhile, other car manufacturers were cropping up in Detroit around the turn of the century; David Buick formed the Buick Motor Company in 1897, while Henry Leland founded the Cadillac Automobile Company in 1901.

A new market, the automobile industry was financially unstable, and before long these Detroit companies had no choice but to consolidate to stay afloat. Henry Ford (18631947) was winning American consumers' hearts with his Model T, and competition was beginning to intensify. The man responsible for bringing together the individual companies was William Durant (18611947), the son of a Michigan governor and a director at Buick. In 1908 Durant combined Oldsmobile and Buick, calling the new business General Motors; he introduced Cadillac and Oakland (later known as Pontiac) to the consortium in the following year. The mergers attracted little media attention at the time. Quick to turn a profit nonetheless, GM was off to a strong start.

Durant established a corporate base in Flint, Michigan, where he aimed to produce a variety of models based on those developed by the original companies. Within a few years, he put together a core staff of specialists to oversee and coordinate production throughout the company's various units and factories. Charles Kettering's 1911 breakthrough, an electric self-starter that would replace the arduous hand-crank mechanism, brought technological innovation to GM, which would later install the device in its Cadillacs. GM promptly invited Kettering to join its ranks, and he eventually took charge of the company's research and engineering programs. By 1920 GM had acquired more than 30 automotive businesses, including Chevrolet, which it procured in 1918.

When the United States entered World War I (19141918), GM stepped up to wartime levels of production. During the last two years of the war, 90 percent of GM's trucks went to the armed forces. Cadillac manufactured war materials like the V-8 engine and the mortar shell, while Buick built tanks, ambulances, and airplane motors. With the Ford Motor Company swelling to mammoth proportions, GM emerged from the 1910s as a potential competitor.

The Great Depression (19291939) hit the country in the late 1920s, threatening to ravage the automotive industry. GM responded to the crisis by recruiting the corporate management talents of Alfred Sloan Jr., who at his previous position at Hyatt Roller Bearing Company had transformed a $50,000 investment into a $3.5 million enterprise. Sloan helped to steer GM through the country's crisis, developing a strong management structure that other companies sought to replicate. Under the new system, GM's market share rose from 12 percent in 1921 to 44 percent in 1941.

With the United States entering World War II (19391945), GM again increased production. War materials from GM factories included 1,300 airplanes and one-fourth of all U.S. aircraft engines. In total, the company's contribution to the war effort was worth approximately $12 billion. After the war the automotive industry benefited from the rejuvenated national economy. But while many American families looked to buy a second car, market trends indicated a growing consumer preference for smaller European models. GM responded by developing more compact cars, but these did not gain the favor of American buyers. In 1959 the company's market share remained high, however, at 42 percent.

The 1960s brought turbulence in Detroit: Riots and other expressions of civil unrest compelled GM to recognize urban poverty and to revise its hiring practices to include minority workers. The expansionist policies of Presidents John F. Kennedy (19611963) and Lyndon B. Johnson (19631969) fostered such efforts toward diversity in businesses nationwide. Finding that change helped the company to grow and prosper, and GM developed new interests in home appliances, electronics, locomotives, insurance, banking, and financing at this time. But the 1970s brought costly changes to the company as it rose to meet national demands to control pollution and conserve resources. By 1977 GM had spent $4.5 billion meeting local, state, and federal requirements regarding pollution control.

Consumer demand for fuel-efficient cars led GM to spend billions more redesigning many of its once-popular models. Two significant purchases in the 1980sthe acquisitions of Hughes Aircraft and Electronic Data Systemsfurther depleted the company's financial resources. As a result of this period of heavy spending, GM reported a decrease in earnings between 1985 and 1992. And from 1990 to 1992 GM reported losses totaling $30 million.

The time was ripe for change at GM, and a new CEO, Jack Smith Jr., ushered in reformed policies. In 1993 Smith moved toward downsizing the company, paring down operations and slimming the corporate staff. Unveiling a plan to close 24 plants by 1996, Smith promised $3.9 billion in benefits to those made jobless and raised the salaries of blue-collar workers. Smith negotiated with the United Auto Workers as he made these changes, but the group remained disgruntled. A 54-day strike ensued in June 1998.

Meanwhile, GM rallied to retain its market share. When vans, trucks, and sports-utility vehicles came into vogue in the 1990s, GM followed the trend. Japanese manufacturers went after the same market, but a weakened dollar made imported cars more expensive than their domestic equivalents. GM benefited from the financial trend, pulling in hefty earnings from 1993 to 1995. Introducing the first electric car built for consumers in 1996, GM went on to announce more plans for change within the corporation and for innovation in the automotive field. As the slimmed-down company entered a new century, it showed no signs of giving up its role as an industry leader.

See also: Automobile Industry, Automobile (Origin of), William C. Durant, Alfred Sloan

FURTHER READING

Hamper, Ben. Rivethead: Tales from the Assembly Line. New York: Warner Books, 1992.

Howes, Daniel. "GM Now Running Leaner, Faster." Detroit News, November 2, 1997.

Keller, Maryann. Rude Awakening: The Rise, Fall and Struggle for Recovery of General Motors. New York: Harper Collins, 1990.

Sloan, Alfred, Jr. My Years with General Motors. New York: Doubleday, 1964.

Weisberger, Bernard A. The Dream Maker: William C. Durant, Founder of General Motors. Boston: Little, Brown, 1979.

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General Motors

General Motors

BIBLIOGRAPHY

In 2006 Detroit-headquartered auto giant General Motors (GM) was the worlds largest automaker and ranked number three on the Fortune 500 list of Americas largest corporations. The company has been a major player in U.S. labor history, and its vast worldwide expansion has had, and continues to have, many social consequences.

In 1897 Ransom E. Olds (1864-1950) formed the Olds Motor Vehicle Company and created several different automobile models powered by electricity and gasoline. After a fire in its factory, the company was forced to change its marketing and development strategy, which had previously focused on the wealthy, and instead moved to create a mass market for its vehicles, making them competitively priced with horses and buggies. This strategy was effective, and by 1904 the company had sold more than 12,500 vehicles.

Meanwhile, the owner of Buick was developing a complex network of suppliers to lower its costs, and incorporated with its holdings as General Motors. From 1908 to 1910 Oldsmobile, Cadillac, and several other smaller companies joined forces with the new company to create a larger, more powerful automaker. The incorporation included many more suppliers and an expansion to trucks and airplanes, and in the first half of the twentieth century, GM grew rapidly. The company also benefited from many defense contracts during World War I (1914-1918) and World War II (1939-1945).

GMs massive growth led to a need for large numbers of workers to assemble parts and automobiles. To improve their working conditions and increase their pay, workers throughout GM began to unionize in 1935 under the AFL-CIO. Later, a split in this organization led to the development of what would become one of the largest and most powerful unions in U.S. history: the United Auto Workers (UAW). The UAW was one of the first unions in the United States to include black workers.

Shortly after its formation, the UAW demanded contracts for GM autoworkers, but was denied negotiations with the automaker. On December 29, 1936, GM was informed that its largest stamping plant, in Flint, Michigan, was going to strike, and the company quickly made plans to move the machinery from the facility. In order to keep GM from removing the machinery, the workers staged a sit-down strike. Police attacked the strikers with tear gas, but workers remained at the plant for forty-four days until GM signed a document recognizing the UAW as the official representative of its workers for bargaining purposes. This was a significant event in U.S. labor history, as a large corporation conceded to the demands of a union.

The unionization of autoworkers at GM helped the American middle class grow rapidly in the 1950s. Despite their blue-collar jobs, workers had salaries and benefits that allowed them the luxuries of middle-class life. Many scholars believe this change in status allowed embourgeoisement to take place; that is, working-class laborers gained middle-class values and lifestyles because of their increased wages and class position, and their support for radical political movements declined (Abercrombie et al. 2000).

GM has been criticized for corporate practices that are ecologically unsound or that violate human rights. Throughout the 1990s, there was much concern about GMs use of factories in the developing world (especially Mexico) for cheap and less-restricted labor. According to a 1998 Human Rights Watch report, the directors of GMrun maquiladoras (foreign-owned plants that are operated by multinational corporations) in Mexico were repeatedly accused by their workers of unfair work termination and sex discrimination, especially pregnancy-related discrimination. Female employees complained that they were forced to undergo pregnancy tests before gaining employment, and some said they were even made to show their sanitary napkins to prove that they were not pregnant to retain employment. Other concerns have been raised over GMs relationship with the environment. For example, its Hummer brand has been repeatedly cited as one of the worse violators in the consumer truck market because of its high emissions and a fuel economy of less than ten miles per gallon. A 2006 documentary, Who Killed the Electric Car, attacks GM for the systematic dismantling of its electric-car program and for what the filmmakers imply was a conspiracy between GM and the oil industry.

SEE ALSO Automobile Industry; Corporations

BIBLIOGRAPHY

Abercrombie, Nicholas, Stephen Hill, and Bryan S. Turner, eds. 2000. The Penguin Dictionary of Sociology. 4th ed. New York: Penguin.

Bailey, L. Scott, ed. 1983. General Motors: The First 75 Years of Transportation Products. Princeton, NJ: Automobile Quarterly.

Jefferson, LaShawn, and Phoebe McKinney. 1998. A Job or Your Rights: Continued Sex Discrimination in Mexicos Maquiladora Sector. Human Rights Watch report 10 (1) December. http://www.hrw.org/reports98/women2/.

Paine, Chris, dir. 2006. Who Killed the Electric Car. Plinyminor and Electric Entertainment.

Remembering the Flint Sit-Down Strike, 19361937. HistoricalVoices.org presented by Michigan State University. http://www.historicalvoices.org/flint/.

Weisman, Jonathan. 2004. No Guzzle, No Glory: History Says Gas Spike Wont Smother SUV Love. The Washington Post, June 13: F01.

Elizabeth Alexander

David G. Embrick

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General Motors

GENERAL MOTORS

GENERAL MOTORS is a worldwide corporation that produces everything from microchips to locomotives. William Crapo Durant of Flint, Michigan and a small group of investors formed the General Motors Company (GM)16 September 1908 in Trenton, New Jersey. Durant, who already owned Buick Motor Company, bought small car and parts manufacturers and incorporated them into GM. Among Durant's first acquisitions were Oldsmobile, Cadillac, and Oakland (Pontiac). By 1920 GM had purchased more than 30 companies. After World War I GM experienced a decline so severe Durant resigned his post as president. In 1923 the Board of Directors elected Alfred P. Sloan, Jr. president (10 May 1923–3 May 1937)and Chairman of the Executive Committee (3 May 1937–2 April 1956). Sloan, whose Hyatt Roller Bearing Company joined GM in 1919, utilized creative management techniques that made GM the largest car and truck manufacturer in the world. Under Sloan's leadership, GM developed a number of firsts including independent front wheel suspension and the automatic transmission. While GM participated in all U. S. war efforts, its most dramatic contribution was during World War II. From 1942 through the end of the war, GM's plants stopped all non-military production. Producing ball bearings to bombers, GM was responsible for 13,000 planes and a fourth of the engines produced for all planes. In all, GM produced 12. 3 billion dollars worth of military materials. After the war GM experienced its share of the postwar boom, and by the sixties and seventies it was taking advantage of new technologies to make cars more efficient and safe even before government regulations went into effect. During the oil crisis of the 1970s GM experienced a decline in sales but responded by designing lighter and more economical autos. During the 1980s and 90s, GM continued to expand and opened plants in Germany, Brazil, Thailand, and Spain. In order to compete with an expanding import market GM developed Saturn located in Spring Hill, Tennessee, in 1990 and in 1996 it developed its own version of the electric car. GM has also been involved in various humanitarian projects such as a housing project with Habitat for Humanity for its employees in Mexico and the "Care and Share" program to collect food.

BIBLIOGRAPHY

Cray, Ed. Chrome Colossus: General Motors and its Times. New York: McGraw-Hill Book Co., 1980.

Madsen, Axel. Deal Maker: How William C. Durant Made General Motors. New York: John Wiley & Sons, 1999.

Smith, Roger B. Building on 75 Years of Excellence: The General Motors Story. New York: The Newcomen Society of the United States, 1984.

Lisa A.Ennis

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General Motors

General Motors

The impact of auto manufacturer General Motors on American culture, the economy, and politics is staggering, as is the sheer size of the corporation. For years, GM was the largest corporation on earth, its value greater than most nations. It was the first company to gross more than one billion dollars a year. When GM had a bad year in 1957, commentators said, "GM sneezed and the economy caught a cold," so interdependent were the U.S. GNP and the fortunes of GM. Controlling more than half of the market and creating more cars than its domestic rivals combined, GM made and sold cars everywhere in the world. Although regulation, foreign competition, and oil shocks have rocked GM the past few decades, for most of its history it has towered over not just the auto industry, but all industry. And from the farmer-friendly, half-ton pick-ups of the 1930s, to the luxurious Cadillac Coup De Villes or the space-age looking Buick LeSabre of the 1950s, to the Pontiac GTO for the youth longing for "muscle cars" in the late 1950s, to the "uniquely American" 1957 Chevy, to sports cars like the Pontiac Trans-Am of the 1970s, to the one and only Chevy El Camino half car/half pick-up of the same decade, GM has produced not just cars, but symbols of American culture.

While Henry Ford staked his claim on manufacturing genius, the "father" of General Motors, Billy Durant, brought to the industry "the art of the deal." Durant was not just an entrepreneur, he was an expert dealmaker who merged companies and formed GM as a large holding company. GM started with Olds and Buick in 1908, then added Cadillac a year later. Durant, however, expanded too quickly and was forced out by bankers. Undeterred, Durant hired a racecar driver named Louis Chevrolet to design a new car, and in 1915, Durant merged the two companies and regained control. Durant continued to buy not only auto companies, but also suppliers (Fisher Body) and related companies (Frigidaire, which was sold in 1979). Yet, again, Durant overextended and was forced out in 1920, his place soon taken by Alfred Sloan.

If Ford created modern manufacturing techniques (Fordism) to conquer the massive scale of making automobiles, then Sloan created management techniques (Sloanism) to master the managing of a large-scale firm. Sloan's management ideas on hierarchical line authority became the model for all large corporations for years. Sloan also became the first GM president to engage in collective bargaining when the United Auto Workers staged a series of successful sit-down strikes in GM plants in Flint, Michigan, in 1937. But Sloan's greatest triumph was his creation of a styling and color department under the direction of designer Harley Earl in 1927. From this concentration on styling, thus on marketing, GM cemented in the American psyche the fact that, according to David Halberstam, "the car was not merely transportation, but a reflection of status, a concept to which most Americans responded enthusiastically as they strove to move up into the middle class, and then the upper middle class." With the annual model changes—which were often only cosmetically different from the previous year—new car buyers were hooked. It was Sloan and Durant's vision of a car for every market niche: new car buyers could start cheap with a Chevy and then, as they earned more, work their way up to an Olds, and everyone would dream of owning a Cadillac.

The war years made GM rich, but its wealth became unprecedented in the 1950s with a combination of pent-up demand, the need for a car for suburban living, and the coming of the interstate highway system. In addition to lobbying for the automobile as the mode of transportation for Americans, GM also did its best to destroy the competition. In 1949, GM, Standard Oil, Firestone, and other companies were convicted of criminal conspiracy to replace electric transit lines with gasoline or diesel buses. GM had replaced more than one hundred electric transit systems in forty-five cities with GM buses. Despite a fine and the court ruling, GM would, with the aid of urban planners like Robert Moses, block efforts at mass transit.

With Earl's love of the "jet engine look" GM cars came to resemble planes, loaded with chrome and fins. Advances in engineering could have made cars more fuel efficient; instead, GM opted to make cars more powerful and loaded with expensive options like air-conditioning. GM showed off its cars with road shows called Motoramas, which annually drew more than one million spectators. The Motoramas ended in 1961 as GM concentrated its advertising dollars on television. During the 1960s, GM divisions sponsored hundreds of TV shows. With famous ads like "See the USA in the Chevrolet," GM created a national car culture, made even more attractive with the coming of color television.

Yet, the events of the 1960s also brought about the first chinks in GM's armor. A poorly designed knock-off called the Corvair inspired a young lawyer named Ralph Nader to write a book about auto safety (or the lack thereof) called Unsafe at Any Speed. While the book was troubling to GM, more embarrassing was GM's clumsy attempt to investigate and intimidate Nader. This led to the spectacle of GM issuing Nader a public apology. The safety issues led to more government regulation of the auto industry, which escalated with emissions and other standards enacted in the 1960s and 1970s. Like all large institutions, GM found itself under attack in the 1960s, but nothing compared to the shocks it would face in the next decades.

Beginning with a lengthy UAW strike in 1970, through oil embargoes, inflation, and recessions, GM lost profit, market share, respect, and dominance into the 1990s. The company underwent a series of huge reorganizations coupled with a titanic downsizing of its work force. The devastating effect of GM's layoffs is best chronicled in Michael Moore's bitterly funny 1989 film Roger & Me. After a series of management shake-ups, some at the behest of new board member Ross Perot (whose Electronic Data Systems Corporation had been purchased by GM in the 1980s), GM tried to reinvent itself with the Saturn project in 1984. Saturn was an attempt to develop not just a new car, but a new method of manufacturing and selling automobiles based on the Japanese model. While new, Saturn also represented something old in GM's past: producing the right car for the right market.

—Patrick Jones

Further Reading:

Automobile Quarterly Magazine editors. General Motors, the First 75 Years of Transportation Products. Princeton, Automobile Quarterly Incorporated, 1990.

Cray, Ed. General Motors and Its Times. New York, McCraw-Hill, 1975.

Flink, James J. The Automobile Age. Cambridge, MIT Press, 1988.

——. The Car Culture. Cambridge, MIT Press, 1975.

Halberstam, David. The Fifties. New York, Villard Books, 1993.

Keller, Maryann A. Rude Awakening: The Rise, Fall, and Struggle for Recovery of General Motors. New York, Morrow, 1989.

Maynard, Micheline. Collision Course: Inside the Battle for General Motors. New York, Birch Lane Press, 1995.

Nader, Ralph. Unsafe at Any Speed. New York, Grossman, 1965.

Sloan, Alfred P. My Years with General Motors. New York, Doubleday & Company, 1996.

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General Motors

General Motors



General Motors (GM) was founded by Billy Durant (1861–1947) in 1908 with his merger of the Oldsmobile and Buick companies. He added Cadillac the next year and the company just kept on growing. GM was the first company to gross more than $1 billion in a year. It dominated the U.S. and world car markets for most of the twentieth century, while its management structure had a major influence on the way large corporations are run. Ford brought no-nonsense motoring to the masses, but GM made the automobile an international symbol of modern America. From finned Cadillacs to the iconic 1957 Chevy, from unwieldy muscle cars to sport utility vehicles (SUVs; see entry under 1980s—The Way We Lived in volume 5), GM has built many of the definitive American cars.

Unlike Henry Ford (1863–1947), whose skill was in manufacturing, Durant was brilliant at striking deals. He started out with car manufacturers but added component suppliers so that he could control every aspect of the business. After Alfred Sloan (1875–1966) took over in 1920, GM's cars became statements about a person's social status, tastes, and desires. The Chevy was a cheap first car; then you worked your way up through Buick and Oldsmobile. A Cadillac was something to dream about. Until 1961, when television ads took over, road shows called "Motoramas" moved around the country selling GM cars and creating a "car culture." GM updated its models every year. They became more "space-age" and more powerful. But GM has sometimes gone too far in trying to sell its products. In 1949, along with several others, GM was convicted of criminal conspiracy to replace electric trams with GM buses in forty-five American cities.

The attack by consumer advocate Ralph Nader (1934–) on the unsafe Corvair in the 1960s began GM's slow decline. Emissions regulations, oil crises, and stiff competition all took their toll on GM's gas-guzzling model range. A sharply comic film Roger and Me (1989) by Michael Moore (c. 1954–) highlights the terrible human cost of GM's failure in the 1980s. But like many large corporations, in the 1990s GM began to revive. With interests in companies around the globe, in the twenty-first century GM remains one of the world's largest and most powerful auto manufacturers.

—Chris Routledge

For More Information

General Motors.http://www.gm.com (accessed January 10, 2002).

Madsen, Axel. The Deal Maker: How William C. Durant Made General Motors. New York: John Wiley and Sons, 1999.

Nader, Ralph, and Barbarah Ehrenreich. The Ralph Nader Reader. New York: Seven Stories Press, 2000.

