General Motors and Manchester United - Never saw it coming
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Does General Motors (NYSE: GM), a leading global automaker, entertain a passion for toping the headlines? After publicly making an announcement that it would stop buying ads on Facebook, it has now surprised the world with its announcement to sponsor Manchester United - the world’s richest and most popular football club.
Mary Barra, the vice president at General Motors, acknowledged that the big wig automotive player was quickly becoming irrelevant. By sponsoring Manchester United, it will greatly improve the marketability of Chevrolet. However, the five years scholarship has been bombarded with a lot of criticism from pundits and seasoned analysts. Some analysts feel as if General Motors is diving into dangerous waters. This is especially so with the rickety European economy.
My take
The Manchester United deal is more than beneficial to General Motors. It is far much better than the Facebook ads. The move to pull out from Facebook ads was wise and tactful. Firstly, Facebook is experiencing a lot of competition from alternate social networks and the future is not as conclusive as it was a few years back when Facebook was used synonymously with social networking. I believe that the $10 million that General Motors would have spent on the Facebook deal will now find a better use.
Manchester United on the other hand offers more favorable prospects. General Motors has not only chosen a good line of marketing (football) but have also chosen to consolidate its position through opting for the crème de la crème. Manchester United has one of the largest fan bases and more than half of the 3.5 billion global football fans follow news on Manchester united. This means that General Motors will be a common household name.
This is where the strategy comes in.
General Motors is using Chevrolet as the official automotive sponsor. Chevrolet is a popular model across the world. The only problem is that it was initially expensive and designed for older generations. Newer models have been designed in a fashion that appeals to the youth and are now more affordable. Considering that most football fanatics are young, this is one of General Motors best marketing approaches so far.
Toyota- the big nightmare
Now that General Motors has made a notable move, one big problem still looms; Toyota (NYSE: TM). Toyota not only has a bigger financial market but also uses a totally different approach as compared to General Motors - one that gives it an indescribable edge. Toyota targets the masses. It doesn’t give much importance to building loyalty and establishing a name among the affluent. It is concerned about providing automobiles with incredible user experience and commendable prices.
This partly explains why its sales figures practically trampled over General Motors’ figures. Toyota’s figures were up by around 87%. These figures extend some real daylight between it and General Motors’ 11%. Looking at figures of the Camry Sedan, which apparently was released just the other day, you will be convinced that Toyota knows how to convert innovations into money. The Camry sold close to 40,000 units. These are the figures that eclipse sales of rival Ford Fusion and Chevy Malibu.
Despite the fact that Toyota extends an evidently formidable fashion of competition, I am confident that General Motors will turn the tables in the long haul. As per now, this may seem farfetched. All the same, it has a strong logical foundation.
General Motors sells the idea of class and luxury - qualities desired by all but attainable by few. Its recent move to Manchester United will act in its favor. Similarly, its inclination towards affordability will generate outstanding numbers.
Conclusion
Ford is also a threat. Nonetheless, it is more containable and cannot be placed in the league of Toyota. Despite Ford’s dividend craze, I am surefooted that it extends fewer worries to General Motors. In actual sense Ford may be stepping on its own toes with its alluring dividends. Basic economics dictates that increased dividends weigh on growth. The whole idea of placing a smile on shareholders is interesting. Nonetheless, Ford equally has to focus on growing.
In conclusion, I strongly voice my support for General Motors as an investment option. It seems to have set on the right path and currently basks in a bullish aura.
muhammadbazil has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
