By on April 23, 2009

As GM’s journey to bankruptcy nears its conclusion, the punditocracy is busy contemplating the company’s afterlife. The current line of thinking: the feds will cleave General Motors in two. Bad GM gets Buick, GMC, HUMMER, Pontiac, Saab and Saturn. Good GM “buys” Chevrolet and Cadillac. It emerges from Chapter 11 unencumbered by outdated production facilities, warring management, befuddled marketing, over-priced labor, restrictive union work rules, astronomical pensions and onerous health care obligations. Chevillac rises from the ashes to steal share from both mainstream and luxury brands, repay its debts and thumb its nose at Bailout Nation’s critics. But here’s the thing: good GM is “saving” the wrong brands.

“What’s a Chevrolet?” branding guru Al Reis asks, rhetorically. “It’s a small or large cheap or expensive car, truck, SUV or sports car.” Reis has been sounding the alarm on Chevy’s branding for over twenty years, claiming the company lacks the focus it needs to survive in a market place with over 40 competitors.

So how could the liberated Chevrolet rebrand itself for success? “Get rid of the trucks,” Big Al suggests. “Take Chevy back to its roots. Make it what it was before Saturn arrived: an entry level car brand.”

Yes, well, what would distinguish this new Chevy from its competitors? Toyota owns reliability. Hyundai owns price. Nissan owns value. BMW owns driving pleasure. So. . . what? “It should be an American brand,” Reis says. Even if the cars are made somewhere else like, say, South Korea? “These days consumers don’t care where their products come from. Ralph Lauren’s clothing is made in China.”

When I push Reis for a unique selling point for Chevy, he hesitates. I can almost hear him shaking his head. “It’s too late to narrow its focus,” he says. “Other than appealing to patriotism, there isn’t anything left.”

I suppose Chevy could play the patriotic card, returning to the brand’s former “baseball, hotdogs and Chevrolet” appeal. It could even play off its taxpayer subsidy to assert itself as “America’s car company” (yes way). Chevrolet could offer comfortable, affordable and reliable American-styled sedans. Sort of like the groundbreaking Chrysler 300, only better.

Fine, but I doubt the US market would value four-wheeled flag waving enough to make Chevrolet profitable. Remember: Ralph Lauren’s WASPy brand ID convinces customers to pay a premium for his Chinese made apparel. If Chevy can’t charge a premium for these “all-American” products, it will have to compete on price with some of the world’s most efficient automakers. Why would the end result be any different than it is today?

Cadillac sits on the opposite end of the scale. As Lexus, Mercedes and Audi have proven, you don’t have to restrict yourself to one automotive genre to be a successful luxury automaker. But, like Chevy, like any car company, it’s all about the brand. The CTS may be as good as an equivalent BMW, but in this rarefied air, perception trumps product.

“If someone goes down to their golf club and says ‘I just bought a Cadillac,'” Reis says, “it doesn’t mean anything. It doesn’t mean you’ve made it.”

Restoring the Cadillac brand to the pinnacle of automotive desirability would require a multi-billion dollar investment in new products and an equally expensive marketing effort. At the same time, Cadillac would have to abandon its current willingness to maintain volumes with badge-engineered bling. Does Cadillac have the time/will/money to ditch/evolve their current lineup and make and promote the kind of world class cars that could reinvigorate the brand?

No.

Meanwhile, GM is throwing the baby out with the bath water. Buick, meh. But GMC is a strong brand that would gain strength the moment Chevy transfers all its SUVs and pickup trucks to the professional graders. Assuming the US economy recovers sometime before the next century, the pickup market will return. And after driving the Chevy Tahoe hybrid, I’m convinced there’s more room for the genre’s fuel efficiency, packaging, durability, safety, style, convenience, etc.

HUMMER may be the antithesis of President Obama’s vision of the American automobile’s future, but it’s an instantly recognizable brand. HUMMER’s underlying concept—SUV as survivalist’s enclave—still has resonance. Saturn has the touchy feely thing happening. It could be the home of green vehicles. American sports cars? Give Pontiac the Corvette, Solstice, Camaro and a performance brand is born. Saab could return to its roots an, uh, do whatever it is Saab used to do.

Alternatively, nothing. While resurrecting two or more of GM’s eight brands is doable, so is going to the moon. Judging from recent polls, Americans are more willing to fund lunar colonies than pour endless billions into GM.

That’s because they know that Uncle Sam isn’t “protecting ” or “investing” taxpayer’s money by subsidizing GM. They’re gambling on a loser. “GM has destroyed the equity of eight car brands,” Reis says. “You could almost say that’s what they do best.”

Get the latest TTAC e-Newsletter!

83 Comments on “Editorial: General Motors Death Watch 245: Core Competency...”


  • avatar
    nudave

    Correction RF. If you go down to your golf club and announce you’ve just bought a Cadillac, it means either A: You are clueless, or B: You are old enough to have voted for Eisenhower.

  • avatar
    mach1

    I agree that plans to dump GMC would be a mistake. Get the Trucks & Vans (and the truck derived SUVs) all together in GMC as a stand alone “Truck Division”. That leaves Cadillac for luxury and Chevrolet for cars for the masses.