Sloan, Alfred P. My Years with General Motors. New York: Doubleday, 1996.

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General Motors Corporation

General Motors Corporation

founded: 1908



Contact Information:

headquarters: 100 renaissance center detroit, mi 48243-7301 phone: (313)556-5000 fax: (313)556-5108 url: http://www.gm.com

OVERVIEW

General Motors Corporation is the largest U.S. industrial corporation and the world's leading manufacturer of cars and trucks. GM designs, manufactures, and markets one out of every three cars and trucks produced in the United States. Its nameplates include Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and Saturn. Overseas, the company is involved in the manufacturing and marketing of Opel, Vauxhall, Holden, Isuzu, Saab, Chevrolet, GMC, and Cadillac vehicles. Although the major portion of its business is derived from the automotive industry, GM has substantial interests in telecommunications and space, aerospace and defense, consumer and automotive electronics, financial and insurance services, locomotives, automotive systems, and heavy-duty transmissions.



COMPANY FINANCES

Since 1992, GM's financial picture has brightened considerably. When John Smith took over as CEO that year, GM owed its pension fund $22 billion, its core North American operations were losing money, and its net liquidity, or cash minus debt, was negative $2 billion. In 1997, according to Daniel Howes in a November 1997 Detroit News article, "North American operations are driving the corporation's profitability—though overall, profit margins are still shy of Smith's 5 percent goal—the pension fund is fully funded, and the cash hoard stands at $14.6 billion."

At the end of 1997, GM had a swelling cash flow of $13.9 billion and said that it is committed to returning value to its stockholders. GM announced a third stock repurchase program for $4 billion; this follows a $2.5 billion repurchase program started in August 1997. When the repurchase program is complete, roughly by the year 2000, GM will have reduced its outstanding shares by 20 percent. The Value Line Investment Survey reasons that GM management decided on a stock repurchasing program (rather than increasing the dividend) because dividends are taxed twice, at both corporate and personal levels. In addition, GM's dividend yield is already well above the market average. A March 1998 Fortune magazine article explains that GM's rationale in funneling money directly to shareholders is based on the company's reducing its outstanding shares and boosting its stock price. By reducing its outstanding shares, GM makes its earnings per share look better and this attracts investors' attention.

In 1997, GM had sales of $166 billion, compared with sales of $158 billion in 1996, and its net income rose 34 percent to a record $6.70 billion from $4.96 billion in 1996. GM stock ranged from a low of $52 to a high of $72 in 1997. The annual dividend for 1997 was $2.00 per share, and GM's price-earnings ratio was 9.5 in May 1998. In addition, earnings per share in 1997 were $8.62.



ANALYSTS' OPINIONS

The year 1997 was the best earnings year in General Motors' history. Despite this success, The Value Line Investment Survey does "not believe that GM will be able to improve earnings in 1998." According to this survey, the launch of GM's C/K light truck platform in North America will result in lost volume and associated launch costs when this changeover occurs. Since the C/K platform makes up almost one-third of GM's North American production, Value Line thinks bottom line gains will be hard to come by," but "the eventual positives from the launch should allow GM to increase earnings in 1999."



HISTORY

Though General Motors was formed in 1908, its history can be traced to 1892 when R.E. Olds founded the Olds Motor Vehicle Company to manufacture horseless carriages, according to the International Directory of Company Histories. Within a couple of years, Olds managed to convert this factory into the first American factory in Detroit devoted exclusively to the production of automobiles.

At the turn of the century, an engineer named David Buick founded the Buick Motor Company in Detroit. At the same time, Henry Leland founded the Cadillac Automobile Company, also located in Detroit. All three companies were setting their own milestones and performing well. However, in 1903, at a time of market instability, these three companies were forced to form a consortium, and General Motors was thus formed. William Durant, a self-made millionaire, son of a Michigan governor, and a director of the Buick Motor Company, brought together Oldsmobile and Buick, and in 1909, Cadillac and Oakland (later renamed Pontiac) joined the union. Even though this merger drew very little attention, immediate positive financial results were seen.

In 1911, a central staff of specialists was put together to monitor and coordinate the activities in GM's different units and factories, and a testing laboratory was set up to serve as additional protection against costly factory mistakes. The research and development system adopted by GM became one of the largest and most complex in private industry. Additionally, Chevrolet became part of GM in 1918. By 1920 more than 30 companies had been acquired, including Ewing, Marquette, Welch, Scripps-Booth, Sheridan, Elmore, and Rapid and Reliance trucks.

During World War I, General Motors turned to wartime production. Ninety percent of GM's truck production between 1917 and 1919 was for the war effort. Cadillac supplied Army staff cars and V-8 engines, while Buick built airplane motors, tanks, trucks, ambulances, and automotive parts.

The Great Depression created suffering for GM. The company emerged, however, with a new and aggressive management and coordinated policy control, which replaced the undirected efforts of prior years. Alfred Sloan Jr., who had converted a $50,000 investment into assets of $3.5 million in 24 years, joined the corporate management of GM. Sloan helped guide GM through the Depression and built a new management policy that was adopted by many other businesses. By 1941, GM accounted for 44 percent of total U.S. automotive sales, compared to 12 percent in 1921. During World War II, GM's factories were retooled in preparation for war, and between 1940 and 1945, GM produced defense materials valued at an estimated $12 billion.

The 1950s were marked by automotive sales records, innovations in styling, and new engineering discoveries. By 1950, all models built in the United States were available with an automatic gear-box. Between 1951 and 1955, the five divisions of GM—Buick, Chevrolet, Pontiac, Oldsmobile, and Cadillac—started offering a new V-8 engine, power steering, brakes, the first air-conditioning systems, and front seat safety belts. The look of the car from the windows to the interior was redesigned. Overall car sales in the 1950s were good, with growing American families creating a demand for a second family car. However, small European cars were gaining popularity, and American car companies were gradually losing market share to their foreign competitors. In 1957, despite a recession, the United States imported more cars than it exported. In 1959, GM's market share slipped to 42 percent of the year's new car sales.

The 1960 Detroit riots forced GM management to recognize urban poverty. As a result, many minority workers were hired, thanks to the expansionist policies of Presidents Kennedy and Johnson. This move helped GM prosper and diversify; GM's interests included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s, GM's returns on investment increased from 16.5 percent to 25.8 percent. The 1970s were marked by heavy expenditures because GM had ignored the importance of pollution control for so long. The oil embargo sent sales of GM's luxury gas-guzzlers plummeting, but the company's compact and sub-compact cars gained a 40 percent market share by 1974.

Between 1985 and 1992, GM reported declines in earnings. An accounting change in 1987 provided a respite and created an increase in earnings. Since the early 1980s, GM had spent more than $60 billion redesigning many of its cars and the plants that built them. GM also made two expensive purchases in the 1980s: Hughes Aircraft and Electronic Data Systems (EDS). The EDS purchase provided GM with better, more centralized communications and backup systems, as well as a vital profit center. In 1987 for the first time in 60 years, Ford's profits exceeded those of GM.

FAST FACTS: About General Motors Corporation


Ownership: General Motors is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: GM

Officers: John F. Smith Jr., Chmn., CEO, & Pres., 59, 1997 base salary $3,350,000; Harry J. Pearce, VChmn., 55, 1997 base salary $1,790,000; J. Michael Losh, Exec. VP & CFO, age 51; Louis R. Hughes, 49, Exec. VP & Pres., International Operations, 49

Employees: 608,000

Principal Subsidiary Companies: General Motors has more than 160 subsidiaries, joint ventures, and affiliates. Its major subsidiaries include Delphi Automotive Systems, General Motors Acceptance Corporation, Hughes Electronics Corporation, General Motors Electro-Motive Division, and Allison Transmission.

Chief Competitors: General Motor's principal competitors in passenger cars and trucks in the United States and Canada include: Ford Motor Company; Chrysler Corporation; Toyota Corporation; Nissan Motor Corporation Ltd.; Honda Motor Company Ltd.; Mazda Motor Corporation; Mitsubishi Motors Corporation; Fuji Heavy Industries Ltd. (Subaru); Volkswagen A.G.; Hyundai Motor Company Ltd.; Daimler-Benz A.G. (Mercedes); Bayerische, Motoren Werke A.G. (BMW); and Volvo AB.




From 1990 to 1992 GM suffered losses totaling $30 billion. Manufacturing costs that exceeded those of its competitors because of high labor costs, overcapacity, complicated production procedures, and competition from 25 companies all contributed to these losses. GM's market share fell from 50 to 35 percent. In 1992, Jack Smith Jr. became CEO of GM, and in 1993, he simplified North American operations, cut the corporate staff, pared product offerings, and divested GM's parts operations. He also negotiated with the United Auto Workers, planned to close more than 24 plants by 1996, and pledged $3.9 billion in jobless benefits, raising blue-collar payroll costs more than 16 percent over three years.

In the early 1990s, GM entered the van, truck, and sports utility vehicle markets. Saturn Corp. was launched at this time, and the weak dollar caused the price of imported cars to increase much faster than domestic prices. All of this helped GM to recapture market share from Japanese manufacturers. In 1993, GM recorded a net income of $2.47 billion on sales of $138.22 billion. Increased 1994 sales totaled $154.95 billion, and 1995 sales were $168.83 billion with profit margins of 3.5 and 4.5 percent, respectively.

On June 7, 1996, GM announced the splitting off of EDS. EDS entered into a 10-year agreement with GM to be its principal provider of information technology services. In December 1996, GM's CIO Ralph Syzgenda announced plans to install 300 of his peers in similar posts at various GM business units to face the challenges of cutting costs, entering new markets, and managing a vast outsourcing arrangement with EDS.




STRATEGY

When GM chairman Jack Smith began his tenure, he introduced a series of "strategy boards" for each sector and region of the company, as well as a "global strategy board" for the company overall. "Each board draws together top executives in manufacturing, finance, purchasing, or various regions, among others, in an effort to manage business together—not as separate fiefdoms," said Daniel Howes in a November 1997 Detroit News article. According to Howes, these strategy boards have had a tremendous impact on GM as they have served to foster debate, evaluate data, and generally bring consensus.

The "strategy boards" are but one element in GM's ongoing restructuring efforts since 1992. Among the most significant has been the restructuring of parts operations. GM's parts plants were renamed Delphi Automotive Systems, and 33 operations that were either unnecessary or too expensive were sold or closed, which created profitable independent suppliers. Delphi also opened 104 parts facilities worldwide, with only one in the United States.

In 1994, GM combined all its stamping plants in North America, each with its own set of processes, controls, and management style, into a single Metal Fabricating Division. The following year, according to Howes, "GM appointed a series of 'vehicle line executives' responsible for all facets of car and truck programs. Insiders say the change has dramatically improved the way cars and trucks are developed by injecting accountability into a once-confused web of overlapping responsibilities. The result has been fewer launch glitches and improved quality."

CHRONOLOGY: Key Dates for General Motors Corporation


1903:

General Motors is formed by the joining of the Oldsmobile and Buick companies

1909:

Cadillac and Oakland (later renamed Pontiac) join GM

1912:

Cadillac cars introduce the electric self-starter replacing the hand crank

1918:

Chevrolet joins GM

1924:

Assembles first GM vehicle abroad in Denmark

1938:

Introduces the column mounted gearshift, setting the industry standard

1940:

Produces its 25 millionth automobile

1948:

Introduces the first torque-converter automatic transmission available in passenger cars

1950:

Introduces the Chevrolet Corvette

1961:

Introduces the first V-6 for an American passenger car

1969:

GM manufactures the guidance systems for the Apollo 11 spacecraft

1974:

First company to offer air bags in production vehicles

1987:

Wins the inaugural solar car race with its Sunracer

1995:

First company to install daytime running lights as standard equipment

1996:

Introduces the first electric car for consumers, the EV1




Another one of GM's restructuring moves has been what the company calls the "Hughes Transactions." This was a strategic restructuring of GM's Hughes Electronics subsidiary and included the spin-off and merger of Hughes' defense unit with Raytheon Company. In 1997, GM sold the defense end of this business to Raytheon for nearly $10 billion. At the same time, Delco Electronics, the automotive subsidiary of Hughes, was transferred from Hughes to Delphi Automotive Systems.

According to General Motors' 1997 annual report, the corporation concentrated on four business priorities: "run common, think lean and run fast, compete globally, and grow the business." For GM, getting common involves its processes, parts, and vehicle platforms worldwide. It is an effort that redirects the company's old strategy of independent, stand-alone companies to one of eliminating duplication, confusion, and waste. Global car platforms allow different varieties of the same car to be built in many different countries and marketed globally.

"Thinking lean" translates into cost reductions by streamlining its vehicle development process, for example. In 1997, GM spent $4 billion on a study of cost competitiveness. "Running fast" refers to the need to make changes in a timely fashion—from the construction of new plants to the launch of new models. Competing on a global basis is a strategic priority, as GM is undergoing the largest international production capacity expansion in the company's history. GM's strategy is to build cars and trucks in the location where it wants to sell them. Finally, GM would like to reestablish itself as a growth company, and it plans to spend $21 billion in the United States between 1997 and 2000 investing in emerging markets.




INFLUENCES

In 1997 several strikes by local unions, including two long work stoppages in the United States, influenced GM's market share. Another factor is the seasonal nature of the automotive business. During a changeover to a new model year, sales are affected by the disruption in car production. Strong competition in the already crowded sport-utility market was also a factor in 1997. Finally, due to the weakened currencies in Japan and Germany in 1997, these car manufacturers took advantage of the cost savings in these countries and increased their sales volume. The launch of several new vehicles—including the Saab in Europe—and the higher associated costs led to increased operating costs for GM.




CURRENT TRENDS

One trend in the automotive industry that has had particular significance for GM is the growing consumer demand for trucks. Truck sales were up 10.8 percent in April 1998 from the previous year. It was the sixth straight month of year-over-year truck sales increases. Truck sales that month were the highest ever for one manufacturer in the history of the industry.



PRODUCTS

General Motors divides its business into seven global operating groups and major subsidiaries. General Motors North American Operations (GM-NAO) makes Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and Saturn cars and trucks. In 1997, GM-NAO introduced a record 14 new models. In 1998, GM introduced six new cars and light trucks in North America.

General Motors' subsidiaries produce various products that are important to the company. GM's Delphi Automotive systems is a diverse supplier of automotive systems and components. Delphi's products and services include chassis, interiors, lighting, electronics, power and signal distribution, energy and engine management, steering and thermal systems. In August 1998, GM announced plans to establish Delphi as an independent company so that it could focus on its core business of building cars and trucks. General Motors International Operations (GMIO) makes cars outside of North America, including Opel, Vauxhall, Holden, Isuzu, Saab, Chevrolet, GMC, and Cadillac. General Motors Acceptance Corporation (GMAC) provides a broad range of financial services, including consumer vehicle financing, car and truck extended service contracts, residential and commercial mortgage services, and vehicle and homeowners insurance.

Hughes Electronics Corporation, another subsidiary, designs, manufactures, and markets advanced technology electronic systems, products and services for the telecommunications and space, automotive electronics, and aerospace and defense sectors. Hughes is the largest producer of commercial communications satellites in the world and the leader in distribution networks for cable television and private business networks worldwide. In the telecommunications and space segment, Hughes' products include satellite design and construction and DIRECTV, a direct broadcast satellite television system that had 2.3 million household subscribers in 1996. In 1997, it attracted 1.0 million new U.S. subscribers and was launched in Japan. Hughes' automotive electronics products include air bag electronics, anti-lock brake modules, remote keyless entry, audio systems, climate controls, ignition electronics, pressure sensors, and spark controls. In its aerospace and defense segment, Hughes makes missile systems, radar and communication systems, air defense, training and simulation systems, and guidance and control systems.

General Motors Locomotive Group designs, manufactures, and markets diesel-electric locomotives, medium-speed diesel engines, locomotive components, power generation units, locomotive maintenance services, and light-armored vehicles. Finally, Allison Transmission is the world's largest designer and producer of heavy-duty automatic transmissions.




CORPORATE CITIZENSHIP

General Motors contributes millions of dollars to a variety of charitable organizations all over the world. GM employees and retirees nationwide volunteer their time and talent by collecting food and clothing, aiding victims of violence and sexual assault, working at homeless shelters, mentoring at-risk students, and sponsoring youth programs and other activities.

The GM Foundation was founded in 1976 to guide the company's philanthropic efforts. In 1996 alone, the GM Foundation donated $27 million to a variety of activities and organizations in the areas of education, health and human services, arts and culture, civic and community, public policy, and environment and energy.

In addition to the GM Foundation, partnerships with community organizations are an important element in GM's philanthropic efforts. GM has had a 46-year commitment to the United Way and is the largest U.S. corporate contributor to this organization.

In 1978, GM formed the GM Cancer Foundation to recognize and reward scientists who have significantly contributed to the treatment and prevention of cancer. GM presents three awards annually: the Charles F. Kettering Prize for the most outstanding recent contribution to the diagnosis or treatment of cancer; the Charles S. Mott Prize for the most outstanding recent contribution related to the causes or ultimate prevention of cancer; and the Alfred P. Sloan Jr. Prize for the most outstanding recent basis science contribution to cancer research. Each prize consists of a gold medal and $100,000.




GLOBAL PRESENCE

General Motors is the largest U.S. exporter of cars and trucks and has manufacturing, assembly, or component operations in 50 countries. GM has a global presence in more than 190 countries. About one-third of GM's sales are generated outside North America, and the company hopes to draw half of its annual revenues that way by 2006. Major markets for exports are Latin America and the Middle East, but exports to the Asia-Pacific region are increasing.

General Motors International Operations, based in Zurich, Switzerland, operates 34 manufacturing and assembly facilities outside of North America. Its 44 sales and marketing operations are located on five continents. GM's international operations are organized into General Motors Europe, Latin America, Africa, Middle East Operations, and Asia-Pacific Operations.

GM would like to dominate the emerging consumer markets in eastern Europe and Russia. Company plans call for the opening of an assembly plant in late 1998 in Poland. GM is also opening plants in Russia, Argentina, China, India, Indonesia, and Thailand. In Russia, Chevrolet Blazers, Cavaliers, and Transports are on the road. The company will invest $2.5 billion in expanding its Asian manufacturing operations and continues to expand in India, with GM, Delphi, Hughes Electronics, GMAC, and GM's Locomotive Group. Under GM chairman Jack Smith, "GM has launched the largest manufacturing expansion in company history—all outside the United States," according to a November 1997 Detroit News article.



EMPLOYMENT

General Motors is one of the largest employers in the world. In addition, GM also offers a Global Intern Program and a Global Cooperative Education Program. The intern program offers college students on-the-job experience through temporary full-time positions during college and university summer break periods. College students work throughout the year in GM's co-op program, with work sessions arranged to accommodate class schedules.

General Motors offers its employees one of the most comprehensive benefits programs in the country. GM benefits include a choice of health care plans, life and disability insurance, a savings-stock purchase program, retirement program, product discounts, and paid holidays/vacations.




SOURCES OF INFORMATION

Bibliography

blumenstein, rebecca. "gm doubles net on strong factory sales." the wall street journal, 27 january 1998.

general motors 1997 annual report. available at: http://www.gm.com/cgi-bin/shareholder/sh_page.cgi?e600.

"general motors corporation." hoover's handbook of american business 1998. austin, tx: the reference press, 1997.

"general motors corporation." moody's handbook of common stocks. new york: moody's investor's service, inc., 1997.

"general motors." standard & poor's stock reports. new york: standard & poor's, 1998.

howes, daniel. "gm now running leaner, faster." detroit news, 2 november 1997.

morris, thomas v. if aristotle ran general motors: the new soul of business. new york: henry holt and co., 1997.

paul, anthony. "indonesia: life under the volcano." fortune, 13 april 1998.

shnayerson, michael. the car that could: the inside story of gm's revolutionary electric vehicle. new york: random house, 1996.

taylor, alex, iii. "the big three's dilemma." fortune, 16 march 1998.

tenreiro, michael. "general motors." the value line investment survey. 13 march 1998.


