I just had the chance to interview Ed Peper, Chevrolet brand manager, and some of his team members, John Hughes, Carolyn Normandin, and Steve Wagg about bringing the Volt to market. Unless other initials occur, the responses are from Mr. Peper.
What is your job in GM?
I'm responsible for all the marketing, advertising, promotion, relation to production development and also just had sales added to my responsibility. So just about anything having to do with the Chevy brand myself or my team is involved.
Does that involve Chevrolet internationally?
No. I'm responsible for the US market. There are 4 major regions in the world for GM in a lot of big countries. I'm part of the global Chevy council that meets and talks probably once a month and we discuss all the issues that are germane to us all and how we can help each other with common practices.
That's especially important as Chevy is the fastest growing global brand right now. Some of our brands do cross different regional boundaries.
When the Volt concept first arrived did you guys know right from the start that you wanted to make it a Chevrolet or did that come later after some initial discussion?
We knew right from the beginning it was going to be a Chevrolet. Prior to the Volt happening we really changed the direction of our brand. We want it to stand for fuel economy as well as the multiple fuel solutions that we offer. That would be great mileage on current vehicles, E85, and hybrid products and also the Volt and hydrogen fuel cell vehicles. We developed this whole campaign, our fuel solutions campaign going from gas friendly to gas free and all of us in leadership in GM felt as the volume brand for the company we had to make a huge statement, not with a smaller brand or a smaller division, we needed to make it with the biggest division. It was very intentional that Chevrolet got the Volt. The other thing is too we've got to find a way to really produce these in high volumes so we can really make a huge difference.
Was the first thought to move Chevy to the fuel economy car and the Volt was the second thought?
Well it was one of many. We have existing technologies already out there right now, but this was one of our gas free technologies this and the hydrogen fuel cell, and were doing that hydrogen fuel cell test now, so we have a couple of different gas free technologies we were working on at the same time.
Even though GM is being open and showing us the Volt program, there are those naysayers that say the Volt is a statement and that GM doesn't really plan to sell Volts in high volumes. What is your comment about that?
Well I think we're making a huge investment in this product and we don't make investments in products that we don't plan to sell. Eventually we may start with a little lower volume at the beginning as we get it into the marketplace and start seeding it and talking about it and obviously working with folks like you Lyle to help spread the word to other consumers. We want to make this a profitable business for us in the long term, not only the Volt business but the business in general of GM. We don't make investments like this if were not planning to take it forward and make it work for us. That's very very very significant.
Some people say its helping to change the image of GM but the real meat and potatoes will be to sell trucks.
For us its definitely going to make a difference as well. We believe its a game changing vehicle for us.
(SW) Its a category buster. When Toyota launched the Prius in the initial years they sold very few of them and they lost a significant amount of money. I'm not suggesting that's the business model you will see with us, but clearly as you plan for next generations of these vehicles you intend to make it a core mainstream vehicle within your portfolio.
There are lots of electrics out there and lots of hybrid, but no other manufacturer has a vehicle like this that provide consumers with the opportunity or the function of a vehicle like this. So we have a real opportunity for a considerable period of time to be sort of alone in this arena. That's why I call it a category buster, because your not really competing with electric and your not really competing with hybrids.
Do you have a plan on how to educate the public to understand the car since its so unique in order to make it more readily salable?
Were working on that right now. Were actually doing a lot of work right now to understand in general who the consumer is for this product. Were working with a group that's based out of Harvard and there a company called Innosight. What their working with us on is developing a jobs-based positioning for Volt. Which means what are the jobs that Volt really needs to handle for the consumers that buy them. On an emotional level, on a social level, on a functional level, what are the jobs that this vehicle must perform and must do well. Were in the process right now. We've done a couple of focus groups. We have a lot of data that you and others have provided us. And its going to help us from a marketing standpoint, what things should we talk about, what things shouldn't we talk about. And how to we best present the category buster. How do we present this in such a way that consumers who are interested will know this is the first of its kind and this will be the best of its kind and it will be the only one of its kind when it hits the market place in 2010.
With respect to volume, any new car that GM makes can only be sold through the dealerships, is that a contractual obligation?
Yes, the dealers have a legal sales of service agreement with us that's a binding agreement. They are the only ones that can sell new vehicle through their outlet.
So GM cannot sell directly to the consumer over the Internet?