  • avatar
    nmcheese

    In my opinion, all the brands except Chevy (bargain American style vehicles – not necessarily cars only) and Cadillac (nice American style vehicles) should be killed off for the sole reason that if the other brands exist, badge engineering will continue.

    If they were to reorganize and produce 1 or 2 vehicles per brand as you mentioned – THE Hummer, THE Saturn, THE SAAB, so on, even if they were off a limited number of platforms (small car, large car, truck – done) the brands may retain enough identity to be valuable/viable.

    As it is with all the brands being full line brands there is no significant differentiation between the Malibu/G6/Aura/Lacrosse.

    If all the brands survive I don’t think they’ll have enough reason to change their existing business model, and continue to fail.

  • avatar

    If Chevrolet got rid of its trucks, Chevrolet deaelers would have a lot of trimming to do. Trucks are over half of their sales, which are already down by half.

    Anyway, getting rid of trucks would not in itself provide enough focus. If you want focused brands, you need more of them. Getting rid of Pontiac means Chevrolet has to carry the performance ball, which means less focus for the brand. Ditto getting rid of Buick, and having Chevrolet cover the near-lux market.

    Truly superfluous at this point: Saturn. When a Toyota owner is more willing to buy a Malibu than an AURA, Saturn’s done.

    If the task force thinks that the way to save GM is to reduce it to Chevrolet and Cadillac, then they’re looking for simple solutions, not correct solutions.

  • avatar
    TexN

    I agree with mach1’s short and sweet synopsis on this one. I think the larger issue of “will good GM survive” is based on the simple idea that you only need to make $1 more than you spend in order to be profitable. Any shot at success for the new GM will be based on the premise that they must have a cost basis that mirrors their much smaller size, revenue stream, footprint, etc.

  • avatar
    Happy_Endings

    Perhaps the biggest problem GM faces today is the fact that their cars don’t sell for nearly enough money. They don’t even come close to covering the bills, even if they had no health care and legacy costs. This is a problem that will only grow more once they file for bankruptcy.

    For the last few years, at least, GM’s are purchased when they offer huge sales. Remember how successful their original employee pricing offer a few years ago was? While it moved inventory at the time, it cemented the feeling in most Americans minds that you only buy GM, and by default Chrysler and Ford, when they have a huge sale. GM has only been so eager to oblige by having one every few months.

    They will need stop this thinking if they are ever to make enough money from each sale to make a profit. While in bankruptcy, GM is going to want to sell cars, no matter what they get so they can move inventory because they need some sort of revenue to survive. This would only continue the thinking in Americans’ minds that GM is purchased only during sales. And the cycle goes on and on and the problem gets worse and worse …

    It will take several years, if at all, for GM to change the minds of American consumers mind regarding the value of their products. It’s time that GM doesn’t have and will cost them money they need in the present.

  • avatar
    hitman1970

    Chevrolet is a full line brand and covers more of a full line than Toyota. What is Toyota’s sports car again, the “nothing”? Sweet ride. Chevrolet needs to get the rest of line up to the standards set by Malibu, Corvette,Silverado, Tahoe, Suburban, and now Camaro. Fix Aveo, Cobalt, and Impala and you are in business.

  • avatar
    ccd1

    The most GM needs is Chevy and Caddy. That’s it. You can have brands within those two brands a la Scion. Those might be Saturn (green) and Pontiac (performance) inside Chevy, but why bother??? The basic problem with GM is that they don’t have enough competitive cars to fill Chevy and Caddy. Why keep Pontiac as a sub brand when it only has one car, the G8, that is worth keeping? What does Saturn have beyond something like the Soltice??? And GMC, why keep it? Other brands just offer trucks as part of their main lines, not as a separate brand. What makes GMC so special that it should stand on its own. If you made a list of the competitive cars that GM has, you would readily see that even two brands, Chevy and Caddy, could arguably be seen as too many. The only real reason to keep Pontiac, et al, as sub-brands is to try to migrate those customers to your main brands.

  • avatar
    yankinwaoz

    Toyota seems to be able to do pickups and sedans under the same roof just fine. Why can’t Chevy?

  • avatar
    superbadd75

    Why is Chevrolet too broad for this guy? What about Toyota, where you can buy a “large or small cheap or expensive car, truck, SUV or sports car”? Chevrolet is the American equivalent to Toyota. Sort of.

    At the other end, Cadillac is GM’s luxury brand. It’s the only brand they have that has the chance to compete in the upper end of the market. Buick and Saab won’t cut it, at least not in North America, as true luxury brands. Saab would work in some areas, but their (lack of) quality has hurt them, and they’re really kind of niche-y, if you will. So Cadillac it is.

    Why GMC? Toyota doesn’t have a seperate truck brand. Hell, the best selling truck in the world, the F-Series, isn’t sold as a different brand, it’s a sold as a Ford. GMC is entirely redundant, with only the Denali line to add any kind of unique touch over Chevy, and the Escalade pretty much overlaps those vehicles.

    Saturn would have been a good brand to keep if GM hadn’t killed off what was left of their brand equity, but at this point they’re not looked at as “Different”, they’re looked at as cheap. And a “no dicker sticker” doesn’t really work for most people.

