CHARLOTTE, N.C. -- Chrysler's auto sales may have fallen 44% last month, but NASCAR driver Kurt Busch is giving the beleaguered company something to cheer about. Busch's recent victory in the Kobalt Tools 500 -- a NASCAR Sprint Cup race at Atlanta Motor Speedway -- provided a lift to the maker of the Dodge he was driving. For Chrysler workers "up there in Michigan,
I was hoping to give them the peace of mind to know their Dodge product is out there winning, just to ease the pain for a moment," Busch said in an interview with TheStreet.com.
And for potential customers, "the old cliché is 'Win on Sunday, sell on Monday,' and the impact we like to make on our race fans is to mention to people that this (car) helped me to get to victory lane and it was a good-handling car," he said. "If that doesn't inspire anybody to go out and buy a Dodge Charger, I don't know what will," Busch said. He had said those same words on Fox TV immediately after the race, which was the No. 1 sporting event of the March 7 weekend, with 6.2 million households tuned in. That comment thrilled Mike Accavitti, director of brand marketing for Chrysler. "After all the time he spent in that car, Kurt got out and gave one of the best product endorsements I've ever seen any driver give," Accavitti says. The immediate results included a spike in traffic at Dodge.com as well as calls or emails to Accavitti from about 50 Chrysler dealers.
|Kurt Busch celebrates recent victory.|
"I have a dealer body right now that is going through one of the most hellacious times in their existence," Accavitti said. "During these hellacious times, they can get unmotivated; they can get deflated. But when Kurt Busch comes out and says those magic words, they get pumped up. I've never gotten that level of enthusiastic response from dealers about anything, in 32 years."
The Busch victory provides an indication why, despite troubling times, automakers continue to support NASCAR, with each of the Detroit Three and Toyota ( TM) allocating tens of millions of dollars per year -- even after cutbacks this year of 35% by Ford ( F) and 36% by Chrysler and an unspecified double-digit reduction by General Motors ( GM). The pressure is on to cut automotive marketing costs. Says Brian Wolfe, director of Ford North America Motorsports: "We're part of the marketing mix, which gets a percentage of revenue (from) new-vehicle sales. The company looks at what happens to sales and uses that as a baseline to establish budgets and that cascades to motor sports." Wolfe says that given the 35% cutback this year, Ford's priority was "to make sure the Cup teams were fully funded and championship-capable
because if you make your teams uncompetitive, you might as well not be in the game." Ford continues its technical support, because "you can get money elsewhere, but you can't get the power of Ford Motor Company elsewhere," Wolfe says. GM and Chrysler generally followed a similar pattern in their reductions, focusing on big-name drivers and their teams while cutting back on developmental racing, track sponsorships and hospitality events.
|Kurt Busch's Dodge Charger, made by Chrysler|
Still, at each automaker, NASCAR advocates have cases to make. At Chrysler, 5% to 7% of sales are influenced by the NASCAR affiliation, Accavitti says, though he adds, "I would never hang my hat solely on that research study." (When Jim Cramer wanted a forum to discuss the economy with a true cross-section of Americans, he ended up at Lowe's Motor Speedway in Charlotte, where he filmed an NBC-TV special, "The American Dream with Jim Cramer," in July 2008. One of the drivers he spoke with was Kurt Busch's brother, Kyle.) At Ford, 56% of all buyers classify themselves as race fans. Also, in two days after Matt Kenseth won the Daytona 500, about 26,000 registered for an online sweepstakes offering prizes whenever a Ford driver wins. Terry Dolan, manager of Chevy Racing, says NASCAR offers the opportunity to market to a favorably disposed audience. "We use the category as a way to reach a large sector of domestically oriented buyers. "Another plus with NASCAR is scale," Dolan adds. "At the Daytona 500 event, almost a half-million people are on the site during the two-week period. These people are passionate about cars and trucks, and a lot of them get there six hours before the start and are looking for something to do. So we put on a display, very similar to an auto show in a major market, and we've been very successful in engaging fans in our products." NASCAR fans' predilection for Detroit's cars is not news to auto analyst John Wolkonowicz of IHS Global Insight, whose research indicates that buyers of U.S. cars and buyers of foreign brands make up two distinct groups.
"There's not a whole lot of cross-shopping between domestics and imports," he says. "It has to do with whether you're blue-collar or white-collar." Because it is so well targeted, Detroit's NASCAR marketing should continue, he says, although he questions whether it is possible to turn Chevy buyers into Ford buyers and vice versa. Wolkonowicz also questions whether GM can maintain its NASCAR commitment. After all, the company recently ended an endorsement deal with Tiger Woods and didn't buy any ads for the Super Bowl, the Emmys or the Academy Awards. "GM is in a fight for their life where they are making very painful cuts to things -- even future product programs -- that in normal times they would not even dream of cutting, (partially) to make clear to the government that they are serious about restructuring," he says. Accavitti says he realizes the auto industry's down cycle diminishes the impact of a NASCAR affiliation or any other marketing effort. "The real trick bag we're up against is that all the analysis and formulas we use were developed under normal times," he says. "In these times, a lot of people are putting off purchases. All we can say is that it's better for us to win, and for Kurt to say what he said then for us not to win and for Kurt not to have said it."