Flint: Killing brands NOT the cure.

[nadepalma]

Source: http://www.thecarconnection.com/Auto...192.A9889.html

Flint: Killing Brands The Cure?
What good would it do? Not much.
by Jerry Flint (2006-01-16)



The idea of killing General Motors brands has come up again, this time from Jerry York.York was once a Chrysler financial officer but today he works for Kirk Kerkorian, who is a major stockholder in GM. And York could be Kirk's man on the GM board of directors one of these days.

He gave his ideas in a talk and interviews in Detroit and you read them here on TheCarConnection.com. Most of his ideas are on target. But he suggested that GM dump Saab and HUMMER. Wall Street analysts are always suggesting GM slim down this way, but usually they talk about killing Buick or Saturn or Pontiac.

Well, they are just wrong, even Jerry York.

First, York probably doesn't understand what's happening to Saab. It's being turned over to Opel, the German arm of GM. Future Saabs will be variations of Opel cars built in German factories. One day the Swedish Saab plant probably will shut, too. So the cost of this operation is being drastically reduced. It's not going to be a problem and opens the chance for GM Europe to sell some more upscale cars. The 38,000 or more cars Saab sells here are just an export bonus for what will be a German GM operation. And 2300 of last year's Saab sales were a Saab version of the Chevy TrailBlazer. If they can get that number up it will be a good bonus to the U.S. TrailBlazer/Envoy/Saab 9-7X platform sales here have, by the way, dethroned Ford's Explorer, its number-one SUV seller.

HUMMER is doing well with the H3, too, and that could grow from the 33,000 sales in part of last year, say to 50,000 or more. Those vehicles are built off the platform of GM's small Colorado pickup, a terrific bonus for the platform's production and those five-cylinder engines used in both vehicles. It's the way to make money.

Saturn, Pontiac and Buick: stayin' alive

As far as killing other divisions go, it doesn't make sense, either.

Saturn has four new models coming: the Sky roadster this spring for excitement (it's built off the Pontiac Solstice platform) will be the first. Then there are three more new models by year's end: a new Aura sedan, good-looking and patterned after a German Opel but built here; a new crossover SUV called the Outlook; and a hybrid version of the Vue SUV. Saturn's dealers are good and I figure that 2007 will be their comeback year, with closer to 300,000 sales than last year's 214,000. So why stop the recovery?

Pontiac had 438,000 sales last year, nearly ten percent of all GM sales here. Who would want to dump that kind of business? Sales could go up this year, too, with the new Torrent, a version of the Chevy Equinox.

Buicks still has problems. The new Lucerne sedan is in a tough market and the new Buick crossover still is 18 months away. But that's no reason to kill a famous name.

What some don't seem to understand is that a single GM plant doesn't just make a Buick or a Pontiac. Models of several divisions come from the same platform and run off the same assembly lines. If you eliminated the Pontiac Torrent, for example, there would be less volume for the factory that makes the Equinox and the Torrent. Kill Buick and you starve the factory making the Cadillac DTS and the Lucerne. The trick is to make distinctive models off the same platforms.

Chrysler shows the way

Chrysler has done an excellent job of this. In one plant, from one platform, it makes three different-looking cars: the Chrysler 300 and Dodge Charger sedans and the Dodge Magnum wagon. It might add the Dodge Challenger coupe some day. The plant runs three shifts at a 300,000 a year pace. That is how profits are made.

None of this means GM is out of trouble. But killing a line just loses customers and reduces plant volume. The trick for GM is to build distinctive vehicles from the same platforms.

Chrysler has a different challenge. It's 70 percent trucks, meaning minivans, pickups, and SUVS, but it's hard to see that volume growing. There's more competition all the time: a new big pickup from Toyota and GM's new pickups, all coming next fall; Korean minivans, and SUVs from everyone.