    Buick? Ha! Maybe in China. Pontiac? Ruined. Excitement my ass.

    Hummer’s done. Their sales are in the toilet, and their brand just seems to stand for the good ol’ American excess and waste that helped drive the economy into the ditch. Nobody needs a huge macho-styled gas guzzler that barely seats five. I think people are starting to be a little more conscious about image, and a Hummer isn’t the image many people want to portray any longer. Shutter the brand.

  • avatar
    paris-dakar

    Good GM “buys” Chevrolet and Cadillac. It emerges from Chapter 11 unencumbered by outdated production facilities, warring management, befuddled marketing, over-priced labor, restrictive union work rules, astronomical pensions and onerous health care obligations. Chevillac rises from the ashes to steal share from both mainstream and luxury brands, repay its debts and thumb its nose at Bailout Nation’s critics.

    The problem with this analysis is that the whole purpose of the Bail Out isn’t to get rid over-priced labor, restrictive union work rules, astronomical pensions and onerous health care obligations. It’s purpose is to perpetuate those things on the back of the taxpayer.

  • avatar
    Stingray

    If the task force thinks that the way to save GM is to reduce it to Chevrolet and Cadillac, then they’re looking for simple solutions, not correct solutions.

    And oversimplifying a REALLY complex problem, I’d add.

    Sometimes, going to the moon should be chosen, even if it’s the hardest/longest road.

    Edit: I forgot… all that “green-ess” going against what the market really wants and needs, just because is politically correct (essentially bullshit), is not only lame, but will also lead to an EPIC FAIL.

  • avatar

    yankinwaoz

    Toyota has an overarching brand promise: reliability. Chevy does not.

  • avatar
    Conslaw

    Chevrolet’s core competency is the ability to sell lots of cars. Chevrolet dealers move lots of metal and always have, even when the cars they were selling were crap. Now most of the Chevrolet line-up is pretty good.

    As far as brand identity goes, the message they’ve been trying to convey is honest value and lack of pretense. With a fresh start in bankruptcy they can focus on delivering what they promise.

    Ford has made amazing strides in delivering the type of honest value that Chevy trades upon. If Ford can do it, then Chevy can too. General Motors is as good as anyone at direct-injection engines. Their electronics are well-integrated. They’ve improved their interiors. Across the board, their cars are at least as good looking as Toyota’s. Chevy has core value, you just have to get rid of the crap to bring the value out.

  • avatar
    jpcavanaugh

    RF and I continue to disagree about the brand thing. The Chevrolet brand should mean no more and no less than the Toyota brand – a full range of well built cars and trucks offering value and covering all but the top end of the market. Only difference is that for the last 35 years, Toyota has done it well and GM has been turning out mostly crap.
    Chevy has a deep reservoir of loyalty among truck owners. I see Calvin peeing on a lot of Fords. With cars and trucks that are both appealing (style, features, price) and built with genuine quality (both initial and long-term) Chevy can stay with Baseball HotDogs Apple Pie and Chevrolet, because it is an American Institution. Just like Ford. The loyalty of Chevy fans is incredible. Toyota buyers are loyal because of the vehicles. Chevy buyers are loyal in spite of them. This is very valuable and can be built upon.
    The problem is, can they build the products? I’m betting no. It’s not the brand, its the cars. Ditto Cadillac. I shake my head at how the 3 then 2 US luxury brands were so busy fighting each other for volume that they completely abandoned the top end of the market. On Cadillac, I completely share RF’s concern.
    But I believe that that the damaged brands are a leadership and product problem, not a brand problem.

  • avatar
    Ronman

    a message to this line of thinking from the Mid east, that’s of the globe, not the USA.

    GMC here has more market value than GM in its entirety. in fact people call GM GMC (gims) because it stands for general motors company. Chevrolet, which is nicknamed SHAFAR or Baldes in a direct translation.

    so these two brands are sure to stay, because it’s not just about the US, right? and that has been confirmed in the latest press release from their regional office. Buick sadly for me will also survive with the good GM. and Pontiac will peekaboo with a niche model every now and then…

    so Chevy in the end might loose the trucks and the Lumina for GMC and Cadillac respectively and perhaps the SS to Pontiac and perhaps the Corvette will stand alone.. and Buick might still be the marshmallow suspended Chevrolet. Badge engineering will never die. it is instilled in GM’s Psyche.

    so what’s left hummer, they are supposed to announce the buyer, or undertaker soon. lets wait and see…

    so in fact the new GM is the same’ol GM, without even a twist… just more debt…

  • avatar

    I think the awful truth goes further: Not only are there too many brands in the market place (besides GMs); there’s too many car manufacturers period.

  • avatar
    Rday

    I think the GM brands are all ‘damaged goods’. Repeated headlines have pretty much forced american consumers to face reality that GM will have to go chapter 11. Maybe a new reborn GM can survive but without government support I doubt it. While the stated goal is to make the new GM more competitive, I have hard time believing that the Obama admin will force competitive wages/benefits/pensions on the UAW. Politics will keep them from making the really hard decisions. Since when has a democrat administration forced their union supporters to face reality. Yesterday Obama’s boys met with the michigan delegation to assure them that they will get the admin’s support. I hope I am wrong but this sounds like some kind of ‘fix’ to me. Look for the gravy train for the UAW to continue for the foreseeable future.