For an annual report:

telephone: (313)556-2044 or (800)331-9922


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. general motors' primary sics are:

3711 motor vehicles and car bodies

3714 motor vehicles parts and accessories

6159 miscellaneous business credit institutions

7374 data processing services

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General Motors Corporation

General Motors Corporation

founded: 1897 variant name: gm



Contact Information:

headquarters: 300 renaissance center
detroit, mi 48265-3000 phone: (313)556-5000 fax: (313)874-2760 url: http://www.gm.com

OVERVIEW

General Motors Corporation is the largest U.S. industrial corporation and the world's leading manufacturer of cars and trucks. GM designs, manufactures, and markets one out of every three cars and trucks produced in the United States. Its nameplates include Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and Saturn. Overseas, the company is involved in the manufacturing and marketing of Opel, Vauxhall, Holden, Isuzu, Saab, Chevrolet, GMC, and Cadillac vehicles. Although the major portion of its business is derived from the automotive industry, GM has substantial interests in telecommunications and space, aerospace and defense, consumer and automotive electronics, financial and insurance services, locomotives, automotive systems, and heavy-duty transmissions.



COMPANY FINANCES

Since 1992, GM's financial picture has brightened considerably. When John Smith took over as CEO that year, GM owed its pension fund $22 billion; its core North American operations were losing money; and its net liquidity, or cash minus debt, was negative $2 billion. In 1997, according to Daniel Howes in a November 1997 Detroit News article, "North American operations are driving the corporation's profitability—though overall, profit margins are still shy of Smith's 5 percent goal—the pension fund is fully funded, and the cash hoard stands at $14.6 billion."

At the end of 1997, GM had a swelling cash flow of $13.9 billion and said that it is committed to returning value to its stockholders. GM announced a third stock repurchase program for $4 billion; following a $2.5 billion repurchase program started in August 1997. The repurchase programs reduced GM's outstanding shares by 20 percent. The Value Line Investment Survey reasoned that GM management decided on a stock repur-chasing program (rather than increasing the dividend) because dividends are taxed twice, at both corporate and personal levels. In addition, GM's dividend yield is already well above the market average. A March 1998 Fortune magazine article explained GM's rationale in funneling money directly to shareholders; pointing out that by reducing its outstanding shares and boosting its stock price it increased earnings per share. This made the company a more attractive option for investors.

In 1997 GM had sales of $166 billion, compared with sales of $158 billion in 1996, and its net income rose 34 percent to a record $6.70 billion from $4.96 billion in 1996. GM stock ranged from a low of $52 to a high of $72 in 1997. The annual dividend for 1997 was $2.00 per share, and GM's price-earnings ratio was 9.5 in May 1998. In addition, earnings per share in 1997 were $8.62.

GM's earnings per share held fairly steady through 1999, shares earned $8.70. In 2000, earnings dropped off and GM stock earned only $6.80 per share. The following year was worse, when GM stocks earned only $1.78 per share in 2001. GMA's total net sales and revenues were $177.3 billion in 2001, $184.6 billion in 2000, and $176.6 billion in 1999. The decrease from 2000 to 2001 was largely credited to lower wholesale volumes in 2001 and unfavorable net prices in North America and Europe. In 2001, GM had cut the prices of its vehicles, particularly in the last quarter, in an effort to boost sales during the economic recession and fall-out after September 11, 2001. During 2001, GM sold in Europe far more smaller, less-profitable vehicles than it did the previous year, however, the loss was offset somewhat by the increase in truck and larger vehicle sales in North America.

Hughes Network Systems also saw falling sales during 2001, and revenues decreased from $8.7 billion in 2000 to $8.3 billion in 2001, due to a decrease in shipments of DIRECTV receiving equipment. In 2000, DIRECTV sales had skyrocketed from $7.6 billion in 1999 due to customers purchasing newly-available high-power DIRECTV service and equipment that year.

GMAC had an increase in adjusted income in 2001, growing from $1.5 billion in 1999 to $1.6 billion in 2000, to $1.8 billion in 2001, although total financing revenue fell from$15.5 billion in 2000 to $15.1 billion in 2001. The increase in adjusted income was due mostly to lower market interest rates and increased asset levels.

FAST FACTS: About General Motors Corporation


Ownership: General Motors is a publicly owned company traded on the New York Stock Exchange.

Ticker symbol: GM

Officers: John F. Smith Jr., Chmn., 63, salary $3,293,797; G. Richard Wagoner Jr., Pres. and CEO, 49, salary $2,338,000; John M. Devine, EVP and CFO, 57; Robert A. Lutz, Vice Chmn. Product Development and Chmn. of GM North America, 70

Employees: 365,000

Principal Subsidiary Companies: General Motors has more than 160 subsidiaries, joint ventures, and affiliates. Its major subsidiaries include Delphi Automotive Systems, General Motors Acceptance Corporation, Hughes Electronics Corporation, General Motors Electro-Motive Division, and Allison Transmission.

Chief Competitors: General Motor's principal competitors in passenger cars and trucks in the United States and Canada include Ford Motor Company; DaimlerChrysler Corporation; Toyota Corporation; Nissan Motor Corporation Ltd.; Honda Motor Company Ltd.; Mazda Motor Corporation; Mitsubishi Motors Corporation; Fuji Heavy Industries Ltd. (Subaru); Volkswagen A.G.; Hyundai Motor Company, Ltd.; Bayerische, Motoren Werke A.G. (BMW); and Volvo AB.


ANALYSTS' OPINIONS

In 2000 General Motors enjoyed the best earnings year in the history of the company. However, in 2001, worldwide sales fell as most economies experienced a recession. Despite a slight rebound in the first quarter of 2002, some analysts believed automotive sales would stabilize and decrease later that year. Credit Suisse First Boston's, Wendy Beale Needham, predicted a rise in interest rates by the end of 2002, which would soften the automotive industry's sales as mortgage refinancing activities slowed. Needham believed, however, that GM's purchase of Daewoo, which was completed 2002, would help GM's financial position. "GM's belief is that 65 percent of the growth auto sales in the next 10 years will occur in eight emerging markets. Korea is one of those markets, so they would like to have a presence there," she said.

HISTORY

Though General Motors was formed in 1908, its history can be traced to 1892 when R.E. Olds founded the Olds Motor Vehicle Company to manufacture horseless carriages, according to the International Directory of Company Histories. Within a couple of years, Olds managed to convert this factory into the first American factory in Detroit devoted exclusively to the production of automobiles.

At the turn of the century, an engineer named David Buick founded the Buick Motor Company in Detroit. At the same time, Henry Leland founded the Cadillac Automobile Company, also located in Detroit. All three companies were setting their own milestones and performing well. However, in 1903, at a time of market instability, these three companies were forced to form a consortium, and General Motors was thus formed. William Durant, a self-made millionaire, son of a Michigan governor, and a director of the Buick Motor Company, brought together Oldsmobile and Buick, and in 1909, Cadillac and Oakland (later renamed Pontiac) joined the union. Even though this merger drew very little attention, immediate positive financial results were seen.

In 1911, a central staff of specialists was put together to monitor and coordinate the activities in GM's different units and factories, and a testing laboratory was set up to serve as additional protection against costly factory mistakes. The research and development system adopted by GM became one of the largest and most complex in private industry. Additionally, Chevrolet became part of GM in 1918. By 1920 more than 30 companies had been acquired, including Ewing, Marquette, Welch, Scripps-Booth, Sheridan, Elmore, and Rapid and Reliance trucks.

CHRONOLOGY: Key Dates for General Motors Corporation


1903:

General Motors is formed by the joining of the Oldsmobile and Buick companies

1909:

Cadillac and Oakland (later renamed Pontiac) join GM

1912:

Cadillac cars introduce the electric self-starter replacing the hand crank

1918:

Chevrolet joins GM

1924:

Assembles first GM vehicle abroad in Denmark

1938:

Introduces the column mounted gearshift, setting the industry standard

1940:

Produces its 25 millionth automobile

1948:

Introduces the first torque-converter automatic transmission available in passenger cars

1950:

Introduces the Chevrolet Corvette

1961:

Introduces the first V-6 for an American passenger car

1969:

GM manufactures the guidance systems for the Apollo 11 spacecraft

1974:

First company to offer air bags in production vehicles

1987:

Wins the inaugural solar car race with its Sunracer

1995:

First company to install daytime running lights as standard equipment

1996:

Introduces the first electric car for consumers, the EV1

1997:

General Motors and Hughes complete the spinoff of the Hughes defense electronics business

1998:

GM North America shuts down vehicle production for nearly two months after UAW workers at two plants in Flint, Mich., go on strike

1999:

GM creates a business, eGM, to bring together of GM's and OnStar's electronic commerce and Internet marketing initiatives

2000:

General Motors announces a plan to allow holders of GM $1-2/3 commonstock to exchange up to $8 billion of GM $1-2/3 stock for GM Class H stock

2001:

General Motors cuts back it European salaried workforce by 10 percent, or 1,500 jobs, as part of a restructuring of money-losing operations there

2002

: General Motors announces recall of 1.9 million Chevrolet Cavalier, Pontiac Sunfire, Buick Skylark, Pontiac Grand Am, and Oldsmobile Achieva cars; the recall was the result of a potential electrical current flow through the ignition switch that could cause a fire in the steering column


During World War I, General Motors turned to wartime production. Ninety percent of GM's truck production between 1917 and 1919 was for the war effort. Cadillac supplied Army staff cars and V-8 engines, while Buick built airplane motors, tanks, trucks, ambulances, and automotive parts.

The Great Depression created suffering for GM. The company emerged, however, with a new and aggressive management, and coordinated policy control, which replaced the undirected efforts of prior years. Alfred Sloan Jr., who had converted a $50,000 investment into assets of $3.5 million in 24 years, joined the corporate management of GM. Sloan helped guide GM through the Depression and built a new management policy that was adopted by many other businesses. By 1941, GM accounted for 44 percent of total U.S. automotive sales, compared to 12 percent in 1921. During World War II, GM's factories were retooled in preparation for war, and between 1940 and 1945, GM produced defense materials valued at an estimated $12 billion.

The 1950s were marked by automotive sales records, innovations in styling, and new engineering discoveries. By 1950, all models built in the United States were available with an automatic gear-box. Between 1951 and 1955, the five divisions of GM—Buick, Chevrolet, Pontiac, Oldsmobile, and Cadillac—started offering a new V-8 engine, power steering, brakes, the first air-conditioning systems, and front seat safety belts. The entire look of the car, from the windows to the interior, was redesigned. Overall car sales in the 1950s were good, with growing American families creating a demand for a second family car. However, small European cars were gaining popularity, and American car companies were gradually losing market share to their foreign competitors. In 1957 despite a recession, the United States imported more cars than it exported. In 1959 GM's market share slipped to 42 percent of the year's new car sales.

The 1960 Detroit riots forced GM management to recognize urban poverty. Many minority workers were hired, as a result of the expansionist policies of Presidents Kennedy and Johnson. This move helped GM prosper and diversify. GM's interests included home appliances, insurance, locomotives, electronics, ball bearings, banking, and financing. By the late 1960s, GM's returns on investments increased from 16.5 percent to 25.8 percent. The 1970s were marked by heavy expenditures because GM had ignored the importance of pollution control for so long. The oil embargo sent sales of GM's luxury gas-guzzlers plummeting, but the company's compact and sub-compact cars gained a 40 percent market share by 1974.

Between 1985 and 1992, GM reported declines in earnings. An accounting change in 1987 provided a respite and created an increase in earnings. Since the early 1980s, GM had spent more than $60 billion redesigning many of its cars and the plants that built them. GM also made two expensive purchases in the 1980s: Hughes Aircraft and Electronic Data Systems (EDS). The EDS purchase provided GM with better, more centralized communications and backup systems, as well as a vital profit center. In 1987 for the first time in 60 years, Ford's profits exceeded those of GM.

From 1990 to 1992 GM suffered losses totaling $30 billion. Manufacturing costs that exceeded those of its competitors because of high labor costs, overcapacity, complicated production procedures, and competition from 25 companies all contributed to these losses. GM's market share fell from 50 to 35 percent. In 1992, Jack Smith Jr. became CEO of GM, and in 1993, he simplified North American operations, cut the corporate staff, pared product offerings, and divested GM's parts operations. He also negotiated with the United Auto Workers; closed more than 24 plants by 1996; and pledged $3.9 billion in jobless benefits, raising blue-collar payroll costs more than 16 percent over three years.

In the early 1990s, GM entered the van, truck, and sports utility vehicle markets. Saturn Corp. was launched at this time, and the weak dollar caused the price of imported cars to increase much faster than domestic prices. All of this helped GM to recapture market share from Japanese manufacturers. In 1993, GM recorded a net income of $2.47 billion on sales of $138.22 billion. Increased 1994 sales totaled $154.95 billion, and 1995 sales were $168.83 billion with profit margins of 3.5 and 4.5 percent, respectively.

On June 7, 1996, GM announced the spin off of EDS. EDS entered into a 10-year agreement with GM to be its principal provider of information technology services.



STRATEGY

When GM chairman Jack Smith began his tenure, he introduced a series of "strategy boards" for each sector and region of the company, as well as a "global strategy board" for the company overall. "Each board draws together top executives in manufacturing, finance, purchasing, or various regions, among others, in an effort to manage business together—not as separate fiefdoms," said Daniel Howes in a November 1997 Detroit News article. According to Howes, these strategy boards have had a tremendous impact on GM as they have served to foster debate, evaluate data, and generally bring consensus.

The "strategy boards" are but one element in GM's ongoing restructuring efforts since 1992. Among the most significant has been the restructuring of the parts operations sector, which was renamed Delphi Automotive Systems. Thirty-three operations that were either unnecessary and expensive were sold, or closed, which created profitable independent suppliers. Delphi also opened 104 parts facilities worldwide, with only one in the United States.

In 1994, GM combined all its stamping plants in North America, each with its own set of processes, controls, and management style, into a single Metal Fabricating Division. The following year, according to Howes, "GM appointed a series of ëvehicle line executives' responsible for all facets of car and truck programs. Insiders say the change has dramatically improved the way cars and trucks are developed by injecting accountability into a once-confused web of overlapping responsibilities. The result has been fewer launch glitches and improved quality."

Another one of GM's restructuring moves has been what the company calls the "Hughes Transactions." This was a strategic restructuring of GM's Hughes Electronics subsidiary and included the spin-off and merger of Hughes' defense unit with Raytheon Company. In 1997, GM sold the defense end of this business to Raytheon for nearly $10 billion. At the same time, Delco Electronics, the automotive subsidiary of Hughes, was transferred from Hughes to Delphi Automotive Systems.

According to General Motors' 1997 annual report, the corporation concentrated on four business priorities: "run common, think lean and run fast, compete globally, and grow the business." For GM, getting "common" involves its processes, parts, and vehicle platforms worldwide. It is an effort that redirects the company's old strategy of independent, stand-alone companies to one of eliminating duplication, confusion, and waste. Global car platforms allow different varieties of the same car to be built in many different countries and marketed globally.

"Thinking lean" translates into cost reductions by streamlining its vehicle development process, for example. In 1997 GM spent $4 billion on a study of cost competitiveness. "Running fast" refers to the need to make changes in a timely fashion—from the construction of new plants to the launch of new models. Competing on a global basis is a strategic priority, as GM is undergoing the largest international production capacity expansion in the company's history. GM's strategy is to build cars and trucks in the location where it wants to sell them. Finally, GM would like to reestablish itself as a growth company, and it spent $21 billion in the United States between 1997 and 2000 investing in emerging markets.

One of the eight emerging markets GM identified was Korea, and the company expected to complete its purchase of Korea-based Daewoo in the first half of 2002. Daewoo was financially indebted at the time of the sale, GM agreed to purchase the company for $1.2 billion and absorb up to $17 billion in debts, a figure higher than GM originally anticipated.

Negotiations for the purchase Daewoo took longer than expected partly due to financial hurdles GM had not foreseen, but also due to labor issues. Daewoo management had assured its labor force there would be no layoffs after the takeover, although GM had laid off more than 3,500 of its own workers in the United States in 2001.

INFLUENCES


In 1997 several strikes by local unions, including two long work stoppages in the United States, influenced GM's market share. Another factor is the seasonal nature of the automotive business. During a changeover to a new model year, sales are affected by the disruption in car production. Strong competition in the already crowded sport-utility market was also a factor in 1997. Finally, due to the weakened currencies in Japan and Germany in 1997, these car manufacturers took advantage of the cost savings in these countries and increased their sales volume. The launch of several new vehicles—including the Saab in Europe—and the higher associated costs led to increased operating costs for GM.

Although car automotive sales remained strong through 2000 and 2001, with GM capturing about 28 percent of the total market share in the United States, and 15 percent worldwide both years, sales dropped dramatically during the third quarter of 2001. General Motors led the industry pack in offering incentives to new car buyers, including zero percent interest and dramatically increased rebates. Automotive industry analysts had predicted a 10 percent decline in automobile sales during 2001, however, the incentives which were offered industry-wide created better than expected results, and sales fell only 3 percent.

Although GM was able to keep cars rolling off the lots during the latter part of 2001, the incentives cut deeply into profits. By mid-2002, profits were on the rise again, and GM expected $1.20 a share increase in the first quarter, and $3.50 a share increase in the second.


CURRENT TRENDS


One trend in the automotive industry that has had particular significance for GM is the growing consumer demand for trucks. Truck sales were up 10.8 percent in April 1998 from the previous year. It was the sixth straight month of year-over-year truck sales increases. Truck sales that month were the highest ever for one manufacturer in the history of the industry.

Truck sales remained strong through 2001, but in 1999 and 2000, the car-truck sales ratio for GM was about 50-50. In 2001, GM trucks again outsold cars, with 2.4 million car sales and 2.75 million truck sales in North America. However, GM Asia Pacific's truck sales were much stronger than its car sales between 1999 and 2001. In 1999, GMAP sold 259,000 trucks to 162,000 cars. In 2000 the mix was 175,000 cars to 283,000 trucks and in 2001 sales were 202,000 cars to 258,000 trucks.

PRODUCTS

General Motors divides its business into seven global operating groups and major subsidiaries. General Motors North American Operations (GM-NAO) makes Chevrolet, Pontiac, GMC, Oldsmobile, Buick, Cadillac, and Saturn cars and trucks. In 1997, GM-NAO introduced a record 14 new models. In 1998 GM introduced six new cars and light trucks in North America.

General Motors' subsidiaries produce various products that are important to the company. GM's Delphi Automotive systems is a diverse supplier of automotive systems and components. Delphi's products and services include chassis, interiors, lighting, electronics, power and signal distribution, energy and engine management, steering and thermal systems. In August 1998, GM announced plans to establish Delphi as an independent company so that it could focus on its core business of building cars and trucks. General Motors International Operations (GMIO) makes cars outside of North America, including Opel, Vauxhall, Holden, Isuzu, Saab, Chevrolet, GMC, and Cadillac. General Motors Acceptance Corporation (GMAC) provides a broad range of financial services, including consumer vehicle financing, car and truck extended service contracts, residential and commercial mortgage services, and vehicle and homeowners insurance.

Hughes Electronics Corporation, another subsidiary, designs, manufactures, and markets advanced technology electronic systems, products and services for the telecommunications and space, automotive electronics, and aerospace and defense sectors. Hughes is the largest producer of commercial communications satellites in the world and the leader in distribution networks for cable television and private business networks worldwide. In the telecommunications and space segment, Hughes' products include satellite design and construction and DIRECTV, a direct broadcast satellite television system that had 2.3 million household subscribers in 1996. In 1997, it attracted 1.0 million new U.S. subscribers and was launched in Japan. Hughes' automotive electronics products include air bag electronics, anti-lock brake modules, remote keyless entry, audio systems, climate controls, ignition electronics, pressure sensors, and spark controls. In its aerospace and defense segment, Hughes makes missile systems, radar and communication systems, air defense, training and simulation systems, and guidance and control systems.

General Motors Locomotive Group designs, manufactures, and markets diesel-electric locomotives, medium-speed diesel engines, locomotive components, power generation units, locomotive maintenance services, and light-armored vehicles. Finally, Allison Transmission is the world's largest designer and producer of heavy-duty automatic transmissions.

CORPORATE CITIZENSHIP

General Motors contributes millions of dollars to a variety of charitable organizations all over the world. GM employees and retirees nationwide volunteer their time and talent by collecting food and clothing, aiding victims of violence and sexual assault, working at homeless shelters, mentoring at-risk students, and sponsoring youth programs and other activities.

The GM Foundation was founded in 1976 to guide the company's philanthropic efforts. In 2001 alone, the GM Foundation donated $47.4 million to a variety of activities and organizations in the areas of education, health and human services, arts and culture, civic and community, public policy, and environment and energy.

