Benzinga - by Chris Katje, Benzinga Staff Writer.
A strike by UAW union workers against three leading automotive companies could have a lasting impact on the future revenue and profitability of the companies involved.
One of the three companies targeted with strikes has announced a move that could be an early cost-cutting measure.
What Happened: One of the key features of the Super Bowl each year is the commercials, with private and public companies shelling out millions of dollars to advertise new products, highlight unknown brands and use celebrity endorsements to generate buzz.
Automaker General Motors Company (NYSE:GM) was among the companies that spent $6 million to $7 million for a Super Bowl commercial in 2023. The company had a joint Super Bowl ad in partnership with Netflix Inc (NASDAQ:NFLX) that imagined if electric vehicles were used more in shows and movies.
The advertisement, which starred Will Ferrell, was one minute long and highlighted vehicle models like the Chevy Silverado EV, Blazer EV, Cadillac Lyriq and GMC Hummer EV, according to Electrek.
General Motors has been featured in Super Bowl commercials the last four years with electric vehicles highlighted in the company's ads. Commercials included using Ferrell twice, NBA star LeBron James and an "Austin Powers" movie reunion.
"We continually evaluate our media strategies to ensure they align with our business priorities," a General Motors spokesperson told Ad Age.
The 2024 Super Bowl (Super Bowl LVIII) will be shown on CBS, a unit of Paramount Global (NASDAQ:PARA)(NASDAQ:PARAA), who is seeking to get a similar $6 million to $7 million for each 30-second advertisement.
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Why It Matters: News of General Motors skipping Super Bowl LVIII comes after company CEO Mary Barra announced the launches of several electric vehicle models would be delayed as the company is "taking immediate steps to enhance the profitability of our EV portfolio."
Barra also announced cost-cutting initiatives.
A new contract agreement with UAW employees will see base wages increase, which could mean lower profits or increased costs passed onto consumers, or a combination of both.
The impact of the strikes, which lasted for weeks, could mean billions of dollars in losses for the big three Detroit automotive companies.
Another reason for skipping out on Super Bowl commercials might be a change in marketing direction. Auto News said General Motors previous Chief Marketing Officer Deborah Wahl was a fan of Super Bowl commercials. A new Chief Marketing Officer was hired by the company in July.
Automaker Stellantis (NYSE:STLA), which was also targeted with UAW strikes, has not announced its plans for Super Bowl LVIII. The company had several ads during Super Bowl LVII.
Ford Motor Company (NYSE:F), which was also targeted with UAW strikes, did not air any Super Bowl LVII commercials and may have a different strategy with promoting its electric vehicles.
"If you ever see Ford Motor Co. doing a Super Bowl ad on our electric vehicles, sell the stock," Ford CEO Jim Farley told analysts in June, as shared by the Detroit Free Press.
Farley said it was better to spend the money on updating vehicles instead.
Super Bowl commercials remain a key way for companies to advertise their products. Last year's Super Bowl was watched by 113 million viewers on Fox, which was a six-year high for the annual NFL championship game. The game was also the third most-watched television event in history.
The Detroit Free Press cited website traffic data for automotive website Edmunds, which showed searches for vehicles featured in Super Bowl ads up significantly after the ads aired compared to normal traffic levels.
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