Saturday, September 30, 2006

GM Hopes Hyundai's Turnaround Plan Works a Second Time

GM Hopes Hyundai's Turnaround Plan Works a Second Time
Adopts South Korean Automaker's Warranty Deal to Signal Improved Quality
By Jean Halliday
Published: September 06, 2006

DETROIT ( -- General Motors Corp., battling long-term misperceptions about the quality of its vehicles, is adopting a powertrain warranty similar to the one that helped Hyundai Motor Corp. execute one of the industry's most stunning turnarounds.

Deutsch gets the assignment

Saying "we believe in our cars and our trucks," Rick Wagoner, GM's chairman-CEO, today said the automaker would beef up its powertrain warranty to 100,000 miles or five years on all its 2007 models. The coverage on most of GM's models was 36,000 miles or three years. The auto giant hired Interpublic Group of Cos.' Deutsch, Los Angeles, to handle the integrated campaign to get the word out on the improved warranty.

Speaking at a news conference at GM's headquarters here, Mr. Wagoner said the marketer has expanded its roadside assistance and courtesy transportation programs to 100,000 miles and five years. "The bottom line is GM has the best coverage in the industry," he said.

GM has known for years that prospects are unsure about the quality of its cars and trucks. In summer 2003, it kicked off a short-lived corporate ad campaign, dubbed internally "Road to Redemption" to change consumers' minds.

Signal to consumers

The latest move borrows from Hyundai, which in 1998 introduced its 10-year or 100,000-mile powertrain warranty as a signal to consumers that it had solved its quality problems. The move, coupled with simplified and better product offerings, fueled Hyundai's incredible turnaround.

Unlike Hyundai's warranty, GM's plan will allow owners to transfer the warranties when they sell their vehicles.

Mr. Wagoner said GM has reduced its warranty costs by 40% in the past five years and its initial quality rose by 11% already this year. He also used the occasion to discuss how GM's turnaround continues to take hold, while admitting the automaker still has a ways to go.

The ad campaign is themed "Elevate" and marks the second major GM assignment for Deutsch, which also has Chevrolet's Major League Baseball and its motorsports accounts. The effort breaks with a 60-second spot that will air during tomorrow night's NBC-televised NFL season opener between the world champion Pittsburgh Steelers and the Miami Dolphins and will continue on premium network and cable sports, news and entertainment programming.

The blitz will include a heavy online presence, an experiential out-of-home component in several major markets across the country, newspapers and point-of-sale materials.

Perception gap

Deutsch created several videos playing on YouTube that are not identified as part of GM's warranty push, but play off the TV commercial in which several 2007 GM models elevate and fly above gridlocked traffic in major cities.

"There's a remarkable gap between the perception of GM quality and the reality," said Eric Hirshberg, president-chief creative officer at Deutsch. "We found that the best way to deal with that was simply to ignore it. If you tell people, 'We're better than you think we are,' they don't believe you. Whereas if you come from a place of utter and complete confidence, people feel it and respond. So we shed the baggage and went on offense."

Copyright © 1992-2006 Crain Communications

© Copyright 2006 The Detroit News. All rights reserved.


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