In addition to the GM Foundation, partnerships with community organizations are an important element in GM's philanthropic efforts. GM has had a 50-year commitment to the United Way and is the largest U.S. corporate contributor to this organization.

In 1978 GM formed the GM Cancer Foundation to recognize and reward scientists who have significantly contributed to the treatment and prevention of cancer. GM presents three awards annually: the Charles F. Kettering Prize for the most outstanding recent contribution to the diagnosis or treatment of cancer; the Charles S. Mott Prize for the most outstanding recent contribution related to the causes or ultimate prevention of cancer; and the Alfred P. Sloan Jr. Prize for the most outstanding recent basis science contribution to cancer research. Each prize consists of a gold medal and $100,000.



GLOBAL PRESENCE

General Motors is the largest U.S. exporter of cars and trucks and has manufacturing, assembly, or component operations in 50 countries. GM has a global presence in more than 190 countries. About one-third of GM's sales are generated outside North America, and the company hopes to draw half of its annual revenues that way by 2006. Major markets for exports are Latin America and the Middle East, but exports to the Asia-Pacific region are increasing.

General Motors International Operations, based in Zurich, Switzerland, operates 34 manufacturing and assembly facilities outside of North America. Its 44 sales and marketing operations are located on five continents. GM's international operations are organized into General Motors Europe, Latin America, Africa, Middle East Operations, and Asia-Pacific Operations.

GM would like to dominate the emerging consumer markets in eastern Europe and Russia. GM is also opening plants in Russia, Argentina, China, India, Indonesia, and Thailand. In Russia, Chevrolet Blazers, Cavaliers, and Transports are on the road. The company will invest $2.5 billion in expanding its Asian manufacturing operations and continues to expand in India, with GM, Delphi, Hughes Electronics, GMAC, and GM's Locomotive Group. Under GM chairman Jack Smith, "GM has launched the largest manufacturing expansion in company history—all outside the United States," according to a November 1997 Detroit News article.



EMPLOYMENT

General Motors is one of the largest employers in the world. In addition, GM also offers a Global Intern Program and a Global Cooperative Education Program. The intern program offers college students on-the-job experience through temporary full-time positions during college and university summer break periods. College students work throughout the year in GM's co-op program, with work sessions arranged to accommodate class schedules.

General Motors offers its employees one of the most comprehensive benefits programs in the country. GM benefits include a choice of health care plans, life and disability insurance, a savings-stock purchase program, retirement program, product discounts, and paid holidays and vacations.


SOURCES OF INFORMATION

Bibliography

"auto sales pace likely to cool, analyst says."detroit free press, 11 april 2002.

blumenstein, rebecca. "gm doubles net on strong factory sales." the wall street journal, 27 january 1998.

bowe, christopher. "gm pins hopes on cost savings." financial times, 19 march 2002.

chappell, lindsay. "chevy topples ford as sales leader." forbes, 1 march 2002.

flint, jerry. "bye-bye oldsmobile, hello scion." forbes, 11 march 2002.

general motors 2001 annual report. available at: http://www.gm.com.

"general motors corporation." hoover's handbook of american business 1998. austin, tx: the reference press, 1997.

"general motors corporation." moody's handbook of common stocks. new york: moody's investor's service, inc., 1997.

"general motors." standard & poor's stock reports. new york: standard & poor's, 1998.

howes, daniel. "gm now running leaner, faster." detroit news, 2 november 1997.

morris, thomas v. if aristotle ran general motors: the new soul of business., new york: henry holt and co., 1997.

paul, anthony. "indonesia: life under the volcano." fortune, 13 april 1998.

shnayerson, michael. the car that could: the inside story of gm's revolutionary electric vehicle. new york: random house, 1996.

taylor, alex, iii. "the big three's dilemma." fortune. 16 march 1998.

tenreiro, michael. "general motors." the value line investment survey, 13 march 1998.


For an annual report:

telephone: (800)331-9922


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. general motors' primary sics are:

3711 motor vehicles and car bodies

3714 motor vehicles parts and accessories

6159 miscellaneous business credit institutions

also investigate companies by their north american industrial classification system codes, also known as naics codes. general motor's primary naics codes are:

327211 flat glass manufacturing

333924 industrial truck, tractor, trailer and stacker machinery manufacturing

336111 automobile manufacturing

336211 motor vehicle body manufacturing

336399 all other motor vehicle parts manufacturing

522298 all other non-depository credit intermediation

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General Motors Corporation

General Motors Corporation

AN AMERICAN REVOLUTION CAMPAIGN
BREAK THROUGH CAMPAIGN
THE CADDY THAT ZIGS CAMPAIGN
EV1 INTRODUCTION CAMPAIGN
HUMMER CAMPAIGN
LOOKING FOR MR. GOODWRENCH CAMPAIGN
START SOMETHING CAMPAIGN

300 Renaissance Center
PO Box 300
Detroit, Michigan 48265-3000
USA
Telephone: (313) 556-5000
Web site: www.gm.com

AN AMERICAN REVOLUTION CAMPAIGN

OVERVIEW

Chevrolet was a division of the General Motors Corporation (GM), the largest car manufacturer in the United States. Long facing pressure from Japanese automakers such as Toyota, the company decided to revamp its vehicle lineup in 2004 by launching 10 new and redesigned models under a single campaign, "An American Revolution." This marked Chevrolet's first division-wide marketing push in more than a decade.

The campaign was headed by Michigan-based ad agency Campbell-Ewald. Beginning with a television commercial on December 31, 2003, during Dick Clark's Primetime New Year's Rockin' Eve, "An American Revolution" featured dozens of TV spots, each featuring a vehicle in the company's fleet. Key spots promoted the sports-car model Corvette C6 and the SSR truck. Chevrolet reached out to many demographics, using "An American Revolution" as a flexible umbrella that encompassed many targeted mini-initiatives. This included a male-focused print campaign for the Silverado truck and a hip-hop themed radio and television campaign for the Impala and HHR. The campaign relied on exposure during key events, including New Year's Eve, the Super Bowl, the Vibe Awards, and the 2004 Summer Olympics.

The campaign was mostly successful. Many models, such as the Corvette and the Impala, had strong sales numbers. Consumers responded favorably to the new commercials, which all fared well in USA Today's Ad Track surveys, with 26 percent of respondents giving the campaign the highest score possible (against an industry average of 16 percent). At 98 percent, dealer participation was impressive. The company also generated significantly more traffic at its website and maintained its high public profile. Nevertheless, some individual lines, especially the SSR, did not sell well.

HISTORICAL CONTEXT

Chevrolet was founded in 1911 by Louis Chevrolet, a Swiss-born race-car driver, and William Durant, a former executive at General Motors. By producing cars such as the 1912 Classic Six, a five-passenger sedan, the company soon became successful enough for Durant to buy a majority of GM's voting stock. Soon thereafter Chevrolet merged with GM and became a separate division of the older company. GM dominated vehicle sales in the United States throughout the twentieth century, with Chevrolet as its premier line. By 1963, in fact, 1 out of very 10 vehicles sold in the United States was a Chevrolet.

The brand featured a number of well-known vehicles over the years, including the 1957 Bel Air, which would later be known as the "'57 Chevy," and the most recognizable American sports car, the Corvette. The Corvette was introduced in the early 1950s and became the most famous vehicle in the entire Chevrolet line. Production on the car continued through the twenty-first century, making it Chevrolet's most established vehicle.

In the face of strong competition from such competitors as the Toyota Motor Corp., Chevy decided to update much of its fleet in a 20-month period beginning in January 2004. Ten of the vehicles would be launched in that period: the cars models Malibu Maxx, Aveo, Cobalt, Corvette C6, Uplander, and Impala; the trucks SSR and Colorado; and the sports utility vehicles (SUVs) Equinox and HHR.

As Chevrolet's signature car, the Corvette was to be the centerpiece of the campaign. The SSR was also important to the launch. Based on Chevy's midsize SUV, the Trailblazer, the SSR was a stylized, convertible truck that Chevrolet hoped would prove popular enough to boost the sales of its other trucks.

TARGET MARKET

The target market for the campaign varied from vehicle to vehicle. The SSR and Colorado trucks were aimed at men, especially those in their 20s and 30s. At a price of more than $40,000 per vehicle, the SSR would have to find a lucrative audience of young professionals to be successful.

Chevrolet also used the "American Revolution" campaign to reach out to minority consumers, particularly African-Americans. The Impala and HHR were especially important to that outreach. The company also made a push for Latin-American consumers. The Accent Marketing agency of Miami was hired to run the parallel Spanish-language "Subte" (Join Us) campaign. The campaign featured television spots that aired on Spanish-language stations such as Telemundo and Univision as well as radio spots and print ads.

COMPETITION

Chevrolet's traditional competition came from GM's primary American competitors, the Ford Motor Company and the Chrysler Group (the American division of DaimlerChrysler, responsible for the Chrysler, Jeep, and Dodge brands). The company was also under pressure from the Japanese automaker Toyota Motor Corp., whose subsidiary, Toyota Motor Sales, U.S.A., was making heavy inroads in the U.S. market. In 2003 Toyota passed Ford to become the second-largest automaker in the world, right after Chevrolet's parent, GM. The Japanese automaker moved 6.78 million units worldwide in 2003 alone, versus 8.6 million units sold worldwide that year by GM.

Chevrolet was especially concerned about the SSR's sales prospects. It would be entering the already crowded light-truck field. Nevertheless, Chevy hoped to move at least 13,000 units of the SSR. This was a relatively conservative number that reflected the strength of the light-truck market in the United States. Both the SSR and the Trailblazer faced stiff competition from the Ford Explorer, which remained the top-selling vehicle in its class in 2003. The Corvette, Chevrolet's biggest name, would be challenged by other sports cars, including the Porsche 911, the Audi 350Z, and the BMW Z4.

MARKETING STRATEGY

Chevrolet was faced with the daunting task of introducing new models for 10 separate vehicle lines, or half of its fleet. To meet this challenge the company unified all of its advertising under one overarching campaign, "An American Revolution." This tagline reflected the dynamic new products Chevy was introducing. The campaign was created by the Michigan-based agency Campbell-Ewald and cost a reported $800 million to implement.

Chevrolet had many goals for the campaign. Most importantly, it wanted to establish strong sales for all of its new vehicles, especially key models such as the Corvette C6. Dealer participation in the company's most recent campaign, "We'll Be There," had been only about 20 percent. Chevy wanted this number to improve significantly. It also wanted to maintain a high level of customer awareness for the company in general.

The campaign was the first company-wide initiative since the "Heartbeat of America" campaign in the 1980s. It kicked off on New Year's Eve 2003–2004, during the television special Dick Clark's Primetime New Year's Rockin' Eve. Chevrolet was the primary sponsor of the event, the most-watched New Year's celebration on American TV. It also bought a major billboard in Times Square to capitalize on the New Year's Eve publicity.

The first spot of the campaign—and the focus of Chevy's New Year's advertising—was the "Car Carrier" spot. Helmed by major Hollywood director Michael Bay, whose films included the blockbusters Armageddon and The Rock, it featured six new Chevrolets that were being introduced in 2004. The spot starred the premier vehicle in Corvette's fleet: the Corvette. Each new vehicle made an appearance as it was loaded onto a car carrier. The SSR received prominent placement, dramatically backing into the frame at the end of the spot.

The New Year's launch underscored one of Chevrolet's key goals for the campaign: to advertise at major events. This approach continued with the debut of two major spots at the Super Bowl just a few weeks later. The SSR was the star of one of these spots, titled "Soap." It featured children getting their mouths washed out with soap after their response to seeing the SSR for the first time. The commercial met with controversy for its implied profanity and only ran for a few months. It made an impression on viewers, however, and was regarded as one of the best spots on the broadcast, which was acknowledged to be the biggest night in TV advertising.

A BLOCKBUSTER ADMAN

Chevrolet kicked off its major "An American Revolution" campaign on December 31, 2003, during the TV program Dick Clark's Primetime New Year's Rockin' Eve, with a commercial titled "Car Carrier." The spot had to be a blockbuster, because it would introduce six brand-new and newly designed vehicles as well an initiate an umbrella campaign that would last 20 months. To ensure success Chevy turned to a blockbuster director: Michael Bay.

Bay had been one of Hollywood's most successful action-movie directors since his 1995 debut film, Bad Boys, which helped make Will Smith a major movie star. He also directed one of the biggest hits of 1996, The Rock, starring Sean Connery and Nicolas Cage. His most successful picture, however, was the Bruce Willis vehicle Armageddon, which was the highest-grossing film globally in 1998. Though often derided by critics as vapid, Bay's films were almost always major box-office hits.

Bay had long been a successful director of commercials. His first spot, for the American Red Cross, won a prestigious Clio Award. Spots directed by Bay also won several Gold Lions at the Cannes International Advertising Festival, an event dubbed the "Olympics of advertising" for its competitiveness and respect within the industry. Bay did work for a number of the world's most recognized brands, including Budweiser, Nike, Levi's, and Coca-Cola.

The Summer Olympics gave Chevrolet a chance to premiere a TV commercial featuring its Silverado truck. The spot depicted a Silverado acting as a tow truck for a car carrier. It recalled the New Year's spot that kicked off the entire campaign while also underscoring the sturdy, reliable power of Chevrolet's signature truck. Later, another key move of the campaign focused on the Silverado as well. In order to unite all of its advertising under one banner, Chevrolet discontinued its popular "Like a Rock" campaign, which had run for more than a decade. Featuring the eponymous song by Bob Seger, the "Like a Rock" spots had helped the Silverado become one of the most popular trucks in the United States. In anticipation of a 2006 redesign, however, Chevrolet decided that a new approach was needed to keep the brand fresh.

To reach the male consumers that composed the major target market for Chevy trucks, Chevrolet used both television spots and print ads. The key spot of the campaign featured the catchphrase "Men love trucks. Why? Because trucks don't ask why." The print campaign was built around a 10—page insert called "Men, Woman, and the Truck: A Relationship Handbook." These inserts were placed in publications with large male readerships, such as Popular Mechanics and Men's Health. The ads were meant to underscore the Silverado's appeal to men in a humorous way, by tweaking traditional "macho" notions about men and women. In addition, retired National Football League (NFL) star Howie Long was signed on as a spokesman for entire Chevy truck line.

For the HHR and Impala lines, Chevrolet devised commercials around the rap group Slum Village in an effort to reach younger fans of hip-hop music. Several television and radio spots were produced, including two 60-second radio spots for the Impala. The television commercials, with stylized visuals and quick-cut edits, were meant to look like music videos. They featured the song "EZ Up," a single by Slum Village. The group itself was chosen because of its Detroit roots, and the spots prominently featured Detroit scenes. These commercials were intended to show the hipness of the Chevrolet brand. They also targeted urban consumers and ran during popular hip-hop themed events, including the Vibe Awards. Created by Vibe magazine, one of the most successful urban-music-themed publications, the awards spotlighted the best hip-hop performers in the United States.

OUTCOME

The campaign was successful on most fronts. Chevrolet accomplished its goal of increasing dealer participation. Ninety-eight percent of United States Chevy dealers participated in the campaign. Traffic at the company's website increased significantly, with individual vehicles, such as the Aveo, seeing 280 percent more visitors than they were before 2004. The campaign's television commercials drew praise from critics, who found them bold and interesting. More importantly, consumers responded to the spots. According to a Millward Brown study conducted in late 2004, the "American Revolution" campaign was the seventh-most-recognized campaign at that time.

The spots as a group drew a positive response in USA Today's Ad Track survey as well, with 26 percent of respondents holding a highly favorable view of the campaign, versus an industry average of only 16 percent. Sales were solid. The Corvette C6, which featured prominently in the campaign's kickoff, sold out for the year. The Impala also performed impressively, moving 290,259 units to become the top-selling domestic four-door passenger vehicle in 2004; and the Trailblazer, with 283,384 units sold, made stiff inroads against the class-leading Ford Explorer's 339,333 units. Some lines disappointed, however. The SSR had surprisingly weak sales, moving less than 9,000 units. Chevrolet later discontinued the line.

FURTHER READING

Carter, Bill, and Stuart Elliott. "New Creative Director for Chevrolet Account." New York Times, May 19, 2004.

Geist, Laura Clark. "Silverado Joins Chevy Revolution." AutoWeek, November 18, 2005.

Greenberg, Karl. "Chevy Silverado Sheds 'Like a Rock.'" Adweek, October 07, 2005.

Howard, Theresa. "'Revolution' in Ad Campaign." USA Today, October 17, 2004.

Krebs, Michelle. "In Detroit, Home Teams Swing for the Fences." New York Times, January 4, 2004.

―――――――. "In Detroit, the Dogs Have Their Day." New York Times, January 9, 2005.

Piligan, Ellen. "Chevrolet Greets the New Year with an Ambitious Campaign to Introduce 10 Vehicles in 20 Months." New York Times, December 19, 2003.

Robinson, Eugene. "GM's Collapsing Ladder." Washington Post, November 25, 2005.

Sanneh, Kelefa. "Mixing Rednecks and Blue States." New York Times, November 8, 2004.

Smith, Stephanie. "Publishers Ponder Auto Ads." Adweek, December 05, 2005.

                                   Guy Patrick Cunningham

BREAK THROUGH CAMPAIGN

OVERVIEW

Cadillac, a division of Detroit-based auto giant General Motors Corporation (GM), had long been GM's luxury division, offering higher-priced, roomier vehicles. The brand had been in trouble for several years, however, and saw sales tumble almost 10 percent between 2000 and 2001. One of the primary culprits was Cadillac's aging customer base. By the early 2000s the average age of Cadillac buyers was 65 years old. Younger drivers tended to prefer European and Japanese luxury automobiles such as BMW, Mercedes, and Lexus. To help reach younger consumers, Cadillac developed the CTS, a sedan that was priced as an "entry" luxury car, along the lines of the BMW 3 Series.

Cadillac earmarked nearly a quarter of a billion dollars for a new campaign, which was implemented by advertising agency D'Arcy Masius Benton & Bowles. Titled "Break Through," the campaign revolved around a television spot that premiered at the 2002 Super Bowl. The commercial first invoked the brand's post-World War II heyday by showing a young professional driving a 1959 Cadillac. The commercial really kicked into gear with the arrival of the new CTS, which passed the 1959 vehicle on the open road while Led Zeppelin's "Rock n' Roll" played in the background. Led Zeppelin was one of the most successful rock bands of the 1960s and 1970s, and Cadillac believed that the band's iconic status and hard-rock sound offered the right combination of nostalgia and edge.

Representing a major achievement for the campaign, the average CTS buyer was 55 years old. Cadillac expanded the "Break Through" campaign for several years, making it a division-wide affair. It became a key component in the company's efforts to revitalize itself.

HISTORICAL CONTEXT

Cadillac rose from the remains of the Henry Ford Company. After Ford left the company, his former partners decided to continue in the automobile business. In 1902 they formed the Cadillac Automobile Company. The organization took its name from Antoine de la Mothe Cadillac, the founder of the company's home city of Detroit. In 1909 Cadillac was purchased by General Motors. As the twentieth century progressed, GM grew to become the largest automaker in the world.

Cadillac developed into GM's luxury brand. The vehicle never sold well outside the United States, but within the country Cadillac became synonymous with quality and luxury. By the early 2000s, however, the brand was under pressure from European and Japanese luxury brands such as Lexus and BMW. Between 2000 and 2001 the company's sales dropped about 9 percent, bringing to 40 percent the sales slide that had been going on since the mid-1980s.

As Cadillac's customer base aged, the brand began to get a reputation as an "older" company aligned with establishmentarian attitudes. In fact, by 2001 the average Cadillac buyer was 65 years old. This presented a problem for GM because the division's future depended on attracting baby boomers—people who were in their 40s and 50s in 2001. The company also had trouble getting women to purchase its vehicles. In an effort to reach out to younger drivers, for model year 2003 Cadillac replaced its sagging Catera model with the CTS, which was designed to be sleeker and flashier than the Catera. The CTS operated on a 5-speed transmission, reminiscent of that used in BMWs, and it used a 220-horsepower V-6 engine, which provided a smooth ride. It also offered OnStar, a computerized guidance system.

TARGET MARKET

The new CTS was positioned as an entry-level luxury car for drivers who tended to be well established in their careers. It was intended for professionals and other consumers who were interested in a roomier, more luxurious ride but who were put off by the price of such Cadillac mainstays as the Seville, a midsize luxury vehicle that would soon be phased out in favor of the STS. Cadillac hoped to attract a younger audience for the CTS: baby boomers (those born from World War II to the early 1960s) and members of Generation X (those born in the late 1960s and 1970s).

