Auto Market Makes For Slippery Relations

NEW YORK The number of car buyers is leveling out, but more new models are being launched all the time. The pressure is on and no agency relationship seems safe anymore. Carmakers continue to respond to the most competitive marketplace in history by making changes to their marketing teams, demanding new positioning from their agencies, and threatening—or making—account shifts.

General Motors became the latest to turn up the heat on its shops last week. “We need to be very focused,” said Mark LaNeuve, GM’s new vice president of sales, service and marketing. Although he denied that the auto giant was contemplating a switch in shops, La Neuve said, “We are asking all of our agencies to perform at a very high level, and if they don’t, of course we would consider reviewing the business, no matter how long the relationship.”

Pontiac is one of the biggest targets of the advertiser’s demand for dramatic positioning shifts. “I’m happy with the effort, but we haven’t hit our sweet spot yet,” La Neuve said last week about the work being produced by Publicis Groupe’s Chemistri in Detroit, which handles the $165 million-plus account. “But the competition is so fierce out there that you have to leverage your media dollars, so I’m asking them to put more than one product in ads. … We will start to define a position around muscular design.”

But GM is hardly alone. Mitsubishi, Kia, Subaru and Ford Motor Co.’s Jaguar, which have combined billings of more than $745 million, all launched creative reviews in the past nine months. Mitsubishi, Volkswagen and Porsche reassigned their media accounts—a collective $700 million-plus—within the last year. Next month, presentations begin for GM’s $3.2 billion media buying business in a shoot-out between Interpublic and Starcom MediaVest Group—the largest buying review in history.

Intensifying the urge to explore options is a concurrent and equally frenetic blur of changes in the ranks of automaker management. In the past year, over two dozen car marketing executives have quit or shifted jobs at General Motors, Ford, Mercedes-Benz, Toyota and Mitsubishi, among others.

There is a lot to fight over. Roughly 40 nameplates—compared to 24 two decades ago—battle it out to sell 300 different models at a time when total light vehicle sales in the U.S. has reached a plateau. Since 2000, when domestic sales were a record 17.4 million vehicles, they have been stuck in a narrow range between 16.8 million and 17 million units. Those numbers have a lot to do with why auto account switches alone reached almost $6 billion last year, by far the most active of any top category—and why turbulence continues in 2005.

“The level of proliferation of models within the auto market has never been higher,” said Wes Brown, analyst at Iceology in Westwood, Calif., adding “anytime you have a new product, it has to launch and perform well almost immediately.”

Jaguar’s $100 million global creative review, won last week by Havas’ Euro RSCG, also was a response to the relentless pressure of the marketplace. (More than one-third of the Ford division’s worldwide sales come from the U.S.)

Agencies that are now part of WPP Group had handled the luxury make for 13 years, most recently Young & Rubicam in Irvine, Calif. But last Wednesday, Euro RSCG worldwide CEO Jim Heekin got the cell phone call that his New York-led Euro team beat out five co-finalists, including WPP’s Berlin Cameron/ Red Cell and JWT, as Euro’s top execs were gathered at the Cavalieri Hilton in Rome for an annual conference.

Euro, which now handles two of the three lines in Ford’s Premier Automotive Group (it also has Volvo), got the nod to “drive desire”—as the brief was dubbed by the client. Its strategy eschewed complexity, engineering or the love-of-fine-things approach—all themes ventured by the other finalists—in favor of a positioning that returns Jaguar to its original role as a sophisticated, daring, modern car for upscale tastes. (Y&R’s latest work used the Seven Deadly Sins to portray Jaguar and its lush looks and interiors as an object of desire.)

“Luxury consumers in New York, Paris and London have more in common with each other than they do with [other car buyers in their own markets],” said David Jones, CEO of Euro New York.

Jaguar asked shops to imagine they were three years forward in time, and then look back at “what had been accomplished and how the advertising contributed,” said evp sales, marketing and communications C.J. O’Donnell.

But back in 2005, the advertiser will have to move as fast as its own sleek cars to keep up in what has become a short-range shootout for every player.