Europe's sales disaster is deja vu for GM's Docherty
 | Docherty: Been there, done that |
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GENEVA -- Susan Docherty, head of Chevrolet and Cadillac in Europe, is girding for an industry sales slide of 6 percent this year atop last year's 8 percent drop. She's seeing car ads that offer discounts of 7,000 euros, or about $9,125. Some European nations are proposing scrappage programs akin to the U.S. cash-for-clunkers program, and that makes it tough to plan production.
But there's a bright side: She has seen this play before.
In 2009, Docherty was vice president of GM sales and, later, marketing. She lived through GM's bankruptcy, cash for clunkers and a 21 percent plunge in U.S. industry sales, to 10.4 million units.
After a 19-month stint as head of sales and marketing for GM's international operations, which include China, Docherty arrived in Zurich at the beginning of 2012 to spearhead the growth of Chevrolet and Cadillac in Europe.
She arrived just in time to slog through her second downturn-of-a-lifetime in just four years.
"I know the market will bottom out, and I know that it's going to come back," Docherty said at the Geneva auto show last week. "It's easier the second time around because you have the benefit of knowing which of the levers you pulled that worked."
In Scandinavian and Baltic countries, for example, Chevy recently began offering three years of covered maintenance. The theory is that people who are worried about shrinking paychecks at least won't have to worry about the expense of oil changes and tire rotations. She ran a similar promotion at GM during the U.S. downturn.
Docherty also is reliving the painful process of trimming inventories to match tepid demand. Chevy entered 2012 with far higher stocks than it needed, she admits, which prompted costly moves to clear the lots. Its inventory was 32 percent lower at the start of this year.
"I'm not panicked about it," Docherty says. "What you have to do is manage through this and watch your inventories like a hawk and understand what's going on uniquely in every single different country."
Helping Docherty crunch those forecasts is Jim Bunnell, the former head of GM's U.S. dealership network. Docherty enlisted him as vice president of sales as of Dec. 1. Docherty says the pair have "gone back and looked at some of the techniques, the short-term tactics, that we needed to keep the business moving" during the U.S. recession.
At Chevy Europe, they decided to ease sales to fleets and rental companies because pricing has gotten so soft. But retail sales have gotten much tougher with unemployment spiking amid government austerity measures. Chevy has responded with some 0 percent financing deals.
Still, Docherty knows Chevy is likely to lose market share this year in key markets such as Germany and Spain. That's because she's unwilling to slash prices to match competitors' discounts -- another lesson from four years ago.
"There is a price war. Everything is about 'deal, deal, deal' and 'price, price, price,'" she said. "That doesn't make sense."
Last year Chevy sold 195,000 units in Europe. Its share inched up for the fourth straight year, to 1.4 percent, or a slightly larger share than Buick holds in the United States. She'll be "cheering" if she can extend the streak to five years, she says, but vows not to chase sales with incentives that would harm the brand's budding reputation in Europe.
"That's the better way to manage the business," she said, "until the market comes back."
You can reach Mike Colias at mcolias@crain.com.