  • avatar

    Mach1: “I agree that plans to dump GMC would be a mistake. Get the Trucks & Vans (and the truck derived SUVs) all together in GMC as a stand alone “Truck Division”.”

    The problem has become that all of GM has become the “Truck Division.” Good luck getting the turf-hoarding middle layers of any GM division to surrender “their” trucks. Despite the current economic conditions “trucks” have been the most, if not ONLY profitable products from GM since the 80s.

    GM seems to be trapped. They are staring at a full set of gangrenous limbs, paralyzed in fear if the pain involved in lopping them off. Meanwhile the rot is consuming the whole body so fast that it may already be too late to save any of it.

    People have been telling GM to mend their ways for 40+ years. Had they taken the advice 40 years ago it would have been clipping a toenail. Had they taken the advice 30 years ago it would have been like losing a foot. 20 years ago, perhaps a leg. Within the past 10 years though the gangrene has spread so fast that you might as well just perform euthanasia because the cure is now far worse than the disease.

    –chuck

  • avatar
    FreedMike

    I’m sorry, what kind of car “guru” would suggest that Chevrolet abandon its top selling product, the Silverado, as the company is going bankrupt, no less?

    By the same logic:

    *Coca-cola is going broke. Dump Coke!

    *McDonald’s is going broke. Dump the Big Mac!

    Frankly, that suggestion is suicidal and makes me wonder what kind of guru this guy is.

    Next, there’s the usual whine about Chevy trying to be many things to many people…but every one of its competitors has a similar strategy, with the exception of Honda, which doesn’t make heavy duty pickups.

    And the inevitable whine about how Cadillac relies too heavily on “badge engineering”…but what about Lexus?

    Cadillac badge engineered products
    Escalade
    XLR (which is going away)
    DTS (even though you could argue it’s the original platform that Buick borrowed from for the Lucerne, not the other way around)

    Cadillac non-badge engineered products
    CTS
    STS
    SRX

    Lexus badge engineered products
    ES350 (a reboied Camry)
    GX470 (a rebodied 4Runner)
    LX570 (a rebodied Land Cruiser)

    Lexus non-badge negineered products
    IS
    GS
    LS
    RX

    So, Lexus has as many badge engineered products, INCLUDING ITS BEST SELLER, which is a restyle of a $20,000 car, and one that’s a rental-fleet queen to boot. Can you imagine the whining if Caddy tried rebadging a Malibu?

    Where’s the criticism?

  • avatar
    ccd1

    Karesh and RF’s comments point to another reason for keeping some brands at least as sub brands in the near term: sub brands like Pontiac have more identity than GM’s major brand like Chevy. Beyond being a full line American brand, Chevy has no identity. Ditto for Caddy except it is a luxury brand, which does not distinguish it at all.

    If I were king for the day (CEO of GM), I would have two brands with separate dealerships: Chevy and Caddy. Trucks would be sold under both brands so GMC is gone. Ditto for Saab, Buick (at least in the US) and Saturn. These brands are damaged beyond repair. Pontiac would become your performance or “M” division where you would organize around the G8, Vette and souped up versions of regular Chevy models. Hummer could be the sub brand of truly off road capable SUVs.

    IOW, keep the sub brands that have an identity and trash the rest. Buick does have an identity, old fart car, but that is hardly worth keeping. Does any think either Saab or Saturn have an identity at this point in time??? And now is not the time to rebuild identities, you either have it or you are gone!

  • avatar
    PaulieWalnut

    This article’s veneration of the ‘brand’ seems to pay no attention to the real world. Chevrolet sells only vanilla cars which means the Aveo, Cobalt, Malibu and Impala. Therefore all the Chevrolet dealers get murdered because they have no trucks to sell. Pontiac and GMC are left selling gas guzzling sportscars and trucks. This would be profitable but, without Chevy’s high-mileage volume cars evening out their Cafe rating, they get hammered too. Saturn sells ‘green’ cars, like, uh, the €40k Volt. Hummer does indeed have a clear and concise brand identity, a “SUV as survivalist’s enclave,” as you put it. Unfortunately, the Hummer brand is the automotive equivalent of the plague. No one will touch a Hummer in these eco-conscious times.

    If American’s paid much attention to ‘brand’ they wouldn’t get any of their money back.

    I think the best course of action would be to kill everything but Chevy. That’s where most of the volume is and what most of GM’s small town dealers are. Chevy makes good, profitable trucks and, with the Malibu has shown it can make good cars. The trucks already sell. The cars will also sell because Chrysler, Dodge, Pontiac etc will no longer exist. Also because the Asian competitors don’t have a strong presence in smaller markets. If it can provide solid, reliable transportation with distinctive American styling, Chevrolet will be profitable and can pay taxpayers money back in the medium term.

