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

[HoosierRon]

For all of you people that want to kill off Pontiac, Saturn or Buick, let me point out the following. These three brands ALREADY have been eliminated. Pontiacs no longer are anything but rebadged Holdens, Saturns no longer are anything but rebadged Opels, and Buicks soon will be nothing but rebadged Chinese Buicks.

So, GM could kill these nameplates, but it still will have the costs associated with Holden, Opel and Buick-China. Sales in the U.S. certain would suffer if these three brands were eliminated, and GM would be spending more per unit to develop Holdens Opels and Chinese Buicks.

If you think all GM needs is Cadillac, Chevrolet and [insert your pet brand here], then have the guts to say that GM should kill Holden, Opel and Buick in China as well.

(I could add the following to this analysis: GM is turning GMDAT into Chevrolet-Europe. So when you say GM should keep Chevrolet, do you mean it should kill GMDAT, and start exporting Cobalts to Germany?)

The only valid point the article makes is that GM is forced to spread its marketing dollars too thin. But the real problem is not too many brands. The real problem is that GM is losing billions of dollars every year, so it does not have enough marketing dollars in the first place.

[drew770]

Originally Posted by tgagneguam

So there's money to close brands but no money to rebuild brands into profit centers? I see. That makes perfect sense. That actually sounds like what a group of MBA's would come up with as a rationale for their failure. It's gonna be tough, though, when GM's a two division corporation. How then will the managers who cannot manage a brand explain their ineptness?

Yes and the business is failing.
So how long would you like to see GM struggle with 8 brands? You have have sliding market share with 8 brands and Toyota can grow with 3.
Lets not count out the Korean and soon to be Chinese automakers that will be around.
GM could sell Saab & Hummer and that money could offset closing of a brand.

GM seems to be the only company handcuffed by its past glories. Every other Fortune 500 company can see when its time to cut its losses and move on. IBM dumped its PC business and is more profitable and GE has sold off various divisions. Dell is moving on from selling its products online to now selling them in stores and Dell was built via the internet.
Times change and companies have to adjust or be lost in the process.

[Lichtronamo]

Originally Posted by ronald mcretard

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

That's what I thought - does anyone know if Saab still exists as a wholly owned subsidary of GM or is it fully integrated as part of GM and just a marketing division like Chevrolet, Buick, Saturn, Pontiac, GMC and Hummer?

[ponchoman49]

Shakes his head sadly. Was this article written by a clueless 18 year old high school dropout that sits in front of a computer screen all day playing video games? I got a better idea. Why don't we just eliminate the big 3 altogether and just have Toyotas and Hondas to drive. Thats what these morons ultimately want. Drive passionless boring clone generic appliances...no color, no style, clone like, machine like and blah. What a sad world we now live in.

[AMERICA 123]

Originally Posted by steverino

Saturn should go. It was Roger Smith's idea and in the final analysis all his ideas SUCKED

Not really.

The 'ideas' ( overall ) were fine - just needed a little tweaking.

The EXECUTION (overall) was pathetic.

[Buickman]

just announced...$2000- $3000 extra rebate by private offer thru mailed coupon, no list available. can you say "CORRUPTION" & "STUPIDITY"? compatible with GM discount and stackable with other incentives. WHY??????

[KingElvis]

Originally Posted by 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.

EXACTLY!!!!!!!!!!!!!!

Jeezuz, why do we need Saturn? Saturn has SUPER LOW VOLUME compared to other divisions. They're not very profitable, and Saturn has no 'brand' image anymore since they make a big SUV and mid size car.

[AMERICA 123]

Originally Posted by CJ Thunder

Simple question: How long has GM been around with more than 3 brands?

Yeah ok Shut up now.

Yep.

And going back to GMs earliest days - which are really the most relevant in terms of GMs current NA situation, ( best - not perfect fit ) exactly how many excellent brands did GM have to overcome to arrive at the 50s and 60s ?

How many more competitors came along successfully after GM found their 'initial formula' and ultimately were defeated either completely or by being greatly reduced ?

The most important critical factors that are different between the challenges that GM faces today in NA and the ones they faced during that first thirty five years are beyond their control so its gets down to developing strategy and TACTICS that will overcome their fundamental strategic disadvantage in the NA market.

If you look, they had a plan - it was looking ( somewhat arguably ) pretty good and much has already been accomplished.

Now, the operating environment has changed, and changed quickly - virtually every OEM has been caught out of step in the US by these changes and all of them , including GM have been busy reformulating their planning, their strategy, and their tactics for the future.

To suggest that Brand elimination in NA should be part of that is idiotic - as is this article's reasoning for it ; because it simply won't pass the back of the envelope financial test. ( Worldwide is a different topic )

( Recounting what others have already pointed out in this thread.................... we know that ................. )

The problem with this article in that regard is that while non quantified cost savings are suggested, even something as simple as the direct costs of brand elimination are not even mentioned, let alone addressed.

This does not include all the other 'costs' going forward - including lost business much less any kind of profit, revenue, or even expected market share considerations and effects .

Also no mention of GM's likely cash flow position over the next two to three years and how this also would be affected - adversely or that other aspects of GM's revitalization would necessarily experience lower funding levels at exactly the time they need, if anything, even more.

The three sentence justification offered here instead is Toyota and their success in this market using only three brands.

This is the most ridiculous aspect of the article and shows a great deal of deliberately employed omission by the author.

It does not even begin to account for any of the real factors behind Toyotas success in the USA, a Toyota success story not matched over Toyotas 'happy time' here - anywhere else , including Japan.

