February 15, 2009 - Big Three NASCAR Sponsorship

Cash-Strapped Automakers Still Sponsoring NASCAR

They are lined up side by side, three rows deep -- shiny Silverado pickups, Tahoes with fuel-management systems, Malibus equipped by OnStar, muscular Corvettes, an Equinox that emits only water vapor and new-edition Camaros.

Amid the roar of 600-horsepower NASCAR engines, hundreds of stock-car fans teem around the new Chevrolets on display at the 15,000-square-foot showroom outside the fourth turn of Daytona International Speedway like ants on a picnic basket.

The speedway hosts NASCAR's biggest event on Sunday, the season-opening Daytona 500. But a different sort of competition has unfolded all week on its grounds, where auto manufacturers vie for the attention of the fans streaming into the track -- 160,000 on race day alone -- each one a prospective car buyer.

At the Chevrolet display, which has the feel of a county fair with its big stage, white circus tent and hydraulic-operated powerboat ride, NASCAR fans poke under vehicles' hoods, climb in front seats, honk horns, fill souvenir bags with literature about the new models and pose for pictures beside the ones they covet most.

If they have questions, one of 10 "product specialists" swoops in with a friendly smile and quick answer. And all the while, tiny cameras attached to banners overhead film the proceedings, to be analyzed later by software that decodes how many NASCAR fans visited the display and which vehicles commanded the most attention.

Amid plunging stock values, mass layoffs and unprecedented plant closings, Detroit's Big Three have slashed their marketing budgets, retrenching from such valuable sports properties as the Olympics, Super Bowl and PGA Tour. And though each has cut spending on NASCAR, as well, all three are clinging to their multimillion-dollar association with stock-car racing as the most fertile ground for cultivating buyers.

In the case of General Motors and Chrysler, which accepted $13.4 billion and $4 billion respectively in federal bridge loans, a certain amount of taxpayer money is footing the bill.

But while some lawmakers have questioned the propriety of troubled banks venturing into sports marketing, such as CitiGroup's $400 million, 20-year naming-rights deal for the New York Mets' ballpark, none, to date, has objected to struggling automakers investing in NASCAR.

The two are uniquely entwined.

"There has never been -- and may never again be -- a sport more authentically and financially tied to an industry as NASCAR is to auto manufacturing," said David M. Carter, executive director of the University of Southern California's Sports Business Institute.

For decades, Detroit has supplied the competitive fodder for NASCAR's races -- currently Chevrolets, Fords and Dodges -- with Toyota joining the ranks in 2007. And NASCAR, in turn, has spawned millions of brand-loyal fans predisposed to buying products that support the sport they love, whether that's Budweiser, Cheerios or Chevrolet.

While NASCAR fans might be cash-strapped at the moment, industry executives say there's still no better place for U.S. automakers to tempt potential buyers with the fantasy of driving a 2010 Chevy Camaro or Dodge Charger than at Daytona.

"Right now, it's not 'Win on Sunday and sell on Monday,' like it used to be," Dodge Motorsports Director Mike Accavitti said. "It's more like, 'Win on Sunday and get more people interested in your product on Sunday, Monday, Tuesday, Wednesday, Thursday."

In terms of their return on investment, auto executives won't disclose figures regarding their NASCAR spending or sales attributed to it.

Stephanie Brinley, senior manager of product analysis at AutoPacific Inc., which analyzes the industry's marketing efforts, said it has been "tough to draw a straight line" from success on the track to showroom sales. Still, she believes the investment makes sense, even for an industry that needs federal help to stay in business.

"I completely sympathize with general outrage over other industries' executive pay and stock options," Brinley said. "But these guys know what their business is, and they need to use all the tools they see fit."

General Motors, the biggest of Detroit's Big Three, has reduced its spending on NASCAR from a high of roughly $125 million a year to about $85 million, according to Peter De Lorenzo, a former automotive advertising executive and editor of AutoExtremist.com.

GM won't comment on the figures. But Terry Dolan, manager of Chevrolet racing, confirms that "all non-essential spending" has been cut. Chevrolet no longer has trackside corporate suites, for example. And its top dealers won't be treated to a trip to the Daytona 500 for a business meeting this year.

"The money we have invested here, to use a slang term, is focused on putting butts in seats of our cars," Dolan said.

Ford has reduced its spending on NASCAR by 35 percent, but remains committed to competing on the track and marketing through its success in the sport. The company's market research shows that NASCAR fans are its biggest fans, with 56 percent of Ford owners classifying themselves as race fans.

If Ford were to stop competing in NASCAR, the fear is it would lose precious market share to its domestic rivals.

Dodge, which slashed its NASCAR spending 36 percent this year and cut its marketing staff from six to one, races for the same reason.

"We are very cognizant of the fact that we have right now $4 billion of taxpayer dollars, and we are using it wisely," said Accavitti, the Dodge executive. "We know how to reach customers, and we know how to reach them in the most cost-effective way."

By competing in NASCAR, Dodge believes it can counter the negative impact of media reports forecasting Chrysler's demise. Its Web site traffic surged after Ryan Newman won the 2008 Daytona 500 in a Dodge Charger, leading fellow Dodge driver Kurt Busch across the finish line. It was a powerful message to potential car buyers, Accavitti says, that Dodge remains vibrant and relevant.

"The challenge all [automakers] face is that consumers are frightened," Accavitti says. "Consumers don't want to go out and buy a car right now. Some of the consumers that want to go out and buy a car find they can't get financing for that vehicle."

The fact that Chevrolet, Ford and Dodge are racing in Sunday's Daytona 500 won't change that. But to NASCAR fans, the Daytona 500 signals the start of the new season, just as Opening Day does to baseball purists each April. And Accavitti believes that a change of season might translate to a new sense of optimism that inspires race fans to wander into a showroom to check out the new models.

That's the hope of GM's Dolan, as well. And he smiled as he surveyed the fans snapping photos alongside three-time NASCAR champion Jimmie Johnson's No. 48 racecar at Chevrolet's trackside display earlier this week.

No sales were being rung up. But NASCAR fans stood in line three- and four-deep at 20 computer terminals for the chance to swipe their driver's license and punch in their address, phone number and projected timetable for buying a new car -- all so they might be contacted by their local Chevrolet dealer at a later date. In return they got a free "Team Chevy" T-shirt.

And for Chevrolet, each sales prospect represented a mini victory before the green flag dropped on Sunday's Daytona 500.

Bill Jackson, 61, of Terre Haute, Ind., was among those signing up. "I'm not in the class to own a Corvette," Jackson confessed, "but I told them I'd like to get more information about it."

Original Story - Washington Post