On April 1st, Car and Driver fooled many into believing that Barack Obama had used his TARP leverage with Chrysler and GM to drop out of NASCAR. Those suckered into their April Fools Day joke can gain some vindication from an AdAge report last Monday on what the Obama administration actually has done to dictate internal policy at Chrysler. The White House forced the automaker to cut their advertising budget in half, and they wanted to eliminate it altogether:
Chrysler wanted to spend $134 million in advertising over the nine weeks it’s expected to be in bankruptcy — the U.S. Treasury’s auto-industry task force gave it half that.
So if GM, which is wrestling with the possibility of a Chapter 11 filing itself, is wondering how much influence the task force will have over marketing, the answer is: plenty. However, transcripts from the U.S. Bankruptcy Court for Southern District of New York, where the Chrysler case is being heard, proved for the first time that the task force at least understands that advertising is a necessary expense — even if it doesn’t think Chrysler needs $134 million for nine weeks of car ads.
Robert Manzo, executive director of Capstone Advisory Group and a consultant to Chrysler, testified at a May 4 hearing that the task force “believed that it was not feasible to not spend anything on marketing and advertising for fear of eroding the image of the brand,” during the company’s planned nine weeks in bankruptcy. However, Mr. Manzo also testified that this “hotly discussed” matter resulted in the task force basically slashing in half the amount Chrysler wanted for advertising in the period.
C&D ginned up a story in which Obama decided that NASCAR sponsorship was a waste of money, because it didn’t directly lead to selling cars. In the AdAge story, that apparently describes the attitude of both the task force and the bankruptcy judge. At one point, the judge asks, “Idle plants, why market?”, in reference to the several plants idled by Chrysler during the bankruptcy. It apparently doesn’t occur to anyone that the way to re-open idle plants is to increase sales — and that advertising is necessary for improvement.
GM will have its turn with the auto task force next, and will likely get the same treatment. Don’t be too surprised to hear at some point that the same group of people who couldn’t comprehend why a struggling automaker needed to spend $135 million on advertising will decide that they don’t need to spend $250 million on NASCAR. Car and Driver may not have set a practical joke on its readers — they may have shown a knack for prognostication.
Update: Can we recall a time when Obama didn’t think throwing money away on PR was a problem? Yes, we can!