    In the long run, as the market adjusts, I suppose Chevy will need that focused brand Al Reis is having trouble defining. Here’s what I think:

    Over time, the product will define the exact values of the Chevrolet brand. Brands are formed organically from within by engineers trying to design the best car they can in much the same way as the ‘invisible hand’ creates a market. This is what gave the world the ‘Ultimate Driving Machine,’ Honda’s high revving engines and ‘Built Ford Tough.’ Engineers used their collective expertise to make great handling cars, fizzy, powerful engines and teak tough trucks because that is what the engineers in question were good at doing. Then, 10-20 years later, marketers caught on to what the customers already knew about the product and defined the brand. In the same way, a liberated Chevy will have a chance to carve out its own mark on the automotive landscape.

    PS: Retiring Cadillac now will allow Chevy to launch a proper luxury brand in a wave of nostalgia, if Chevy is in the position to do so.

  • avatar
    golf4me

    GM should be Chevy, Pontiac, Caddy, and Saturn.

    Here’s why:

    Chevy is chevy. Only thing to do is make them less expensive, and more attractive. Delete high trim levels with stuff you can get on a caddy. GMC to meld with Chevy dealers and sell only heavy duty trucks and worktruck chassis.

    Pontiac: Extremely sporty cars, mostly RWD. Could be outlet for Opels, Holdens. Buick has too much overlap with Caddy, sorry. Sell it to the Chinese.

    Caddy : Make 3 sizes of the best sedans you can. One SUV- the Slade. 2 styles, Euro-sport, and American Lux. Should satisfy all potential demoes.

    Saturn: Green cars only. Let it be the “shiny happy electric people” brand. People who like Chevy, Pontiac and Caddy’s don’t like shiny happy people anyway.

  • avatar
    nikita

    “Why GMC? Toyota doesn’t have a seperate truck brand.”

    Hino

    GMC can take the real commercial trucks and leave the personal/consumer lines to Chevy. Without Buick and Pontiac dealers, GMC wont have to be a badge-engineered clone.

  • avatar
    newfdawg

    The “New GM” needs to focus on four brands: Cadillac, Chevrolet, GMC and Buck. The company should return to its original business model when each division was basically autonomous, with each brand building cars for its core customer base and NO badge engineering. Cadillac gets rid of the Escalade and focuses on the DTS, CTS, STS and SRX.
    Chevrolet needs to return to its original purpose building entry level cars: Malibu, Cruz, Impala, Camaro and the Corvette.
    GMC gets the trucks, vans and SUVs under the “truck division”. Buick builds vehicles that span the gap between Chevrolet and Cadillac and compete with makes like Lexus, Infiniti and the likes.

  • avatar
    Mrb00st

    “whatever, uhh… saab used to do”

    you mean build intelligently designed, efficient and solid cars with turbo power and hatchbacks? You mean like, the brand with the most clearly defined purpose in GM’s portfolio?

    Man am i sick of the press trashing Saab every chance they get. It’s not nearly as funny as you think it is, it just looks ignorant.

  • avatar
    mattstairs

    In the 50’s, GM had the car for every price and purpose thing nailed, but it 1) didn’t keep up with a changing market and 2) badge engineered so much, it made the brands a muddled mess.

    GM – Hey, we need a brand to take sales from the imports, let’s launch Saturn.

    Chevy – Hey, we need that too, let’s badge up some imports and call them “Geo”‘s.

    GM – OK, we’ll do that too and have business as usual elsewhere.

    GM didn’t understand that consumers don’t segment the market into domestics and imports, that ALL cars must be competitive in ONE car market.

    I don’t think a “sports” brand or a “green” brand really works. Look how much mileage Toyota has received from the Prius, despite the fact Toyota makes big trucks and SUV’s too.

    I do agree with this point. GM is not at the edge of bankruptcy because of Hummer, Saab, or Saturn. The problem is systemic. Although I suppose lopping off redundant brands simplifies things a bit.

    The bottom line is that until GM can build and sell enough cars at a price where they can make money off of them (it’s that simple and that difficult), they will continue to be in trouble.

  • avatar
    NN

    branding guru Al Reis and other morons like him are the reason GM is ruined. Get rid of Chevy trucks? Are you out of your mind? The Chevy truck brand is one of the strongest brands that exist in the US. Huge Profits, people…Jesus christ. It doesn’t matter if American cars are actually Chinese or Korean? I beg to differ.

  • avatar
    fincar1

    As usual, we of the B&B have lots of ideas on what GM should end up as, no two of them quite the same.

    I want to say a few words about badge engineering. Although some people spit the words out as a curse, it has basically always held sway in automotive marketing in the United States. Look at the 1ineup of cars for GM in, say, 1935, a year when the old square-box bodies had largely been left behind. There was enough in common not only in looks but in actual shared parts that there was an obvious relationship between Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. This applied to Chryser as well; Plymouth, Dodge, DeSoto, and Chrysler were obviously related. By 1939, Ford introduced the Mercury, which has always been either a fancy Ford or a slightly de-contented Lincoln.

    The fact that Lexus is successful with a very similar strategy of badge engineering would seem to indicate that badge engineering is not a bad thing per se. When badge engineering doesn’t work is when the product being sold under several different names is mediocre to piss-poor.

