GM's Larson: 3-brand channel strategy works

adplusone · 08-10-2006, 10:32 AM

Jamie LaReau | | Automotive News / August 9, 2006 - 2:06 pm

DETROIT -- By year end, General Motors expects nearly three-quarters of monthly sales for Pontiac, Buick and GMC to come from channeled dealerships selling all three brands.

"We're making great progress," said John Larson, GM's general manager of Pontiac-Buick-GMC. He said 60 to 65 percent of monthly sales "are from dealers who are on channel."

"It would not be unreasonable," Larson said, "to say that by the end of this year, it'll be closer to 70 percent."

He said he expects that number to grow to 80 percent within the next two years. Last year just over half - 56 percent - of all monthly sales came from dealerships that sold Pontiac, Buick and GMC.

GM started to press dealers to get "on channel" last year, although the idea has existed for many years. The plan is meant to align the three brands' products, trimming redundant models but giving an on-channel dealer a broad portfolio. Larson said that will improve GM and dealer profits.

In an interview earlier this year with Automotive News, Bob Lutz, GM's vice chairman of global product development, said Buick will offer luxury sedans; Pontiac will be mostly sporty and performance cars, and GMC will consist of trucks only.

Larson confirmed that Pontiac will offer mostly rear-wheel-drive performance cars, but he said he would not rule out an SUV-like product. "Bob was pretty fair in his statement, but there's a blurry line between cars and trucks these days," Larson said.

He intends to push for a Chevrolet Camaro-type product for Pontiac possibly to replace the GTO. Pontiac will kill the GTO at the end of this model year.

Long term, Larson said he sees the three brands' success being measured more by total retail sales across all three divisions rather than by year-to-year comparisons. That's because the individual brands' lineups will be more focused, offering fewer products, so comparisons to years past would be unrealistic, he said.

"We don't want to be another commodity out there," Larson said. Channeling "allows us clear, precise definition about what our products need to be - and because we have only say 12 products, you better get it right."

You may e-mail Jamie LaReau at jlareau@crain.com

ByTheLake · 08-10-2006, 11:22 AM

Quote:

Originally Posted by adplusone

Jamie LaReau | | Automotive News / August 9, 2006 - 2:06 pm

DETROIT -- By year end, General Motors expects nearly three-quarters of monthly sales for Pontiac, Buick and GMC to come from channeled dealerships selling all three brands.

Does that statistic really mean anything? I'm more interested in learning whether Buick/Pontiac/GMC brand sales are rising or whether they are slipping.

Having all 3 brands in all of the stores means that it would also be much easier to shut-down one of those brands in the future, if GM ever felt it needed to. There would be few physical stores closing and fewer legal issues with dealers.

Cortazzo · 08-10-2006, 11:32 AM

Quote:

Originally Posted by ByTheLake

Does that statistic really mean anything? I'm more interested in learning whether Buick/Pontiac/GMC brand sales are rising or whether they are slipping.

Having all 3 brands in all of the stores means that it would also be much easier to shut-down one of those brands in the future, if GM ever felt it needed to. There would be few physical stores closing and fewer legal issues with dealers.

But realistically, why would they shut down either Buick or Pontiac, that would leave a gaping whole in the distribution channel that one of the other brands couldn't fill realistically. Pointac nor GMC can sell a luxury sedan, and GMC nor Buick and sell a sports car for example. I don't think GM plans to shut any of them down, because it really wouldn't be in their best interest to do so.

Bornfromparents · 08-10-2006, 11:40 AM

this is good because it allows GM to focus on cars and trucks and not on keeping whining dealers happy with rebadges. Now they can build with same platform but unique vehicles that are taylored to the prospective
clients.

**mgescuro** · 08-10-2006, 11:45 AM

Quote:

Originally Posted by Cortazzo

But realistically, why would they shut down either Buick or Pontiac, that would leave a gaping whole in the distribution channel that one of the other brands couldn't fill realistically. Pointac nor GMC can sell a luxury sedan, and GMC nor Buick and sell a sports car for example. I don't think GM plans to shut any of them down, because it really wouldn't be in their best interest to do so.

Because, realistically... if you shut down Buick or POntiac or GMC, it wouldn't be unreasonable for Chevy and/or Cadillac to pick up the slack.

