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New GM CEO Must Seek Young Buyers

February 7, 2000

DETROIT (AP) _ When G. Richard Wagoner Jr. assumes the job of CEO of General Motors Corp. on June 1, he will be the youngest chief executive ever at GM, running the world’s largest automaker at age 47.

But whether he can keep the company in good health will depend in part on improving GM’s standing among consumers half his age. With rivals hustling harder for younger buyers, Wagoner will have to show that GM can compete profitably for those consumers and keep bringing them back as they grow older.

``I think it’s critical that we engage that group,″ Wagoner said Friday. ``History has shown that when you get a buyer into your family and treat them well, it’s easier to keep them than to attract someone new.

``We’ve got to focus on products that meet their needs. The challenge has been getting something that’s eye catching ... at a price point that they want to pay.″

The average American car buyer is in their early 50s, the time of life when many Americans are able to afford new vehicles more often. While GM remains strong with older buyers, research from The Polk Co. shows that the vehicle lines with the most pull with buyers under the age of 35 are imports _ namely makes such as Isuzu, Honda and Volkswagen.

While Chevrolet, Pontiac and Saturn sell about one-fifth of their vehicles to customers under 35, the number drops precipitously for other GM vehicle lines, Polk found. Karen Piurkowski, director of loyalty with Polk, said buyers in the age range from 23 to 35, commonly labeled Generation X, tend to consider foreign manufacturers more than their predecessors.

``GM has a big challenge ahead of them as people move up through these population segments,″ she said. ``It’s not as natural for (Generation X members) to be as loyal to a domestic manufacturer, whereas the baby boomers were always a Ford family or a GM family.″

Younger buyers have not always been a major concern of automakers, since they tend to choose cheaper, smaller vehicles that carry slim profits.

In recent years, GM has shifted its attention from small cars to trucks and sport utility vehicles. The company has said it loses money on every Chevrolet Cavalier and Pontiac Sunfire it builds; those models will be 10 years old by the time GM brings out their replacements in 2004.

``Our research on younger buyers says they aren’t necessarily interested in small cars,″ Wagoner said. ``I don’t necessarily believe that traditional small cars with more progressive styling are what young buyers are after.″

Other automakers have gone after younger buyers with more force. Among the new vehicles targeted at the market are Chrysler’s Neon and upcoming PT Cruiser, the Toyota Echo and Ford’s Focus _ all well-equipped models that carry far more options than cars of that size and price had before.

Ford said Friday that one fourth of all Focus buyers so far were under 25 years old _ a higher share of younger buyers than any other vehicle sold in the United States.

To compete with those models, Wagoner said GM would use more expressive vehicles that are a step above the bottom of the market.

He points to the Pontiac Aztek, a new SUV coming out this year and the Pontiac Piranha, a concept car that will be shown for the first time at this week’s Chicago Auto Show, as the types of vehicles that eventually will bring younger buyers back into the GM fold.

``Our view is that we’re increasingly focused on the kind of things that will attract youthful (buyers) into the family,″ Wagoner said. ``That’s why we’re putting so much more emphasis on the Internet, because more people are using it and because of the kind of people that are using it as well.″

Analyst Jim Hall with AutoPacific said the Aztek and an upcoming Saturn SUV had the potential to make GM a contender for those consumers.

``The fact that they’re developing vehicles like that at all is amazing,″ Hall said. ``Their attitude for a long time was that they were going to be a fast second to market with a new product. The irony is that being second to market is a losing proposition.″

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