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GM fights to keep Oldsmobile owners

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(08:35 Aug. 11, 2003)

As Oldsmobile folds, GM fights to keep brand's owners

By DAVE GUILFORD | Automotive News

DETROIT -- Sometime during the 2004 model year, the last Oldsmobile will be built. And Oldsmobile's market share, which was 0.8 percent through the first seven months of this year, will hit zero after the last vehicles trickle off dealer lots.

That's a dire prospect for a company as market share-obsessed as General Motors, which celebrated in 2002 when it improved share by just 0.3 percentage points.

In response, GM has accelerated efforts to woo Oldsmobile owners to its other brands - a practice it initially approached gingerly as it tried to soothe the feelings of Oldsmobile dealers. It has sent out several direct-mail pitches this year to woo Oldsmobile owners to other GM brands, for instance.

Darwin Clark, vice president for industry-dealer affairs, says GM hasn't decided exactly when it will pull the plug on Oldsmobile. GM will build the Alero, the Bravada and the Silhouette "into the 2004 model year," Clark says.

GM says it is retaining 60 percent of Oldsmobile owners. Data from Power Information Network LLC in Troy, Mich., showed GM's retention at 48.4 percent in July and 52.7 percent in June. (See graphic)

The retention rate is similar to GM's overall retention rate, indicating that Oldsmobile owners are not defecting from GM in unusual numbers. Overall, GM retained 55.4 percent of its owners who bought new vehicles in July, according to Power Information Network data.

The three competitors most likely to win Oldsmobile owners are Ford Division, Toyota and Dodge, according to Power Information Network.

Paul Ballew, GM executive director for market and industry analysis, acknowledges that rivals also are chasing Oldsmobile owners. "We've seen very aggressive plays by a variety of manufacturers to reach out to customers," he says.

Tom Libby, director of industry analysis for Power Information Network, says GM has an advantage in customer loyalty. "Repeatedly, in the data for loyalty, GM's brands do very well, especially the traditional domestic brands," he says.

David Bradley, an analyst for J.P. Morgan Securities Inc. in New York, says GM's labor and retiree costs force it to pursue any market-share opportunity. But, he adds, "I would be very skeptical that they will be able to retain eight-tenths of a percent (of market share)."

GM began letting non-Oldsmobile dealers solicit Oldsmobile owners last summer, but only in areas where an Oldsmobile dealer had closed. In most cases, that meant that a multiline GM dealer was approaching Oldsmobile owners to buy other GM brands in the same store.

But this year, GM broadened the effort. Pam Hughes, Oldsmobile field advertising manager, says a January mailing went to more than 1 million owners in the Oldsmobile database. It promoted all GM brands and touted incentives on them.

"Basically, we told them, we've appreciated your loyalty, but as we move on, we would like to introduce you to our GM family," Hughes says.

In May, GM took a further step, approaching about 300,000 Oldsmobile owners with a mailing for Buick vehicles.

Since it announced plans to close Oldsmobile, GM has pumped up customer loyalty programs, such as an expanded warranty. Loyalty coupons worth $1,500 on an Oldsmobile or $1,000 on another GM brand have been a key component.

GM sent out about 722,000 loyalty coupons in January 2000. Clark says that about 225,000, or 31.2 percent, have been used.

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