Cadillac can sell a luxury sedan and luxury truck. That takes care of Buick and Denali.
Chevy can take over Pontiac and regular GMC.

tgagneguam · 08-10-2006, 11:46 AM

I do think ByTheLake brings up reasonable points, though I think there would be no reason to close any divisions if GM set to the task of making class-leading products with every redesign. They're not there yet, which makes the possibility of having to close another division-as much as I disagree with that-more likely. And combining sales channels makes the process all that easier. Hedging their bets, perhaps?

racy · 08-10-2006, 11:46 AM

Pontiac is a goner. The writing is on the wall.

Chevy can easily assume the Solstice, as they have room. The rest of the Pontiac brands with the exception of the G6 are dead on the vine. The G6 is still a wildcard - decent car, botched marketing execution. It ranks at about 5th best in class, yet has the potential to be a top contender. It'll be interesting to see what GM does with it.

I just don't see a business case justifying the "Pontiac Rebadge Division". If there ever was a time when I'd side with the beancounters, it would be with the decision to delete Pontiac.

asim · 08-10-2006, 11:50 AM

Quote:

Originally Posted by ByTheLake

Does that statistic really mean anything? I'm more interested in learning whether Buick/Pontiac/GMC brand sales are rising or whether they are slipping.

Having all 3 brands in all of the stores means that it would also be much easier to shut-down one of those brands in the future, if GM ever felt it needed to. There would be few physical stores closing and fewer legal issues with dealers.

I don't think they are closing down GMC anytime soon.

Greg Burr · 08-10-2006, 12:18 PM

Racy:
... I just don't see a business case justifying the "Pontiac Rebadge Division". If there ever was a time when I'd side with the beancounters, it would be with the decision to delete Pontiac.[/quote]

Having so many divisions, and dealerships selling only one brand, leads to the rebadging so that every dealer has something to sell. That's wasteful .This new strategy takes away the need for that.

I once thought Pontiac should be killed, now I think it should be utilized as a distribution channel sell more Holdens. It should shrink into a boutique brand, be more like "Pontiac Motor Sports", except I'm not crazy about the initials "PMS". This does more justice to the heritage and image of the brand.

From a beancounting standpoint, it's wasteful to throW away band equity that demonstrably has net future economic benefit. Leverage the Pontiac brand to sell different product, like Holden It's incomprehensible to sink so much into Holden only to support ANZ and England.

KingElvis · 08-10-2006, 12:55 PM

The problem isn't having lots of divisions, the problem is "copycat" or rebadge vehicles. By reducing the number of platforms used by each division, you get rid of the intra-GM competition.

It's really not hard to imagine a world where Pontiac has maybe a G6 type car and a 'zeta' GTO/coupe and Buick has an affordable (neo-Special) Lacrosse type sedan and a luxury zeta sedan - just four cars on three platforms - so none are fighting against eachother.

kenman923 · 08-10-2006, 12:59 PM

I would like to think of it as a one stop shop.

jae1987 · 08-10-2006, 01:30 PM

I'm kinda sad to hear that my local Pontiac dealership is going to consolidate or close. It is the last one in the county I think that sells only Pontiac's, and they're good at it. I hate going to huge mega dealerships like Al Serra in Grand Blanc they seem so impersonable. I want to fell like the salesteam is working for my business not just waiting for the next person to come through if they don't like me. But that is just me.

Havasavana · 08-10-2006, 01:32 PM

It would be interesting to see breakouts of sales by GM brand, geographic area, distance from another dealer, etc. I'd think this kind of info, in addition to total sales by brand of course, might be significant for GM in deciding what to do. In more sparsely populated areas, farm country, there are lots of small dealers. The fact that they're small limits the inventory they can afford of course, but small dealers can survive with lower volume and people like having a dealer nearby, and they get lots of business just due to proximity. And many of these dealers have long histories with the people they serve. Killing these dealers might well result in lots of lost sales to GM. Chances are there's a small Ford dealer right up the road.

mbukukanyau · 08-10-2006, 01:56 PM

Quote:

Originally Posted by Greg Burr

Quote:

Originally Posted by Greg Burr

Racy:
... I just don't see a business case justifying the "Pontiac Rebadge Division". If there ever was a time when I'd side with the beancounters, it would be with the decision to delete Pontiac.

Having so many divisions, and dealerships selling only one brand, leads to the rebadging so that every dealer has something to sell. That's wasteful .This new strategy takes away the need for that.

