Quote:
Originally Posted by johnny smallblock
For what seems like the hundredth time: The average GMC vehicle sold generates more profit then the sale of an equivalent Chevy vehicle. Plus, buyers of Denali vehicles have a higher average household income then Cadillac buyers.
There are 2 expenses to keeping GMC: advertising and sheet metal. I'm assuming that since GMC was one of GM's most profitable brands for years it was well worth it. Maybe that will change as trucks become less popular.
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Johnny, I see your point, but product profitability alone - at the expense of other divisions or products - cannot be the sole reason to keep a brand or similar products around.
This is especially true when you consider peripheral issues like corporate image (is GM a "green company" or "do they make gas guzzlers"?), too few advertising dollars (who wins in marketing prioritiziation - does the Aura marketing push always lose out to the Malibu's?), and a far-flung dealership network.
Consider that the Crown Victoria, Grand Marquis, and the Town Car ALL make HUGE margins for Ford - and yet Ford has discontinued retail sales of the Crown Vic (now only fleet sales), the Grand Marquis production will end, and the Town Car will eventually be phased out. Yes, it's an old product, but they DO make huge margins (the tooling was paid off forever ago and one report I read said that Ford makes $5K of profit per Panther product).
Same could have been said about "cheap to make" but high margin products like Lincoln Mark LT (based off the F150) or the Jeep Commander (based off the Grand Cherokee), and yet one is dead and the other will join it soon.
Or for that matter, the same could have been said about entire divisions like
Oldsmobile, Plymouth, Geo or
Eagle.
Afterall, all were relatively cheap to manufacture and used mostly off the shelf items from the coporate partsbin. Yes, Oldsmobile was set apart a bit more from these other brands and probably more expensive, but most of Plymouth's lineup was derived from near identical Dodge or Chrylser products - how much did it really cost ChryCo to do this? I'm sure it was nothing, considering the fact that the only differences were literally grilles and badges - and yet Plymouth was retired to the history books. Eagle was a mix off products from Mitsubishi and Chrylser - it probably cost close to nothing too. Even Geo was a bag of mixed rebadged Suzuki, Isuzu, and Toyota products - and it died too.
And yet all of these were mostly cheap to make and restyle, and probably made fair profits of their own for mass-market vehicles.
Even GM possibly selling or shutting down Hummer - which probably makes massive profit per unit - speaks to the fact that profit-per-vehicle formula isn't the entire story. Other factors fit into this and should be considered if a brand is to be "viable and sustainable" or not.
I'm not saying your points aren't valid, but how far do you go with it if it means it could impact the rest of the company? With the rest of the ship in need of repairs (and losses at GM North America dragging down the rest of the world-wide operations), GM really should look at cutting some of it's divisions to keep the rest of the empire running. The Navistar deal above could present a way to do this while saving face and reshifting an existing nameplate.
Just my thoughts on this...thanks Johnny!!!