Theory why American Automakers are in trouble

[vcs2600]

Changes in income distribution.



In the modern American economy, certain segments and people are doing much better than others. The above graph shows that it is true that "the rich are getting richer and the poor are getting poorer", and even more notably that isn't happening in other national economies.

I marked certain auto brands on the graph, because every brand has a particular positioning. Chevy was always considered an 'entry' or 'everyman' brand while BMW is considered 'new money'. Now what happens when the everyman gets the squeeze and there's a whole lot more new money? From the graph, the results are obvious.

I hope this thread doesn't get political, at least in the partisan sense. Obviously there's a lot of functional problems with the american economy, and IMO both parties and candidates at least recognize it. I think it's a more fundamental question at least.

[t-rex]

And people wonder why I so strongly push moving Buick into the lucrative mid-lux segment, and mgescuro's push for a truly prestigious Cadillac.

This is the very argument I've used to justify burying Pontiac... a dwindling customer base. Upscale buyers simply will never, ever buy anything with a Pontiac badge, and Pontiac's traditionally blue-collar customer base has been losing purchasing power for quite a while now.

Americans need to wake up and smell the coffee, and quit bickering over stupid non-issues like same-sex marriage and imaginary threats from anywhere and everywhere.

Detroit isn't going to go under because of rap music, drugs, g*ys getting married, or people not going to church every Sunday. It'll go under because the poeple of this country allowed the corporate bigwigs to ship their jobs overseas and then throw them to the dogs.

[vcs2600]

t-rex, I agree completely. If you can predict the income distribution, "Brand Management" becomes an easier problem. I think the evidence is that GM/Ford didn't foresee this and low-balled their brands below the growth segments.

[2648562]

Originally Posted by t-rex

And people wonder why I so strongly push moving Buick into the lucrative mid-lux segment, and mgescuro's push for a truly prestigious Cadillac.

This is the very argument I've used to justify burying Pontiac... a dwindling customer base. Upscale buyers simply will never, ever buy anything with a Pontiac badge, and Pontiac's traditionally blue-collar customer base has been losing purchasing power for quite a while now.
.

Very true.

[t-rex]

Maybe that's what went wrong with Saturn. GM correctly guaged the need for a brand with a nice price cushion above Chevrolet, but perhaps misguaged just how low-rent the Saturn name was with most buyers.

The question is though, is Saturn's floundering sales because of product, brand name, or possibly another cause, such as lack of dealers? Would the Saturn products have had more success if sold under a different brand, say Opel? I was honestly very surprised recently to see how many people here on GMI supported the idea of GM selling Opels as Opels in this country.

My wife's contention is that GM should have scuttled the Saturn brand entirely — given its image with the general public as purveyor of entry-level plastic-bodied cars — moved Pontiac into former Saturn "retailers" and rejuvenated Pontiac by making it the North American arm of Opel/Holden. On the surface it seems as though it could have been a success, but then the question is raised whether Pontiac carries any more prestige with the buying public than Saturn. Clearly the Oldsmobile name was simply too old-fashioned to tackle the job.

I've been pondering the "what if" possibility of turning Buick into the N/A arm of Opel/Holden. I stared at a photo of an Astra Classic sedan for about 20 minutes, trying to picture it with Buick grille/trim, and thought "that would work", and would probably outsell the Astra by an enormous margin. The upcoming Invicta(?) is, according to the Chinese press, no more than an Opel Insignia with a stretched wheelbase (sort of like the Caddy SLS), and we see just how desirable the Holden-based Park Avenue is, pondering one to question whether the Commodore could have just as successfully been turned into a new LeSabre. And it's not as though Buick doesn't have a history of producing highly-respected sports models: the GS455, Grand Nationals, and the entire first decade of Rivieras come to mind...

Or there's the traditional Buick-Opel link, where the subcompacts and compacts could be Opel-badged, with the larger models sold as Buicks.

Would GM be better off with simply Chevy-Buick/Opel-Cadillac as its mainstream-midlux-prestige brands? It would certainly streamline the company globally.

*Sigh* I'm always thinking of these "what ifs"....

[paul8488]

Hmmm... interesting idea t-rex. Buick could replace Buick, Pontiac, AND Saturn in North America using various Holden and Opel models. They certainly don't need a Corsa / Aveo or Meriva or even Zafira, but Buick could make use of medium and large-sized Opels and Holdens to provide a lineup of cars a step above Chevrolet. As for the 'sporty' segment that Pontiac supposedly occupies, Chevrolet could offer a full range of SS (or whatever you want to call them) models. Combine Buick with GMC to keep decent volumes at the delaers and GMs lineup would be a whole lot more simple. It would also eliminate an extra version of many platforms... there would be an Astra and equivalent Skylark, Vectra and equivalent Lacrosse, Torana (we can dream!) and equivalent Invicta, and Commodore and equivalent Park Avenue. They couldn't be simple rebadges... Buicks would deserve at the very least unique front and rear end designs... but it would be a whole lot mroe cost effective than the current extra versions of each platform.