    GM is in the unique position of having two lines of trucks, each of which has considerable brand equity. Ford and Chrysler have done well enough with one truck brand, and afaik there’s no way to know whether GM could have done as well over the years with only one truck brand. Now, I suppose, that’s just another complication for Our Government to deal with.

    Incidentally, “It doesn’t matter if American cars are actually Chinese or Korean? I beg to differ.” Oh, I don’t know, we seem perfectly okay with Canadian or Mexican….

  • avatar
    NN

    fincar1,

    There is a large difference between a Chrysler 300 and a Chevy Aveo. Yes, one is made in Canada with a Mexican engine on a German platform; but from conception it is still designed for the American market as a typically American car. That is already what many American cars have become.

    As bad as that already may be, that is still much more acceptable than a rebadged Daewoo. And cars that are more American (Corvette, CTS), though rare, can also be some of our best representations of our brands.

  • avatar
    John Horner

    On the west coast at least, Chevrolet is a truck brand. Reis is off his rocker arms proposing that Chevrolet drop trucks. Sometimes gurus are just wrong.

    I agree that ditching GMC would be stupid.

    GM’s stated plan to keep Chevy, Buick, GMC and Cadillac is actually starting to make sense. GMC has room to expand more into the heavy duty truck area it has been abandoning in recent decades.

    Buick is going to live on in China, so why not also sell Chinese Buicks as a value priced step-up brand in the US?

    Chevrolet needs to offer a one-stop shop for all major categories of cars and personal use trucks at everyday low pricing. The WalMart of personal transport.

    GMC focuses on highly optioned personal use trucks and more seriously equipped trucks for tradesman and industry.

    Cadillac does American style luxury vehicles.

    Pontiac, Saturn, Saab and Hummer go away.

    “The company should return to its original business model when each division was basically autonomous, with each brand building cars for its core customer base and NO badge engineering.”

    In GM’s heyday there was in fact a great deal of platform sharing going on. The chassis & frame was routine shared between the brands as were many suspension and drive-line parts. General styling themes were also multi-division, and most of the styling was done in corporate studios. Platform sharing done right is brilliant. It only devolves into badge engineering when little or nothing is done to differentiate the brands. Aveo-G3 is a badge engineering hatchet job, Malibu-Aura is appropriate platform sharing, but with insufficient target customer differentiation (same price point). The main problem is when multiple versions of a platform end up priced right on top of one another. A Chevrolet and Cadillac can share the same bones, but they shouldn’t look alike, shouldn’t be trimmed out alike and shouldn’t sell at similar price points. The Camry-ES350 and Accord-TL pairings are examples of platform sharing done right both on the design and target market fronts. Malibu-Aura flunks on target market. G3-Aveo flunks on all counts.

  • avatar
    jimmy2x

    FreedMike :
    April 23rd, 2009 at 9:46 am

    I’m sorry, what kind of car “guru” would suggest that Chevrolet abandon its top selling product, the Silverado, as the company is going bankrupt, no less?

    By the same logic:

    *Coca-cola is going broke. Dump Coke!

    *McDonald’s is going broke. Dump the Big Mac!

    Frankly, that suggestion is suicidal and makes me wonder what kind of guru this guy is.

    Jim Cramer?

  • avatar
    mtypex

    I like Ike too, but I’m not going to want a Cadillac when you have so many other better choices on the market.

    I like the idea of Chevrolet cars – and GMC trucks – being sold in the same dealership. Of course, Ford, Nissan, and Toyota sell trucks under the same brand as cars, so you could not argue market precedent here.

    While I’m still losing – I am a HUGE fan of the Toyota Nothing SE! (SE means it’s sporty…)

  • avatar
    86er

    Will a vastly downsized GM with perhaps a better credit rating but vastly smaller economies of scale be able to maintain some of its strengths listed above, such as DI and pickup architecture?

  • avatar
    MrDot

    Mrb00st:

    Saab hasn’t had a hatchback since they re-designed the 9-3 in 2003. And “intelligent design”? Give me a break. All of their models have been stale designs based on someone else’s platforms since the GM takeover. Face it, GM ruined your favorite car company.

  • avatar
    njoneer

    Maybe Good GM would be better off with today’s competitive GM products, regardless of brand:

    Silverado
    Suburban
    Malibu
    Corvette
    Camaro
    G8
    Enclave
    CTS
    Good GM might need to also keep Cobalt and Equinox for CAFE.

    The other 40+ models GM makes are either not up to par with competitors or are just clones of the vehicles on this list.

    This list looks like GM could realistically support only one dealer brand.

  • avatar
    PaulieWalnut

    njoneer :

    You hit the nail on the head. Forgot to mention that in my own post above.

  • avatar
    FreedMike

    PaulieWalnut :
    April 23rd, 2009 at 9:55 am

    This article’s veneration of the ‘brand’ seems to pay no attention to the real world. Chevrolet sells only vanilla cars which means the Aveo, Cobalt, Malibu and Impala. Therefore all the Chevrolet dealers get murdered because they have no trucks to sell. Pontiac and GMC are left selling gas guzzling sportscars and trucks.

    Hole-in-one.

