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General Motors and Honda are strengthening their ongoing relationship through an alliance aimed at manufacturing cars for North America. According to the Financial Times, this strategic alliance will involve “… building rival vehicles using the same platform or body base….”
Automotive alliances are common today. Fiat Chrysler Automobiles is planning a merger with French brand Peugeot. Ford and VW plan to share technology for the development of electric and conventionally fueled cars.
The GM-Honda strategic alliance is, in fact, the second time GM has cooperated with a Japanese car company for the production of same-platform vehicles.
In 1984, GM partnered with Toyota in a venture called NUMMI, New United Motor Manufacturing Inc. Together, GM and Toyota owned a GM manufacturing plant in Fremont, California. Prior to the NUMMI experiment, the Fremont factory was considered one of GM’s worst performing plants.
Toyota aimed to gain a US manufacturing foothold. GM’s goals were to gain insight into lean manufacturing and W. Edwards Deming’s zero-quality defects systems approach. The NUMMI plant closed in 2010. It was later sold to Tesla.
It is unclear how successful GM’s lean manufacturing take-away was after NUMMI. It took quite a while for GM to implement what it absorbed through the NUMMI alliance. However, GM’s biggest lesson from the NUMMI experiment, whether GM liked it or not, was the power of a quality brand.
NUMMI manufactured Toyota Corollas and two GM versions of the Corolla: the Geo Prizm (1989-1997) and the Chevrolet Prizm (1998-2002). The Prizm was basically identical to the Corolla: the few differences were purely cosmetic.
Geo was a sub-brand of Chevrolet. The Geo Prizm could not compete with the Corolla. The Geo Prizm lacked popularity and sales. When GM discontinued the Geo brand, NUMMI manufactured the Chevrolet Prizm. The Chevrolet Prizm lacked sales as well.
On the other hand, Corollas sold well, really well. And, the Corolla sold at a premium to Chevrolets. The Toyota brand had a reputation for quality. Chevrolet and its cute sub-brand Geo did not.
Having the same platform and manufacturing identical-looking vehicles does not mean identical sales. Having the same platform and manufacturing identical-looking vehicles does not mean having identically-powerful brands.
A brand is the promise of a relevant, differentiating, trustworthy experience. Just because two brands were made the same way by the same people does not mean these brands are the same perceived value.
Nissan had to face these same facts in 1999. A research test was designed with the same Nissan vehicles, one branded Nissan and one branded Toyota. The Nissan branded vehicle was perceived to be valued $1500 less than the same vehicle with the Toyota logo. That meant for a customer to even consider a Nissan compared to a Toyota, the Nissan would have to be priced significantly lower than the Toyota.
Even though the 2020 J.D. Power Initial Quality Study shows Chevrolet ranking higher than Honda, Honda still has the better emotional, exciting brand connection with drivers. In the 2020 J.D. Power APEAL Study, Honda ranks higher than Chevrolet. The initial quality report looks at problems per 100 vehicles; the APEAL report looks at the emotional appeal of the brand. Just because a Honda car will be made on the same platform as a GM car and just because these two vehicles will share technology, does not mean the brands will be perceived to be the same.
Costs are usually at the heart of these automotive alliances, as is size and geographic market share. Sharing platforms, technologies and research information can lower costs. But, in the end, the customer decides the value of a brand. Even when two products are physically identical, brand matters. If GM does not improve the perception of its Chevrolet brand, this alliance, as with NUMMI, will be another disappointment.
