GM gives Mr. Goodwrench a pink slip

General Motors opts instead for separately branded 'certified service' for its Chevy, Cadillac, Buick and GMC lines.

By InvestorPlace Nov 9, 2010 10:33AM

Car Trouble © Getty ImagesThere have been a lot of changes at General Motors since its 2009 bankruptcy filing, subsequent government bailout and current plans for an IPO. In less than two years the company has shed 900 dealers, about a dozen auto plants and a number of brands, including Pontiac, Hummer, Saab and Saturn.

 

Though GM has purportedly pulled out of its tailspin and claims it has returned to profitability, that doesn’t mean there aren’t still big changes in the works. The latest business division on the chopping block is the car’s dealer service brand.

 

That’s right, after 37 years, Mr. Goodwrench is getting a pink slip.

 

The fictional mechanic, a symbol of GM's repair and maintenance divisions since the 1970s, will be rebranded Feb. 1 in favor of "certified service" divisions for each of GM's remaining remaining nameplates: Chevrolet, Buick, GMC and Cadillac.

The marketing ploy is intended to connect the brands with their customers and hopefully provide an uptick in service revenue for the automaker and its related dealerships.

The move is coupled with a push for more service training and a renewed effort to improve customer satisfaction and keep motorists returning to dealers for repairs and tuneups. And more importantly, the branded service departments are meant to build a relationship with car buyers and keep them loyal when it comes time to purchase some new wheels. Post continues after video:
But the real question is whether it will actually move the needle or is just change the illusion of progress for the once-dominant auto brand.

It’s true that in these tough economic times motorists are driving older cars longer and the demand for parts and service has increased dramatically. Just look at auto parts stocks -- AutoZone (AZO) is up 53% year to date and just reported its fiscal-fourth-quarter same-store sales increased a hefty 7%, while Advanced Auto Parts (AAP) is up 63% so far in 2010 and saw its fiscal-second-quarter earnings leap 40%!


But at its core, this trend is a move toward being more frugal, and pricey dealership service may be passed over for cheaper repairs performed at local shops.

 

And as for brand loyalty, that seems to be a bit of a myth in the current economic environment. Most cash-strapped consumers are looking for the best deals and best value right now, and that’s true for all items, from dishsoap to dishwashers.

 

The reality is that in the short term, the loss of Mr. Goodwrench probably won’t pay dividends. The branding move appears to be little more than posturing for the upcoming GM stock IPO.

 

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