Chrysler's opportunity to grow is in cars. It's done a good job with those Chrysler 300s, and Dodge Magnum and Charger. Next will the Dodge Caliber to replace the Neon, but it's difficult to see sales reaching the 200,000-plus numbers of the old Neon. That's because the Plymouth division, which used to sell the Neon, too, was killed. But that's the challenge: more cars. Too bad they killed Plymouth. Two new Jeeps, built off that Caliber car platform, will be coming this year, too.

After that there will be replacements cars for the mid-size Dodge Stratus and Chrysler Sebring.

The way up is to grow, not to kill.

[megeebee]

Well stated. I just hope the domestics can save themselves. As the saying goes, there are only three things you need to succeed in any consumer products business: Product, product, and product.

[DuSpinnst]

It's about time someone in the Media with a brain said something like this

[mbukukanyau]

Agreed. Winning Sales and profits from Toyota, Honda, Nissan is the real cure.
NUFF SED!!!

[cfch3399]

Absolutely. Success<-->growth: more brands, more models, more makeovers. Failure<-->shrinking: cutting brands, cutting models, less updates.

[ChevroletTough]

amen guy who wrote the article, killing pontiac or saturn would be a HUGE mistake. Buick is so so, and saab can go. I think making less hummers would be ok, becasue there is nitche for them though it be very small, its still there.

[01cavalier]

I like this, he makes sense. A few years ago, it would have made more sense to suggest killing off a division. Still though, killing off Oldsmobile cut GM market share and sales, probably having more of a negative impat.

[Road Kill]

Unfortunately GM customers have more loyalty to the brands (Chev, Pont, etc) than they do to GM itself. Any models dropped will likely mean more lost customers to GM.

[Butz]

They could still badge Saab as Buicks in the US. That would add a youthfull car to the Buick lineup.

The 9-3 could become the new Skylark and 9-5 could become the Electra, just fix the interior to match Buick's design theme.

No one wants Saab in the US, keep'em in Europe.

[ByTheLake]

Funny how when Jerry Flint says something to defend GM, he's touted as a genius out here, but when he's critical of GM, the gang out here crucifies him.

Historically, I've always felt he's had good industry insight and is more right than wrong.

[Mikkoo]

Originally Posted by Butz

They could still badge Saab as Buicks in the US. That would add a youthfull car to the Buick lineup.

The 9-3 could become the new Skylark and 9-5 could become the Electra, just fix the interior to match Buick's design theme.

No one wants Saab in the US, keep'em in Europe.

Saab has a very loyal, but small customer base. Your comment about no one wanting a Saab is quite shallow. I'd say this, GM needs to decide if they should keep pumping money into Saab, as they continue to hemorrhage with no sign of profitability in sight.

[GMCtruck]

"HUMMER is doing well with the H3, too, and that could grow from the 33,000 sales in part of last year, say to 50,000 or more. Those vehicles are built off the platform of GM's small Colorado pickup, a terrific bonus for the platform's production and those five-cylinder engines used in both vehicles."

Now just imagine what all those people who are paying top dollar for an H3 would think if they knew they were really buying a Colorado pickup underneath all that fancy looking sheetmetal.

[04Malibu]

Originally Posted by ByTheLake

Funny how when Jerry Flint says something to defend GM, he's touted as a genius out here, but when he's critical of GM, the gang out here crucifies him.

Historically, I've always felt he's had good industry insight and is more right than wrong.

YES. Like when he predicted that 2005 would be a Ford Motor year. And that the Dodge Charger would outsell the 300. And that the UAW would not vote the concessions in health care and benifits. Yor are so right. Flint is a profit of this industry who is right on.

[ByTheLake]

Originally Posted by 04Malibu

YES. Like when he predicted that 2005 would be a Ford Motor year. And that the Dodge Charger would outsell the 300. And that the UAW would not vote the concessions in health care and benifits. Yor are so right. Flint is a profit of this industry who is right on.

You can pick and choose examples that will appear to support whatever position you like.

If you review his past articles at http://www.forbes.com/flint, I'd still say that he is more accurate than not.

[paul3230]

Yep...makes total sense. GM has to make products people want to buy...not kill off divisions.