Nearly two-thirds of Pontiac owners and almost three-fourths of Saturn drivers defected from General Motors Co. to other automakers when they bought new vehicles last year.
The Detroit automaker jettisoned Pontiac, Saturn and Hummer as part of its bankruptcy restructuring in 2009, but hoped to keep most of the buyers of those brands in the GM family.
GM "knew by cutting these brands they were going to lose market share and they have," said analyst Jesse Toprak of online data firm TrueCar.com in Irvine, Calif.
"But higher sales numbers doesn't always equal profits," said Toprak, adding that GM will be better off in the long run by making its four surviving brands more profitable.
The Detroit automaker is wooing owners of its defunct brands in hopes they will transfer their loyalty to Chevy, Buick, GMC or Cadillac when they buy a new vehicle. There are about 3 million Pontiacs, Saturns and Hummers on U.S. roads.
But GM faces a tough battle in the competitive automotive industry, where customers lured from competitors are called conquests — converts who are considered critical to helping automakers gain and preserve market share.
While GM reports some success — Chevrolet, for example, is a top choice for many Pontiac and Saturn owners — a majority of those customers are defecting to rival brands, including Honda, Toyota and Nissan.
In 2010, GM retained 36 percent of Pontiac owners who bought new vehicles, as well as 26 percent of Saturn and 39 percent from Hummer, according to California-based research firm J.D. Power & Associates.
That's far below the 55 percent retention rate for GM's Chevrolet brand, as well as under the industry average of 48 percent.
To keep these customers from straying, the automaker has worked to connect them with alternate GM dealers for their service needs and regularly keeps in touch with special promotions, said Julie Heisel, GM's director of customer lifecycle management.
The automaker has rolled out one-year free maintenance offers and invited customers to test drive new GM cars and trucks.
"The size of owner base is very important to us," Heisel said. "And we want to do everything possible to retain these owners."
In March 2010, GM began offering Pontiac, Saturn and Hummer owners $1,000 off a new GM vehicle — a deal still in place today. GM extended the $1,000 offer to all current GM customers in January and February, hoping to keep them loyal.
Analysts and investors, at the time, criticized GM for the move, which they viewed as falling back into the old habit of pushing sales numbers over profits. The discounts, they said, also contributed to flat North American earnings for the first quarter of this year, compared with the first three months of 2010.
GM has since dropped many discounts to keep incentive spending in line with the rest of the industry.
Originally Posted by W-Body Store
