Monday, October 4, 2010

GM + SUVs = HUH?

General Motors recently announced that it will move quickly to bring big new SUVs to market. Why? Because these are GM's most profitable vehicles.

Even though high gas prices and sluggish economic conditions have put the brakes on SUV sales, and GM's smaller cars are helping the firm rebuild itself financially, management is looking ahead to better times and bigger profits that can come from high-ticket SUVs. But has anybody asked customers what they want?

Of course GM has to think years ahead, because gearing up for new vehicle launches takes time. By the time tomorrow becomes today, the economy is likely to be far better and unemployment much lower. I'm just not sure how quickly SUV demand will rebound, however.

Some customers will always want SUVs, regardless of gas price ups and downs. But will demand be high enough to justify GM's big investment in accelerating new vehicle intros?

Contrast GM's SUV push with Ford, which has been boosting global sales with smaller, fuel-efficient cars. James Farley, Ford's marketing chief, knows how to intro big vehicles: He was in on Toyota's Tundra pickup launch a few years ago.  And Farley is putting Ford's money into smaller vehicles these days, without starving the F-150s and F-250s for which the firm is known.

No matter how profitable SUVs and pickups may be, if they're not what customers want or need, they won't help anybody's bottom line. That's why I'm concerned that GM + SUV = marketing misstep.

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