GM Utes: Defining A Niche

GM is pinning its SUV hopes on the '02 Chevy TrailBlazer (pictured here), the GMC Envoy and the Olds Bravada.

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It’s a rare winter morning when the sun doesn’t shine on Cabo San Lucas, but for Jim Vurpillat, the dark rain clouds moving in off the ocean probably felt appropriate that mid-December morning. A brand manager for General Motors’ Oldsmobile division, he’d come to the tip of Mexico’s Baja Peninsula to pitch the 2002 Bravada, the latest reincarnation of Olds’ midsize sport-utility vehicle. But with the way events were unfolding 2500 miles to the north, Vurpillat could do little more than go through the motions.

Finishing his presentation, Vurpillat and the reporters who’d joined him in Cabo crowded around a speakerphone dialed into a news conference in Detroit. Senior GM officials were making an announcement some had long expected, others had long feared—the decision to drop the ailing Olds brand, America’s oldest automotive nameplate.

Olds’ demise came, not in small part, from its inability to distinguish itself from other GM brands. Indeed, the two previous generations of the Bravada were little more than re-badged clones of the company’s other midsize SUVs, the GMC Envoy (previously called the Jimmy), and Chevrolet’s Blazer models.

Ironically, the 2002 Oldsmobile Bravada made its debut and its exit at the same place in Mexico.

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With reporters given the chance to drive the ’02 versions of the Bravada, TrailBlazer and Envoy, the Cabo preview was intended to emphasize “badge engineering” was a thing of the past for the world’s largest automaker. For Olds, that argument has become largely academic. As it winds down operations, the division’s prime attraction is likely to be fire sale pricing.

Differentiating from within

Yet the issue of product differentiation remains nonetheless a serious challenge for GM, especially between its two big truck brands, Chevy and GMC. For decades, they’ve sold essentially identical products. Until recently, their full-sized SUV, even carried the same name: Suburban. While Chevrolet is emphasizing its brand-for-everyman status, GMC has repositioned itself as “Professional Grade,” a somewhat hazy distinction apparently meant to avoid overlapping the luxury status staked out by Cadillac, with trucks like its top-end Escalade.

So, even without Olds, GM doesn’t have a lot of wiggle room—even without considering the competition. And “There are a lot of brands and products coming in here,” noted Russ Clark, brand manager for the TrailBlazer. “It’s getting to be a tough market.”

That it is, industry observers echo. For one thing, there’s the market’s two-ton gorilla, the Ford Explorer, which has been the segment’s best-seller since its introduction, nearly a decade ago. And despite the Firestone tire scare, sales are holding strong.

But where Ford, GM and DaimlerChrysler’s Jeep division once controlled the lucrative SUV market, the real threat is coming from overseas.

'02 Envoy: new name, new mission.

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“We see this…as a prime opportunity for growth,” declared Toyota marketing director Alan DeCarr. Toyota has set in motion a classic, military-style pincer movement. There are the true trucks, like the full-sized Sequoia, and car-based “soft-utes,” such as the new Highlander.

Toyota’s not entirely unique. Importers like Nissan, Honda and even Audi are looking for ways to tap the high profit margins of the booming American SUV market with a wave of products targeted at ever more narrow niches.

When you add them all up, the market research firm, AutoPacific, Inc., predicts there soon will be something like 70 sport-utes and SUV-like crossovers on the road in the U.S.

“We take this very seriously,” admitted Tom Davis, who until recently oversaw GM truck operations. “There’s absolutely no discounting what they’re doing.”

Critical moment

GM’s strategy with the Envoy, Trailblazer and Bravada is critical, said analyst Sue Jacobs, of Jacobs & Associates, emphasizing that look-alike products won’t play well in a fragmenting market. “Whether they can differentiate from each other is one important step,” according to Jacobs, “but they need to do it in a way that will also distinguish them from other, outside competitors.”

Initial reviews of the three new GM SUVs has been positive, suggesting the automaker has done a credible job of meeting its target. Though essentially the same length, they boast different body styles, and handle quite differently, as well. The new utes are more carlike, in keeping with current trends, though they remain truck-based, and maintain their hefty towing capacity and off-road capabilities.

Will that be enough for GM to preserve its market? Davis and other GM officials insist there’s plenty of room to grow share. Perhaps so, analysts cautiously agree—if the market keeps growing. But there are signs that demand for traditional sport-utility vehicles may be peaking. That would only be exacerbated by another oil price crisis anytime soon.

With that in mind, GM can’t take chances. And it appears it isn’t. It’s also making big moves into the crossover market. The Pontiac Aztek was an early—if flawed—attempt, but there are plenty of others on the way, including a planned production version of the Chevy Borrego, which proved such a hit on the 2000 auto show circuit.

“In a more competitive market, the only way you can maintain your margins” and market share, Davis stressed, “is by offering more to the market than your competitors.”