As General Motors struggles to survive, the Democratic Congress is considering a bailout. While we can debate whether or not a Chapter 11 bankruptcy filing would be more beneficial, thereâ€™s one good reason why GM might be eager to avoid such a scenario: their brand loyalty is very poor.
In fact, national branding expert Robert Passikoff of Brand Keys, points out that surviving bankruptcy is much harder when a companyâ€™s brand is as poorly regarded as is GMâ€™s. Customers who are already predisposed to have negative views of a brandâ€™s quality may treat a bankruptcy as a sign that they should abandon the brand altogether.
How bad off is GM’s brand within the car market? Passikoff provides this list of brand loyalty among the major car companies:
2) BMW / Mercedes
5) Saab / Subaru
10) Chrysler / Volvo
13) General Motors
Not a pretty picture. I can see why GM would be wary of bankruptcy. But, really, wouldnâ€™t a bailout (which is likely to be unpopular with many taxpayers) also damage the brand? The one bright spot is that Chevrolet apparently has the most brand loyalty of the American-made cars. Maybe GM could focus on that line and abandon all the poor performing models that have all but ruined the companyâ€™s image?
Whatever happens with GMâ€™s current struggles, I think itâ€™s clear that neither Chapter 11 nor a large cash infusion will guarantee the companyâ€™s long-term survival. We have to be very careful not to waste money prolonging the inevitable. Controlling the collapse may be our best option. But how we do that is still open for debate.