June 22, 2007

GM's "green image" challenge in L.A.

Los Angeles has become a tough car market for General Motors. Toyota sold 50% more Priuses in L.A. last year than all the cars GM sold here combined!
That frank admission was part of the message presented by "good cop" GM North America President Troy Clarke to a small, rapt audience of bloggers at the historic and very scenic HRL Laboratories in Malibu, CA.

GM's corresponding "bad cop" would be Chairman Rick Wagoner who on June 5th at the shareholders' meeting criticized the raising of CAFE standards and the U.S. government's mileage requirements - which, subsequently, were added to the Senate's version of the 2007 Energy Bill. The new legislation mandates increases to average fuel economy by 40 percent to 35 miles per gallon for cars, SUVs and pickup trucks by 2020.

Producing cars that will meet the standard aren't the big problem for GM. However, squeezing that kind of economy from SUVs and pick-up trucks will require risky and significant technological redesigns of the propulsion system (considering the weight of the vehicles and loads they are designed to handle) with no assurance that the standards set by implacable public and political expectations won't move again. Since California is GM's strongest market for trucks (with three times as many GM trucks sold in Southern California than cars), the stakes are very high.

Both Clarke and Wagoner insist that the future of the company is tied to a successful transition away from gasoline-powered technology. They contend that GM currently leads all U.S. manufacturers with over 30 vehicle models that are rated above 30mpg.

Their plans for the market is to continue to introduce a number of new hybrid and electric cars over the next decade. Some of these represent new technological approaches to the twin transportation challenges of increasing fuel efficiency while lowering emissions. Most are planned to be flex-fuel compatible, able to run on any blend of gasoline and ethanol.

Author's note - In my opinion all combustion engines produced by GM factories should be flex-fuel compatible because it doesn't cost much to do at the factory ($50-200/vehicle vs. thousands for hybrid technology) but allows the consumer the greatest number of fuel purchasing options (simultaneously depressing prices while reducing fossil fuel dependence). It will solve the chicken/egg dilemma faced by service stations of having enough compatible ethanol vehicles available to justify installing the pumps. And it starts the clock on when we cycle out all gasoline-only vehicles - which some estimate will take 15 years.

Still, L.A. is a market that relies more on image than on substance. Sometimes that image is the sleek styling and high performance characteristics of the vehicle. However, with the one-two punch of oil addiction and global warming fears, image and status now comes from driving "greener" vehicles - which is why the ho-hum Prius body shape is looking more stylish every day (while Hummer and Suburban owners are ducking accusatory glares from outraged fellow citizens).

So how can GM crack back into the global trendsetting L.A. market? Apparently Troy and GM's local public relations agency, Manning Selvage & Lee (MS&L), believes that building non-traditional relationships with bloggers and their audiences is an effective p.r. strategy - รก la The Tipping Point. Convince some passionate, funky bloggers of the company's sincerity and it just might infect their audiences - leading to a cascade of positive image-building and sales.

MS&L calls it One Across Marketing:
One Across Marketing is MS&L's signature approach that strives to build a relationship between a consumer and brand. It focuses entirely on the phenomenon of information "wildfires" or "viruses," which are transmitted by word-of-mouth, usually among individuals who "cluster" (often virtually) around issues, shared situations, lifestyle needs, entertainment pursuits, etc. Driven by one-to-one communications, One Across approaches include: epidemic campaigns, E-community mobilization, influencer seedings, vernacular PR, and grass-tops marketing.

I'm not sure what category I fell into but I'm glad it was good enough to get me invited.

During his speech Troy Clarke talked about effective marketing from his personal viewpoint:
We get the opportunity to talk publicly in the auto industry typically at Auto Shows where we have these wonderfully orchestrated backdrops of cars and models. It is a very tailored environment for us to be able to tell our story to alot of press over a short period of time.

I had the opportunity to do something a little different. In Chicago, interestingly, it was still an Auto Show venue but it was outside the Detroit area and I was asked if I would talk to four bloggers. (I did) and in ten to fifteen minutes this dialog broke out which was kind of a public relations first. I turned to my public relations people and said that this feels a lot better to me than the typical interaction. Part of the reason why is that I learned alot.

Some of this stuff was stuff I didn't want to learn. Some people were making comments to me that I hoped that they wouldn't make. But the fact that they made them accomplished more than I expected.

Well here is a piece of advice from this blogger that I would hope GM and MS&L would hear:
In October 19-20 Santa Monica will host its second Alt Car Expo. Last year's event was much more fun and informative about green transportation at a grass roots level than the glitzy L.A. Auto Show across town (see A Tale of Two Auto Shows). Toyota was a huge beneficiary because most of the alternative designs were converted Priuses. GM had a paltry presence at this event (one flex-fuel pickup and a salt-in-wound carcass EV1) and was not even listed as a sponsor. This year none of the Big Three is a listed sponsor - but Honda is. This show is a green opportunity for GM to build bridges with the Southern California market.

One interesting new propulsion approach that Troy focused attention on is being demonstrated by the new Chevy Volt, a 5-seater concept car. Its "E-Flex Drive" always delivers power to the wheels through its battery charged electric engine. However, after the initial plug-in charge is depleted (at about 40 miles) an onboard flex-fuel combustion motor can generate a surplus charge giving the vehicle a potential range of 650 miles between charge and refill. GM is logging votes from consumers who would like to see the vehicle produced and on the showroom floor. The current tally of nearly half a million votes is about 99.5% in favor. I would gladly sign up to be a test driver.

I came away very impressed by the sincerity of the presentation and the approachability of its speaker. Just walking around on a tour, I was able to steal 5 minutes of uninterrupted time with Troy to talk about my pet projects - promoting the 25x'25 Alliance (I gave him a lapel pin), expanded recycling of waste-to-energy, the energy renaissance potential of a depressed paper and pulp industry, and the need to support local regulatory reform efforts in California.

No, we didn't talk about cars, but the kicker is that he echoed my sentiment that all of these facets are necessary parts of the new continuum that will affect the sale of cars in the coming decades. To make green profits on its green product offerings, GM will not only have to develop and deploy new technologies, but will also have to weather the challenges of fickle public opinion, shortages in raw materials and energy supply, strained labor relations, unpredictable world events, and environmentally sensitive regulatory reform.

It's a daunting task for any multi-national corporation. Of the Big Three in America, I'd put my money on GM.

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