After filing for bankruptcy protection, General Motors is pushing a new ad campaign promising it will emerge from its financial troubles leaner and stronger.

Is this a good marketing approach? Will it allay consumer fears about buying from a carmaker with an uncertain future?

Advertising experts say GM — and fellow Chapter 11 filer Chrysler — should move past the negative and focus on their brands as they try to get car sales rolling again. Consumers are staunchly loyal to their car brands, they say.

GM says its brands are key to emerging from these tough times. But first it has to tell consumers how it will remake itself and what to expect, Jay Spenchian, GM executive director of corporate advertising strategy, said Tuesday.

“There are lots of questions,” he said. “The best thing we can do is quickly get out there and assure them.”

Here’s a look at what GM is saying to consumers right now and how it’s delivering the message — think social media — followed by some thoughts by marketing experts on whether the company’s approach will likely work.

What GM is doing
Detroit-based GM wasted no time acknowledging its problems to consumers. Shortly after it filed for bankruptcy protection on Monday, GM launched a Web site with a message built into its address: www.gmreinvention.com. The site is forward-looking, showing videos of satisfied consumers — like a former Jaguar owner who never thought he’d own a GM product — and engineers talking about new technologies.

But it doesn’t ignore the company’s current situation. There are links to financial filings under the header “progress,” and articles with headlines like, “What happens to my warranty if GM files for bankruptcy?”

The company has released a 60-second ad on the site that will air nationally on TV starting Wednesday, pledging a “reinvention.”

“Let’s be completely honest, no company wants to go through this,” the ad begins. “But we’re not witnessing the end of the American car. We’re witnessing the rebirth of the American car.”

Among the images in the ad: city skylines, shots of Detroit, a sun rising, plants growing, people raising a house’s frame, athletes commiserating — and later celebrating.

Also on Wednesday, GM will print a letter to customers from chief executive Fritz Henderson in major newspapers in markets including New York, Cleveland, San Francisco and Miami. He tells customers the company cannot afford to lose their business, “or your trust. You have our word.”

Key to the pledged “reinvention” will be an effort to leverage social media, GM’s Spenchian said. The company has links to social media staples like Twitter and Facebook on its new site, which will also host a Web chat later this week with Henderson.

One major advantage of this approach: It’s a lot cheaper than traditional advertising.

TOKYO – Toyota Motor Corp. lost $7.7 billion (765.8 billion yen) in the January-March quarter — a bigger loss than General Motors reported — resulting in its worst fiscal year since the Japanese automaker was founded in 1937.

Toyota also warned Friday that because of the global auto slump its net loss would deepen in the year through March 2010 to $5.55 billion (550 billion yen) from $4.4 billion (436.94 billion yen) in the just-ended fiscal year.

President Katsuaki Watanabe said the devastating results were caused by “the significant deterioration in vehicle sales particularly in the U.S. and Europe,” the strong yen and the rising cost of raw materials.

The bigger-than-expected quarterly loss — down from a profit of 316.8 billion yen a year ago — was bigger than the full-year loss because it had some positive quarters earlier in the fiscal year.

Throughout much of last year, Toyota’s sales were booming, thanks to its reputation for quality and good mileage, and the popularity of its Camry sedan and Prius hybrid.

It even overtook General Motors Corp. last year to become the world’s biggest automaker by annual sales.

But Toyota’s business has been hit hard by the U.S. financial crisis and credit crunch, which sent ripple effects around the world, causing people to hold off on buying new cars. The red ink for the full year was worse than Toyota’s own forecast for a 350 billion yen net loss, and a stunning reversal from the record profit of 1.72 trillion yen it chalked up the previous fiscal year.

Sales for the fiscal year sank 21.9 percent to 20.529 trillion yen. In the year ahead, Toyota reckons it will sell about 1 million fewer vehicles, with revenues sliding 19.6 percent to 16.5 trillion yen.

Toyota’s quarterly loss even eclipsed GM’s $6 billion in red ink for the same quarter — although the Japanese manufacturer is on far stronger capital footing than GM because of its historical profits. For all of 2008, GM lost $30.9 billion.

Robert Wiseman, professor of business at Michigan State University in East Lansing, said Toyota should emerge in good shape in the long run, and can even hope to benefit from a decrease in price competition in the U.S. as rivals weaken.

“Toyota continues to have a very strong positive brand reputation among North American buyers,” he said. “I would expect all global car manufactures to report a loss this fiscal year since car sales are way down.”

A turnaround is likely to take time.

To cut costs, Toyota has been slashing managerial pay and offering buyouts to thousands of American workers. It has reduced the number of temporary workers in Japan from 9,200 last year to 3,000.

The manufacturer is expecting its operating loss — reflecting its core automaking business — to worsen to 850 billion yen for the year through March 2010 from 461 billion yen this past year.

“It appears to take some more time before the financial markets in the U.S. and Europe normalize and the global economy recovers,” Watanabe said.

Toyota’s vehicle sales for the fiscal year ended March 31 fell 15.1 percent to 7.57 million vehicles from 8.91 million vehicles the previous year. It expects to sell even fewer vehicles in the fiscal year through March 2010 — 6.5 million vehicles.

