GM, Ford's Negative PR Take A Hit

Anthony Fontanelle
February 6, 2007

Negative PR affects the perceptions of consumers and this fact is supported by several studies. This fact also made General Motors Corporation’s and the Ford Motor Company’s reputation among the worst in corporate America.

Two of the world’s most admired American companies are now enduring the worst aftermath of negative PR. Both automakers have plummeted sales in 2006. The decline is attributed to the negative publicity about plant closures, job cuts and financial problems.

How bad was the fall? Among the 60 best known American companies in the 8th annual Wall Street Journal/Harris Interactive Poll, GM ranked 57th, down from 38th spot that it used to occupy back in 2005. Ford, on the other hand, dropped to 55th spot from the previous 37th. GM and Ford dropped the most number of rungs of any companies included in the poll.

"It's all about negative PR. It comes down to job losses, layoffs, plant closings, declining market share," said Scott Upham, a senior vice president at Harris Interactive who previously worked in purchasing for Ford. "They certainly have a lot of work to do to improve their overall brand image."

Reputation issues are a major concern as automakers enforce their restructuring plans and improve their current lineups. GM’s 2007 lineup is now greener. The automaker includes a new hybrid system, a fuel-saving V-6 and 14 models — or about 400,000 total vehicles — that can run on E85 ethanol. The Chevrolet Express and the GMC Savana vans are the newest ethanol-capable vehicles. So far, the automaker has about 2 million ethanol-capable vehicles on the road.

In an interview, GM Chairman and CEO, Rick Wagoner, said he thinks GM’s strategy of having several hybrid options is a good one and will make up for the fact that GM has trailed Toyota and other rivals in bringing hybrids to market. GM has been steadily losing U.S. market share to Asian rivals. GM expanded its vehicles with six-speed automatic transmissions. The technology is being added to the Saturn Aura sedan, the Saturn Outlook sport utility vehicle, the Pontiac G6 and the Cadillac STS and SRX.

Ford also expanded its range of safety, handling and entertainment features for its 2007 lineup. Ford, Lincoln and Mercury presented a wide array of new and updated models to offer a boost in customer demand for distinctive design, fuel-efficiency and safety. This expansion also called for tuning the vehicles for maximum performance. Some of the models use Active Brakes Direct to produce a high-performance street machine.

"Too often in the past, our philosophy was to move the metal -- to build the vehicles that we had the capacity to build and then price them -- often discounting them -- to get the customer to bite," said Mark Fields, Ford Motor Company Executive Vice President and President of the Americas. "We didn't look far enough beyond the horizon, tracking the trends, knowing our customers, and seeing the day when they might want something else. I'm proud to tell you, that's the Ford of the past -- not the Ford of today."

Last month, GM introduced a concept plug-in electric hybrid called Volt. Ford also unveiled a plug-in fuel cell vehicle, the Hy-series hybrid Edge. The introductions are made to reclaim prominence in the field.

The reputation issues are a major concern as the companies restructure their operations and improve vehicle quality and design. Both companies have talked recently about trying to close a "perception gap" that keeps some consumers from considering Detroit-made vehicles.

GM and Ford have lost more than $25 billion since 2006, while cutting more than 55,000 hourly jobs and thousands of salaried jobs. GM intends to close 9 plants by 2008, while Ford is in the process of shuttering 14 factories by 2012.

GM's accounting is the subject of an SEC probe. In addition, GM spokesman Tom Wilkinson acknowledged that the automaker has received "a lot of mixed publicity." And that "it takes time to close the gap between perception and reality."

Source: Amazines.com