1

Dated: 11th December 2008

MG6073: Marketing Project

“The GM Volt”

Sankar Ponnusamy Sujan Patel Mayuri Unhale

2

CONTENTS

• Brief company History and Profile -- 3-6

History

Profile

GM’s Vision

Products and Service Offering

The GM Volt

• Product and Service Strategy -- 6

• Distribution Channel and Relationships -- 7-8

• Branding, Customer Perception and Behavior --9

• Market Segmentation: -- 9

• Product Positioning -- 9 - 10

• Competitive Landscape -- 11- 13

• Conclusion -- 13

• References -- 14

3

THE GM VOLT

Brief Company Profile & History

History:

General Motors (GM) was founded on September 16, 1908 in Flint, Michigan, as a holding company for

Buick, then controlled by William C. Durant, and Oldsmobile was acquired later that year. The next

year, Durant brought in Cadillac, Oakland (later known as Pontiac) and several others like Elmore. In

1909, General Motors made major acquisitions of Reliance Motor Truck Company of Owosso,

Michigan, and the Rapid Motor Vehicle Company of Pontiac, Michigan, the forerunner of the GMC

Truck. A few years later after gaining control of General Motors again, Durant would start the Chevrolet

Motor car company and through this he secretly purchased a controlling interest in General Motors.

Durant took back control of the company after one of the most dramatic proxy wars in American

business history. Shortly after, he again lost control for good after the new vehicle market collapsed.

Alfred Sloan was picked to take charge of the corporation and led it to its post war global dominance.

This extraordinary growth of GM would last through the late 70's and into the early 80's.

General Motors Vision

“Our vision is to be the world leader in transportation products and related services. In order to achieve

this vision, we recognize that many issues must be addressed and many goals attained. It is imperative

that economic, environmental and social objectives be integrated into our daily business objectives and

future planning activities so that we can become a more sustainable company

Our future success is dependent, in part, on technology, innovation and partnerships. It is essential that

we manage the economic, environmental and social issues we face in an integrated manner with these

factors in mind. ” (GM.com)

4

Profile

General Motors Corporation and its subsidiaries take on the development, production, and marketing of

cars, trucks, and related parts worldwide. It offers small, midsize, sports, and luxury cars; and pickup,

van, utilities, and medium duty trucks. The company sells its products under the Chevrolet, Buick, Saab,

GMC, Pontiac, Cadillac, Hummer, and Saturn, Opel, Vauxhall, Isuzu, Holden, and Daewoo brand

names in Canada, Europe, Latin America, and Asia Pacific. General Motors also provides a range of

financial services, including consumer vehicle financing, automotive dealership and other commercial

financing, residential mortgage services, automobile service contracts, personal automobile insurance

coverage, and commercial insurance coverage under the name of General Motors Acceptance

Corporation (GMAC). In addition, the company offers after sale services, such as maintenance, light

repairs, collision repairs, and vehicle accessories, a way to enhance customer relationship. General

Motors markets its products through distributors and dealers, as well as through retail dealers. “As of

December 31, 2007, the company operated 6,776 vehicle dealers in the United States, 729 in Canada,

and 330 in Mexico, as well as approximately 14,052 distribution outlets in the rest of the world. It has

collaboration with PTT Public Co., Ltd. for the development of alternative fuels for vehicles.”

(yahoo.com)

Corporate Structure:

• GMAP - Asia-Pacific

• GME – Europe

• GM LAAM - Latin America, Africa and the Middle East

• GMNA - North America

• GMAC Finance and insurance services

• SPO Service, Parts and Operations

• Other Operations

Product and Service offerings

5

Rising Fuel Costs and a concern over the environment have led automakers to experiment with

alternative fuel cars. One of the most promising alternative-fuel technologies is the hybrid engine. A

hybrid technology combines a gasoline powered engine with a battery powered electric motor. The

battery is designed to recharge whenever the car brakes or more conventionally by a generator supplied

by gasoline engine. Most Electric Vehicles are non pluginable and use less petroleum for power.