No sir, we may get people interested and they may wish to communicate with the dealer over the Internet but ultimately that sale has to take place at the dealership.
About how may Chevy dealers are out there?
How might you distribute these vehicles to those dealers initially?
I think there is going to be specialized service training. Many times what we do for example with certain brands like Corvette, not every Chevrolet dealer sells Corvettes because there's an enormous amount of training that has to be done to service those vehicles. This could very much be like that. If someone's not trained and they're not able to fix the potential problems or issue with VOLT they probably wont be getting any.
(SH) That's one of the benefits of having this branded a Chevrolet is the vast distribution channel that exists and the service support that exists within that channel. But as Ed mentioned there will be prerequisite for the dealers prior to them being able to sell the new Chevy Volt. That will be of course service training and sales training. We want to make sure they are able to understand how the car operates completely and totally. But also if there are any issues technically they know how to address them swiftly. There may also be some required tools and such. The whole idea is to make sure that our entire sales and service organization is at a high level of readiness for this prior to the arrival of the product. That part of the whole experience to make sure that when the product gets here the support system is in place.
(CN) There's a very very strong history of that. For example the hybrids that are out there now have a special battery. So before a dealer could get a hybrid that dealer would have to have his or her service people go through the training and that is one of the prerequisites.
And it goes beyond our dealer to the first responders and law enforcement and fire department areas as well to make sure that when these vehicles are on the marketplace they're familiar with then just as they become familiar with our hybrids and our hybrid systems. As well as the Equinox fuel cell and the hydrogen storage that is on that vehicle. We have a very comprehensive plan so that when we go to market not only our dealers are ready but the municipalities are ready as well.
So even though the cars have to be sold at dealers then, GM can still regulate what the dealer has to do to get the car?
There would be certain criteria that we would uniformly apply across all our dealers in an equitable manner. In terms of the requirements, we are going to have to develop them. The dealer has a choice though, they can either do them or not do them. If they don't do them then they wont get the product.
Are you going to roll the car out gradually considering the huge public demand in light of recent gas prices, though wouldn't it be great to get a strong initial foothold?
There a lot of considerations that we have to take into play. First off this is new innovation and first off and foremost we want to make sure that the product and the safety and all the key components and elements of the product itself are one hundred percent before we come to market. But also when we do come to market because its new unlike anything we've ever done there becomes the requirement for us to train and have service support before we distribute the product there. In some cases the system has a limitation. Its difficult to train 4000 dealers or 8000 technicians over a period of a month or two. So there potentially could be the need to have a regional rollout and go across the country in a somewhat systematic manner. But there's a number of considerations we have to look at along the way.
Lyle what is your sense in talking with your many many people that they think this vehicle is going to be priced at? (ME) When it was initially stated that the car would be less than $30,000 you could sense people's happiness with that. But then as the latest sentiment has moved closer to $40,000 as per Bob Lutz, you can detect some degree of discontent. Certainly I think that at $40,000 there would be a lot less people who would be able to afford it.
All of us would really want to see this car take over the roads, that's my dream, and obviously the price is going to have to play a role in that somehow. I think people now expect its probably going to be around $35,000.
Do you think that the fact its a four seater could be a hindrance to widespread acceptance of the car?
I think just to start with this is going to be a very nice sedan. I think its good sized to start with. I will tell you that were obviously going to look for other applications for this technology in other products. It could be bigger products. Were still on the drawing board on some of that stuff right now.
Are you thinking about other brands and other sizes of vehicles?
(SH) Yes. And also when you take a look for example at a Civic hybrid. While it does have a bench in the back, that's not a place where you and I would want to spend a lot of time. So in the scheme of things we don't see that as a major issue. The idea is that when we take a look at what the vehicle is we keep falling back on the benefits. The gas free range, and no anxiety with the ability to drive it as a regular vehicle. Its not convenient to charge but you still have the ability not to use gas ever. That's something that's unique and I think trumps any issue about a three place versus two place second row.
Are you targeting certain markets in the rollout?
We're still in the planning process. A lot is going to happen here when we meet with Innosight next week . We're going to go through a lot of this data. Customer clinics and what they perceive to be this jobs based positioning. And then we will roll from there to get a really good marketing positioning for the vehicle. And the we will start developing tactics for the launch of the vehicle. And so it all comes in sequence and we should have a really good plan I'd say in a couple to three months.