The company was concerned that Cadillac was being seen by consumers as an older, un-hip brand. Image-conscious boomers tended to shy away from Cadillac in favor of flashy foreign luxury brands such as BMW and Lexus. The company also felt that it needed to appeal to more women drivers. Cadillac wanted to reach those consumers with the CTS, with the anticipation of luring them to buy higher-priced Cadillac models, like the Seville/STS, in the future. While the company enjoyed its reputation as a classic luxury car, it wanted to freshen up that image to help meet the challenges of the early 2000s.

COMPETITION

As an affordable, entry-level luxury car, the CTS competed with similarly priced vehicles from other luxury automobile brands. Chief among these was the Lexus ES 300, manufactured by the Toyota Motor Corporation's Lexus division. The ES 300 was the latest in the popular ES sedan line, first introduced in 1989. Lexus introduced the ES 300 in model year 2003, at the same time that Cadillac brought out its new CTS. Because the ES 300 launch was a major priority for Lexus, the CTS faced intense competition from the beginning.

Acura would also be launching a new design of its luxury vehicle the TL, though with less fanfare than Lexus. Other imports that competed directly with the CTS included the Mercedes-Benz C-Class, the Audi A4, the BMW 3 Series, and the Infiniti G35, made by a subsidiary of Nissan. The Ford Motor Company's Lincoln luxury division was long considered a chief competitor for GM's Cadillac division. Lincoln, however, did not have a strong entry-level vehicle available at the time. Its flagship model, the Town Car, did draw from some of the CTS's market share, but it was more expensive and competed more directly with the Cadillac Seville.

MARKETING STRATEGY

Cadillac wanted its new campaign to accomplish many different things. Most importantly, it needed to introduce the CTS successfully. Its other goals were to reverse the previous year's substantial decline in sales and to burnish the company's image in relation to import luxury brands. Cadillac enlisted ad agency D'Arcy Masius Benton & Bowles, based in Troy, Michigan, to run its new campaign, which would cost more than $240 million. The agency had worked with Cadillac before and understood the company's concerns.

To drum up advance publicity, Cadillac offered the CTS for use in The Matrix Reloaded, the 2003 sequel to the popular science fiction movie The Matrix. At the core of the campaign was a series of several television spots, all of which featured the Led Zeppelin song "Rock n' Roll." Led Zeppelin, who recorded nine studio albums between 1968 and 1980, was one of the first hard-rock bands and also one of the most enduringly popular. While the band still appealed to younger fans, its original loyal fan base was now comfortably middle-aged.

THE CADILLAC OF ROCK BANDS

In 2002 Cadillac used Led Zeppelin's 1971 song "Rock n' Roll" as the soundtrack to the company's Super Bowl commercial introducing the new CTS. The spot was so successful that Cadillac continued the campaign for several years, using "Rock n' Roll" as the backdrop for numerous spots that highlighted its other vehicles.

Led Zeppelin was a British-based hard-rock band that had sold more than 100 million records in the United States alone by the time the spot was filmed. It was formed in 1968 by former Yardbirds guitarist Jimmy Page. The band also featured singer Robert Plant, bassist John Paul Jones, and drummer John Bonham. With such songs as "Whole Lotta Love," Led Zeppelin quickly established itself as the premier hard-rock band of its era. Its untitled fourth album, released in 1971, was its most successful outing. The album featured "Rock n' Roll" as well as the band's best-known song, "Stairway to Heaven," which for decades was one of American radio's most-requested songs.

The band continued to record and tour throughout the 1970s, releasing multiplatinum albums such as Houses of the Holy (1973) and Physical Graffiti (1975), until the tragic death of John Bonham on September 5, 1980. While the band reformed for 1985's Live Aid benefit concert, and Page and Plant recorded together again in the 1990s, the band never toured or recorded again.

It was believed that Led Zeppelin's music possessed a combination of nostalgia and edge that would appeal to baby boomers. The band's untitled fourth record, featuring the classic-rock staple "Stairway to Heaven" as well as the hard-charging "Rock n' Roll," was one of the best-selling records of the 1970s and was seen by some baby boomers as a touchtone of their youth. Because Led Zeppelin had an outlaw reputation in its heyday, attracting various stories and urban myths about its members' over-the-top parties and decadent lifestyle, the band never acquired a stuffy reputation, even with the passage of time. Also, the band's classic status—it was in the Rock n' Roll Hall of Fame and was generally regarded as the exemplar of the hard-rock genre—helped to underscore Cadillac's reputation as the classic luxury car.

The campaign kicked off during the 2002 Super Bowl on Fox television, at a cost of more than $10 million. The event, which served as the championship game for the National Football League, was typically the most watched television event of the year, and the advertisements that ran during it garnered not only a large audience but also a significant amount of media attention. The Cadillac spot began by showing a young professional driving a vintage 1959 Cadillac. He was stuck in a traffic jam but then managed to turn off down a side street, which led to an open highway. At this point the Led Zeppelin music began, and a CTS appeared in the rearview mirror. A unseen announcer then declared: "A legend—reborn." Soon the CTS passed the older car and rocketed down the open road, as the music played louder and louder. The spot closed with the tagline "Break Through."

Other brands, including Coors Light beer and Sheraton Hotels, also used popular 1960s and 1970s songs in their advertisements during this time. As baby boomers aged, they continued to buy products that celebrated 1960s and 1970s recording artists, such as the Beatles Anthology CDs. Led Zeppelin itself had released several popular box sets in the 1990s, and in 2003 it put out a successful collection of live performances recorded in 1972.

On January 27, 2004, Cadillac paid to become the official vehicle of Super Bowl XXXVIII, which was broadcast on CBS. Cadillac featured a new 60-second spot called "Turbulence" that expanded upon the "Break Through" campaign. It featured a voice-over by the actor Gary Sinise, who had played a major role in the Oscar-winning 1994 film Forrest Gump. The commercial retained "Rock n' Roll" on the soundtrack and highlighted four key Cadillac models: the Escalade and SRX sports utility vehicles (SUVs), the XLR, and the CTS. The spot showed the four cars driving in the desert. The CTS, Escalade, and SRX all met at an intersection, creating a swirl of "turbulence" that eventually subsided to reveal an XLR with its top down, driven by a young woman. Cadillac ran three other spots during the broadcast, featuring the Escalade, SRX, and XLR individually. All three ended with the "Break Through" tagline.

The musical focus of the spot dovetailed with Cadillac's decision to offer XM radio in its DeVille, Seville, CTS, and Escalade models. XM was a popular satellite-radio service that provided a diverse array of music, sports, and entertainment channels. The subscription service required a special radio, which Cadillac began to offer for the CTS and other lines.

OUTCOME

The CTS did not fare well competing head-on with BMW or Mercedes, but its competitive pricing—it came in at under $35,000—meant that Cadillac could reorient its campaign to take on the Honda Accord and Toyota Camry. Otherwise, the campaign met with success. Automobile journalists awarded the CTS the North American Car of the Year at the Detroit-based North American International Auto Show in 2002.

Cadillac was pleased with the "Break Through" campaign results. Eventually the company's website even carried the "Break Through" tagline. As late as 2005, 85 percent of respondents to an internal survey still saw the campaign as fresh and different. Most importantly, within nine months of the "Break Through" campaign's inception, the average age of CTS buyers was down to 55, a marked improvement over the Cadillac division's average of 65. Nearly 40 percent of those consumers were women. Internal data showed that approximately half of CTS buyers would not have previously considered purchasing a Cadillac.

FURTHER READING

Cantwell, Julie. "The Big Idea Is Even More Important Now." Automotive News, January 14, 2002.

―――――――. "Cadillac Launches 'Break Through' Ad Campaign to Reverse Sales Slide, Change Image." Automotive News, January 28, 2002.

Elliott, Stuart. "Despite Millions of Viewers, the Super Bowl Is Not Quite So for Madison Avenue." New York Times, February 1, 2002.

Guilford, David. "A Cadillac Century: At 100, Cadillac Shows Signs of Life." Automotive News, August 22, 2002.

Hendry, Maurice, et al. Cadillac, Standard of the World: The Complete Seventy-Year History. New York: Dutton, 1973.

Howard, Theresa. "Hard-Rocking Ads Aim for All Ages." USA Today, July 27, 2003.

Salmieri, Stephen. Cadillac. New York: Rizzoli, 1985.

Walker, Rob. "Ad Report Card: Cadillac's Rock of Ages." Slate, April 15, 2002. Available from 〈http://www.slate.com/id/2064338/〉

Yorke, Ritchie. Led Zeppelin: The Definitive Biography. Lancaster, PA: Underwood-Miller, 1993.

                                   Guy Patrick Cunningham

THE CADDY THAT ZIGS CAMPAIGN

OVERVIEW

Although ownership of a Cadillac was for decades widely considered a part of the "American Dream," Cadillac Motor, a division of General Motors, saw its share of the luxury-car market begin to decline in the 1990s. The company also saw the rise of a new subcategory in the luxury-car field, the entry-level luxury car (or "entry-lux"), exemplified by new models such as the Lexus and new, lower-priced Mercedes models. Cadillac responded to these trends by taking a risk in 1997 with a new entry-lux model, the Catera. The sporty, comparatively affordable Catera was unlike anything Cadillac had ever sold before. It was also the first Cadillac made entirely overseas (in Germany).

To launch this groundbreaking new model, Cadillac implemented a marketing campaign unlike any it had done before, calling the Catera "The Caddy that Zigs." The campaign—which included a variety of television and print advertisements—used humor and clever copy to communicate to car buyers that the Catera was a whole new kind of Cadillac. The campaign even used a quirky red cartoon duck as a prominent symbol, another move that broke with the more staid marketing usually associated with Cadillac.

The campaign received harsh criticism from media and auto-industry critics. Surveys also showed the public had a mixed reaction to the campaign (especially the duck). But Cadillac executives were pleased with the sales figures for Catera's first year, and they reported that the campaign overall had made a positive impression on the public's traditional perceptions of the car maker.

HISTORICAL CONTEXT

Since its early days Cadillac was a company that specialized in luxury cars. Eventually car buyers identified the Cadillac name as synonymous with American luxury cars ("Cadillac" even appears in some dictionaries with the definition "luxurious"). Marketing campaigns emphasized the car maker's tradition and quality and were aimed at an older, wealthy, male demographic.

But the emergence of luxury cars from foreign manufacturers made a dent in Cadillac's market share. Competitors like Mercedes-Benz, BMW, and Lexus gradually eroded Cadillac's long-time dominance of the luxury field: from 1990 to 1996 Cadillac's share of the luxury-car market plunged dramatically from 22.2 percent to 14.8 percent.

One of the reasons for the drop was that other car makers were building the popular entry-lux vehicles. Traditional luxury vehicles controlled 52 percent of the overall luxury market in 1991 but only 34 percent four years later. During the same time period, the market for entry-lux cars grew from 25 to 39 percent.

TARGET MARKET

The typical buyer of a Cadillac automobile was male, in his late 50s or 60s, affluent, and usually but not always college-educated. David Nottoli, Cadillac's Catera brand manager for 1997, said the Catera campaign sought a different market. "We were looking at the 45-50 age bracket," he said. In addition to this narrow market, Cadillac wanted to expand on its traditional customer base by pursuing more female customers. The car maker was hoping 50 percent of Catera customers would be women. In addition, Cadillac hoped to draw an audience that was almost 100 percent college-educated. Nottoli added that non-General Motors customers were also targeted by the Catera campaign.

According to the Catera Brand Book for Cadillac dealers, "The target buyer for this car is young enough to be the son (or, just as likely, daughter) of people currently driving DeVilles [a larger, older Cadillac model]. Their definition of luxury bears no resemblance to their parents' generation. For them … BMWs, Volvos, and Infinitis say more than Cadillacs and Lincolns. When it comes to luxury, Cadillac is status quo. And these buyers don't want status quo."

COMPETITION

By 1997 Cadillac was increasingly concerned about its decreasing market share as well as the growing popularity of entry-lux autos. The buyers in this new market tended to be younger, more performance-conscious, and more open to automobiles built overseas such as Mercedes-Benz and Lexus. Cadillac executives' attention was especially drawn to the cases of two competitors' vehicles launched in the 1990s: The Lexus ES 300, which sold 39,367 units in its first year (1992); and the Mercedes-Benz C class, which sold 23,793 units in its launch year (1994).

Cadillac's Nottoli noted that these cars were introduced with essentially the same marketing strategies traditionally used for upscale automobiles. Television and print ads were geared for an affluent audience, with dignified shots of cars rolling along country roads or displayed in luxurious settings. Cadillac knew it had to pursue a different style of marketing campaign for its Catera, as it wanted to make a major impact in the competitive entry-lux market.

MARKETING STRATEGY

To launch its ambitious Catera campaign Cadillac worked closely with its national advertising agency, the Bloomfield, Michigan, office of the international firm D'Arcy Masius Benton & Bowles (DMB&B). The car maker spent an estimated $40 million on the campaign. According to Nottoli, Cadillac knew most car buyers saw the company as the manufacturer of serious, luxury automobiles. To challenge this perception, Cadillac wanted to emphasize a lighter side in the Catera campaign. "We tried to focus on fun," he said.

They started with the campaign's slogan, "The Caddy that Zigs." Although auto enthusiasts and Cadillac owners had long called the cars by the "Caddy" abbreviation, the company had never used the shortened term in any advertisement before the Catera. This simple break with tradition was an important one for Cadillac, as the company wanted to emphasize that the Catera was different from any car the maker had produced before.

When Cadillac and DMB&B faced the issue of which symbol or spokesperson to use for the campaign, they turned to the family crest of the founder of Cadillac (the crest is on each automobile made by the company). That crest featured six ducks—actually mythical birds called merlettes that are similar to ducks. In the crest all six ducks face left. Cadillac officials decided to play off the crest—a symbol rooted in years of family and company tradition—for its Catera "spokesperson." Cadillac and DMB&B creative teams decided to turn one of the ducks in the crest to the right. The idea was that the duck "zigged" away from Cadillac tradition, just like the Catera. Thus the slogan "The Caddy that Zigs" was born.

The use of a cartoon duck—red, no less—was meant to emphasize fun and irreverence, Nottoli said. Cadillac knew the use of a cartoon animal to promote a luxury car was not without its risks, but the company also knew it had to take chances to reach its younger target market. "The goal of the duck was to show how luxury and fun could come together," Nottoli said. "It was representative of a whole attitude."

The 1997 Catera campaign got off the ground in January with a spot in a prime advertising location: the Super Bowl. The Catera spot, featuring the red duck and model Cindy Crawford, generated quite a bit of attention—not all positive—for the car maker. Several more television spots followed, all emphasizing the duck and a younger, irreverent attitude. One full-page magazine advertisement played on this attitude with a paean to "duck logic": "Ducks think differently than you and me. They would never forget a birthday. They have never sponsored a negative political ad. They avoid talk shows like the plague. They dance in the rain and take great pains not to walk around the puddles." Ads later in the year noted the performance features of the car. One 30-second television spot was set on a curving, mountain road. The Catera drove along with two competing entry-lux cars following. The voiceover announced, "You follow the leader. You follow the pack. Then you get a Catera. Suddenly, you don't follow anything." The background music was upbeat techno-pop, and the spot closed with the "Caddy that Zigs" slogan and the duck.

In a unique promotional move, Cadillac displayed Cateras at an Atlanta mall for five weeks in January and February 1997. Cadillac-trained specialists were on hand to answer questions about the cars, and special kiosks were set up for curious shoppers. The idea was to expose the Catera to the public in an environment not traditionally associated with automobiles, with the goal of interesting consumers who might not normally consider buying a Cadillac in test driving a Catera. Figures showed about 70,000 people visited the mall display.

SUPER BOWL SPOT NOT SUPER FOR CADILLAC

It was the 1997 Super Bowl, the most prestigious advertising platform available to companies seeking a prime audience. Cadillac bought a 45-second spot during the second quarter of the game. They then readied an ad starring supermodel Cindy Crawford and the red cartoon duck used as a spokes-symbol for the Catera. The car maker hoped Crawford and a witty script would give Catera the younger buzz they were looking for.

The spot aired and won a few raves. But then the criticism started. As the London Daily Telegraph described it, "There in the driving seat was supermodel Cindy Crawford, kitted-out in black leather micro skirt and thigh-high leather boots, looking like she was on her way to an Emma Peel fan-club meeting. What's more, Ms. Crawford is discussing the car's finer qualities with a cartoon duck, informing the feathery fellow that 'This is the Caddy that zigs'—presumably followed by a particularly impressive zag." Women's groups were outraged at the choice of clothing for Crawford, especially the leather miniskirt and go-go boots. They did not find the clever copy amusing, either.

Facing a firestorm of criticism, Cadillac pulled the spot from rotation. When combined with the widespread criticism of the poor maligned duck, the 1997 Catera campaign confronted more than its share of slings and arrows.

Other innovative direct marketing techniques were employed. One Cadillac dealer took Cateras to golf and tennis tournaments, events populated by affluent, younger car buyers. The same dealer also used Cateras to taxi people to and from National Symphony Orchestra performances. In another unique move, a six-page fold-out ad, which ran in fashion magazines, tied the Catera's styling to the work of trendy fashion designers.

OUTCOME

There were strong, divergent views on how successful the 1997 Catera campaign was. For Nottoli, the campaign was a winner for bottom-line reasons: the Catera sold well in its launch year. "In the end you judge the outcome based on results," Nottoli said. Those results included the sale of 25,411 Cateras in the vehicle's first year, surpassing Cadillac's sales goal of 25,000. But Nottoli remarked that sales figures were not the only measure of success for the Catera campaign. He noted that the age of the typical Catera buyer—a factor that had been a crucial part of the marketing strategy—was lower than that of other Cadillac buyers. While Cadillac and industry experts differed on what the median Catera-buyer age was (while Cadillac claimed the median age was 52 years old, 13 years younger than the median age for traditional Cadillac buyers, auto industry observers claimed the age was closer to 58), Nottoli said the undeniable fact was that the car was bought by younger consumers.

The gender makeup of Catera buyers was also promising, Nottoli said. About 51 percent of Catera buyers were male, which was right on target for Cadillac's goal of having an equal number of female and male buyers. This gender equity was much different from the typical Cadillac customer base, and Nottoli said the Catera marketing campaign played a big part in drawing female customers.

In addition, Nottoli said the Catera was successful as a "conquest vehicle," an auto industry term for a car that brings in buyers who had previously not purchased a vehicle from that brand. In the case of the Catera, the campaign helped draw non-General Motors buyers into the Cadillac showrooms, another of the campaign's key goals.

While Nottoli considered the 1997 Catera campaign a success, he acknowledged problems, most notably the red duck. While Cadillac originally adopted the duck as a spokes-symbol to emphasize fun and irreverence, the cartoon character soon began receiving too much attention. "We couldn't get people off the duck," Nottoli said. "People took it too far. They had a love-hate relationship with the duck."

Criticism of the Catera campaign was consistent and strong. From the beginning of the campaign, viewers were critical of the use of the duck. They also questioned whether the target market would accept a Cadillac. USA Today's fourth annual survey of advertising agency creative directors reported it as one of the worst campaigns of 1997, writing, "More than a third of the panelists name Catera as their first choice for 1997's worst ad. Cadillac wants to attract younger viewers to its $30,000 car, but ad executives say it was a mistake to link a luxury brand in a commercial with a wise-cracking cartoon duck." In addition, USA Today's Ad Track survey reported that only 9 percent of consumers surveyed liked the Catera duck (below the 22 percent average) and only 11 percent found the ad campaign very effective (compared to a 25 percent average).

Cadillac dealers were also critical of the campaign, complaining that the Catera campaign focused too much on fun and not enough on the car's features. "We don't need a quack as our spokesman," Jacques J. Moore, president of a Cadillac dealership, told the Washington Post. "The Catera is a heck of a good car, an excellent car. We need an advertising campaign that sticks to the merits of the car, that emphasizes the quality of the Cadillac name."

Nottoli responded by saying that Cadillac was aware of the campaign's weaknesses. He added that his one regret was the campaign was a little too "silly" and not sophisticated enough. But, he added, "We took a risk. I'm glad we did."

Nottoli said focus groups conducted by Cadillac showed solid awareness of the Catera, but that awareness did not necessarily bring buyers to the point where they bought the car. He added that many focus group participants did not consider the Catera a Cadillac; they considered it to be a different car altogether. Cadillac owners also did not consider the Catera a "real" Cadillac, but rather a "little Cadillac," he said.