    And who complains that Toyota’s line is “vanilla,” despite having some of the most boring-looking Anycars on the face of the earth? Who complains that Toyota makes trucks that guzzle at least as much gas as Chevy’s, plus not one, but two sumo-sized SUVs?

  • avatar
    86er

    This editorial highlights the folly of trying to swat the proverbial “bad” GM on the nose with a newspaper when it won’t stay down.

  • avatar
    MikeyDee

    Create two new separate companies out of Chevrolet and Cadillac. Lose the GM name entirely. Both names can stand on their own.

  • avatar

    Why does the new Chevy have to offer sedans at all?

    Why not go with:
    GMC: All Trucks, SUV’s and crossovers (world class)
    Cadillac: Evolve the existing lineup. ‘Sclade, CTS, new STS (7 series/S class competitor), etc.

    Down the road, maybe Cadillac tries to take on the A3 and the 1 series, but you don’t need GMC or Chevy trying to take on the Civic, Corolla, Accord or Camry. That’s financial suicide, and any pathetic attempt will cost the new ‘brand’ credibility.

  • avatar
    Pch101

    This discussion illustrates part of the problem that burdens GM.

    The brands should be there to serve the company and its profit goals. But instead, they have deteriorated into a huge weight around their necks. They spend more time fixated on trying to save brands from death than they do trying to make money. As a result, they lose money and the brands are still dying.

    Someone at GM needs to sit down with a notepad and answer this question — if you were starting from scratch, what would you do? If your goal was to make money and compete with the existing players, would you or wouldn’t you create eight car brands from the get go in order to do that?

    If you were starting a new car company from scratch, it is obvious what you would do — you would build a couple of solid bread-and-butter products, and use those to build your rep with your future audience. Think VW Beetle, Datsun 510 and 240Z, Honda Civic and Accord, Toyota Corolla and Celica, Ford Model T or first generation Taurus, Hyundai Sonata, etc.

    You’d also want to avoid having conspicuous losers that could drag down your name. Think Hyundai Excel, Chevy Vega, Ford Pinto, etc.

    GM circa 2009 has plenty of lessons available from automotive history that make it obvious. The model works: Create two or three winners per brand, and invest heavily in using those winners to reinvent a reputation. Use those winners as a foundation to sell cars today and to build a brand that will sell even more cars tomorrow.

    The only reason that GM should have eight brands, or even four or five brands, if it can come up with enough home runs for each of them, and without cannibalizing them.

    But guess what? It can’t. Nobody could. There is simply no way that any car company could develop 16 or 24 home runs — there just aren’t that many innings in the game.

    This is why the successful companies have rejected the GM brand-for-every-whim-under-the-sun marketing model. If you try to spread automotive goodness over a multitude of brands, you spread it too thin. You end up with 24 strike outs instead of three homers and some solid triples and doubles that can be batted in. Success does not come from flailing away at the ball, but with how well you hit it.

  • avatar
    jpcavanaugh

    The reason GM cant have more than 2 brands is that they cannot manage them. Two brands leaves a single boundary line between them. GM cannot deal with more, as they have shown for the last 40 years. Add even sub-brands, and the plan gets muddled.

    Pch101 has me thinking. This really is a clean sheet of paper moment. One mass market brand, one luxury brand. If GM were known for its cars and was not a big truck company, I would say ditch Chevy and go Saturn. But if you do this, you have to keep GMC for trucks because no red blooded american male will buy a Saturn pickup. And I don’t think GM will be able to manage 3 brands. So it’s gotta be Chevrolet. Pack it with the best of what GM has, set Toyota as the benchmark, and let them go out and compete. This has the added benefit of each brand having an existing independent dealer network.

    As for Cadillac, here’s an idea. Cadillac needs to spend 10 years grossly overbuilding its cars. When an engineer specs out a part, increase quality/cost by, say, 50%. No penny pinching. Everything the customer sees and touches, and all mechanical components. When Cadillacs top every quality survey and have the highest resale because they are so reliable and well built, Cadillac will have its reputation back.

    This will guarantee losing money for awhile. Next question, will a new GM have the ability to sustain such a venture? Perhaps not. But if not, then Cadillac will have a difficult time making it.

  • avatar
    SLLTTAC

    Everyone seems to know how to fix GM. How many of you all use, own, or lease GM vehicles?

  • avatar
    njdave

    I think that GM should abandon everything but Chevy. Get rid of the GM name altogether, it now has too much negative associated with it. Get rid of all the brands, because as many have pointed out Chevy outsells all the others by a wide margin. Concentrate on building high quality, desireable cars for while to establish Chevy as a good brand, with great products. Then perhaps bring back Caddy as a luxory brand added on top, like Lexus is for Toyota. GM right now is a bad word to almost all taxpayers.