The GM Volt

Unlike traditional electric cars, Chevrolet Volt has a revolutionary propulsion system that takes you

beyond the power of the battery. It will consist of a lithium-ion battery with a variety of range-extending

onboard power sources, including gas and, in some vehicles, E85 ethanol to recharge the battery while

you drive beyond the 40-mile battery range. Which implies that for someone who drives less than 40

miles a day, Chevy Volt will use zero gasoline and produce zero emissions, the battery charges when the

car brakes. The 40mile limit is beneficial because statistics show that the daily commute of 75% of

Americans averages around 33 miles (53 km). And when the Chevrolet Volt comes to being plugged in,

Chevy Volt will be designed to use a common household plug and the charge time will be for around

6hours.

After 40 miles (64 km), the range of the Volt will need to be extended through the use of a small

4-cyl internal combustion engine which drives a 53 kW generator. This arrangement creates a sustaining

charge current to the HV batteries and permits them to continue powering the 111 kW electric drive

motor. This effectively extends the Volt's potential range to as much as 640 miles (1,030 km) on a single

tank of fuel. And which could be potentially extended for longer trips through conventional refueling.

Marketing Specific issues:

Product & Service Strategy

6

As a response to the market and every change in the industry, GM created a strategy to gain market

share with a new compact platform on which most of the hybrids will be manufactured called the E-

Flex. General Motors had previously produced an electric car, The EV1.

E-Flex is a future General Motors' automobile platform slated to be released in late 2010. E-Flex

initially uses plug-in capable, battery-dominant series hybrid architecture. The E-Flex vehicles are all

electrically-driven, feature common drive train components, and will be able to create electricity on

board, either through a generator set or a fuel cell. Regenerative braking will also contribute to the on-

board electricity generation. (“E” stands for electric drive and “Flex” for the different sources of

electricity), Fig.1 Shows the pictorial form of E-FLEX PLATFORM as explained above.

fig.1: E-Flex Platform

Distribution Channels & Relationships

GM executives account that battery technology will have a great impact in determining the success of

the car and to help spur battery research, GM selected two companies to provide advanced lithium-ion

battery packs: Compact Power, which uses manganese oxide, based cells made by its parent company,

7

LG Chemical, and Continental Automotive Systems, which uses Nan phosphate based cylindrical cells

made by A123Systems. However, on August 9, 2007, GM established a more close-knit relationship

with A123Systems so that the two companies could co-develop a Volt-specific battery cell. This cell

was later unveiled at the EVS23 industry convention in Anaheim, CA. Work with CPI has continued at a

rapid pace, and in late 2007 CPI delivered two fully-functional prototype battery packs to GM's testing

facilities. On January 31, 2008, A123 and Continental delivered their first prototype to GM's European

test facilities. GM will likely use both suppliers for the Volt.GM expects ten years of life out of the

batteries. As of early 2008, they had started extensive battery testing and planned to have 10-year battery

results in two years. Batteries were placed in Chevrolet Malibus for further real-world testing. The

lithium-ion battery is preferred to the Nickel hydride batteries used in other hybrids because it’s light

weight and higher power and efficiency.

Distribution

General Motors has a relationship with over 6000 dealers and approximately 8000 technicians employed

in the United States. The Volt has been branded as a Chevrolet to take full advantage of the enormity of

the existing distribution channel and the solid support that is already established. Considering the

distribution of the volt to the dealers, the dealers have a legal sales binding agreement with General

Motors. The vehicles can be sold only through the dealer outlets; it is the only method of selling this

product. General Motors wants all of its employees and dealers to be equipped with sound knowledge of

the product and they plan to invest heavily in sales and service education. General Motor also plans to

provide specialized training to all the dealers since they believe the dealers must have a comprehensive

knowledge base about the product in order to completely understand it and hence be capable of handling

technical issues and enquiries. They want to make sure that everyone involved in the distribution

channel is completely prepared for the product with all the required support systems and assistance

when the product is finally launched.

