More aid to Chrysler, GM irks consumers

Los Angeles Times

For six months, General Motors Corp. and Chrysler have been trying to convince the government that they need billions of dollars in aid, while at the same time assuring the American consumer that everything is A-OK.

It has proved to be the marketing equivalent of trying to stuff a Hummer into the trunk of a Corvette.

The negative PR campaign appears to have reached the right ears in Washington, D.C. Today President Barack Obama will announce his plan for supporting the two automakers beyond the $17.4 billion they have received, his press secretary said Friday. Obama is expected to offer them further financial help in exchange for deeper restructuring concessions.

But car buyers also have been listening, and they’ve been taking their business elsewhere.

Since the first congressional hearings on the auto industry in November, U.S. sales by GM and Chrysler have fallen a combined 45 percent compared with the same period a year earlier -- while all other carmakers slid only 33 percent during that time. Taking federal money is keeping people away from their lots, consumer surveys suggest.

By comparison, Ford Motor Co., which has not accepted any government aid, saw its share of the retail car market rise for four consecutive months through January, the first time that has happened in 14 years.

Now, as Chrysler and GM extend their hands for as much as $21.6 billion in additional taxpayer cash, experts question whether the automakers can recover from the damage to their image that the drawn-out and painful bailout process has inflicted. Ultimately, they suggest, no amount of federal aid can guarantee the key to their long-term survival: getting car buyers behind the wheels of Chevys, Buicks, Dodges and Jeeps.

“GM and Chrysler are sending out messages that are very definitely in conflict with each other,” said Kelly O’Keefe, a professor at Virginia Commonwealth University’s Brandcenter, and the son of a former Chrysler executive. “On the one hand they’re saying they’re in trouble, and on the other they want consumers to keep buying. It’s a marketing nightmare.”

A survey released this month by polling outfit Rasmussen Reports found that 88 percent of Americans would prefer not to buy a car from an automaker receiving government aid. That’s even worse than the 63 percent who said they would eschew buying from a bankrupt car company.

In the first two months of the year, the number of buyers considering a GM or Chrysler vehicle fell by 12 percent and 33 percent, respectively, according to CNW Marketing Research, which specializes in the auto industry. At the same time, Ford saw a 12 percent increase in consideration.

“The companies seem to be hoping that if they can continue to get federal cash, then they can figure out how to restore public confidence in the long term,” said Jim McCarthy, president of crisis management company CounterPoint Strategies. “It’s a risky approach to say the least.”