Wiseman, the MSU professor, says Toyota should prepare for an eventual recovery.

“What Toyota can do as it waits for the economy to turn around is invest in the next generation of vehicles and work on improving quality control in its production facilities,” he said.

To send a message of change, Toyota has turned to its founding family roots, tapping Akio Toyoda, the founder’s grandson, who at 53 is relatively young for leading a major conservative Japanese company.

Watanabe, whom Toyoda is succeeding in June, promised Friday more cost reduction and a focus on hybrids and compact vehicles to boost profitability. Toyota will work on ecological technology such as hybrids and plug-in vehicles toward long-term recovery, Watanabe said.

Standard and Poor’s on Friday lowered its long-term credit rating on Toyota one notch to AA — its third-highest rating — and gave a “negative” outlook. But S&P also said the automaker “maintains a minimal financial risk profile, characterized by a strong capital structure with massive liquidity.”

Toyota was likely to face hard times for awhile because demand will likely remain depressed into 2010 before it could hope to again count on its strengths to boost profits once a recovery arrives, S&P said in a statement.

DETROIT – General Motors Corp. told its dealers Tuesday that it will force 1,000 to 1,200 underperforming locations to close their doors as the automaker tries to thin dealer ranks to make the remaining outlets more profitable.

GM told the dealers about the plan in a video conference, according to a dealer who spoke on condition of anonymity because the video conference was private. It is part of the company’s plan announced Monday to cut more than 2,600 dealers by 2010.

The company expects to lose 500 Hummer and Saturn dealers when those brands close or are sold, and it expects 400 dealers to close voluntarily. Another 500 would be consolidated into other dealerships, according to the dealer.

GM said Monday that it also would eliminate its Pontiac brand, but there are only 27 dealers that sell just Pontiacs, according to the National Automobile Dealers Association. Most Pontiac dealers also sell Buick and GMC vehicles at the same location.

Company spokeswoman Susan Garontakos confirmed the numbers and said GM is in the process of deciding which dealers to keep based on their sales performance, capitalization, potential profitability, size, image and customer satisfaction scores.

After that, she said, the company will go market by market and determine which dealerships are not meeting the terms of their franchise agreements.

“There’s a lot of things that we have to consider, but we’ll have talks with those dealers that show or haven’t demonstrated that they have maintained a good performance,” Garontakos said.

John McEleney, chairman of the NADA, said in a written statement that GM must treat all of its dealers fairly and those that close should be compensated.

“It’s not out of any fault of their own that these dealers are being forced to close their businesses,” McEleney said.

He said many details were unknown about how the dealerships will be closed, but “137,330 dealership employees will lose their jobs, and state and local governments will lose an estimated $1.7 billion in sales tax revenue that would have been used for economic development in communities around the country.”

GM announced Monday it plans to reduce dealerships by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605.

GM is living on $15.4 billion in government loans and faces a June 1 government deadline to complete restructuring moves, win concessions from its unions and cut its debt. If it fails to meet the deadline, it will go into Chapter 11 bankruptcy protection.

GM has decided to scrap its Pontiac brand and either sell or close Hummer, Saturn and Saab. It will focus on four core brands: Chevrolet, Cadillac, GMC and Buick.

Courtesy of the Associated Press.

Last month we reported how Ferrari was up in sales for 2008. Well now we are reporting that market competitor Lamborghini is beginning to feel some negative effects of the economy on its sales numbers. Lamborghini CEO Stephan Winkelmann recently spoke of the state of Lamborghini and its future, depicting a grim 2009 with luxury market sales down spiraling 40 percent for the first two months of 2009.
For those who have already placed orders, well you are in luck. Average waiting times have been cut from twelve months to just under six months in order to complete orders and ship them out before anything else negative stirs up. So far, Lamborghini has received 100 orders for the new Murcielago LP 670-4 SV for which only 350 will be made. Ironically, in a more stable economy we would have seen all 350 units pre sold before the car even being available to the public.

Over 200 people were temporarily cut this week in an effort to stabilize an uncertain future. This 20% cut in workforce also mimics what Winkelmann explains as “temporary” despite the financial difficulties that Lamborghini will be facing in the near future.
Lamborghini expects a 20% drops in sales for 2009 but with the state of the American economy, and the fact that we are its largest market slice, things could get worse…

As the economy and its slowing effects take a negative downturn in the Unites States, countries across the pond have been taking major hits below the belt. Reports tell Tuned that over 3,000 vehicles have been abandoned by their respectful owners in the past 4 months alone. The trend is the fruit of the declining Dubai real estate industry and what critics say is “laughable”. Many of these vehicles are of high profile, having been owned by fleeing executives most likely returning to their native countries.
Dubai has a strong policy for travel and business Visas and has been overturning an average of 1500 Visas per month in 2009 alone.
The abandoned vehicles become property of the state and are auctioned off at public auctions where a heck of a bargain can be made.
Just last week it was reported that an Englishman purchased an abandoned Ferrari 360 Modena for little over $35,000, incredible isn’t it?
Tuned travel tip: Travel to Dubai, go sightseeing, buy a car.