Even if GM Wants to Sell off its Brands, Would there be any Buyers?

[Ming]

GM may try to shed brands, but market is tough
By Tom Krisher
AP Auto Writer / July 7, 2008

DETROIT—General Motors Corp. is reviewing its brands and may try to jettison some to raise money as it burns through cash at an alarming rate.

But industry analysts say buyer interest in the brands most likely to be sold -- Buick, Hummer, Saab and Saturn -- may be low due to a U.S. sales downturn brought on by high gasoline prices and a slow economy.

Also, analysts say, there are individual problems with some of GM's weaker nameplates.

While Hummer is unique in terms of engineering and manufacturing and could be sold, other brands share vehicle underpinnings and manufacturing and are so integrated it would be tough to sever them, David Healy, an auto analyst with Burnham Securities said.

He questioned whether there would be any buyers in the midst of a U.S. economic downturn.

Hummer might be attractive to a Russian or Indian automaker for its U.S. dealership network, said Mark Warnsman, an analyst with Calyon Securities.

Saturn could be of interest to another automaker that doesn't have a mainstream brand, and a luxury automaker might have the expertise to revive Sweden's Saab, analysts said. Buick might be a tougher sell, they said.

Buick and Saturn continue to struggle despite having revamped model lineups and some of GM's best vehicles, said Tom Libby, senior director of industry analysis for J.D. Power and Associates.

Saturn, born in 1990 as GM's small-car answer to the Japanese automakers, was remade over the past three years with more upscale models, but sales this year are down nearly 19 percent.

"Saturn, to me, it's got this identity problem," Libby said. "It's not clear what it is. That's not going to go away with a new owner."

Buick sales are down 21 percent so far this year, while Saab sales are down 29 percent.

Warnsman said GM already is consolidating brands by reducing the number of models and putting two or three brands into separate marketing operations.

JPMorgan analyst Himanshu Patel last week predicted GM will burn through $18 billion in 2008 and 2009 as it struggles with depressed U.S. sales.

GM has $24 billion in cash and $4.6 billion in credit on hand, he said, so it doesn't need to raise more money immediately. But he predicted the automaker will try to raise another $10 billion in the third quarter of this year by mortgaging trademarks, international operations and other assets.

Critics have said GM still has too much fat in its middle management, despite cutting white-collar employment to 32,000 last year from 44,000 in 2000. They also say the engineering, manufacturing and marketing costs are too high for it to keep all eight of its brands.

GM could simply cancel a brand like it did with Oldsmobile in 2004, but Warnsman said that was costly and something GM can't afford right now.

Source: http://www.boston.com/business/artic...hrinks/?page=2

[WishIhadatruck]

They could sell Saab or Hummer because they are such low volume it would hardly be missed in the US and have limited potential for high volumes.

The other brands really couldn't/shouldn't be sold. Any of the brands have a fair amount of brand equity that could be used by another company (a Chinese company for instance) and with great product could really steal a lot of GM customers. Lots of people have no idea who owns what and don't care, they just buy what they want and want it cheap. Closing down a brand would be cost enough market share. Selling the brand name would cost even more. It should be a last resort before bankruptcy perhaps.

[throwback]

I think they would find buyers. If you are PSA, Tata, Mahindra, or any Chinese brand and you want to come to the USA what are your choices? Start from scratch and build up your brand, or buy an established brand with name recognition (good or bad) and sell under that name. For example, PSA has great small cars, how about if they bought Saturn and started selling their cars here as Saturns. They could also buy the Spring Hill plant and get additional capacity here in the US at a time when the dollar is weak and transportation costs are high. I chose Saturn as my example because their dealer network is small and the dealers have gold plated reputations.

[Ming]

I guess the Chinese, Indian, etc. economies should be taken into consideration. It wasn't long ago that a Chinese company bought MG, and I can't imagine they are getting much volume from that.

