Chevrolet to Bury "Chevy" in Corporate Communications

On June 10, I came across several articles dealing with an internal GM memo which apparently prohibited its staff to use the name „Chevy“ when speaking of Chevrolet models or the brand in general. „Why this?“ you may wonder. Isn’t this term common all over the U.S or even the world and doesn’t this express that to many people Chevrolet is more than a brand, something that has been part of American lives for centuries and that people have strong affection for? Damn right! And what is the corporate benefit of only using Chevrolet instead of Chevy? Should Coca-Cola avoid the use of Coke? Surely GM’s marketing department has had its reason for this. I use this opportunity to provide you with some interesting facets of the history of the US automobile market and the central role of patriotism.Many American automakers make heavy use of patriotism in commercials. Why? Well, simply because it works and it helped sell cars for many centuries.

When in the late 70s Japanese makes with surprising product quality and price-quality-relation entered the U.S. market, pointing to U.S jobs and the economy helped push sales of U.S. automobiles. Using the country-of-origin effect to gain a competitive advantage towards foreign makes and playing the patriotic card is what I term „patriotic marketing.“ Especially the U.S. is a country most popular for its loyalty towards its nation and its cultural heritage and thus patriotic marketing has seen great success throughout different industries. Wal-Mart, Ford, Chevrolet and Budweiser are just some examples. And patriotic marketing is not a recent phenomenon. It can be found in markets all over the world. In the the U.S. it has been applied already in the days of the early colonies in order to support the local economy and to push the independence from British goods and dominance.

The sad side: Patriotic marketing has the same effect on domestic economies as other trade barriers have. They hinder foreign goods from entering the market. If they had been produced more efficiently , the tariffs make them more expensive than they actually would be and thus less attractive to the US consumer. Unfortunately this did not give U.S. auto brands in the 80s the time and space to improve in terms of productivity and quality. Instead patriotic marketing just helped to distract consumers from the obviously lower quality compared to German or Japanese makes. By avoiding direct competition and by producing specifically to a patriotic US target group, US automakers lost touch of the Japanese and European competitors. This is the reason why in the past you could barely sell US automobiles outside of the US. As a result GM, Chrysler and Ford all have been struggling in the beginning of the 21st century.

Status Quo: Today Ford and GM have realized that future market share comes from quality and innovation and from producing globally competitive vehicles that are attractive to auto buyers all around the world. Ford today is known for a strong focus on Social Media. Why? To connect with young target groups and in order to rejuvenate the brand. In the US more and more small-sized cars enter the U.S. market and GM is among the leaders when it comes to Hybrid technology or battery-powered vehicles such as the promising Opel / GM Ampera. Also GM started to introduce successful European Opel models in the US (under the Saturn brand). And they did NOT sell Opel, which may be playing a central role for the future of the GM corporation.

Learning: Patriotism may work nicely in domestic markets but in a global economy values such as quality, innovation and fit-to-market is what matters. President Obamas decision against a major Buy American campaign to boost domestic economy may have cost a short-time boost, but in the long run and in a global context, this was certainly the right decision. The recent financial reports by Ford and GM show that they obviously have made the turn: They again make good money with better vehicles. And Toyota who has always been ahead in terms of quality and reliability now has the quality troubles…. If this GM memo has been a move away from the patriotic American background towards a more global positioning, I cannot tell. Future commercials may provide an insight. But I am sure that the future of GM can only lie in becoming a strong global brand such as Ford or VW. Only then you can selll enough vehicles, profit from economies of scale and invest in order to be able to equip your vehicles with the latest technology.

Today, we are experiencing exciting times in the global automobile industry. Never before have there been challenges such as gas prices, battery technology, etc that may fundamentally change the auto business.

But let’s get back to America’s love for Chevy and how important a role Chevy had been playing in the past. When writing my master’s thesis on „Patriotism and American Values in U.S. Advertising“ I came across numerous examples of patriotic marketing applied in US TV commercials. And I must admit that some of them also have a strong impact on me. To many proud Americans, these commercials may feel like a confirmation in their beliefs, in the cultural values many Americans so proudly cherish. I have provided you with a selection of commercials that are filled with references to American cultural values such as „work ethic“, „freedom“ „risk-taking“ and „individual achievement“. And in almost all of them you come across „Chevy“. Enjoy these colorful, moving commercials. Some of you may find them pathetic or stereotypical. But just imagine how these images may move a patriotic American citizen and ease the complex purchasing process…

1994: „Like A Rock“

2007: Chevrolet Super Bowl Commercial „Ain’t We Got Love“

~2006: This Is Our Country (Chevy Silverado)

1991: Chevy Truck „The Heartbeat of America Campaign“

1992: Chevy Like a Rock

Ads like these show that Chevy is a positive synonym for Chevrolet, a brand that helped make America what it is today. A brand that brought mobility to generations of Americans.

