GM takes a page from Darwin

[Globalist]

GM takes a page from Darwin
LaNeve: Strong brands win, weak brands lose product

By Jason Stein
Automotive News / May 23, 2005

Brand (re)building
To revamp its products, GM will
Offer a full line of vehicles for Chevrolet
Position Cadillac as a rival to foreign luxury brands
Create a narrower line of products for Pontiac, Saab and Buick
Take Saturn upscale
Consolidate Buick, Pontiac and GMC franchises under one roof


DETROIT -- Mark LaNeve is offering a wake-up call to General Motors' 300 stand-alone Buick and Pontiac dealerships: GM is downsizing its product lineup.

Buick-Pontiac-GMC dealerships will have a full range of products; stand-alone dealerships will not.

Over the past month, LaNeve, GM North America's vice president of vehicle sales, service and marketing, has explained his plan to nearly 3,000 dealers.

"We're not going to put a bullet to anyone's head saying you have to do this," LaNeve said last week during an interview with Automotive News.

But "we're not designing the portfolio for stand-alone Buick dealers," he said. "You might make it as a stand-alone if you're really good in the right market. But the business opportunity of all three is where you'll really see profits."

As of Jan. 1, Buick had 198 stand-alone dealerships, while Pontiac had 110. There were 168 GMC stand-alone stores. By contrast, there were 784 Buick-Pontiac-GMC stores and 245 Pontiac-GMC stores.

In an interview with Automotive News on March 23, LaNeve enunciated his plan to eliminate product clones. At the time, GM had just issued a downbeat earnings forecast. And during a question-and-answer session at the New York auto show, GM Vice Chairman Robert Lutz had called Pontiac and Buick "damaged brands."

LaNeve subsequently assured dealers that those brands would survive. But GM concluded that it had to accelerate its plans to eliminate product clones.

That plan has been "turbocharged in the last six months -- especially in the last 60 days," LaNeve said.

No clones

In the past, GM gave brands their own versions of the same vehicle -- creating an overlapping product lineup and confusion in the marketplace.

For instance, Buick offers the Terraza minivan, and Pontiac sells the Montana SV6 minivan. Meanwhile, Chevrolet markets the Uplander minivan, and Saturn sells the Relay. Those minivans are built on the same underpinnings.

In the future, LaNeve said, GM might not have minivans for Pontiac and Buick.

Chevrolet and Cadillac dealers expect to benefit from the Darwinian product strategy that is taking shape. Last week in New York, LaNeve outlined GM's plans for Chevrolet and Cadillac.

"Strong brands win; weak brands lose," he said during a speech to the International Motor Press Association. "End of story."

Successful automakers "are anchored by a great volume brand at one end and a great premium brand at the other," LaNeve said. "In our case, (that's) Chevrolet and Cadillac."

LaNeve's comments are borne out by GM's U.S. sales figures for the year to date. Despite GM's 4.9 percent sales decline through April, Cadillac is up 4.0 percent and Chevrolet is up 1.1 percent.

But not everyone agrees with La-Neve's approach. Conrad Darby, owner of Darby Buick in Sarasota, Fla., says, "If GM is adapting a strategy of survival of the fittest, I don't know if that helps dealer morale."

GM's product strategy makes sense to megadealer Jack Fitzgerald, who sells all GM brands except Saturn and Hummer at three of his 12 dealerships in suburban Washington.

"Chevy is doing OK, and Cadillac is doing better," says Fitzgerald, who has sold cars for 50 years.

Chevy, Cadillac prosper

The elimination of GM's product clones is "probably a good strategy," Fitzgerald says. "GM makes too many different cars. You can't stock all of them or focus on all of them. Reducing models will save money."

GM's old strategy of me-too products isn't working anymore for Buick, Pontiac and Saturn. Each reports declining U.S. sales.

Lynn Thompson, co-owner of Thompson Pontiac-GMC-Cadillac-Saab in Springfield, Mo., says his Cadillac and Saab sales are up substantially over last year.

But his Pontiac and Buick franchises are suffering, and his store's overall sales are down 20.0 percent from his original forecast. At a meeting last week of 20 Pontiac dealers from around the country, Thompson learned that other Pontiac dealers are struggling, too.