8

To spread awareness about the product, GM intends to provide sufficient technical information

about the product such as the different energy source to be used on the Volt to the lead users, the law

enforcement and the fire department personnel.

With respect to Volt’s customers, as of today, roughly over 20,000 people have expressed their

interest in purchasing a Chevy volt by signing up in the Virtual waiting list on the GM website.

Customers can communicate with the dealers over the internet, but the sale has to occur only at the

dealership. In order to address the issue of the growing waiting list and maintaining a good relationship

with its customers, GM is working with an ardent Volt fan to upgrade and make the waiting list a

dynamic real time one that would be capable of reflecting the number of customers and the distribution

of population. GM considers its relationship with its customers most valuable and hence plans to make

enough provisions to ensure that all its customers who ever dreamt of owning a Volt get one. GM also

opened a blog site that constantly updates the fans of the Chevrolet Volt with the development and

important news pertaining the company and industry at large.

Furthermore, GM has a distribution plan of rolling out the car gradually rather than flooding the

market place to get a huge share of the market. Their strategy behind this plan is to ensure that all the

components and safety measures are in place before the car is rolled out. The Chevy volt will also not be

available for sale in all cities and at all Chevrolet dealerships as that would require setting up of service

stations and more training. GM plans to begin roll out in about 10 major cities to start with and then

gradually expand their presence in other cities and in the market.

Branding, customer perception and behavior

As a plan to market and sell the Volt on a global scale, GM has declared that the Volt will be sold in the

United Kingdom as the Vauxhall Electra and in other parts of Europe as an Opel brand. This is due to

9

presence (lack of) of Chevrolet in Europe. Whereas Vauxhall has a major presence in the United

Kingdom and Opel is GM’s main brand in Europe. Opel is a known German automotive company and

Perception:

General Motors has always received a bad rap in terms of perception from the customers. Customers

perceive GM to be manufacturers of gas guzzling Sport Utility Vehicles so the production of a hybrid

with at least 100 miles per gallon will create a new, better and much needed perception of General

Motors. GM intends to promote their new green technology by creating primary demand since they are

one of the first to attempt to create a near electric vehicle. They also intend to market it is a cheaper

mover around than the otherwise expensive gas fill ups for conventional cars.

Market Segmentation and Positioning

The Chevy Volt falls into the category of niche marketing. GM tends to use psychographic

segmentation, as the Volt would appeal to those who are environment conscious, cost conscious and to

those whose lifestyle requires them to commute less.

Product Positioning

GM has decided on a new descriptive terminology distinct from calling it a hybrid. They are calling the

Volt an E-REV, for "extended-range electric vehicle". This is in part justified since there is no

mechanical linkage between the petrol engine and the wheels. The design is conceptually similar to a

modern electromotive locomotive, with a generator, an electric motor, regenerative braking, with the

addition of a storage battery. This underlines its crucial point of separation from other hybrids: It

operates entirely as an electric car for its first 40 miles after a full charge. It burns no gasoline during

those miles, drawing energy from a 400-pound lithium-ion battery pack containing 16 kilowatt-hours

(kWh). Current from that pack powers a 150-hp electric motor that drives the Volt’s front wheels. Thus

the key points for volt’s points are:

10

Eco friendly

Long term cost benefits.

Commuter’s Car.

Its 100% electrically driven upto 40 miles. Based on statistics the average American drives 35 miles

for daily commute.

Flexible option for customers to choose their engine based on fuel availability and prices in their

region.

Challenges

The major challenge General Motors face with the Chevrolet Volt is going to be the pricing of the car.

Although the car may be well positioned in terms of performance but the major stick will be their

pricing. At $40,000 for a commuter vehicle, that seems very steep, and with competitors offering

products at about half the price, their initial goal of selling about 100,000 units in the first year seems

very steep. Although demand for that type of technology is existence, the price tag of the volt will

definitely deter customers as only loyal customers to the brand may bite at that price.