Buying a brand like, say, Saturn, and getting instant access to all of the Saturn stand-alone dealerships would seem like a pretty sweet deal for a brand like Chery. They could slowly introduce their own imported cars, while keeping some deal in place with GM to continue outsourcing the production of existing Saturn cars for a couple of years.

Here's an idea that I'm not sure makes any sense, but might be worth considering:

How about "selling" Saturn to Opel, and Pontiac to Holden? Opel and Holden each would run the two brands as if they were Import transplants like Mitsubishi or Suzuki. The financial successes or woes of Saturn and Pontiac would be tied to Opel and Holden respectively.

Pontiac, a Division of Holden.
Saturn, a Division of Adam Opel AG.
GMC, a Division of GM do Brasil
Buick, a Division of Shanghai GM

That kind of thing.

Potentially it could take those brands off of "the books" for GM USA.

Probably nonsense, but it's an idea.

[Sal Collaziano]

Those are some pretty interesting ideas there...

Originally Posted by Ming

I guess the Chinese, Indian, etc. economies should be taken into consideration. It wasn't long ago that a Chinese company bought MG, and I can't imagine they are getting much volume from that.

Buying a brand like, say, Saturn, and getting instant access to all of the Saturn stand-alone dealerships would seem like a pretty sweet deal for a brand like Chery. They could slowly introduce their own imported cars, while keeping some deal in place with GM to continue outsourcing the production of existing Saturn cars for a couple of years.

Here's an idea that I'm not sure makes any sense, but might be worth considering:

How about "selling" Saturn to Opel, and Pontiac to Holden? Opel and Holden each would run the two brands as if they were Import transplants like Mitsubishi or Suzuki. The financial successes or woes of Saturn and Pontiac would be tied to Opel and Holden respectively.

Pontiac, a Division of Holden.
Saturn, a Division of Adam Opel AG.
GMC, a Division of GM do Brasil
Buick, a Division of Shanghai GM

That kind of thing.

Potentially it could take those brands off of "the books" for GM USA.

Probably nonsense, but it's an idea.

[mrgto]

Originally Posted by Ming

I guess the Chinese, Indian, etc. economies should be taken into consideration. It wasn't long ago that a Chinese company bought MG, and I can't imagine they are getting much volume from that.

Buying a brand like, say, Saturn, and getting instant access to all of the Saturn stand-alone dealerships would seem like a pretty sweet deal for a brand like Chery. They could slowly introduce their own imported cars, while keeping some deal in place with GM to continue outsourcing the production of existing Saturn cars for a couple of years.

Here's an idea that I'm not sure makes any sense, but might be worth considering:

How about "selling" Saturn to Opel, and Pontiac to Holden? Opel and Holden each would run the two brands as if they were Import transplants like Mitsubishi or Suzuki. The financial successes or woes of Saturn and Pontiac would be tied to Opel and Holden respectively.

Pontiac, a Division of Holden.
Saturn, a Division of Adam Opel AG.
GMC, a Division of GM do Brasil
Buick, a Division of Shanghai GM

That kind of thing.

Potentially it could take those brands off of "the books" for GM USA.

Probably nonsense, but it's an idea.

Yup, nonsense.

[WishIhadatruck]

Originally Posted by Ming

Pontiac, a Division of Holden.
Saturn, a Division of Adam Opel AG.
GMC, a Division of GM do Brasil
Buick, a Division of Shanghai GM

That kind of thing.

Potentially it could take those brands off of "the books" for GM USA.

Probably nonsense, but it's an idea.

Interesting idea. Perhaps in a bankrupcy plan? Kind of like Delphi North America went bankrupt while the rest of the company (internationally) continued on unaffected.

[paul8488]

Originally Posted by Ming

Ha! Nosedive!

[BigThreeForever]

The Chinese and Indian "no-name" manufacturers are the obvious candidates. They will probably acquire the nameplates when GM goes into bankruptcy, a la MG Rover. When, no longer if.