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NYT: G.M.’s Road From Prosperity to Crisis

NYT offers a very nice visualization of the history of US auto giant GM and the milestones which lead them from riches to rags..

NYT: G.M.’s Road From Prosperity to Crisis

How Long Can Germany Keep Auto Jobs?


the following article was published in BusinessWeek
September 28, 2009, 12:40PM EST

So far, Germany’s auto industry has escaped massive job losses, but major cuts could soon be on the cards

By Moira Herbst

The recession has caused a dent in global auto sales, but German automakers have avoided mass layoffs. In part, that’s because the German government subsidizes workers whose hours have been trimmed through a program called Kurzarbeit, or „short work.“ A successful cash-for-clunkers program, which has just finished, also sheltered the industry.

But how long before Germany’s blue-collar workers head for the unemployment lines? The signs don’t look good. If demand doesn’t return to pre-recession levels soon, many German automakers will likely begin making large layoffs. Analysts reckon up to 10% of the workforce could face the chop, while others will have to learn new skills to cope with the changes to the automotive sector. „Employment in the auto industry in Germany has peaked,“ says Ferdinand Dudenhöffer, director of the Center for Automotive Research at the University of Duisburg-Essen. „[Job losses] will come, and workers will have to find possibilities in other industries.“

The likelihood of mass layoffs could increase under Germany’s newly elected center-right government. On Sept. 27, Chancellor Angela Merkel won national elections and will now form a coalition with the pro-business Free Democratic Party, which wants to make it easier for German companies to dismiss workers. Analysts warn the auto industry could become a main target.
Changing Market

Even before the recent election, autoworker job cuts already were under way. Dudenhöffer says 2007 marked the high for auto employment in Germany, with about 750,000 jobs split between producers and suppliers. About 30,000 jobs have been lost in the past two years, and a further 70,000 could go by 2015.

„Government support will run out eventually,“ says Ian Greer, professor of economics at the University of Leeds in Britain. „Either the employer starts paying full wages at that point or, more likely without a strong recovery, there will be mass layoffs.“

Changing consumer habits underpin the pending job cuts. Michelle Krebs, senior analyst at auto Web site, says German manufacturers must make the painful adjustment to making fewer expensive premium cars, which generate fat profit margins. The global recession has forced many consumers to downgrade to cheaper, more fuel-efficient, and smaller cars, which offer automakers less lucrative returns. „People want cheaper and smaller cars,“ says Krebs. „That will inevitably affect the bottom line, which speaks to job loss.“

Aware of the changing market dynamics, German union IG Metall, which represents many in the country’s auto industry, is now calling on the government to further strengthen employee rights with a campaign called Gemeinsam für ein gutes Leben, or „Together for a good life.“ The union’s plan includes creating a national minimum wage and increasing protection for older workers. The union regularly holds rallies nationwide with tens of thousands of workers to bolster popular support.
Blue-to-White-Collar Shift

Indeed, the pressures on the industry—and on its workers—are great. Many German carmakers are suffering from excess production capacity despite shrinking demand. „In three to five years, automakers will be struggling with large structural problems, primarily excess capacity,“ says Peter Kaiser, senior analyst at the economic consulting firm Prognos in Bremen.

If more manufacturing jobs head overseas, the German auto industry could shift gears to take advantage of the country’s continued strength in design and engineering. That, suggests Kaiser, could include a marketing logo of „Engineered in Germany,“ instead of the current „Made in Germany“ campaign.

The recession certainly is helping accelerate the shift in the German auto industry from blue-collar manufacturing jobs to white-collar work such as design and marketing. Yet to succeed, auto industry experts say Germany will need to turn out more highly skilled young professionals, especially engineers, and help current workers learn new skills. „The only chance for the German car manufacturing industry is to focus on [keeping] high-quality jobs,“ says Stefan Bratzel, head of the Center of Automotive Research Institute in Bergisch-Gladbach.

Of course, not all German automakers are in the same position. Volkswagen (VOWG.DE) and its subsidiary Audi are holding up remarkably well and may be better prepared for the industry’s ongoing shifts. More troubled automakers such as Daimler (DAI) and BMW (BMWG) similarly have adjusted their workforces to prepare for lower domestic demand and a global move toward smaller cars.
Expanding Abroad

Daimler’s dealings with its workforce illustrate how one German automaker is handling the changing market. The company’s goal is to maintain existing jobs in Germany while adding to overseas operations. In April 2009, management and IG Metall agreed to reduce labor costs while safeguarding employment. That included no official layoffs until mid-2010, but almost three-quarters of Daimler’s 162,800 German employees had to agree to work reduced hours.

„As a Germany-based company, the passenger car business will always have a strong production footprint in its home market,“ says Daimler spokeswoman Nicole Kicherer. „Daimler is also set for growth in emerging markets,“ she adds. Future production will focus on regional markets in Brazil, China, India, and South Africa.