I once thought Pontiac should be killed, now I think it should be utilized as a distribution channel sell more Holdens. It should shrink into a boutique brand, be more like "Pontiac Motor Sports", except I'm not crazy about the initials "PMS". This does more justice to the heritage and image of the brand.

From a beancounting standpoint, it's wasteful to throW away band equity that demonstrably has net future economic benefit. Leverage the Pontiac brand to sell different product, like Holden It's incomprehensible to sink so much into Holden only to support ANZ and England.

you can
A-Kill the brand
B-Rebadge
C-Import Holdens

What do you think would add to shareholders value?

56 Starchief · 08-10-2006, 01:57 PM

Quote:

Originally Posted by mgescuro

Because, realistically... if you shut down Buick or POntiac or GMC, it wouldn't be unreasonable for Chevy and/or Cadillac to pick up the slack.

Cadillac can sell a luxury sedan and luxury truck. That takes care of Buick and Denali.
Chevy can take over Pontiac and regular GMC.

it didnt work for oldsmobile--GM has openly regretted it because they just lost those customers...

customers still dont see GM as GM. they will move on like they did after olds.

08-10-2006, 10:32 AM	#1 (permalink)
adplusone 3.8 Liter Supercharged V6 Join Date: Oct 2005 Location: Texas Drives: Long Time Chevy Driver Posts: 672	GM's Larson: 3-brand channel strategy works Jamie LaReau \| \| Automotive News / August 9, 2006 - 2:06 pm DETROIT -- By year end, General Motors expects nearly three-quarters of monthly sales for Pontiac, Buick and GMC to come from channeled dealerships selling all three brands. "We're making great progress," said John Larson, GM's general manager of Pontiac-Buick-GMC. He said 60 to 65 percent of monthly sales "are from dealers who are on channel." "It would not be unreasonable," Larson said, "to say that by the end of this year, it'll be closer to 70 percent." He said he expects that number to grow to 80 percent within the next two years. Last year just over half - 56 percent - of all monthly sales came from dealerships that sold Pontiac, Buick and GMC. GM started to press dealers to get "on channel" last year, although the idea has existed for many years. The plan is meant to align the three brands' products, trimming redundant models but giving an on-channel dealer a broad portfolio. Larson said that will improve GM and dealer profits. In an interview earlier this year with Automotive News, Bob Lutz, GM's vice chairman of global product development, said Buick will offer luxury sedans; Pontiac will be mostly sporty and performance cars, and GMC will consist of trucks only. Larson confirmed that Pontiac will offer mostly rear-wheel-drive performance cars, but he said he would not rule out an SUV-like product. "Bob was pretty fair in his statement, but there's a blurry line between cars and trucks these days," Larson said. He intends to push for a Chevrolet Camaro-type product for Pontiac possibly to replace the GTO. Pontiac will kill the GTO at the end of this model year. Long term, Larson said he sees the three brands' success being measured more by total retail sales across all three divisions rather than by year-to-year comparisons. That's because the individual brands' lineups will be more focused, offering fewer products, so comparisons to years past would be unrealistic, he said. "We don't want to be another commodity out there," Larson said. Channeling "allows us clear, precise definition about what our products need to be - and because we have only say 12 products, you better get it right." You may e-mail Jamie LaReau at jlareau@crain.com __________________ Long time Chevy driver. Viva Tejas!

08-10-2006, 11:40 AM	#4 (permalink)
Bornfromparents 3.6 Liter V6 Join Date: Feb 2006 Posts: 1,028	Re: GM's Larson: 3-brand channel strategy works this is good because it allows GM to focus on cars and trucks and not on keeping whining dealers happy with rebadges. Now they can build with same platform but unique vehicles that are taylored to the prospective clients.

08-10-2006, 11:46 AM	#6 (permalink)
tgagneguam 7.0 Liter LS7 V8 Join Date: Aug 2003 Posts: 6,951	Re: GM's Larson: 3-brand channel strategy works I do think ByTheLake brings up reasonable points, though I think there would be no reason to close any divisions if GM set to the task of making class-leading products with every redesign. They're not there yet, which makes the possibility of having to close another division-as much as I disagree with that-more likely. And combining sales channels makes the process all that easier. Hedging their bets, perhaps?