Another major challenge with the Chevrolet Volt will be the speed to market, with the

competitors all seeming to launch their products at around the same year; speed to market will be a

major part of gaining marketshare. And with the economy in a recession and General Motors in tough

situation. The top management is hoping this innovative idea will be the way out of the energy crisis and

a way to maintain a competitive advantage but with the lack resources, the project might delayed which

in turn would cost them dearly.

Competitive landscape:

Although still a very young industry there is a fair size of competition for the Chevrolet Volt and some

of the competition is still in its developmental stage, while some other hybrid vehicles are in market.

11

Toyota Prius: One of the pioneers to the market launched in 1997, it is priced at $ 22,000 and it uses a

sealed Nickel Metal Hydride battery. It seats for five . It is a front wheel drive accelerates from 0 to 60

miles per hour in 10.5 seconds. It is positioned as an evironmental vehicle for commuters.

Honda Insight: Originally launched in 1999 the second generation is due in 2009. once in market it will

cost $19,000 and it will use a nickel Hydride battery. It’s fuel efficiency will be about 67 miles per

gallon . It also will be a 5 door hatchback that will be able to seat five and will also be a commuter

vehicle.

Nissan Cube: Still in developmental stages, the third generation Cube will be an electric vehicle and

will be produced in 2009. The cube’s price will range from $14,500-$17,000 and just as the Volt , will

use lithium-ion battery. The cube intially lauched and marketed for the just the japanese market , is

expanding on a global level and use the new generation electric vehicle to capture market share in

europe and america.

Mini E: Though still a concept in its early developmental stages, The Mini E is anticipated to cost

around $ 24,000 and will use a lithium-ion battery. It will be relatively more powerful than the Volt

(150kW). Its top speed will be 95 miles per hour and its acceleration from 0 to 60 miles per hour will be

8.5 seconds. And it seats two.

Tesla Motors Model S: An all electric vehicle concept from a start up in Silicon Valley, expected to

cost $60,000. It is going to be a sedan, made to compete with conventional cars like the BMW 5 series

and the Audi A6. It will be a plug-in hybrid and will seat 5. Its charge time will be 3.5hr

Dodge EV: an electric vehicle concept from Chrysler, it is a sports car in the mould of a Lotus Europa.

That will seat two and possess a top speed of 125 mph.

    Tesla  Models   Dodge  EV   Mini  E   Toyota  Prius  

12

Price   60000    N/A   24000   22000  

Battery    Lithium-­‐ion    

Lithium-­‐ion   Lithium-­‐ion  

Sealed  Nickel  Metal  

hydride  

Engine  Motor  

Output  185  kilowatts  

200  

kilowatts   150  kilowatts   50  kilowatts  

Recharge  Time   3.5  hr   8  hr  110V  -­‐  23  hr    &  

220V-­‐  4  hr                                         N/A  

Drive  Type  

Rear  Wheel  

Drive  

Rear  Wheel  

Drive   Front  Wheel  Drive   Front  Wheel  Drive  

Top  Speed   125  mph   125  mph   95  mph   100  mph  

Acceleration  

Around  4  

seconds   <  5  seconds   8.5  seconds   10.5  seconds  

Seat  Capacity   5   2   2   5  

Table 1: Competitors comparison

13

Fig2: Product positioning map

Conclusion:

In conclusion, General Motors Chevy Volt is not only a mode of transportation, but also part of the

solution to the nation's energy crisis and possibly the solution for General Motors financial problem.

Although skepticism still exists due to the economical situation, all can agree on the potential the

Chevrolet Volt has to deliver. All one can do is wait to see if the Volt sets a new standard for American

transportation and change the fortunes of General Motors.

14

References:

http://www.treehugger.com/files/2007/01/the_buzz_around.php

http://www.bloomberg.com/apps/news?pid=20601103&sid=a2GgcMQbsIcU&refer=us

http://www.gm.com/

http://gm-volt.com/

http://finance.yahoo.com/q/pr?s=GM