Winnipeg Free Press - PRINT EDITION

Stakes high for new Chevy marketing head

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Chevrolet's new marketing chief, Tim Mahoney, only started on April 1, but his to-do list is daunting.

First there is the showroom slump of the Malibu, which is lagging behind its competition from Toyota, Honda and Ford. Chevy's new Find New Roads tagline hasn't gained full traction yet. Then last month, one of the agencies behind the highly touted Commonwealth creative venture decided to sell out to the other partner.

The good news is coming from an all-new Silverado pickup and full-size Impala sedan

Getting Malibu on track will be a priority. Chevy cut the sedan's price by several hundred dollars earlier this year, but U.S. sales in February tumbled 26 per cent, while sales of the Honda Accord rose 35 per cent, Ford Fusion gained 28 per cent and the Toyota Camry fell 9.5 per cent from a year earlier.

"It's a good sign they're recognizing something had to be done," Edmunds.com analyst Michelle Krebs said. "My concern is things are going to be in turmoil while they're launching 13 new vehicles this year."

Next, Mahoney must get a better return on one of the largest advertising budgets in corporate America. Chevy spent US$973 million on advertising in 2012, according to Kantar Media.

GM has confirmed the two advertising agencies that formed a joint venture called Commonwealth a year ago were splitting. McCann Worldgroup, a division of Interpublic Group, is buying out Omnicom Group's Goodby, Silverstein & Partners, but retaining most of about 200 employees working in Detroit.

The stakes are high. Chevy is launching 13 products in the U.S. this year and 25 around the world. Certain models, especially the Equinox crossover and the Sonic subcompact, are flourishing, but the Malibu has been a disappointment.

GM spokesman Pat Morrissey said the Commonwealth changes won't be disruptive because the joint venture has already mostly completed the next stage of Find New Roads ads for the Chevy Volt, Impala, Corvette Stingray, Sonic and Spark.

"We think we've got a lot of momentum as we go into our launches," Morrissey said.

In 2012, Chevy sales in the U.S. rose 3.7 per cent. For the first two months of 2013, sales are up 7.6 per cent, but the 2013 Chevy Silverado pickup, which will be replaced with a redesigned version in the second quarter, has accounted for 86 per cent of the increase.

GM introduced the Malibu in stages last year, starting with the Eco version. Former global chief marketing officer Joel Ewanick, who was fired in July over a European soccer-marketing deal, helped create the Commonwealth agency.

But while the agency debated whether to keep its Chevy Runs Deep tagline, which was dropped earlier this year, the Malibu hit showrooms without a strong marketing push, said Polk Automotive analyst Tom Libby.

"There wasn't any oomph," Libby said. "There wasn't any real splash. In a strong launch, you see it everywhere."

Krebs said Malibu's weakness may be hurting sales of the Chevy Cruze because there's a lot of cross-shopping between compact and midsize cars.

Despite Malibu's struggles, Chevy could rebound. The redesigned 2014 Impala has just hit showrooms. In 2012, about three of four Impalas were sold to fleet buyers. Now the goal is to sell only one-third to rental agencies and government agencies. That's important because sales to consumers are generally more profitable.

The Impala's styling has won praise from critics.

"It's going to be a real step forward," Libby said. But "once it gets a reputation for being a fleet vehicle, it's a hard thing to get rid of."

The ultimate factor in measuring Chevy's success will be the all-new Silverado pickup, the second-best selling vehicle in the U.S. A separate agency, Leo Burnett, is handling advertising for the truck.

Libby said the Silverado will benefit from a housing market recovery that has encouraged many contractors and small businesses to upgrade their pickups.

"The timing of the Silverado couldn't be better," he said.

-- Detroit Free Press

Republished from the Winnipeg Free Press print edition April 26, 2013 A1

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