Poll: Texans Reluctant to Buy GM Trucks Because of Bailout

More than half say bailout would affect their decision on buying a truck

October 9, 2013

More than half of Texans said that the nearly $50 billion taxpayer bailout of General Motors may deter them from buying from the company, according to a survey released Tuesday.

The National Legal and Policy Center (NLPC), a nonprofit ethics watchdog, surveyed more than 500 Texas residents and found that 40 percent said the bailout would "absolutely" affect their decision about buying one of GM’s new pick-up trucks. More than 22 percent said it would "likely" or "very likely" affect their decision, while just 24 percent answered "not too likely."

About 150 of those surveyed said that they were in the market for a new truck.

"Truck buyers are older, less urban and more politically conservative than other consumers," according to the NLPC. "Ominously for GM, the percentages of those who said their buying decision would be influenced by whether the company received financial assistance from the government were higher than those not in the market."

Texas is the largest truck market in the United States: pickups represent 20 percent of all new vehicles sold in the state, according to Bloomberg Businessweek.

The state will serve as a bellwether for pick-up demand. The company plans on sending 40 percent of new Chevrolet Silverados to dealerships in Texas.

GM executives have been working hard to woo Texas residents. Mark Reuss, president of GM’s North American operations, visited the Texas State Fair in September to bolster the company’s image.

It also embarked on an ambitious marketing campaign, posting nearly 80 billboards across the state and scheduling more than 40 marketing events to promote the Silverado, according to Bloomberg Businessweek.

Despite its heavy push to increase its market share against the best-selling Ford F-Series, GM pick-up truck sales fell 8 percent in September from one year ago, according to the NLPC.

The company has pulled back its marketing push for the Chevy Volt and other vehicles to focus on pick-up sales—but the memory of the bailout could come back to hurt them.

"GM doesn’t want the Volt out there reminding traditional truck buyers that it’s a bailed-out company, as that message clashes with the values of patriotism and self-reliance that truck marketing depends on," auto expert Ed Niedermeyer told the Washington Free Beacon on Tuesday.

The Treasury Department is in the process of selling off more than 100 million shares of GM stock owned by the federal government. Taxpayers are expected to lose $10 billion on the bailout—a 20 percent loss.

GM President Mark Reuss acknowledged that the bailout could come back to haunt the company.

"We … know that the government ownership influence is highest among truck buyers. … Being owned by the government is problematic for now," he said in October.

However, some say GM’s falling market share may not be that problematic. The company has streamlined its operations and created more common components, such as universal radio systems, to cut down on costs, according to Autopacific analyst Dave Sullivan.

"Long-term if you’re looking at GM, maybe their market-share isn’t increasing, but they’ve gotten smarter and engineered their products making them more profitable," he said.

GM Canada President Kevin Williams said on Monday that GM’s past focus on market share has led to risky business practices that plunged the company into bankruptcy in 2009. GM leads the industry in subprime auto-lending to move vehicles off the lot, which Williams said could have catastrophic results for the automaker.

"The real question is, are you going to run the business the way you ran it in the past in order to drive market share exclusively. The answer is that’s not our intent because it [led to] a failed company," Williams told the Globe and Mail editorial board on Monday.

Published under: Bailout , General Motors