Nottoli said this was part of the "Cadillac baggage" the Catera marketing campaign fought to overcome. Cadillac's traditional image as a maker of big luxury cars for older people played a big part in the acceptance of the "Caddy that Zigs" message. "We didn't start with a clean slate," Nottoli said. "The Cadillac baggage hurt us."

In 1998 Catera advertising downplayed the duck and emphasized the car's performance features. The duck only appeared at the end of ads as an icon. Catera sales for 1998 were up considerably over sales in 1997, and the age of Catera buyers continued to decrease, Nottoli said, demonstrating the effectiveness of the "Caddy that Zigs" campaign.

FURTHER READING

Brown, Warren. "The Caddy They Ducked; Sporty Catera Hasn't Steered Younger Buyers to GM's Flagship Division." Washington Post, September 11, 1997.

"Cadillac Goes after Customers by Taking Catera to the Mall." Automotive News, June 26, 1997.

Crain, Rance. "If It Walks Like a Duck … Then Caddy Rises to Defense of its 'Entry Lux'." Advertising Age, September 29, 1997, p. 28.

Enrico, Dottie, and Melanie Wells. "Campaign 1997: Some Ads Win Kudos, Others in Death Throes." Salt Lake Tribune, December 21, 1997.

Halliday, Jean. "Caddy's Catera Will Be a Tough Sell." Advertising Age, August 19, 1996, p. 12.

"How the Ad Track Ads of 1997 Stack Up." USA Today, December 29, 1997.

Jackson, Kathy. "Catera Report Card: Missing Boomers on First Attempt." Automotive News, September 1, 1997, p. 3.

Pepper, Jon. "Cadillac Catera Ad Team Flying against Tradition." Detroit News, Jan. 26, 1997.

Simison, Robert L., and Rebecca Blumenstein. "Cadillac, Lincoln Struggle to Get Back in Luxury-Car Race." Wall Street Journal, July 3, 1997.

Washington, Frank S. "Caddy Hopes Catera Lures Younger Buyers." Automotive News, October 28, 1996, p. 6.

Washington, Frank S. "Cadillac: Pluck the Duck, Dealers Urge." Automotive News, February 10, 1997.

Washington, Frank S. "Catera Finds Red Duck Is a Lame Icon." San Diego Union-Tribune, December 6, 1997.

                                    Alden ScottCrow

EV1 INTRODUCTION CAMPAIGN

OVERVIEW

In December 1996 General Motors Corporation (GM) became the first major automaker in almost 80 years to market an electric car, dubbed the EV1. The car's debut came just months after the California Air Resources Board had reluctantly decided to postpone a mandate requiring that 2 percent of cars sold in the state by 1998 be powered by electricity. Regulators agreed to change the mandate to 10 percent by 2003, but only if automakers began voluntarily introducing electric cars. With the EV1, GM effectively shifted the discussion about electric cars from the fringe to the mainstream.

By most accounts, the car was a technological marvel. Its sporty aerodynamic design, which included an all-aluminum frame, magnesium seats, and low-resistance tires, earned GM engineers 23 patents. But while the introduction of the EV1 was undeniably a watershed event, there were obstacles to the car's success. It could travel just 80 to 90 miles before needing to be recharged, which took about three hours. The price was high, with lease payments coming to about $480 a month after various federal, state, and local tax incentives. And since there were only a handful of public charging sites, drivers would need to lease a charging unit for their garages or workplaces for another $50 a month.

Thanks to a steady stream of media coverage, there was pent-up curiosity about the EV1 when it became available on December 5, 1996. The $10 million advertising campaign developed by Hal Riney & Partners of San Francisco added to the mystique of the EV1. The campaign did not delve into the intricacies of the car's technology but instead was aimed at building awareness and excitement about the fact that an electric car was available and that GM was behind it. While the target market for the EV1 was expected to be affluent people with an interest in technology and the environment, the early stage of the campaign was aimed at reaching a broader, more general audience. Teaser billboards and newspaper ads inaugurated the campaign, which was kicked off in full force on December 5, 1996, with the broadcast of a $1.5 million television commercial that featured an endearingly lifelike brigade of home appliances.

HISTORICAL CONTEXT

During the 1990s California earned the dubious distinction of having the dirtiest air in the nation. Car and truck exhaust could be blamed for at least half of the state's air pollution, which spurred regulators to create a mandate for electric-powered vehicles. Similar clean-air mandates were in the works in other states, such as New York and Massachusetts that were also alarmed by worsening air quality. The laws that were passed varied, but in general they required automakers to begin offering vehicles that met the ultra-low-emissions-vehicle (ULEV) standard or the zero-emissions-vehicle (ZEV) standard.

The mandates were controversial. The principal question was whether states should mandate production of the cars and hope that consumers and ample public charging stations followed or if consumer demand should determine how many electric cars automakers built. GM's research suggested that consumers were receptive to electric cars, even if it meant sacrificing some of the conveniences they enjoyed with gas-powered automobiles. The lack of a public infrastructure was worrisome but not insurmountable to GM. In southern California, for example, utility companies had already begun installing charging sites in locations such as shopping centers, restaurants, hospitals, theaters, and public parking structures. By being the first to bring a car to market, GM would be able to stake a claim to technological leadership going into the next century.

Many in the industry believed that the EV1 and other electric cars could legitimize a new approach to transportation that would dramatically lessen air pollution. John Dunlap III, the chairman of the California Air Resources Board, was enthusiastic about the EV1: "This has the potential of being a revolutionary step." Others, however, worried that if the EV1 failed it could set back development of alternative-fuel vehicles for years to come.

TARGET MARKET

Not surprisingly, GM selected California as a launch state for the EV1. Arizona, the other launch state, also made sense, for its warm climate allowed for optimal performance of the car's battery. A key marketing decision was made that, while the car would carry the GM badge, it would be leased through the Saturn Corporation subsidiary. The two-seater EV1 seemed to be a good fit with Saturn's young, environmentally conscious buyers. Moreover, by offering the EV1 at Saturn dealerships, where 73 percent of sales were to people whose second choice was not a GM vehicle, GM saw an opportunity to reach import-loyal customers.

Oddly enough, marketing the EV1 was as much about determining who should not drive it as who should. GM was quick to point out that the EV1 was not right for everyone. Joseph Kennedy, the Saturn vice president for marketing, told Popular Science, "Because the EV1 is a two-seat vehicle and does not have the long-distance range [of] 200 miles or 300 miles, it will play a role in the owner's portfolio of vehicles." He explained that the EV1 was not a primary household vehicle that could fulfill all driving needs but one appropriate for "shorter, quicker uses around town."

The groundwork for introducing the EV1 was laid in 1994, when GM's PrEview Drive Program gave people in 12 cities the chance to drive a prototype model for two weeks. "We saw that it wasn't going to be an ordinary buyer," Necole Merritt, manager of corporate communications for Saturn, observed. "It was someone attuned to innovation, the kind of person who bought the first cell phone or first computer." The PrEview Drive Program and other research suggested that potential drivers would be affluent college graduates, usually white, middle-aged men who were leaders in their fields. They were expected to be 35 to 54 years old, with an annual family income of more than $125,000 and a high interest in technology and the environment. Frank Pereira, GM's EV1 brand manager, noted that the car "really speaks to those who have a desire to be in the forefront of directing the evolution of technology."

Once the vehicle was in the Saturn retail facilities, sales consultants narrowed the target market even further. Each facility had a consultant trained in EV1 technology who screened customers to be sure that an electric vehicle was appropriate for their needs. Next, would-be customers made an appointment with an electric vehicle marketing specialist who spent up to 12 hours making certain that their driving habits and expectations were a good fit with the EV1. "It's important they convey to customers what this car can and cannot do," explained Donald Young, Saturn's representative for the EV1 program. "We don't want to sell it to someone who drives 60 miles to work each way." The specialists also coordinated a home and garage inspection to determine how to install the EV1's charging unit.

COMPETITION

In 1996 a reporter for the Los Angeles Times wrote that, "while other major auto makers have held their electric vehicle cards close to the vest, GM has been center stage." Every major automaker, however, was under the same clean-air mandate, and they all kept watchful eyes on the public's reaction to the EV1. What they observed was a market, albeit a small one, emerging.

Other automakers followed on GM's heels. Toyota produced an electric version of its RAV4sport utility vehicle, but for government or company fleet leasing only. In 1997 Ford produced an electric vehicle for fleet use. Ford, however, seemed to be taking a different approach from GM, with its efforts directed at creating alternative-fuel vehicles that would meet ULEV standards. Consumers' Research Magazine reported that Ford offered the best range of "street-worthy" alternative-fuel vehicles, including the electric Ranger pickup truck, a Taurus sedan that ran on methanol and ethanol, and several other sedans that ran on compressed natural gas.

In May 1997 Honda presented the most formidable challenge to GM's electric car yet when it introduced its EV Plus, which boasted a longer-life nickel-metal hybrid battery and a greater driving range. Advertising for the EV1, however, did not address any of the emerging competitors. For the time being there was plenty of room for all electric carmakers on the playing field.

MARKETING STRATEGY

To build public awareness of the EV1's introduction, GM hired Hal Riney & Partners, the same marketing and communications partner that had created Saturn's award-winning advertising. Teaser billboards in Los Angeles and San Diego were the first element of the campaign to be unveiled. The billboards displayed a lightning bolt and the words "You can't hear it coming, but it is." The day the cars went on sale, new billboard ads went up with a photograph of the EV1 and the words "The electric car is here."

The campaign's centerpiece was a 90-second television commercial that showed animated household appliances greeting the battery-powered EV1. Its eye-catching special effects were created by Industrial Light and Magic, a studio started by Star Wars creator George Lucas. The commercial began with a thunderstorm that knocked the electricity out in a home. When the power came back on, the appliances sprang to life. They unplugged themselves and waddled out the door to watch as the EV1 approached on the street. "It's intended as a celebration of the arrival of the electric vehicle," explained Saturn's Kennedy. Both 30- and 60-second versions of the commercial also aired for 12 weeks in late 1996 and early 1997.

Newspaper ads during the introductory campaign tried to show consumers what a dramatic departure the EV1 was from gasoline-powered cars. For instance, a two-page ad in the Los Angeles Times depicted reeds blowing in the wind as the car drove by. It read, "There is no noise. No pistons. No valves or exhaust. Just the whir of an AC motor. And the wind. And your thoughts, of course. As you drive the electric car." Because the automobile was available only in limited markets, the heaviest concentration of newspaper advertising was regional. Newspapers ads appeared in the California edition of the Wall Street Journal and in the Los Angeles Times, Arizona Republic, and Phoenix Gazette.

FROM PLANES TO CARS

General Motors' commitment to the development of an electric car can be traced to a 1977 airplane flight. The plane, called the Gossamer Condor, was the first human-powered plane to fly a difficult three-mile course. Designed by engineer Paul MacCready, it had transparent wings spanning 96 feet, virtually no fuselage, and a minuscule cockpit in which the pilot sat and pedaled. The success of the delicate craft led to the creation in 1979 of the Gossamer Albatross, a human-powered plane that was able to cross the English Channel. Two years later MacCready built a solar-powered aircraft that accomplished the same feat.

Engineers at GM financed the next MacCready project, which was an aerodynamic, solar-powered vehicle called Sunraycer. When the vehicle won a 2,000-mile race in Australia in 1987 against fierce international competition, GM decided to hire MacCready's research firm to build a prototype electric vehicle. This car, called the Impact, debuted at an auto show in Los Angeles in 1990 to tremendous public response. Its innovative design and technology established the direction for what was to become the EV1.

Magazine advertising during the introductory period was placed to reach leaders in technology and innovation. The media plan included such periodicals as Business Week, Inc., Scientific American, Wired, and American Benefactor. Magazine ads had the same thoughtful, laid-back approach as the newspaper ads. One ad, for instance, showed the blur of the car on a stretch of highway and read, "You will never again use the words 'fill'er up.' Or 'check the oil.' Never utter the need for a tune-up. Or a smog check. Nope. You will simply say, 'Unplug the car and let's go.' When you drive the electric car."

Following the 12-week introductory campaign, the marketing efforts for the EV1 shifted into a lower gear. The remainder of the advertising budget went primarily into direct-mail pieces and a handful of ads in magazines favored by technology buffs.

Time magazine's Margot Hornblower criticized the marketing approach used for the EV1. Describing a billboard that showed a single headlight in the darkness and the words "Electrohydraulic power steering, digital clock, EV1," Hornblower wrote, "The low-key print campaign has been so esoteric as to be nearly incomprehensible." This subtle approach also was frustrating to members of the EV1 Owners Club, who felt that the car's features should be spelled out more clearly in order to lure potential drivers. In fact, Marvin Rush, cofounder of the club, purchased airtime on KFI in Los Angeles with his own money and ran unauthorized spots for four weeks in early 1998. Rush told the Los Angeles Times that EV1 owners "consider ourselves evangelists. We're trying to get GM to change its advertising." In the end GM's lawyers reviewed the radio ads for misstatements, found none, and opted to let the renegade campaign run its course. "They're actually pretty good," EV1 brand manager Frank Periera confessed to the Los Angeles Times.

OUTCOME

The EV1 advertising campaign received critical kudos. Bob Garfield, a reviewer for Advertising Age, wrote that the television commercial used "eye-popping digital effects to communicate the revolutionary significance, the drama and the exciting implications of this introduction." He added, "The march of the electro-nivores! It's a wonderful concept, wonderfully realized. Even the unplugged among us will not be able not to stare at the futuristic vehicle Californians and Arizonans can buy right now." A print ad for the EV1 took home the prized $100,000 cash Kelly Award for best magazine advertising as well as nonmonetary Kelly Awards for meeting the campaign's objective and for design and graphics.

While the EV1 got rave reviews for its advertising, the car itself had no shortage of critics. Automotive analyst Christopher Cedergen told CBS News, "Overall, the electric car concept is premature. The technology really isn't there yet." Richard de Neufville, professor of transportation at the Massachusetts Institute of Technology, was quoted in Time magazine as saying, "They gave a party, and nobody came." GM declined to make sales projections when the EV1 rolled out, but industry sources speculated that fewer than 2,000 would be leased in the first year. That figure proved to be optimistic, for only 300 EV1s were actually leased. Some speculated that the advertising had missed the mark by failing to link the EV1 with Saturn dealerships. Joe Ricciardi, who led GM's EV1 effort in Arizona, acknowledged in the Arizona Republic that "there are a lot of people who don't know it [the electric car] is out there and don't know where to find it."

To some the EV1 was most remarkable in its role as a stepping-stone to other clean-air transportation solutions. Phil Hodgetts, president of the Electric Vehicles Association of Southern California, said in the Los Angeles Times, "The biggest advantage of the EV1 has been to excite public interest in cars that will be nonpolluting, in pure electric vehicles running on batteries. I think it's the start of something big." GM executives contended all along that the goal of the EV1 was to build a market for alternative-fuel vehicles and that sales volume was less important than giving early drivers a good experience. Despite tepid leasing numbers in 1997, GM's commitment to the EV1 remained firm going into 1998. The car was introduced in the metropolitan areas of San Francisco and Sacramento, the advertising budget was increased from $10 million to $15 million, and GM stepped up efforts to create an infrastructure by committing $750,000 for the development of public charging sites in the car's markets.

NOTHING NEW

Electric-powered vehicles were anything but a new invention. In fact, in the early 1900s battery-powered cars were all the rage, accounting for about 30 percent of the market. They were quiet and easier to start than gas-powered cars, which had to be cranked. After improvements, however, gasoline-powered cars quickly eclipsed electrics, for they were faster and could go farther. By the 1920s electric cars were a thing of the past.

While the basic approach remained the same, advertising leading into 1998 introduced a welcome touch of humor to the sometimes awestruck tone of the 1997 campaign. A few print ads even cleverly capitalized on the public's dubiousness. An ad that ran in newspapers in northern California, for example, showed an overhead view of the EV1 and stated, "All the skepticism in the world can't stop it. The electric car is here."

FURTHER READING

"Charge over Electric Cars." Newsday, February 13, 1997, p. A75.

Cogan, Ron. "The Electric Experience." Popular Science, November 1, 1996, p. 81.

Gardner, Greg. "GM Flips EV1 'On' Switch." Ward's Auto World, March 1, 1996, p. 89.

Garfield, Bob. "EV1 Provides Saturn with Charge of Pride." Advertising Age, November 1996.

Gellene, Denise. "Electric Car Owner Spots GM Some Ads." Los Angeles Times, May 22, 1998, p. D1.

Golfen, Bob. "GM Trying to Spark Interest in EV1: Allowing Car's Sale Could Be Next Step." Arizona Republic, March 29, 1997.

Hornblower, Margot. "Is This Clean Machine for Real? Electric Cars Hum down the Road but Face Obstacles of High Cost, Limited Range, and Unlimited Politics." Time, December 15, 1997, p. 62.

Maynard, Michelle. "Only A List Can Buy New E Car." USA Today, August 28, 1996, p. 1.

Nauss, Donald W. "GM's EV1 Gears Up amid Charge of the Ad Brigade." Los Angeles Times, November 26, 1996, p. D3.

―――――――. "GM Rolls Dice with Roll-Out of Electric Car." Los Angeles Times, December 5, 1996, Home Edition, p. A1.

Peters, Eric. "Alternative Fuel Vehicles." Consumers' Research Magazine, October 1, 1997, p. 35.

"Reality Check on Electric Cars." Los Angeles Times, September 1, 1996, p. B4.

                                           Kim Kazemi

HUMMER CAMPAIGN

OVERVIEW

When General Motors Corporation (GM) acquired the commercial marketing rights to the Hummer truck, the civilian version of the U.S. Army's Humvee, it faced the challenge of promoting a vehicle that was never intended to be sold in high numbers. Part of the solution was to design smaller, less-expensive versions, the H2 and H3, but much of the success would have to depend on the marketing. Rather than turning to a roster of ad agencies it usually worked with, GM hired a young Boston creative boutique, Modernista!, in 2000.

The initial goal of the $35 million campaign, begun in August 2001, was to establish Hummer as a luxury brand. Thus, images of mud-splattered Hummers that played up the vehicle's off-road capabilities were scrapped in favor of shots that made it seem jewel-like. Once the brand was repositioned, the marketers' goal was to pitch the lower-priced H2 and H3 to a wider market, hopefully to more women.

Factors such as rising gas prices and the perception that the Hummer was oversized for most consumers proved to be major hurdles for the marketers. However, by the end of 2003 the campaign had succeeded in redefining the Hummer brand, and with the introduction of the H3 in 2005, the marketers took on a new challenge: selling the Hummer to a mass market.

HISTORICAL CONTEXT

The Humvee was designed for the U.S. Army in 1979 by AM General Corp., based in South Bend, Indiana. The 3.5-ton vehicle became a star of the 1991 Persian Gulf War, spurring consumer demand for a civilian version, which was introduced in 1992 as the Hummer. It catered to an exclusive market, as demonstrated by the fact that Arnold Schwarzenegger was one of the first buyers. The vehicle never received much advertising support; AM General spent less than $1 million on marketing the Hummer in 1999, when it sold about 700 of the trucks. Nevertheless, AM General did enough business to attract the attention of General Motors, and in the end bought the Hummer brand in late 1999.

GM signed a seven-year contract with AM General to produce the next generation, GM-designed version, the Hummer H2 sport-utility vehicle (SUV). The agency Modernista! was hired to promote the brand. Prior marketing efforts had played up the military connection and the Hummer's off-road capabilities, billing the vehicle as "the world's most serious 4×4." Modernista! won the account because it was the only agency that attempted to fashion a wider appeal by going beyond the tough-guy, army-truck image.

The principals involved in the campaign did not lack experience in selling cars. Modernista!'s cofounder, Lance Jensen, had worked with Hummer's advertising director, Liz Vanzura, when she was at Volkswagen of America and he was with the Boston-based ad agency Arnold Communications. Both played key roles in developing Volkswagen's award-winning "Drivers Wanted" campaign. Vanzura commented that, while the Volkswagen ads were aimed at "cool, young people," her new mission was to sell Hummers to "cool, rich people."