"Not everyone is making more," says Thompson, who is the former co-chairman of GM's national dealer council. "We get fat and sassy when things get real good. Only when things slow down do we start to pay attention."

Peter Brown, Gail Kachadourian, David Kushma and Jamie LaReau contributed to this report

You may e-mail Jason Stein at jstein@crain.com

[gacSTclass]

Good for GM. Single brand Pontiac, Buick, and GMC dealerships need to bite the bullet and get a second brand.

[dindak]

I generally agree with this strategy. No more killing brands, Oldsmobile's death cost 1.5 - 2 points of market share.

Better a smaller and lean brand than no brand at all.

[AJR]

We have a stand alone Buick dealer in town. He has been like that since AMC left the market. We could never figure out why he never went after the Pontiac or GMC brands. Now, it seems like a good idea. Since the Chevy and Ford dealers left years ago, the only competition in town is the Chrysler/Dodge dealership. GMC would allow him to better compete for the truck market and Pontiac would allow him to sell lower priced cars. The older, loyal individuals have kept him in business by buying Buicks. I think it is time for him to expand. Mark LaNeve is right.

[uujjj]

Halleluja! We have a strategy!

Merging Pontiac, Buick, and GMC seems a better idea than killing brands. Then, the combined Pontiac/Buick/GMC can have a full lineup with each portion filled by one brand.

[ROCNDAVE]

Not that Camaro is coming back anytime soon, but I guess this definatley means no Firebird.

D

[SSrevolution]

Originally Posted by Globalist

Offer a full line of vehicles for Chevrolet

You call that a full line of vehicles? What a joke. Think about the holes! No hybrids, no full sized rwd car, and biggest of all no pony car.

[joe1280]

Originally Posted by SSrevolution

You call that a full line of vehicles? What a joke. Think about the holes! No hybrids, no full sized rwd car, and biggest of all no pony car.

The Corvette's got enough ponies.

Eliminate me-too cars. Good Strategy. But at the same time the Torrent comes out this fall. Are they going to kill that? Or the Saturn Sky?

[SSrevolution]

Originally Posted by joe1280

No pony car? What do you call the Corvette, an economy car?

Do you even know what a pony car is? A Pony car is a sub compact (smaller than midsized) V8 car. I.E. Camaro, Mustang, 'Cuda, Challenger.

[djbango]

Originally Posted by SSrevolution

Do you even know what a pony car is? A Pony car is a sub compact (smaller than midsized) V8 car. I.E. Camaro, Mustang, 'Cuda, Challenger.

hahahaha...now that was funny

[TriShield]

There may be hope for GM yet, but a brand or two will still die eventually.

[ethayes]

GM kills the high volume youth oriented uniquely designed Sunfire and it wonders why sales are down.

GM desides to invest in Cadillac for prestige and Chevy for volume first. "And then we will revive our middle brands" And now it wonders why sales of the middle are down.

Buick and Pontiac are alive and kicking it was the product that was dying, starved or being killed all together.

And every Buick that has been recognized in the past 2 weeks either is on the way out or like the Rainier, according to LaNeve we wish it was out.

Just make the Velite and Solstice and every other car in the portfolio in thier image and sales will revive the dormant brands.

[Mach9k]

Pontiac Buick and GMC would do much better if they weren't being ignored most of the time. If they actually took the time and put a real effort into it, I'm sure Buick could have as big of a comeback as Cadillac did, even better...

They really need to stop focusing solely on Cadillac and Chevrolet all the time and to actually remember that they have many other brands that can be much more than rebadged Chevys.

What ever happened to "A car for everyone"?

[joe1280]

Originally Posted by SSrevolution

Do you even know what a pony car is? A Pony car is a sub compact (smaller than midsized) V8 car. I.E. Camaro, Mustang, 'Cuda, Challenger.

sub compact?!? i don't exactly know what that means. But by your definition, the Monte Carlo is a pony car (2006).

[princecharmless]

wait a minute...with gm wanting to downsize buick and pontiac models to four that means no velite...
see:
lausanne(velite sedan)(invicta as it has been rumored to be called)
lucerne
lacrosse
rainier(probaly will be cut in favor of the new rendezvous(or replacement)
rendezvous

no room for velite.