May 18, 2010

Want winning PR? build a better vehicle!

Filed under: Marketing Quick-Tip — admin @ 2:20 pm

General Motors has stepped back from the financial brink, reporting its first quarterly profit Monday since 2007. These earnings mark progress toward the turnaround GM mapped out last year in financial viability plans, which played up a role for the plug-in Chevy Volt.

GM used the extended-range electric Chevy Volt model — due out at the end of this year — in those bids for aid to bolster its credentials as an innovative, green-minded company. Today, 10 months after the “New GM” launched (leaving much of the automaker’s assets in a company controlled by the feds), the General has ticked the box for profits — thanks in large part to an improving economy and government-managed restructuring that allowed it to slash costs. Now comes the quest for a green halo, as part of GM’s efforts to sustain profits for the long term.

During the first three months of this year GM says it generated a net income of $865 million, compared to a $6 billion loss in the same period a year earlier. For GM shareholders (the U.S. treasure holds a 60.6 percent stake in the automaker), this amounts to earnings of $1.66 per share in the latest quarter — a dramatic uptick from the $9.78 per share loss in the first quarter of last year.

Chris Liddell, chief financial officer for the automaker, commented on Monday, ”We’re in the process of rebuilding a company here and putting down the foundations is one of the most important things when you’re rebuilding. One of those foundations is clearly achieving profitability.”

The road to building a nimble, green and innovative business that can be proactive with its technology, as competition heats up among car companies from Silicon Valley to China, holds plenty of challenges for the downsized automaker. But its significantly stronger bottom line puts it in a better position to invest in advanced alt-fuel vehicles like the extended-range electric Chevy Volt.

GM has reportedly spent more than a billion dollars to develop the model, and does not expect to turn a profit on it for at least the first generation or two. But it’s looking to gain other rewards from the Volt. In an automaker’s lineup, a “halo” car  is meant to cast a positive glow over a company or brand — showcasing technology, styling and smarts while also helping to define what the brand stands for and luring customers into showrooms to buy other models. With the Volt, GM has said it’s hoping in particular to boost its image in two high-growth market segments where the automaker has lagged: young and environmentalist car buyers.

In this latest quarter, newer models provided a bump to GM’s sales figures, with the new Buick LaCrosse, Chevy Equinox, Camaro and Cadillac CRX making up more than 110,000 of the nearly 184,000 vehicles that GM sold in April. As the Chicago Tribute reports, the models sold last month at a “combined rate nearly 300 percent over the vehicles they replaced.”

GM is targeting production volumes of only 8,000-10,000 units for the Chevy Volt next year. But with its high profile and the heavy bets GM has placed on it as a green halo vehicle, it could help increase the automaker’s momentum as it revs for an IPO.

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