TARGET MARKET

Even before hiring Modernista!, GM had done a great deal of market research. According to Ted Evanoff, writing for the Indianapolis Star, "In 1999 researchers stumbled across the notion that an unlikely cross-section of America—surgeons, dot-com millionaires, rock stars, high school students, corporate execs—prized their individuality. And they regarded the rugged Hummer as a symbol of individuality, especially compared with the typical sport-utility common in suburbia." Modernista! was given 2,200 pages of market data to distill into an advertising message. The agency was also handed a brand that skewed very much toward males, averaging 50 years in age and with an annual household income of more than $200,000. The target buyer for the less-expensive H2, while still male, was 42 years old on average and had a household income above $125,000. Vanzura told Chris Reidy of the Boston Globe that the coveted audience included "rugged individualists, adventurous entrepreneurs, and adrenaline junkies." In other interviews she described the target market as "successful achievers" and "style leaders." She also told Evanoff that Hummer had to vie with other purchases the well-to-do might consider, such as yachts or vacation houses, stating, "We're really not competing in an automotive category."

COMPETITION

The yacht, vacation house, and other status symbols notwithstanding, Hummer competed in the luxury-SUV category against other SUVs, including the Lincoln Navigator, Land Rover's Range Rover, and the Lexus LX 470. But Hummer's chief opponent was DaimlerChrysler's Jeep Wrangler. Boasting similar military roots but extending back to World War II, Jeep had defined the SUV category and at its height in 1993 controlled nearly 30 percent of the traditional SUV market. Over the following several years, however, the brand failed had to introduce new models, and its less-expensive ones faced increasingly stiff competition, resulting in a severe erosion of sales. As long as Hummer was not a direct competitor, DaimlerChrysler took little notice of it, but as soon as GM acquired the right to mass-market the Hummer, DaimlerChrysler recognized the threat at the high end of the SUV category and became determined to hold on to Jeep's reputation as the premier heavy-duty, off-road brand.

The two vehicles had slightly different target markets, however. Jeep appealed to consumers who loved the outdoors and might attend one of the dozens of Jeep Jamboree off-road events held throughout the year. Typical Hummer customers, on the other hand, wanted the off-road capabilities the vehicle had to offer but were more interested in the image it created. They were as likely to drive their Hummers to an upscale mall as up a mountain.

MARKETING STRATEGY

In preparation for marketing the lower-priced H2, Modernista! instituted a bridge campaign, paid for by AM General, to sell the H1 while repositioning the brand. As Will Uronis, an associate creative director at Modernista!, explained to the Boston Herald's Greg Gatlin, "Hollywood had defined what Hummers stood for—war, explosions and arrogance … We just took a look at another facet of the truck." Jensen added, "We went out and talked to guys that drove them … they don't all hunt and kill things." Nevertheless, Hollywood movies had done a good job of making consumers aware of the Hummer. Market research conducted in 1999 indicated that as many as one in five buyers of full-size SUVs considered purchasing the Hummer. The bridge campaign was intended to play to the "rugged individualists" who, research revealed, were attracted to the Hummer and to set the stage for the launch of the H2 by creating an emotional attachment to the brand that transcended the hard-edged image fostered by Hollywood. According to Evanoff, writing in the Indianapolis Star, the promotion of the H1 was intended to create a "halo" over the brand, providing "the foundation for a brand image that will carry the smaller H2."

The first national ads for the GM-owned Hummer began appearing on August 13, 2001. It was an all-print campaign that featured photographs of the vehicle in lush locales in Chile. Not only did the pictures suggest where the H1, with its off-road prowess, could take the viewer, but they also made the big truck look small. It was the first time Hummer was not portrayed covered in mud or linked to the military. Reinforcing the visual message of the ad was the text, which included the headline "How did my soul get way out here?" and the concluding text "Sometimes you find yourself in the middle of nowhere. And sometimes in the middle of nowhere you find yourself. The legendary H1." Hummer's longtime tag-line, "World's most serious 4×4," was replaced by "Like nothing else." The four ads ran through the rest of 2001, appearing in such publications as the Wall Street Journal, Barron's, Esquire, Spin, Wired, and Red Herring. Hummer's 50 dealers were also encouraged to use the ads created by Modernista! to bring continuity to the brand's makeover, with some of their media costs being reimbursed by a cooperative advertising program.

The H2, based on GM's Chevrolet Tahoe full-size SUV, was introduced in July 2002. A second model featuring a small pickup bed and a cargo door was supposed to be offered at the same time, but the launch was pushed back, partly because the vehicle needed more work but also as a way to extend the marketing buzz the brand was creating. The new H2, with a base price of $48,000, was about half the price of the H1 and, despite being called the "baby Hummer," essentially the same size. But it featured a smaller, less noisy gas engine rather than a cumbersome diesel one, and it had comforts and customizable options the H1 lacked but that were expected in a luxury SUV.

The introduction of the H2 was supported by another print campaign developed by Modernista! While the "Like nothing else" tagline of the previous ads was retained, the look of the new ads was markedly different, relying on dramatic close-ups set against bold, sky-blue backgrounds.

Like the first ads, the new ones ran in a wide range of magazines, with the text tailored to the publication. For example, in the Robb Report, which covered all things luxurious, the text read, "Excessive. In a Rome at the height of its power sort of way." The Vanity Fair text read, "Threaten the men in your office in a whole new way," part of an effort to increase the number of women buying the vehicles. Another ad proclaimed, "Perfect for rugby moms." About 10 percent of H1 owners were women, and one goal of the H2 campaign was to increase that number to 25 percent. Outdoor ads were also produced, running in 14 major markets, including New York, Los Angeles, Chicago, and Detroit. Print and outdoor ads were made available for the use of dealers.

FAMILY FEUD

Hummer and its chief rival, Jeep, shared a common heritage. American Motors bought the Jeep business from Kaiser Jeep in 1970, forming the basis of a military unit that was spun off as a subsidiary, AM General Corp. In 1979 AM General designed the Humvee for the U.S. Army as a military transport vehicle and incorporated Jeep's seven-slot grille. When Chrysler acquired the Jeep business in 1987, the two vehicles parted ways. AM General introduced the civilian version of the Humvee, the Hummer, in 1992. Although Chrysler did not initially object to sharing the Jeep's distinctive grille, that changed in 1999, when GM acquired the rights to market Hummer and became a direct threat to the Jeep franchise. In February 2001 DaimlerChrysler sued General Motors, alleging that the Hummer's front grille too closely resembled that of the Jeep. DaimlerChrysler lost, and the cousins continued to share a family resemblance.

The first Hummer television ads aired in mid-August 2002. The initial three 30-second spots, intended to romanticize the truck, were shot in Iceland and in Vancouver, British Columbia, and featured both natural and urban locations. They showed friends in a Hummer speeding over the tundra of Iceland or a professional woman weaving through traffic in a city. Set to rock music, the only words in the spots were text statements such as "Maybe if you can, you will." A second phase of the television campaign played on people's perception of the Hummer as a gas-guzzling road hog. In one spot a young boy constructed a small wooden version of the Hummer to enter in a soapbox derby, while The Who's "Happy Jack" played in the background and the little girl next door looked on. At the start of the big race the other boys scoffed at little Jack and his less-than-streamlined racer, but he prevailed by abandoning the asphalt course, breaking the rules to go cross-country and win the race and the girl. Through the humor of the spot Jack was portrayed not as a blatant cheater but as a heroic iconoclast, offering subliminal reassurance to potential Hummer customers who might feel guilty about buying a vehicle that got about 13 miles to a gallon of gas on the highway. A second Hummer spot, also displaying a tough side, hearkened back to the Asteroids video game of the 1980s, with a spaceship blasting boulders only to confront an indestructible Hummer, which chased the ship off the screen.

OUTCOME

GM and Modernista! succeeded in introducing Hummer to a wider market, but after a strong showing in 2003, sales began to tail off, partly because of high gas prices. To regain lost ground, in 2004 GM introduced the H2 SUT (sport-utility truck). This was followed by the unveiling in 2005 of the H3, a midsize Hummer priced from $29,500 to $32,000. Almost 17 inches shorter, 1,700 pounds lighter, and more fuel-efficient at 20 miles per gallon, it was a vehicle GM hoped women and younger drivers would find more appealing.

In pitching the vehicle to a mass market, Hummer and Modernista! faced a new task. Putting a positive spin on the challenge, Jensen told Jeremy W. Peters of the New York Times, "The brand has a lot of different personality levels … You can do the serious capability stuff, the real rough-and-tumble rock climbing stuff, the peaceful back-to-nature stuff." Industry analyst Mary Ann Keller disagreed, telling the New York Times that it was impossible to sell Hummer to the masses: "How in the world can you possibly fathom that something that looks like a military vehicle is practical for the average driver?"

FURTHER READING

Cantwell, Julie. "General Motors Is Trying to Wipe the Mud Off Hummer." Automotive News, August 6, 2001.

Evanoff, Ted. "GM Blazes a New Trail with Its Marketing Strategy for Upscale Hummer." Indianapolis Star, August 12, 2001.

Garfield, Bob. "Garfield's AdReview." Advertising Age, July 7, 2003, p. 25.

Greenberg, Karl. "Liz Vanzura: GM's Ad Director Is on a Roll." Brandweek, April 7, 2003.

Hakim, Danny. "Spots for the Hummer and the Hybrid Prius, Opposites on the Road." New York Times, September 11, 2003, p. C5.

Halliday, Jean. "Of Hummers and Zen." Advertising Age, August 6, 2001, p. 29.

Irwin, Tanya. "GM's Hummer Choice Reflects Desire for Daring." Adweek, October 16, 2000, p. 6.

―――――――. "Modernista! Launches $20 Mil. Hummer Campaign." Adweek, July 8, 2002, p. 5.

―――――――. "Modernista! Repositions Hummer." Brandweek, August 6, 2001, p. 5.

Peters, Jeremy W. "How to Market Hummers to the Masses." New York Times, June 28, 2005, p. C3.

Reidy, Chris. "Boston Ad Agency Hopes Hummer Ads Juice General Motors Profits." Boston Globe, August 16, 2001.

Wells, Melanie. "Muscle Car." Forbes, July 22, 2002.

                                    Ed Dinger

LOOKING FOR MR. GOODWRENCH CAMPAIGN

OVERVIEW

In the early 2000s General Motors Corporation (GM) found itself the victim of its own success. Improved quality in its vehicles had resulted in less warranty work for the service centers of GM dealerships, which very much depended on the revenues. All of GM's 7,400 dealers were brought under the Goodwrench program (a national chain of GM dealer repair shops), and the ad agency chemistri (later called Leo Burnett Detroit) was given the task of building up the brand to attract more nonwarranty work to the service centers. The marketers decided to revive the Mr. Goodwrench character, not seen in GM ads for almost a generation but still alive as a cultural icon. The result was the "Looking for Mr. Goodwrench" campaign.

Rather than portray Mr. Goodwrench as an actual person, as was done from 1975 to 1985, chemistri revisited the concept by creating an oblivious reporter character, played by comedian Stephen Colbert, known for a similar role on Comedy Central's program The Daily Show. He set off on a never-ending quest to find the one and only Mr. Goodwrench, never quite able to comprehend that every one of GM's 80,000 technicians was, in essence, Mr. Goodwrench. In addition to 30-second TV spots, the campaign consisted of radio spots and print ads, supplemented by an updated website.

In the first year GM spent $50 million on the "Looking for Mr. Goodwrench" campaign, which began in March 2003 and succeeded in elevating the Goodwrench brand in the minds of consumers. Colbert's rising stardom also helped the campaign, and he was retained for a second set of TV spots, launched in October 2004, and for a third in 2005.

HISTORICAL CONTEXT

To promote its network of dealership service centers, in 1975 GM's Service and Parts Operations (SPO) introduced Mr. Goodwrench, the everyman of General Motors technicians, along with the slogan "Keep that great GM feeling with genuine GM parts." The character remained the focal point of GM SPO ads for a decade. In the ensuing years, however, GM SPO received fewer advertising dollars and produced no memorable campaigns. In the meantime the quality of General Motors cars improved, resulting in a significant erosion in income for the shops, which concentrated on performing warranty work. In 2002, for example, GM cars had 130 problems per 100 vehicles, an 11 percent improvement over the prior year, placing the company third in quality behind Toyota and Honda. Because their cars had fewer problems, GM consumers also became lax about taking them in for scheduled maintenance and repairs, adding further to the loss of business at GM repair shops. It was estimated that dealers performed 15 to 20 percent less warranty work in 2002 than in 2001. GM dealers became concerned that the loss of warranty work would reduce the amount of money they could invest in mechanics' training and service facilities and that this would produce a downward spiral of diminished service quality, poor reputation, and further erosion of sales.

The obvious way to offset the loss of warranty repairs was to boost nonwarranty business. To do this GM decided to beef up its Goodwrench program, in which only about half of the GM dealerships were participating. Starting in January 2003 all of the dealers were required to participate in the program. As a result Goodwrench became the largest automotive service network in the United States and had more financial resources at its disposal. For advertising GM turned to chemistri, an agency based in Troy, Michigan. Chemistri was heir to D'Arcy Masius Benton & Bowles, whose connection to GM dated to 1915, when the agency fashioned ads for Cadillac. In 2002 D'Arcy's parent company, Bcom3, was acquired by Publicis Groupe SA and disbanded. D'Arcy's Detroit operation was kept and renamed chemistri, its purpose to focus exclusively on GM clients.

TARGET MARKET

The target market for the "Looking for Mr. Goodwrench" campaign consisted of both male and female owners of GM vehicles whose ages ranged from 24 to 54. A GM spokesperson quoted by Alice Z. Cuneo in Advertising Age described the coveted demographic as "Starbucks suburbanites." It was with this type of person in mind that the marketers made their decision about who would represent the brand in the new campaign.

COMPETITION

As Goodwrench service centers attempted to expand beyond warranty work, they began competing against a multitude of local mom-and-pop shops. On the national scene Goodwrench had to contend with Ford's Quality Care service centers, which were in much the same plight, looking to drum up repair work to make up for the loss of business that had resulted from improved vehicle quality. Quality Care was spending about $40 million a year on advertising, as was another national player, Midas Muffler Company, which had been hurt by the introduction of longer-lasting mufflers in the 1990s. Midas was attempting to reposition itself as a general car maintenance center instead of just a muffler shop, and it had the benefit of a well-recognized brand to aid in the effort.

Goodwrench also faced regional competition from smaller muffler shops, such as Meineke Discount Mufflers, which had changed the name of its 900 shops in Canada and the United States to Meineke Car Care Center. Although it lacked the budgets of other companies, Meineke had the advantage of a celebrity pitchman, boxer George Foreman. Another muffler chain stepping into the fray was the 600-unit Monro Muffler and Brake. Moreover, the repair field was crowded with competitors of a different type: auto parts retailers—such as Pep Boys and the northeastern chain Strauss Discount Auto—who were opening supercenters to install the parts they sold.

Given the crowded auto repair field and the difficulty of standing out, GM was committed to spending at least as much as Ford and Midas on advertising. "We want to get this program launched at industry-leading levels," Jon Brancheau, director of brand marketing for GM SPO, told Automotive News's Dave Guilford.

MARKETING STRATEGY

As the new Goodwrench campaign was being developed, GM requested that chemistri expand its marketing approach beyond creating TV spots. The agency was asked to think in terms of wider marketing plans and to bring in partner agencies with expertise in direct mail, interactive advertising, diversity affairs, and other areas. In crafting the "Looking for Mr. Goodwrench" campaign, chemistri received significant input from GM's Dealer Fixed Operations Advisory Board. The agency also got marketing advice from the Optimization Group, a Detroit consulting firm, and hired Six Degrees, based in Scottsdale, Arizona, to provide research assistance.

CAREER IMPROVEMENT

In the late 1980s, before becoming the star of the hit television sitcom Home Improvement, Tim Allen played a Mr. Goodwrench-like technician in a General Motors ad campaign.

In an interview with Guilford for Automotive News Brancheau said that the decision to bring back the Mr. Goodwrench character, even though he would be nothing more than a phantom, was a "no-brainer." Research showed that, despite an 18-year absence, Mr. Goodwrench remained firmly entrenched in the mind of consumers. The marketers elected to use humor, but because it was important to portray the technicians as skilled professionals, they had to walk a fine line. The challenge, therefore, was to find a way to relay serious information—such as the fact that dealer technicians used the latest in diagnostic tools and had received more then one million hours of combined training in the previous year—and still be funny. Humor also helped to address another potential pitfall: focusing too much on the need for service, which might carry the implication that GM products were not trustworthy. Moreover, humor helped spice up what was a less-than-exciting subject for consumers. Marketing director Beth Grotz told Theresa Howard of USA Today, "Your typical automotive service ad is a technician or service manager pleading with you to come in. We thought we'd take a little different approach to see if we could get more interest in the category."

To serve as the focal point of the new Goodwrench campaign, GM elected to hire a comedian and settled on Stephen Colbert, a reporter on Comedy Central's The Daily Show, a satire of an evening news program. Colbert's deadpan delivery and well-honed dimwit persona made him an ideal choice to play the role of a reporter searching to find the one and only Mr. Goodwrench. While many people may not have recognized Colbert at the time, he was well known by the target market.

The "Looking for Mr. Goodwrench" campaign was multifaceted. In addition to TV spots, it included radio, print, and Internet elements. Print ads appeared in such magazines as People, Newsweek, Time, Sports Illustrated, Better Homes and Gardens, and Ebony. All ads mentioned the Goodwrench website, where consumers could find additional information and locate their nearest service center.

The focus of the campaign was four 30-second television spots, which aired during both network and cable programs. In addition, chemistri created five spots that dealers could air on their own, and GM established 30 local marketing groups to fund local advertising. The national ads first appeared in March 2003, in time to be shown during telecasts of the NCAA Men's Basketball Championship. They were also shown during other sporting events, including NASCAR races, a major venue for promoting anything automotive. Moreover, GM Goodwrench sponsored a race car, which would be featured in one of the TV spots.

All four of the first wave of ads in the "Looking for Mr. Goodwrench" campaign featured Colbert's clueless reporter attempting to uncover the identity of the man called Goodwrench. The spot called "Service Bay" showed Colbert in a safari vest that would become the character's trademark. He interviewed three GM service technicians, asking, "Mr. Goodwrench—who is this one and only GM expert?" They all claimed to be Mr. Goodwrench, confusing Colbert, who resorted to a bullhorn to ask the real Mr. Goodwrench to please step forward. The spot closed with the line "Find Mr. Goodwrench at over 7,000 GM dealerships nationwide." A second spot, "Mitre Saw," was broken into two parts. First, when told that Mr. Goodwrench had more than one million hours of training, the disbelieving reporter quipped, "Doesn't leave much time for Mrs. Goodwrench now, does it?" Colbert then asked a technician what kind of tool Mr. Goodwrench would be if he were a tool. When the bemused technician answered, "Wrench," Colbert was quick to reply, "No, the correct answer is mitre saw."

The final two spots in the initial "Looking for Mr. Goodwrench" campaign took Colbert out of the service center. In "NASCAR Garage" he visited with the driver of the GM Goodwrench-sponsored race car, Kevin Harvick. Colbert was again skeptical when Harvick confirmed that Mr. Goodwrench knew GM cars better than he did and could be found both at the track and at GM dealerships. The spot closed with Harvick expelling Colbert from his race car, where Colbert was pretending to be a driver. In the last spot, "On the Street," Colbert approached people to question them about Mr. Goodwrench, capping off the interviews by outlandishly asking whether he did root canals as well as service work on GM vehicles.

There was no doubt that Colbert's work on the TV and radio spots was the cornerstone of the success of the "Looking for Mr. Goodwrench" campaign. When the ratings of The Daily Show improved dramatically during the U.S. presidential campaign of 2004, Colbert's visibility grew. The show's "Indecision 2004" coverage was especially popular with a younger demographic, part of which admitted to getting most, if not all, of their real news from the fake news show. GM's Goodwrench service centers enjoyed Colbert's reflected popularity. GM even became a sponsor of The Daily Show's website. Market research indicated that, after the launch of the campaign, GM experienced significant gains in unaided brand awareness, ad awareness, and brand consideration.

A COMEDY VET

Born in South Carolina, Stephen Colbert, star of the "Looking for Mr. Goodwrench" campaign, studied acting at Northwestern University. He got his start with the Second City comedy troupe in Chicago, then moved to New York with fellow cast members to create the sketch comedy show Exit 57 for Comedy Central. After two seasons Colbert joined The Daily Show in 1997. He was also a creator and star of the acclaimed program Strangers With Candy, which aired on Comedy Central from 1999 to 2000.