08-10-2006, 11:46 AM	#7 (permalink)
racy 6.0 Liter Vortec V8 Join Date: Dec 2003 Posts: 1,645	Re: GM's Larson: 3-brand channel strategy works Pontiac is a goner. The writing is on the wall. Chevy can easily assume the Solstice, as they have room. The rest of the Pontiac brands with the exception of the G6 are dead on the vine. The G6 is still a wildcard - decent car, botched marketing execution. It ranks at about 5th best in class, yet has the potential to be a top contender. It'll be interesting to see what GM does with it. I just don't see a business case justifying the "Pontiac Rebadge Division". If there ever was a time when I'd side with the beancounters, it would be with the decision to delete Pontiac. Last edited by racy : 08-10-2006 at 11:55 AM.

08-10-2006, 12:18 PM	#9 (permalink)
Greg Burr 3.8 Liter Supercharged V6 Join Date: Mar 2006 Location: Los Angeles, CA Drives: 2003 Ford Escape XLT AWD Posts: 720	Re: GM's Larson: 3-brand channel strategy works Racy: ... I just don't see a business case justifying the "Pontiac Rebadge Division". If there ever was a time when I'd side with the beancounters, it would be with the decision to delete Pontiac.[/quote] Having so many divisions, and dealerships selling only one brand, leads to the rebadging so that every dealer has something to sell. That's wasteful .This new strategy takes away the need for that. I once thought Pontiac should be killed, now I think it should be utilized as a distribution channel sell more Holdens. It should shrink into a boutique brand, be more like "Pontiac Motor Sports", except I'm not crazy about the initials "PMS". This does more justice to the heritage and image of the brand. From a beancounting standpoint, it's wasteful to throW away band equity that demonstrably has net future economic benefit. Leverage the Pontiac brand to sell different product, like Holden It's incomprehensible to sink so much into Holden only to support ANZ and England. Last edited by Greg Burr : 08-10-2006 at 01:49 PM.

Remove Advertisements Sponsored Links
GM Inside News Forum Advertisement

08-10-2006, 12:55 PM	#10 (permalink)
KingElvis 6.0 Liter Vortec V8 Join Date: Feb 2003 Posts: 1,637	Re: GM's Larson: 3-brand channel strategy works The problem isn't having lots of divisions, the problem is "copycat" or rebadge vehicles. By reducing the number of platforms used by each division, you get rid of the intra-GM competition. It's really not hard to imagine a world where Pontiac has maybe a G6 type car and a 'zeta' GTO/coupe and Buick has an affordable (neo-Special) Lacrosse type sedan and a luxury zeta sedan - just four cars on three platforms - so none are fighting against eachother.

08-10-2006, 12:59 PM	#11 (permalink)
kenman923 6.2 Liter Vortec V8 Join Date: Feb 2005 Drives: 2009 Acura TSX Posts: 2,632	Re: GM's Larson: 3-brand channel strategy works I would like to think of it as a one stop shop. __________________ Current: 2009 Acura TSX Gone but not forgotten: 2001 Saturn L300 1993 Saturn SL2 1986 Nissan Sentra

08-10-2006, 01:30 PM	#12 (permalink)
jae1987 3.5 Liter V6 Join Date: Feb 2006 Location: Michigan Drives: 1998 Chevy Silverado 200k miles and still running Posts: 201	Re: GM's Larson: 3-brand channel strategy works I'm kinda sad to hear that my local Pontiac dealership is going to consolidate or close. It is the last one in the county I think that sells only Pontiac's, and they're good at it. I hate going to huge mega dealerships like Al Serra in Grand Blanc they seem so impersonable. I want to fell like the salesteam is working for my business not just waiting for the next person to come through if they don't like me. But that is just me.

08-10-2006, 01:32 PM	#13 (permalink)
Havasavana 6.0 Liter Vortec V8 Join Date: Nov 2004 Drives: 03 GMC Savana 91 Honda CRX Posts: 1,688	Re: GM's Larson: 3-brand channel strategy works It would be interesting to see breakouts of sales by GM brand, geographic area, distance from another dealer, etc. I'd think this kind of info, in addition to total sales by brand of course, might be significant for GM in deciding what to do. In more sparsely populated areas, farm country, there are lots of small dealers. The fact that they're small limits the inventory they can afford of course, but small dealers can survive with lower volume and people like having a dealer nearby, and they get lots of business just due to proximity. And many of these dealers have long histories with the people they serve. Killing these dealers might well result in lots of lost sales to GM. Chances are there's a small Ford dealer right up the road.

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode