Some American Consumers Are In GM's Corner Again

Some American Consumers Are In GM's Corner Again

Rich Scholl is not a bitter man, but he's not a forgiving one either. He was a lifelong customer of General Motors: first a '63 Chevrolet, then a '72 Olds convertible, a '70 Cadillac, a '77 Buick, a new Pontiac 6000, a new Olds Intrigue, and on and on. In 2002, the state insurance-department trainer in Mt. Prospect, Ill., bought a Chevrolet Silverado pickup truck.

But that might be the last. When GM management went hat in hand to the federal government in the spring of 2009, the 63-year-old retiree was finished with GM. Sure, he worried about practicalities such as whether it would be more difficult to get warranty work done as the company shook out its dealer ranks. Yet Scholl was far more motivated by disgust.

"I just really had no faith in the fact that the government was taking over GM," he said recently. So after the GM bailout, Scholl and his wife bought a 2010 Mercury Milan from Ford, which hadn't asked for government money.

Even today, Scholl casts aspersions on his erstwhile favorite automaker because "it's being run by political hacks." The only thing that could bring him back to the fold, he said, would be if the government completely backed out of running GM.

Scholl is in no way alone. GM held by far the largest share of the American auto market before its bankruptcy filing. Though it had dwindled steadily over the decades, GM's 22 percent stake in 2008 still ranked well above that of any other OEM.

All that changed when GM management ceded control to the federal government rather than go into fire-sale mode. Its market share in April was down to 18.7 percent, and clearly a good portion of buyer defections are people such as Scholl who just can't stomach buying automobiles from a socially owned company.

Three Camps

At the same time, some Americans actually have rallied to support GM because suddenly, as taxpayers, they had a bigger stake in its survival and success. And many others had a dispassionate view, concerned more about the effects on the economy of GM's situation than with the fate of the company per se.

"There are still a lot of people who are very offended by the fact that they took bailout money," said Rebecca Lindland, head of automotive analysis for IHS Global Insight, Boston. "But here also are a lot of people who are very pro-American, and (who think) now that we've bailed them out, the least we can do is support them.

"Just like with political parties, people can be very passionate about them, but most people fall into the middle."

The majority of Americans "see GM's new models selling well, and so they're still going to go into GM showrooms to see those vehicles," said David Whiston, automotive analyst for Morningstar, which researches mutual funds and equities. "As long as they have a great group of products, they'll keep winning with these people."

Ali Bennett is that kind of person. GM was in the thick of its woes when she and her husband went looking for replacement vehicles for each of them in March 2009. But they found the new Chevrolet Traverse was the best vehicle to fit his tall frame. And she purchased a 2008 Malibu, which she thought was "beautiful."

"It seemed really unlikely to me that GM was going anywhere any time soon, even then," recalled the 32-year-old software engineer in Maryland Heights, Mo. "Someone's got to make cars."

Life Goes On

The American public as a whole these days is inclining more toward Bennett's thinking than Scholl's, apparently. In June 2009 an NBC-Wall Street Journal poll found 47 percent of Americans surveyed had a "somewhat negative" or "very negative" attitude toward GM. But last month that measure had improved to only 27 percent.

And in the new poll 37 percent had a "very positive" or "somewhat positive" view of the automaker, compared with a total of only 18 percent who held either view about a year ago.
The reasons for this shift are several. For one thing, a substantial cohort of Americans has believed all along rescuing GM was the right thing to do.

In the panic of early 2009, with the entire global economy seeming on the verge of collapse, it seemed the better part of valor to many Americans to allow the Obama administration to take over GM and Chrysler -- as long as there were firm promises the move wasn't permanent, and mechanisms installed that would ensure it was only a temporary receivership.

"If GM or Chrysler had failed, it would have taken the supply structure down too, and probably would have turned the depression in the auto economy into a depression in the overall economy," said David Cole, chairman of the Center for Automotive Research at the University of Michigan. "The cost of stepping in clearly was far less than it would have been from such an implosion."

New Generation

Another factor is GM clearly has taken strong steps to change its ways, and that is evident to the American people. Shedding four of its brands was the highest-profile step, a radical move that showed consumers the company meant business. So was getting the unionized workforce to sacrifice some of its gold-plated compensation -- which long had stuck in the craw of many Americans.

And, of course, the fact that GM already is repaying some of the taxpayers' largesse -- and inching back into the black -- further supports the course the nation took.

"We weren't convinced that they'd be able to maintain their market-share levels," Lindland said. "The fact that they've lost so little is pretty healthy. GM actually has good momentum going into a market that is still constrained. "

Some long-term trends in the American populace favor a revived and improved GM. For example, the 75 million-member boomer generation hugely abandoned the domestic Big Three and grew attached to Japanese brands. But the next age bracket of Americans, Generation X, is 35 million strong, and Generation Y that followed them swelled to 65 million.

"That's a lot of people -- 100 million - who aren't devoted to Toyota and Honda and haven't been drinking that Kool-Aid their whole lives," said Lindland of IHS. "That is a lot of potential customers for someone. No reason it couldn't be GM." -- Dale Buss, Contributing Writer

Editor's Note: This post is part of a month-long series about the "new" GM. The series is a collaboration with sister Edmunds.com Web sites AutoObserver.com, InsideLine.com, and GreenCarAdvisor.com.  The entire series can be found on a specially designated section of AutoObserver.com

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.