In October 2004, in an attempt to build on the momentum created over the previous year, GM began airing two new spots in the "Looking for Mr. Goodwrench" campaign. Colbert was again featured, this time joined by a sidekick, comedian Brian Posehn. Together they traveled in a tiny three-wheeled truck with "Looking for Mr. Goodwrench" emblazoned on the side. In the spot titled "Stakeout" they tried using high-tech equipment in a dealership parking lot to find Mr. Goodwrench. In the second spot, "APB," Colbert asked a mounted police officer to put out an all points bulletin (APB) for Mr. Goodwrench, noting that Mr. Goodwrench claimed to spend more than a million hours a year training. "Do you know what that means?" he asked. "Expertise?" suggested the officer. "Two words," replied Colbert, then offered three: "Labor law infraction."

Three new "Looking for Mr. Goodwrench" ads appeared in the summer of 2005. While the little truck made an appearance when Colbert challenged Harvick to a race, Posehn did not. Instead, Colbert was solo once again, questioning technicians and customers alike in his ongoing search for Mr. Goodwrench, a concept that continued to provide the copywriters with enough humorous situations to exploit Colbert's talent and promote the Goodwrench brand.

OUTCOME

GM was extremely pleased with the "Looking for Mr. Goodwrench" ads. As Grotz told the online resource the Auto Channel, "GM has broken away from the pack … Most vehicle service ads feature a technician holding a part in his or her hand, but we moved away from the typical spot and connected with consumers through unique settings in addition to the dealership environment, and through humor." The campaign was recognized by the advertising industry, winning a Bronze EFFIE Award (Automotive Aftermarket Products and Services category) in 2005. Meanwhile, Colbert's high profile, both in films and on Comedy Central, added luster to the ongoing campaign.

FURTHER READING

Baker, Ross K. "Logo-Types." American Demographics 11, no. 3 (March 1989): p. 68.

Bonamici, Kate. "The Daily Show Shill." Fortune, November 29, 2004, p. 64.

"Chemistri Continues Search for Mr. Goodwrench." Adweek, October 5, 2004.

Cuneo, Alice Z. "Marketers, Politicians Clamor for 'Daily' Fix." Advertising Age, September 27, 2004, p. 12.

Guilford, Dave. "GM Boosts Goodwrench Advertising." Automotive News, March 17, 2003, p. 8.

Halliday, Jean. "GM's New Goodwrench Ads Seek Trust in Dealer Service." Advertising Age, June 7, 1999, p. 20.

―――――――. "Goodwrench Rolls First Ads in 2 Years." Advertising Age, August 18, 1997, p. 25.

Howard, Theresa. "GM Revives Mr. Goodwrench Ads, Throwing in Comedic Twist." USA Today, December 5, 2004.

Irwin, Tanya. "New GM Spots Look for Mr. Goodwrench." Brandweek, March 17, 2003, p. 12.

Jackson, Kathy. "D'Arcy Takes a New Name." Automotive News, March 17, 2003, p. 22.

Miller, Duane. "Driving Service Business during Car Care Month." Automotive News, April 11, 2005, p. 2.

"Mr. Goodwrench Cranks up Fresh Pitch for GM Service." Brandweek, March 17, 2003, p. 7.

                                    Ed Dinger

START SOMETHING CAMPAIGN

OVERVIEW

Once the crown jewel of the General Motors Corp. (GM), the Oldsmobile division had fallen on hard times. As a result, GM went so far as to contemplate terminating the venerable Oldsmobile nameplate, but it opted to reinvent the division instead. Beginning in 1994 Oldsmobile introduced new cars designed to appeal to younger consumers and help win back sales from competitors. Moreover, GM designated Oldsmobile as its import-fighting wing. To this end Oldsmobile created the Alero, a compact car designed to take on such best-sellers as Honda Motor Co.'s Accord and Toyota Motor Corp.'s Camry. With a planned launch date of September 1, 1998, Oldsmobile turned to its longtime ad agency, the Leo Burnett Company, to create a campaign that would generate excitement about the Alero.

For this $80 million kickoff campaign, Oldsmobile adopted the tagline "Start Something." The commercials were unlike anything Oldsmobile had ever done before. In both the 15-second teaser commercials (which debuted August 3, 1998) and the 30-second commercials (which began on September 1), quick-cutting images were set to a pulsing electronic sound track, scenes of screaming teenagers were interspersed with shots of the Alero, and red ovals spelled out such commands as "Start to Scream" and "Stop Commuting. Start Driving." Every spot closed with the "Start Something" moniker. Leo Burnett also created print pieces and savvy Internet ads.

The Alero and its supporting marketing campaign were deemed a success by General Motors executives as well as industry insiders. The campaign also managed to reach its target audience of younger consumers. GM predicted that 1999 sales of the Alero would reach or surpass 100,000 vehicles. Based on its success, the campaign was continued in 1999 and expanded to include the entire Oldsmobile line of vehicles. Early in 2000 the tagline "Start Something" was modified depending on which vehicle was being promoted in the specific spot. The initial success of the Alero was brief, however, and by the end of 2000 Oldsmobile sales were again on the decline. In December 2000 GM announced that it was ceasing production of Oldsmobiles.

HISTORICAL CONTEXT

Oldsmobile had once been perceived as a "status" car, a high-powered American car for the stylish executive with a family, said an article in the July 15, 1991, Adweek. Between 1983 and 1986 the division sold more than one million cars per year. In 1987, however, Oldsmobile's fortunes waned. GM's policy of "badge engineering" resulted in Oldsmobile's vehicles becoming indistinguishable from other GM lines, diluting the brand's cachet. In addition, the company was slow to introduce new products that kept up with consumers' tastes. Although Oldsmobile's 1988 campaign, "This Is Not Your Father's Oldsmobile! This Is a New Generation of Olds," was lauded by ad critics and popular with consumers, it did little to bolster the brand's sinking sales. By 1996 Oldsmobile's share of the U.S. car market had reached an all-time low of 2.2 percent (down from its 1995 share of 2.6 percent). Its 1996 sales were 14.5 percent lower than in 1995. According to Fortune magazine, Oldsmobile's loyal customers were aging and had either "died or defected to Buick."

The division took stock of its situation in the mid-1990s and committed itself to revamping its entire product line. In 1994 Oldsmobile debuted the Aurora, which served as "the centerpiece of [the company's] strategy to boost sagging sales by attracting buyers younger than its traditional sixty-something crowd," noted USA Today. The redesigned Bravada sport-utility vehicle (model year 1996), the Silhouette and Cutlass (1997), and the Intrigue (1997) followed. So adamant was Oldsmobile to reach younger drivers that in 1997 it teamed up with The X-Files, a show that had a cultlike following among Generation Xers, for a major promotion. Nevertheless, Oldsmobile had no entry-level car that could draw consumers into the Oldsmobile line, so as the entire Oldsmobile line struggled to shed its geriatric image, Alero was pegged as the division's entry-level vehicle.

TARGET MARKET

Priced between $17,500 and $22,000, the Alero was designated as the entry-level vehicle of the Oldsmobile line. The division intended it to be a high-volume car and set a prelaunch goal for Alero of eventually accounting for 40 percent of Oldsmobile's sales. "Start Something" was grounded in the premise that the bulk of the consumers who would ultimately drive these sales would be those between the ages of 30 and 50. Within this broad demographic group, Oldsmobile focused on "well-educated singles or young families with children," according to the San Diego Union-Tribune. The division's lingering reputation for "fogey-mobiles" made this a challenging audience to win over. Nevertheless, it was an important segment for Oldsmobile to capture. The grail for all car companies was to have consumers "grow" within a line of cars—to start with low-end vehicles and progress to ever-more expensive cars as they became older and wealthier. Market research had shown that brand allegiances were often formed early and tended to be long lasting. If Oldsmobile were to survive, it had to introduce consumers to its line.

To indicate that the Alero represented a new direction for Oldsmobile, Leo Burnett crafted a campaign that was meant to stand out from the array of other car commercials and seize viewers' attention for itself. "At first glance, it doesn't look like car advertising—it's not supposed to," the division explained in an August 26, 1998, press release. To add to the aura of uniqueness, Oldsmobile opted not to use actors in the commercials. "These are real people with real lives and passions. They closely reflect the attitude and character of the Alero," said Mike Sands, Oldsmobile's director of advertising. Moreover, the commercials had a high-energy, youthful feeling. Images of children, teens at a concert, a martial artist, and a man jumping off a mountain into the snow were the core of the spots. The sound track was modern and pulsing, and the quick-cutting cinematography resembled a music video more than a standard car commercial. "We want people who are willing to try something new," Sands told Automotive News. But Oldsmobile was careful not to position itself too far outside the mainstream. The company wanted women to account for 50 percent of its sales, and conventional wisdom held that this demographic responded well to family-oriented messages. As a result, the division included upbeat domestic scenes in many of its ads. "The spots are trying to communicate a certain way of thinking and living," a Leo Burnett spokesperson told Adweek. "[The campaign] speaks to a consumer set that is very new to Oldsmobile."

Oldsmobile pitched the Alero not only to younger drivers but also to minority groups, most notably Hispanics and African-Americans. The U.S. Census predicted that Hispanics would account for 42 percent of America's population growth between 1998 and 2008, while only 2.3 percent of Oldsmobile's 1997 sales had come from Hispanics. African-Americans were also under-represented among Oldsmobile consumers. "There is a huge potential for the Alero to gain Hispanic and African-American customers who had never before considered buying an Oldsmobile," Oldsmobile's brand manager Bob Clark explained to Automotive News in September 1998. In its bid to pitch Alero to Hispanic and African-American consumers, Oldsmobile created separate ads that targeted these distinct communities. For instance, Alero's Hispanic-oriented advertising used the tagline "Vivelo," which meant "To Live," because "Start Something" translated poorly.

COMPETITION

As GM's "import-fighting" line, Oldsmobile wanted the Alero to compete against comparable compact sedans by the established import players—the Honda Accord, the Toyota Camry, the Nissan Altima, and the Mazda 626. Alero's task was a difficult one because it involved "mak[ing] conquest sales in a shrinking market segment," according to Automotive News. Sales in the lower mid-range segment that Alero sought to enter had seen shrinking sales, as increasing numbers of consumers bought sport-utility vehicles and other light trucks instead of cars. It was a highly competitive market, and Alero's rivals conducted savvy campaigns designed to keep their share of the market. Claiming converts would be a challenge.

Foremost among the Alero's rivals was the Toyota Camry, which was the best-selling car in the United States in both 1997 and 1998. Since fall 1997 Toyota's ad agency, Saatchi & Saatchi, had advertised the Camry as part of the company's overall branding campaign: "Everyday People." The Camry figured prominently in these print and television spots that showed the versatility and practicality of Toyota. Toyota's overall share of the U.S. market grew from 8.1 percent in 1997 to 8.7 percent in 1998.

The Honda Accord was the second-best-selling car in the United States in 1997 and 1998. For model year 1998 Honda had launched a completely redesigned Accord. Spots by Rubin Postaer & Associates used the tagline "An Accord Like No Other" to tout the Accord's roomier interior, performance, and quiet engine. This $100 million campaign "was almost paying homage to the Accord over the past 22 years," a Honda spokesperson told Advertising Age. In October 1998 Honda switched strategies with two new national Accord commercials (also by Rubin Postaer) that did not use "An Accord Like No Other." Instead the spots presented the Accord not just "as a car you need," but more as "a car you want," a Honda representative explained in the October 5, 1998, issue of Advertising Age. In one a frazzled woman left an airport, and, by using her remote-control key, was able to freeze all action around her until she reached her Accord. The tagline proclaimed, "It's not just a car. It's a state of mind." Honda's overall share of the U.S. car market rose from 6.2 percent in 1997 to 6.5 percent in 1998.

Oldsmobile also viewed the Mazda 626 and the Nissan Altima as direct competitors of the Alero. Since spring 1998 Mazda, which controlled a 1.5 percent share of the U.S. car market, had used the slogan "Get In. Be Moved." in advertising for all its offerings. As part of this campaign, Mazda's ad agency, W.B. Doner & Co., created a commercial for the 626 that sought to build a more energetic and sophisticated image for the car. Set to David Bowie's song "Rebel Rebel," the commercial portrayed an attractive woman driving across town in her 626. She stopped at a sign announcing a PTA meeting and walked inside carrying a cake. "Do not go gentle into that good PTA meeting," the voice-over intoned, in a spoof on Dylan Thomas's famous poem, "Do Not Go Gentle into That Good Night." Mazda ran a similar commercial for the 626 in May 1999. Nissan, whose share of the U.S. car market was an impressive 4.0 percent, pulled the plug on its "Enjoy the Ride" branding campaign in 1998 and initiated more product-specific spots that failed to have their desired effect. The company consequently inaugurated a new branding campaign in 1999 with the tagline "Driven."

MARKETING STRATEGY

"Start Something" was designed to generate excitement for the launch of the Oldsmobile Alero. Just as the component advertisements strove to convey the car's fun-to-drive and distinct image, Oldsmobile's marketing efforts attempted to make the Alero's introduction highly visible to the car's target audience. "We really need to establish this vehicle with a big splash," Oldsmobile's Sand was quoted in the August 17, 1998, Adweek. The teaser commercials were an essential component of this plan. Even before the Alero had arrived at dealers, these 15-second spots "offer[ed] more of a sneak preview than a full disclosure of what l[ay] ahead," Oldsmobile explained in a press release. By the time the full 30-second spots aired on September 1, Oldsmobile had piqued viewers' curiosity. Print ads ran in major monthly magazines and newsweeklies after September 1.

REAR VIEW?

One interesting aspect of the "Start Something" teaser spots for the Alero was that each commercial ended with a shot of the Alero backing up, seemingly out of the commercial. The image was probably meant to help differentiate "Start Something" ads from the visual cacophony of other car advertising.

Oldsmobile employed atypical media strategies to ensure that the Alero received a considerable amount of attention. The Internet figured prominently in the "Start Something" campaign. According to Brandweek, the Internet was the "centerpiece of its media blitz." In addition to scores of banner ads displayed on popular websites, Oldsmobile even offered test drives at home for consumers who signed up online. Incorporating the Internet into its marketing venues was a logical choice for Oldsmobile. "We think the Internet is used by very youthful, very technologically savvy consumers who are similar to the consumer profile that we want to attract with the Alero," Sands told Automotive News. To raise the Alero's profile further, Oldsmobile announced its "Start Something Tuesdays on ABC Sweepstakes" in August 1998. This promotional tie-in with ABC's Tuesday evening prime-time lineup encouraged viewers to enter a sweepstakes in which 200 Aleros would be awarded.

Because Oldsmobile included Hispanic and African-American consumers in its target audience, the division used slightly different methods to reach these groups. For instance, Alero advertisements bearing the "Vivelo" tag-line appeared in national Hispanic magazines and on Spanish-speaking networks. Oldsmobile concentrated its Hispanic-oriented efforts on large cities such as Los Angeles and Miami, as well as in regions with substantial Hispanic populations, such as Texas and the Southwest. GM declared October 13, 1998, to be "GM Hispanic Awareness Day." At the company's Miami symposium that day, a GM executive said, "I think the Alero speaks volumes about our commitment to, and expansion into, the Hispanic community."

In 1999 GM expanded the "Start Something" campaign to encompass all of its Oldsmobile vehicles in what company executives described in Advertising Age as a "divisional branding campaign," or "divisional effort." Karen Francis, Oldsmobile's general marketing manager, told Advertising Age that in 1999 Alero's marketing tag-line, "Start Something," was being moved to all Oldsmobile vehicle models and that the expanded campaign would kick off with television spots during the 1999 Super Bowl. A new campaign to support the introduction of the Oldsmobile Aurora sedan began in April 2000; it featured the "Start Something" theme, but with a subtle twist. Francis explained to Advertising Age that each vehicle in the Oldsmobile line would have a different word after "Start." For the Aurora the tagline was "Start Obsessing," and the Alero's modified tagline was "Start Connecting." The strategy took a different spin in late 2000 when GM announced that the redesigned Bravada sport-utility vehicle would be the last vehicle released under the Oldsmobile brand. Leo Burnett created just one 30-second TV spot supporting Bravada's launch; it was scheduled to appear on syndicated cable for three weeks followed by a run during the "March Madness" basketball coverage. The spot featured a Bravada racing down a road with a herd of wild horses running alongside it. A voice-over stated, "A new beast on the road."

OUTCOME

Both GM officials and industry analysts heralded the Alero's launch as a success. Although GM's overall 1998 performance was sluggish, the Wall Street Journal called the Oldsmobile division GM's "one bright spot" and stressed the importance of the Alero to Oldsmobile's positive results. Sands informed the January 11, 1999, Adweek that the Alero campaign was the first Oldsmobile effort that had "truly resonated" with this younger target audience. "It was like a light bulb went off in [consumer's heads] that Oldsmobile had changed," he exclaimed. An Oldsmobile dealer further emphasized the division's turnaround to Automotive News on February 15, 1999: "We're attracting non-Oldsmobile owners into the showrooms to buy Oldsmobiles." The company predicted 1999 sales of the Alero to exceed 100,000.

The Alero's debut was made all the more impressive by the challenges it overcame. In June 1998 a labor dispute led to strikes at major GM production facilities, which delayed the Alero's initial release. Some dealers and analysts therefore predicted a tepid reception for the car. "We've got a lot of advertising support and market interest generated and now people come in the door and there's nothing to show them," one dealer complained to the Capital Times. But these fears proved to be overblown.

Following a brief rise on the crest of the "Start Something" campaign, in December 2000 Oldsmobile sales took a disappointing nosedive. GM executives soon announced that the entire Oldsmobile line would be phased out. The launch of the redesigned Bravada sport-utility vehicle in 2001 would be the brand's swan song. According to an Advertising Age report, Oldsmobile's plans for a 2001 first-quarter divisional branding campaign were canceled. "Obviously, we're not into brand building, we're into brand selling," a GM spokesman said. Further, amidst complaints from Oldsmobile dealers that the advertising failed to clarify fully the brand's new positioning, the unit's general manager Karen Francis and advertising director Mike Sands both resigned, and Oldsmobile conducted an agency review. Included in the review were incumbent Leo Burnett; McCann-Erickson Worldwide, which was the agency for the Buick line; and E. Morris Communications, the agency handling Oldsmobile's African-American advertising. Following the review Leo Burnett retained the account and created the final advertising for Oldsmobile. In 2004 the last new Oldsmobile rolled off the assembly line.

FURTHER READING

Akre, Brian. "GM Strike Has Dealers Fretting over Inventory." Capital Times, June 19, 1998.

Halliday, Jean. "Curtain Call for Oldsmobile; GM's 103-Year-Old Unit Going Out with Bravada—and a $10 Mil Push." Advertising Age, March 19, 2001.

―――――――. "Honda Ads Stick Simplicity." Advertising Age, October 5, 1998.

―――――――. "How to Sell a Dying Brand; GM Agencies Confront Uphill Challenge of Marketing to Consumers Who Worry about Servicing Their Olds." Advertising Age, December 18, 2000.

―――――――. "The Marketing 100: Honda Accord." Advertising Age, June 29, 1998.

―――――――. "New Olds Effort Evolves Tagline; Automaker Starts 'Obsessing' for Aurora and 'Connecting' for Alero." Advertising Age, February 28, 2000.

―――――――. "Olds Suffers Sales Slide, Dealers' Dissatisfaction; New Ad Director to be Named at Troubled GM Unit." Advertising Age, October 16, 2000.

―――――――. "Olds to Buck GM Trend, Plans Division Brand Ads: Effort Likely in 1st Quarter 2000, Says Francis." Advertising Age, June 21, 1999.

Jaffe, Andrew. "Is Olds Making an Intelligent Choice?." Adweek, July 15, 1991.

Maynard, Mark. "The New Olds Alero." San Diego Union-Tribune, April 5, 1998.

"Oldsmobile." Adweek, August 10, 1998.

Taylor, Alex, III. "GM: Time to Get in Gear." Fortune, August 28, 1997.

Warner, Fara. "GM's Sales Fall by 5% in the US." Wall Street Journal, December 4, 1998.

Washington, Frank. "Olds' Goal: 400,000 '99 Sales." Automotive News, February 15, 1999.

―――――――. "Olds Plans an Aggressive Ethnic Pitch." Automotive News, September 14, 1998.

                                     Rebecca Stanfel

                                        Rayna Bailey

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