It also fails to account for Toyotas only relatively recent status as a full line manufacturer and other related aspects of their success that will not be available to them in the future. A future that even now they are openly contemplating with possibly a Prius line or 'sub' brand that would be allowed to become a full brand later .

The easiest way to see some of the limitations of a three brand strategy here and to start to get a feel for the MANY THINGS outside the number of brands that are the real factors behind Toyotas success is to consider Ford and Chrysler.

You can also look at the Europeans OEMs. Compare their marketshare history and experience in the US and how they've done virtually everywhere else.

Eventually a usable, universal explanation emerges that explains all the above and is pretty simple to understand.

Toyota, Honda, and Nissan's success here has had none to very little to do with their number of brands and channels .

And that brings us to the final lunacy in this articles brand elimination 'justification' .

Making GM into Toyota or even adopting Toyotas brand strategy in NA is doomed to failure because GM does not have a JAPAN INC. and a Yen subsidy behind it - its obviously quite the opposite.

Whatever else can be said about brand and channel management here there and everwhere , brand elimination in NA does not correct those fundamental disadvantages that GM faces in NA.

Playing an 8 brand 4 channel dealer system - even weakly to start - is exactly what you need to 'hang on' until your sales overseas and your NA product /powertrain programs produce enough money to do more with the brands themselves if preferred/supported later.

You can see it another way.

Does anyone here really doubt that if it was politically and socially acceptable , An 8 brand GM in NA would be kicking ass with product sourced from anywhere but here or Europe ?

[avdberg]

Here we go again. Some journo not knowing anything about developing cars, nor about the way to sell them and on top of that someone who has never stuck his nose outside the USA writes a stupid article and we all start discussing whether to kill the brands of .... And in the end there seems to be a reason for every GM brand to be killed.

Why?! And why are we falling for this?

If this journo is so smart then why is he not the CEO of GM, or Ford, or .....?

[scotted73]

Originally Posted by KingElvis

EXACTLY!!!!!!!!!!!!!!

Jeezuz, why do we need Saturn? Saturn has SUPER LOW VOLUME compared to other divisions. They're not very profitable, and Saturn has no 'brand' image anymore since they make a big SUV and mid size car.

Image - Just like Pontiac who is selling a small SUV, possibly a pick-up-car and clones of Chevrolets? Not to mention they sold a minivan. Their portfolio is all over the place. Unfortunately for Pontiac, direction and product that lives up to the name has been scarce.
Saturn sells well for its small dealership network of about 400. Sure Saturn doesn't sell in high volume - it's not suppose to.
The bigger cars were always needed shortly after the intro of their first cars. Families wanted to move up and couldn't, so they left the GM family.

[GMC-70]

Originally Posted by ponchoman49

Shakes his head sadly. Was this article written by a clueless 18 year old high school dropout that sits in front of a computer screen all day playing video games? I got a better idea. Why don't we just eliminate the big 3 altogether and just have Toyotas and Hondas to drive. Thats what these morons ultimately want. Drive passionless boring clone generic appliances...no color, no style, clone like, machine like and blah. What a sad world we now live in.

It was probably written by an overweight, know-everything, middle-aged man who of course drives a Toyota and was probably burned by a FWD early 80's GM product and hasn't "moved forward" since.

But your on the right track--LI is already largely comprised of boring, generic applicances already with the occasional idiot who drives a 10 year old Accord with a go-fast fart-box muffler extending 6 inches beyond the bumper.
Have you every heard anything more annoying then these mufflers?
Why--just why????

[ogg vorbis]

Originally Posted by windvale

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

can i nominate this rebuttal as the dumbest comment of 2008?

i also found it funny that one poster said he'd buy a mazda if gm stopped building pontiacs...ignoring the fact that there are other gm products on the same platform, with the same powertrains - a little more than a nameplate away. mazda is way out there.

he is absolutely correct: chevy is a melting pot...as are the other brands. every brand can't have their compact/midsize/crossover/sports car/suv. the problem comes from 8 brands trying to compete with several other marques that have a broad range in a single lineup. either you have an ecclectic chevy AND keep every other brand or give each brand their own niche.

gmc/hummer = trucks/suv, cadillac = mid/large upper mid/premium sedans, chevy = entry/mid level compact/mid/large sedans, corvette = sports cars. although you don't need saturn to take a global platform upscale...chevy can do it. mb reaches down in europe, caddi can do it in n/a.

the ev1 was a gm. gm started putting those little silver "GM" emblems on their cars...maybe they'll have bread and butter, mid, and premium GM brand cars? korea/china can produce the entry level, mexico can make mid lux cars, and canada make premium cars (since we have THE #1 plant in north america of ANY mfg).

[Geotpf]

GM should cut brands, but his list is dumb. Saab (domestically, at least), Saturn, and Hummer should be cut. Everything else stays. What is especially dumb on his list is cutting Pontiac and Buick but not GMC. Either all three go, or they all stay-they are very intermingled at this point and most dealers stock at least GMC and one of the other two if not all three.

[Geotpf]

Originally Posted by nsap

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

Saab and Hummer are nearly worthless. The only people who would be interested would be the Chinese, and even then I'm not sure they would actually pay anything for them. It would have to be like the Chrysler deal, where whoever is buying them basically gets them for free. Better to just shut them down, IMHO.

[Geotpf]

Originally Posted by AMERICA 123

I wonder what this author would have to say about Toyota brands & channels in the JDM.

Toyota has a 45.6% market share in Japan. If GM still had a 30%+ market share in the US, cutting brands wouldn't even be on the table.

Source:

http://www.toyota.co.jp/en/news/08/0423.html