Chevrolet would then continue to become even more globalized, so that very little would differ from region to region. This could work very well!

[throwback]

I have long thought Buick, Pontiac and Saturn need to be consolidated into one brand. That brand should sit above Chevrolet and below Caddy, it makes sense for it to be called Buick. Chevy has always had performance models even before Pontiac. SS versions of the Cobalt/Cruze, Malibu, Impala, Corsa and HHR would make up the performance group. I would add the next gen Corsa and Meriva to the N. American Chevy lineup instead of the Aveo. Build them in Korea or Mexico to keep the price down. The only down side is the need for an affordable rear drive sedan for Chevy. Alpha version perhaps.

[stanczyk]

think GM< FORD and Chrysler , schould focus more attention to Pony cars,
i bet they would sell a lot of them in Europe ...
do what they can best...that cars are cool..
american muscleis great , because is american
look at CTS new model...it's a great looking maschine, with ot a bad engine....
it's little bit european..but it's oryginal...as cadilac allways was...

[EldoFan]

Originally Posted by vcs2600

t-rex, I agree completely. If you can predict the income distribution, "Brand Management" becomes an easier problem. I think the evidence is that GM/Ford didn't foresee this and low-balled their brands below the growth segments.

Amen to that.....everything makes much more sense (to me at least) once you put the ol' GM brand ladder up against the demographic/economic realities of today.

Realities could become much clearer (Pontiac = Chevrolet on steroids?) and goals that much more well defined (i.e. Buick's transformation into a true Lexus fighter).

Instead, we have most, if not all GM brands lagging behind their foreign competitors and we wonder why........

[Ming]

Originally Posted by vcs2600

t-rex, I agree completely. If you can predict the income distribution, "Brand Management" becomes an easier problem. I think the evidence is that GM/Ford didn't foresee this and low-balled their brands below the growth segments.

It was hard for GM to do anything else with the limited R&D they applied to so many of their brands from an engineering perspective.

How can you expect a Buick or Pontiac to compete with a BMW when you give a BMW look-alike crossover (Torrent) or a Lexus-wannabe (Rendezvous) an engine like the old pushrod 3.4L, largely unchanged since its 1994 debut in the dustbuster minivans, and made in China for "extra value", no less?

Or when the top of the line Buicks for many years used a very slow to change (or improve) 3800? Praise the 3800 all day long if you want, but everything can get better. When Hyundai tops your 3.8L with its own 3.8LV6 by 60 or more horsepower, something is wrong with your investmen in R&D.

You had BMW, Mercedes and Lexus putting heavy emphasis on new technology under their hoods, and guys like Zarella who thought you could just market everything to popularity, and "no one cares what is under the hood", or "the 3800 is bulletproof, why change it?" thinking.

Cadillac is fairly new (in returning) to the idea that fresh, new and always improving technology and styling is essential to sales, and at least in part Detroit finally recognizes that even the best efforts of the best salesmen and marketers cannot overcome a deficit in technolgy, trends, and keeping the machine you engineer competitive and desireable simply by being a great, cutting edge MACHINE.

Image and sales tactics are only so much sewage (or unreaistic optimism) if your product is hampered by poor investment in R&D. Eventually the consumers, and reviewers that they read, catch on when you've been using the same old, largely unchanged platforms and engines, year after year, and even Buickman can't save a brand through creative sales tactics when that happens.

GM has to extricate itself from that old image - an image that in some cases still is reality, with cars like the LaCrosse, Lucerne and DTS. They may have their customers, but they are not the type that will sustain a brand's popularity long term.

GM has a lot of new cars and platforms coming on to the scene, but in many cases (aside from the Volt) they have yet to emphasize this newfound GM focus on newer and better technology, so how would anyone, aside from us GM enthusiasts, know or come to expect anything different than the status quo of 3800s, 4-speed transmissions and smallblock V8s?

A new ad campaign stressing new GM technology in all GM cars could go a long way. (Of course they'll need to get rid of some of the old hangers-on mentioned above before they do that)

[Neanderthal]

Interesting theory.

Are you also theorizing that humanoids think logically, act rationally, and live within their means?

[Bravada]

I doubt it people of the second decile buy new cars. This is the used car market, IMHO. I'd look to 4th-6th decile for Chevrolet's new car market. Remember those deciles make up the 100% of population, so the first decile is really VERY poor (the kind of people you usually try to forget about, which is pretty easy because you don't see them), and the second decile folks are only marginally better off.

As concerns Saturn turnaround as a mistake, I agree. The customer base and non-GM image is one thing, but between the happy inauguration of Spring Hill and the golden days of a women-ran company producing the rather compelling S-Series and the Aura there was an Ion, a Relay and an L-Series (which was a good car, but didn't go far enough)... And, at the end of the day, the Aura is NO Vectra, and the Astra comes in limited supply in its least appealing form...

ANYHOO...

