The Risk of Brand Erosion for the Big 3 Detroit Automakers Amidst UAW Strike

The ongoing UAW (United Auto Workers) strike has put the Big 3 Detroit automakers—Ford, General Motors, and Stellantis—in a precarious position. While the immediate focus is on resolving labor disputes and mitigating supply chain disruptions, there might be a longer-term consequence to face: the erosion of brand equity and the risk of being further “conquested” by foreign automakers.

The Consumer Perception Quagmire

For brands such as Chevrolet and Buick, it sometimes feels like General Motors has moved heaven and earth to ensure their respective divisions stay on the upswing of positive consumer sentiment. It wasn’t too long ago that Chevrolet was perpetually considered a value brand – one that was solely shopped based on their low monthly payments. Additionally, Buick was the brand your grandparents drove. And Cadillac? Cadillac was stuck in a naming convention tug-of-war while introducing sedans (albeit good ones) to an audience that had shifted their luxury driving tastes to SUVs.

But all three brands worked diligently to bring customer consideration back into the fold. They invested in established media franchises like the Country Music Awards, Major League Baseball, and the U.S. Open. Chevrolet moved on from the often irritating Real People, Not Actors campaign and began using those John Cusack voiceovers better. Buick revamped their lineup, and Cadillac dropped the hammer on the ultra-luxury segment by introducing the world-beating Celestiq and Escalade IQ.

For Ford Motor Company, they too have spent considerable time and effort introducing the Bronco family of SUVs to compete against Jeep’s stronghold on the offroad segment successfully. The Bronco gave Ford a viable alternative to Mustangs and F-Series trucks, being introduced at the right time when the concept of escapism was at his peak during the pandemic.

As the strike prolongs, however, consumer perception of the Big 3 is at risk of deteriorating. The potential of parts shortages and the resulting inconveniences that have started trickling down to owners of domestic vehicles are not just logistical issues; they directly impact how consumers view the brands. When a consumer can’t find the vehicle they want or has to wait an extended period for parts, their dissatisfaction could lead them to consider other options, including foreign brands not affected by the strike.

The Conquest by Foreign Automakers and the Advertising Dilemma

The term “conquest” in the automotive industry refers to winning over customers from competitors. As the strike continues, foreign automakers see an opportunity to conquest customers who are frustrated with the Big 3.

Interestingly, the Big 3 have been noticeably quiet on brand advertising, even before the strike. The focus has been mainly on make and model advertising, highlighting specific features, performance metrics, and technological advancements and incentives. While this strategy effectively drives sales of individual models, it does little to build the overall brand, especially during a crisis.

Friends in the publishing industry have also noticed, with one sales executive telling me that spending across at least one Detroit-based automaker has seen a staggering 80% decline in brand and in-market investments. Another, who represents an ultra-HHI publication targeting luxury EV automakers, has found a lack of interest in sponsorship opportunities.

Conversely, the Japanese and Korean automakers have nearly quadrupled their media spend with at least one publisher I was in touch with.

During the strike, continuing to push make and model ads could further erode the overall brand equity. Consumer attention may fall on deaf ears over make/model when the overarching brand is embroiled in labor disputes and supply chain issues. The lack of brand-focused advertising means there’s no counter-narrative to balance the negative press arising from the strike, leaving the Big 3 more vulnerable to conquesting efforts by foreign competitors. Additionally, while all three domestic automakers have maintained a healthy amount of inventory on dealership lots in anticipation of a drawn-out strike, that inventory will need to outlast the eventual agreement between the UAW and the respective auto companies.

So What’s Next? A Warning.

The UAW strike poses a multi-faceted challenge to the Big 3 Detroit automakers. While the immediate concerns involve labor and supply chain, the long-term risk of brand erosion and customer loss to foreign competitors is equally concerning. The current advertising strategy, which focuses more on makes and models than the brand, may need reevaluation. As the strike continues, the Big 3 must consider a more holistic approach to protect their brand equity and retain customer loyalty. Even when taking the UAW strike out of consideration, brand loyalty has slipped this year, according to JD Power.

Let’s face it, loyalty matters. Brands matter and no amount of cash on the hood of your next vehicle purchase could persuade you to stick with a brand that stands for less than it did previously. The perils of playing the game of selling the vehicle and not the badge could rear its ugly head for GM, Ford and Stellantis. Failure to ignore the power of brands and the emotional connections they make with consumers will result in a significant shift in the American automotive landscape, one that could favor foreign brands for years to come.

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