Business Magazine Suggests GM Should Close 5 Of Its 8 U.S. Brands

[Perian]

Link: http://www.portfolio.com/interactive...hat-Should-Die

Source: Portfolio Magazine, June 2008; Page 86.

Article quote:

G.M.’s biggest problem, however, is its unwieldy collection of eight brands—Cadillac, Chevrolet, Pontiac, Buick, Saturn, Saab, G.M.C., and Hummer. Each product line has its own dealers, its own development costs, and its own marketing budget, meaning that all those resources are diluted to the point of impotence. If you’re shopping for a midpriced sedan, for example, G.M. has six. Buick by itself has two. Toyota, by comparison, has just one—the Camry, which sells nearly as many vehicles each year as all six of G.M.’s offerings combined.

To reduce some of the overlap, Wagoner is trying to merge all the brands into four sales channels. Such consolidation is a tedious process, but cheaper than killing brands outright. When G.M. dropped Oldsmobile a few years ago, the bill totaled more than $500 million. The company still has about 6,700 dealers, a number that is down about 14 percent since 2005, and it’s now helping stronger dealers buy out weaker ones. Some executives privately concede that G.M. needs only three or four U.S. brands: Cadillac, Chevrolet, G.M.C., and perhaps Saturn.

The sad part is that these problems have overshadowed the real progress that G.M. has made. The company has cut billions from its overhead and promises to cut billions more. It has launched well-received new products like the Cadillac CTS sedan, which competes with the BMW 3 series, and the Chevy Malibu, G.M.’s first credible competitor to the Camry and Honda Accord in decades. And G.M.’s overseas operations are growing fast. Last year, it sold more cars internationally than in North America, a first for the firm. The Buick brand, stunningly unsexy in the U.S., actually has cachet in China. Book a limousine from the Shanghai airport into town, and you’ll likely get a Buick.

As with Chrysler and Ford, G.M. is now faced with an unusual business goal: not to grow but rather to shrink its U.S. operations intelligently until costs are in line with revenue.

To that end, here are some prescriptions: Kill Saab and Pontiac today. Merge Saturn with Chevy (the cars aren’t that different anyway). Sell Hummer. Move Buick to China.

Given that G.M. once sold one out of every two cars in the U.S., such steps might seem like radical surgery, but that’s what’s needed. The stock is at a 33-year low, and the company’s market share is 23 percent and dropping, a reality that industry insiders are slowly coming to accept.

“Can G.M. be okay at 20 percent market share?” asks one former G.M. executive. “With the right size and structure, the answer is yes.”

Those aren’t the grand visions that propelled G.M. during its 77-year stint as the No. 1 seller of cars in the world. But given the other, scarier scenarios it now faces, a more modest definition of success might have to be good enough.

Full article here:
http://www.portfolio.com/news-market...tomakers#page1

[DemonKnightDK]

why keep saturn over pontiac? pontiac has a lot more fans than saturn does I'm willing to bet...SAAB as a brand I dont think should be sold in the US any more, it just dosent sell in a justifiable volume. (but that could be a lack of dealerships, which could be said for saturn as well.) and GMC what deveolpment dollars? a guy to design a new grill? they are marked up chevys, and make a nice chunk of profitable sales for GM.. if GM closes buick or Pontiac, when I am ready to buy my next car it will likely be ford, or mazda. I'm not a chevy guy, or saturn person.

I'm a firebreathin, screamin chicken, petal to the metal professional grade die hard. and by damnit, I want my RWD to screech the tires, and then pull into the trailer and hauled by the truck with three letters to its name.

[windvale]

I think GM needs to get down to just Chevy, Cadillac and Hummer. Not because Toyota has just Toyota and Lexus, but because it eliminates overlap and duplication of effort.

Make the G8 the new Impala. Make the Soltice a Chevy. Make the Enclave a Cadillac.

Saturn is DOA anyway you slice it. A niche brand at best. A money pit more than likely.

Pontiac is a rental car supplier.

Buick is the answer to the question no one is asking.

GM needs to move forward...

[jkennedy293]

Merge Saturn with Chevy (the cars aren’t that different anyway).

What is this guy smoking? except for the Outlook, no Saturn is a rebadged Chevy.

[GMC-70]

Here we go again----everyone knows what GM needs except GM

[redfox]

I would get rid of Saturn and put the money in Buick and Pontiac. Chevrolet and Cadilac will always be the top cars at GM but the rest need help.

[nascarnate326]

Originally Posted by windvale

I think GM needs to get down to just Chevy, Cadillac and Hummer. Not because Toyota has just Toyota and Lexus, but because it eliminates overlap and duplication of effort.

Make the G8 the new Impala. Make the Soltice a Chevy. Make the Enclave a Cadillac.

Saturn is DOA anyway you slice it. A niche brand at best. A money pit more than likely.

Pontiac is a rental car supplier.

Buick is the answer to the question no one is asking.

GM needs to move forward...

Only took 2 posts to find a good way forward.

But seriously, Saturn and Buick need to be cut ASAP.

[bballer113]

No other brands will be killed off. All we will see is a collection of brands on the same car lot. GMC, pontiac and buick on the same lot. With Caddy, Saab and Hummer on the same lot.

[HotCarNut]

I'm not sure that the brands need to be killed off, just better differentiated which GM has started to do.