They should've just turned Saturn dealerships into "GM Saturn" dealerships, offering better value and experience (and slowly phasing out "normal" GM dealers, by either requiring them to convert or squeezing their margins). When they had no breakthrogh products, they could've at least competed on service (as I read, Toyota and Honda aren't exactly excelling in that department).

Such "GM Saturn" dealership could've offered Saturns (as in the original Saturn) augmented by selected, best GM produce. Depending on the time frame, those could've been Oldsmobiles or BPGs. OTOH, plastic cladding and the Saturn badge could've saved the minivan, a vehicle bought by people who aren't car nuts but rather make "reasonable" decisions. That said, the U-body was crap anyway.

As concerns Opel-developed vehicles, Pontiac seemed a natural choice to me. The Cobalt and Astra are so close in dimensions and all GM could've just transplanted the Astra over the Cobalt/Ion chassis and call it a day. Pontiac has (had?) the lowest average buyer age, a high share of conversion, female, young and minority buyers and the sporty/youthful image required for this type of car.

Let's face it - the fact that Astra is European does not mean it is a BMW. It was a worthy rival of the Focus and Golf back in 2004, and could've made a splash in America back then with more compelling engine choices, correct prices (i.e. Civic-like) and a more apt brand. As concerns hatch vs. sedan, let's not forget that the Sunfire/Cavalier had no real trunk anyway, and in its last years the Sunfire was a coupe-only model in the US. I think it could help make Pontiac "different".

[BigAls87Z28]

GM showcasing its technology would be cool, but who will listen?
GM's technology is seen as 2nd rate to the public. There is always something else, something that will be different or that wont work as they say. Look how many skeptics there were when AFM came out. Chrysler had no problem, people accepted it. But I remember people going back to the 8-6-4 Caddy engines of yore, talking how GM is "doing it again..."
Even GM's 2 mode system is looked at as a lesser technology compared to Toyota's single mode, even if it is better.
Again, perception is damaged and no matter how great and how good GM is doing, it will be percevied as less of a car.

[HVM]

Originally Posted by t-rex

My wife's contention is that GM should have scuttled the Saturn brand entirely — given its image with the general public as purveyor of entry-level plastic-bodied cars — moved Pontiac into former Saturn "retailers" and rejuvenated Pontiac by making it the North American arm of Opel/Holden. On the surface it seems as though it could have been a success, but then the question is raised whether Pontiac carries any more prestige with the buying public than Saturn. Clearly the Oldsmobile name was simply too old-fashioned to tackle the job.

It seems that your wife and I have the same idea. I have a feeling that GM should globalize the hierarchy of their brands. My thoughts: Four levels of brands - two non-luxury and two luxury levels made of no more than six brands in one market. Hummer presumably has no future within GM and I would merge Saturn and Pontiac. The mainstream brands would be Chevy and Cadillac, the rest would be some kind of niche. The brands: one group -Chevrolet/Daewoo at the bottom, then Opel/Vauxhall/Holden/Pontiac and/or GMC, these two groups are the non-luxury ones, the third group: Saab and/or Buick, then Cadillac.
Each market has different specifics, taste and requirements. Here in Europe people don´t think of Cadillac when shopping for premium cars. That is what keeping Saab is good for. We don´t appreciate pick-up trucks but Americans do. So serve the market with GMC. My point is that in some markets you can hane more brands but they have their place set in global structure so you can properly define them and avoid overlapping. So no G6/Aura fwd sporty sedans and no Insignia for Buick in China when Opel is there too.
The markets: for example in UK the portfolio would be - Chevrolet then Vauxhall than Saab than Cadillac; NAFTA - Chevrolet then Pontiac and GMC than Buick and Saab then Cadillac; China - Chevrolet then Opel than Buick and Saab than Cadillac.

In my plan Pontiac would phase Saturn out and sell Opel and Holden. It would replace GMC as the cornerstone of BPG and it would allow it to distinguish itself from Chevy.

BPG product portfolio
Pontiac: Pontiac would be sporty non-luxury brand that would offer more bodystyles than Chevy, certainly no million-a-year brand, competes with Mazda, Subaru, VW, Kia , Scion and such

G2 (Corsa, Gamma II subcompact H3/5)
G4 (Astra, DeltaII compact sedan, H5, cc)
Vibe (Zafira, Delta II compact MPV)
Vue (Antara, Theta compact CUV)
Solstice (Alpha compact roadster, coupé)
G6 (Insignia, Epi II midsize sedan)
G8 (VE Zeta fullsize sedan, ute)

GMC: as is plus replacing HUMMER´s position

Envoy (GMT-700 midsize SUV)
Sonoma (GMT-700 midsize p/u)
Yukon (GMT-900 fullsize SUV)
Sierra (GMT-900 fullsize p/u)

Buick: near lux Lexus killer

Invicta (lwb EpiII midsize sedan)
Enclave (Lambda midsize CUV)
Electra (lwb Zeta sedan)
Riviera (Zeta cabrio)

[Pedal 2 Metal]

And at the same time GM is putting a Cadillac flagship on hold, canceling a new V8, canceling the V12, and taking their sweet ass time with everything else.