Ditto for Chrysler.

What they will do with those nameplates is another kettle of fish.

[TriShield]

No.

GM's brands have zero value to any other automaker. They are also too closely associated with GM itself and GM has managed them all into obscurity. They are all very weak to completely irrelevent in the marketplace.

HUMMER is pretty much the only brand GM could have sold off but with fuel prices as they are it's value disappeared overnight.

If someone picks up a GM 'brand' it will be for the established dealer network, but then again if you're a new automaker what's to stop you from franchising GM's disenfranchised dealers and bypassing dealing with GM at all?

[Ambalanche]

Originally Posted by Ming

While Hummer is unique in terms of engineering and manufacturing and could be sold, other brands share vehicle underpinnings and manufacturing and are so integrated it would be tough to sever them, David Healy, an auto analyst with Burnham Securities said.
[/IMG]

This is what I was talking about in Big Al's Rant about the media not doing their homework. How is Hummer unique in terms of engineering and manufacturing? Yes, the original H1 was a civilianized HumVee, but the H2 is based on the GMT800 platform and it is built by AMGeneral and the H3 is built in Shreveport, LA on a modified Colorado platform, hardly unique from any other division. The media is clueless, but more importantly, they don't care, the sheeple will believe anything they tell them!!

[Markld74]

Originally Posted by throwback

I think they would find buyers. If you are PSA, Tata, Mahindra, or any Chinese brand and you want to come to the USA what are your choices? Start from scratch and build up your brand, or buy an established brand with name recognition (good or bad) and sell under that name. For example, PSA has great small cars, how about if they bought Saturn and started selling their cars here as Saturns. They could also buy the Spring Hill plant and get additional capacity here in the US at a time when the dollar is weak and transportation costs are high. I chose Saturn as my example because their dealer network is small and the dealers have gold plated reputations.

GM could set-up a product deal that they can sell the current Saturn vehicles for say 3 years then they have to produce there own. Same could be done with Saab & Hummer. Maybe GM should look at making it a package deal, then with those three brands. Then a company that wants into the USA gets an entry level car brand, truck and luxury line. For a package like that GM could get a lot more money, they could then put it into R&D for Buick (Affordable FWD Luxury), Pontiac(Affordable FWD&AWD Fuel Efficient Performance for Every Day), Cadillac (High End Luxury RWD & AWD) and Chevrolet (Full Line Everyday Cars and Trucks with V8 RWD Performance -Corvette & Camaro). GMC is just a carbon copy of Chevy Trucks, so either it will die and go away or needs to have a complete overhaul. Also those 3 brands would have little negative impact on GM's market share, as long as they market the change and get some new product to replace the lost brands to the kept brands.

[FierySolstice]

I would first find buyers for Hummer and Saab and then go from there. I would also cut back on truck and large SUV production right now until the price of oil stabilizes. I would definitely get to work on compact and sub-compact cars. These might be able to save GM.

[mgescuro]

Absolutely there would be buyers -- mainly in India or in the Far East.
And the primary reason is to get a foothold in the US Market -- still the largest auto market on the planet.

Pontiac, Buick, Saab could easily be sold off.

IF GM plans on doing more than axing or selling HUMMER, then they would need to do a strategic review of their options. They just can't sell a brand to someone. That would give a stronger, more adept company a foothold in GM's territory.

[ksr]

I think there's still a lot of value in the Buick and Pontiac names. If someone bought them and then made a big advertising push about the "All-new Pontiacs" or "Buick Reborn!" or "What Buick Was Meant To Be!" then I think they could be quite successful. It could definitely provide an entry into the market for a brand like Tata.

I think there's a lot more residual affection for those brands than it now seems. I think people's perception of those brands is that they just don't offer good products, true Buicks and Pontiacs, anymore. Sometimes that's been true, sometimes not.

Saab and Saturn are a tougher sell. Hummer has some value, but gas prices hurt it.