Buick in China is so popular because they have amazingly good looking and high quality vehicles that we don't see here in America. The Enclave has sold well and the new design unveiled in China for global production should provide a good litmus test for the brand's power here in the US. It is definitely better styled and has a nicer interior than anything here currently.

Saturn doesn't really cost anything anymore for development as they are simply re-badged Opels. Saturn's problem is the dramatic shift over the last 2 years in pricepoint that has alienated it's old customer base. Good advertising to create brand awareness could solve that problem and bring import buyers back to an American nameplate.

Saab needs to go away. Let it be a European brand only as it isn't large enough to sustain the investment needed to meet regulations in both Europe and the US. Sell it to Sir Carlos or whoever was interested in buying Volvo.

Hummer is a niche brand that makes a substantial profit for GM. Why sell it when it's development costs are shared with Chevy and GMC (the platforms underlying the H2 & H3)? Plus it reaches a market segment that no other GM vehicle hits. All Hummer dealerships are tied into another (normally a Cadillac), so it's not like selling the brand will help decrease your glut of dealerships either.

Pontiac. This is a brand in flux. The strategy was to move Pontiac to RWD performance at an everyman's price. However, unless GM significantly changes it's engine strategy and offers diesels, emissions regs and CAFE will kill this lineup. The only real hope is to lower the volume such that Pontiac has 3 or 4 great models selling a total of 150k vehicles a year max. Again, it's hard to argue that killing it saves any money since it is now linked closely to Holden and therefore development costs won't really go away. Most of the dealers also have Buick and GMC, so killing Pontiac by itself won't help the dealership glut.

Honestly (and I realize this is going to piss a lot of people off) the best strategy would be to kill Chevrolet as it has the most independent dealers and nearly every model has a counterpart in another brand. Yes, I realize that it's the historical pillar of GM. Yes, I realize that the brand recognition is the highest. However, it also offers the best opportunity to close a large number of dealerships without having to kill 3 separate brands. Is it easier to kill one vs three? I don't know, but Chevy's lineup is a truck & SUV heavy hodgepodge, and with the exception of the Corvette, there isn't a unique model in the current lineup. Even the upcoming Camaro would fit well in Pontiac's lineup as a Firebird. If you use brand identity as the criteria, what is Chevy? It has a mix of models, from FWD to RWD to AWD, one mild hybrid that's a clone of a Saturn, a small car that is duplicated at Pontiac (although it really doesn't belong in Pontiac's lineup) and is inferior to the new Saturn Astra, a poor selling large car in the Impala that is nothing like the ones from the 60s or 96-98 that were so popular, etc. etc. etc. In short, Chevy has no defining DNA. It is a garbage dump of the DNA from all of the other brands, and yet it gets the most marketing support and has the biggest dealer network. By taking the pain and abolishing Chevy, GM could free up the marketing dollars for all of the other brands and kill off the majority of its dealers instantly right-sizing the company for the forseeable future.

Now, everyone, please feel free to tar and feather me for being the first to say publicly that the sacred cow is really a lead weight sinking GM's ship.

[jbernie]

I don't disagree that GM could benefit from a more streamlined approach, that being said, the costs of maintaining multiple brands is probably alot less than trying to buyout dealerships and close dealerships etc etc. Closing Oldsmobile was hard enough.

This being said, one of the benefits of having more brands is that you don't need to design vehicles that please 90% of the people 100% of the time. I won't say all of GM's brands are at the pinnacle of automotive design, but when you look at Toyota you can see where streamlining goes wrong. Anything witha Toyota badge must appeal to the masses, Scion is that quirky brand, Lexus is luxury. For Toyota they have to have multiple models overlapping because they can't pass those models off to the other two brands they have.

[tgagneguam]

G.M.’s biggest problem, however, is its unwieldy collection of eight brands—Cadillac, Chevrolet, Pontiac, Buick, Saturn, Saab, G.M.C., and Hummer.

Oops, the author goofed a bit. I'll fix it for him:

G.M.'s biggest problem, however, is its unwieldy bureaucracy replete with incompetent managers who couldn't manage a brand if their careers depended on it and who have zero accountability for their past failings.

It's funny, GM will be shaving divisions-since the market allegedly cannot support them-yet we will see the market welcome new [read: better managed] foreign nameplates arrive on this shore in the coming years. Many of them will somehow find success despite having lesser budgets and zero brand image in this country. Fancy that!

[jlt0x]

I agree 100%. GM only needs Chevy, Cadillac, GMC, and maybe Saab or Saturn.

Every interesting (read supercharged V6, V8 models) Pontiac should be branded Chevy SS. Keep Pontiac's swoopy-design cachet and only use it for SS models. Chevy models should remain in the "everyday" category. Anything remotely upscale should be Cadillac (from small to large sedans and SUVs). Saab or Saturn can handle the heavily-European influenced-designs...they can sell in small to moderate numbers, but remain credible to the US market. GMC sells only SUVs and pickups...and maybe special edition Hummers.

[ronald mcretard]

If GM killed Saab I would never forgive them. Besides, why kill it? I'm sure someone would buy it.

[windvale]

Originally Posted by HotCarNut

the best strategy would be to kill Chevrolet as it has the most independent dealers and nearly every model has a counterpart in another brand...In short, Chevy has no defining DNA.

I'm going to go ahead and nominate this for the dumbest comment of 2008.

[nsap]

I think they need to kill Pontiac, sell Saab, and sell Hummer.