Daimler also is building a plant in Hungary that will start production on the automaker’s small A-Class and B-Class cars in 2012. The project will be combined with an existing plant in Germany, which still will be the main production location for these cars as well as other compact vehicles.

Combining German facilities with plants overseas could safeguard some domestic jobs, cushioning the impact of cuts in lower-skilled production work. The Center of Automotive Research Institute’s Bratzel says lower wages in emerging countries will force German autoworkers to adapt if they want to keep their jobs. „My advice for the car industry is to focus on building innovation and quality here in Germany—creating the car of the future—even if some manufacturing functions move elsewhere,“ he says.

Herbst is a reporter for BusinessWeek.

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Some IAA 2009 Impressions

Today is Saturday and thus weekend. Me and some colleagues from Syzygy decided to visit the IAA in Fraknfurt today to get a hands-on impression of what’s new in the automotive industry. Working on automobile accounts, this visit was mandatory. On my way to the fair I wondered what the must-sees of this year were. And although firm in the automotive sector, there was no groundbreaking innovation I could think of. Maybe I might find out at site…

We got to the Messe Frankfurt quite early which made the visit of the Mercedes-Benz exhibition fairly pleasant. Not too many people. I will drop a few lines to the brands we visited:
-Mercedes: smaller than in previous years due to the fact that they did not use an entire level. The E-Class T-model and the B-Class F-Cell were among the major attractions. not to forget the SLS in red. As always, there was a good light show, a big screen but no ‚runwalk‘ this time. Interactive surface table were rather boring. Except for the one by Smart which was really quick.

Mercedes-Benz E-Klasse T-Modell 2009

Mercedes-Benz E-Klasse T-Modell 2009

Mercedes-Benz in der Festhalle

Mercedes-Benz in der Festhalle

Mercedes-Benz SLS AMG

Mercedes-Benz SLS AMG

-VW had all its cars displayed which barely leaves space for entertainment. All Cars were in white just as the Audis. Bmw did the same two years ago. As to the cars: the Multivan got a new more mean looking front. The Golf Variant was there with a minor facelift. The star may probably have been the new Polo which might cannibalize big brother Golf.
2009er VW Polo

2009er VW Polo

The Phaeton was praised as luxury car but no one really cared if you ask me.
-Seat: also present in the same hall as the rest of the VW family. Some sporty vehicles such as the Cupra versions and the new Exeo / former AF4. But in my eyes those Seats often look somewhat tiny when the tires are too small.
-Skoda: Nice Yetis running around.
Skoda Yeti auf der IAA 2009

Skoda Yeti auf der IAA 2009

The Yeti attracted young families as did the other affordable Skodas.
-Fiat: nice playful exhibition. Similar to sister Lancia which other than Fiat used more darker colors to support a touch of premium.


-Alfa-Romeo: a comparably large exhibition for this niche brand. All vehicles in alfa romeo red and the construction resembling children construction kits. Great job!
Alfa-Romeo Messestand

Alfa-Romeo Messestand

-Ferrari: much too crowded to get a peak at the new Ferrari
-Maserati: see above
-Hyundai: Hello ladies! I must admit, i have no clue whether the small Hyundai was a show car or regular model but the hostess presenting it surely received more looks than the car. In general, the exhibition was fairly big and loud. Sales in Europe are on the rise…
Hyundai mit deutlich größerem Auftritt 2009

Hyundai mit deutlich größerem Auftritt 2009

-Porsche: packed…
-Opel: new dynamics at Opel! Aside from the current turmoil about the future of Opel, the exhibition was well populated. The new Insignia Sports Tourer OPC was presented as well as the new Opel Astra. Big hopes lie on this car. From my point of view, it comes with modern design, efficient engines and decent quality. We’ll see how it performs vs. the Golf VI.
Opel Astra

Opel Astra

-BMW: Well well well! I did not believe when I read it, but BMW did in fact increase its budget for the 2009 IAA. No longer situated in the Agora, BMW Group’s brands BMW, Mini, and RR were now displayed in probably the newest building of the Frankfurt fair. Like a carrera round course, BMWs were driving on the first level while the vehicles were presented on the ground level.
BMW Messestand

BMW Messestand

The new Active Hybrid X6 and 7series were displayed as well as the new X1. In the center of attention was the new Efficient Dynamics show car.
BMW Efficient Dynamics Studie

BMW Efficient Dynamics Studie

BMW also presented BMW Performance, a new special equipment line which can be ordered aside from the M packages.
Mini, still the most fashionable of auto brands brought along its own DJs to celebrate its anniversary. Giant letters in black and white decorated the Mini area. The attraction here: the Mini Coupe show car! And simply the ambiente that also sets the Mini drivers apart from they rest: it is premium, it is stylish it is different.
Mini Messestand

Mini Messestand