  • avatar
    oboylepr

    GM as we have come to know it is gone forever. There is no brand cachet or vision left in any of the brands that GM currently own. An American auto company may or may not rise from the ashes of the GM funeral pyre but I would argue that if it has any of the trapings of the old GM still attached to it, it will not survive. To those who grew up with the storied nameplates like Chevrolet, Buick, Pontiac etc. it is hard to imagine an American auto industry without them. Their past glory is just that: past glory and it’s gone forever. GM has so badly damaged the brands in it’s care, they are all beyond redemption. As much as I respect Buickman’s love of GM when it was run well I do not believe that ‘ a return to greatness’ is possible with this corporate entity. No, all the brands must go, all of them, and especially the GM brand. They must start with a clean sheet of paper as pch101 alluded to in his post. Resist the temptation to bring anything over from the old GM to it’s replacement that would hobble it in any way. Bring over the best cars but find new names for them. Doing it any other way will spell doom for the new car company. GM is now in the corporate pallative care ward and the letters DNR (do not ressusitate) needs to be in big bold type over it’s death bed.

  • avatar
    jaje

    Good GM has always been Chevrolet and Cadillac. Cadillac for class and luxury. Chevrolet for everything else. 2 Brands will survive better than 10 different brands all claiming for their own support, marketing $s, new and unique designed metal, etc.

    The days of 10 brands with overly shared platforms of mildly differentiated product is over.

    GM needs to overcome that perception…well b/c they for decades falsely claimed they were even with the competition. It is just too hard to lie for so long and change perception overnight. GM cried wolf too many times.

  • avatar
    Steve Biro

    “PaulieWalnut :
    April 23rd, 2009 at 9:55 am

    This article’s veneration of the ‘brand’ seems to pay no attention to the real world.”

    Amen. Remember, it was the branding guys in the 80’s and 90’s who put the nail in the coffin at GM. “Branding guru Al Reis” sounds like he’s reading out of a textbook.

    I still think GM’s best chances lie with Chevy and Cadillac. As for the bow-tie, I don’t know why Reis seems confused: The concept of a mass-market, value-driven American brand that provides cars and trucks of all sizes is clear enough for me. What’s more, I think most Americans understand it was well. The only problem is, the cars weren’t good for quite a while. But they are now. The problem isn’t branding as in determining mission and market position – it’s getting more people to give Chevy a chance again.

    As for Caddy… hey, scoff if you will but I think they’re pretty darn good and much more desirable than a Mercedes, BMW, Audi, Lexus, Infinit, et al. Sure, many won’t agree with me but many do. I want Caddy to be different form the other luxury brands and offer a uniquely American interpretation of the high-end auto – which it is and does.

  • avatar
    ccd1

    Steve Biro:

    Take a look at the list of GM vehicles
    njoneer listed. Chevy itself makes about 3 cars that most car people consider competitive: vette, camaro and malibu. Of the 3, one (Vette) is a limited production niche vehicle. And Caddy? Throw out the trucks and you are left with the CTS/CTS-V. I do think this Caddy can compete with its European rivals. The problem is that nothing else in the lineup can. If you want American interpretations of car classes, only two of these vehicles stand out: the Vette as the uniquely American intepretation of the sports car and the CTS/CTS-V as the American interpretation of the sports sedan/uber sports sedan. The camaro is a good representative of the muscle car, but that is a uniquely American car class.

    It’s not that GM has caught up with the competition but the public hasn’t realized it. GM has a LONG way to go. These vehicles show that GM can make competitive vehicles, even class leaders. Unfortunately, GM doesn’t make nearly enough competitive vehicles. Personally, I’m willing to look at GM, but it has exactly one car that interests me, the CTS, and only one I truly covet but cannot afford, CTS-V. I doubt that I am alone in being interested in so few GM products. That is the problem and it is FAR from fixed!

  • avatar

    He’s right about Cadillac. When my dad bought a new CTS, all the guys at the country club asked him “why?”. He’d been driving BMWs, Audis, and Lexuseseses before that.

  • avatar
    MisterB

    The discussion seems to be ignoring the DEALER question. Supporting too many dealer lines with look alike cars has been a huge problem for GM. What dealers does GM want to keep? (This is assuming a bankruptcy that then allows GM to eliminate dealerships with legal penalties.)

    The original plan from earlier this year called for 3 sets of dealers: Chevy, Cadillac and PBG (Pontiac, Buick, GMC). The dealers have to be viable going forward also. (The key reason for the branding nameplates of the same car/truck was to support the various dealer networks.)Pontiac is now going so for the PBG dealers to have any chance at viability they would need the trucks from GMC. I also agree that Chevy needs trucks to be viable also. I think that the PBG dealers need to be dropped. If one “started over” maybe GM should select their best dealers (regardless of whether they are Chevy or PBG dealers) give them the new Chevy line and kill the rest of the dealers.

    Oddly enough GM could keep its Pontiac and Buick brands – so long as they were SOLD THROUGH the Chevy dealers and didn’t need their own dealers. This would also help move out the stock of current Pontiacs and Buicks. The performance cars would then be Pontiacs (not Chevys). Likewise the fancy car versions could be Buicks and the basic cars Chevys. For example, the standard SUV would be the Chevy Traverse and the fancy version would be the Buick Enclave. In this scenario, one couldn’t get the Traverse with leather seats, sun roofs and navigation etc. and all the Enclaves would have all of the deluxe features.

  • avatar

    GMC should be turned into an Iveco analog. Heavy commercial trucks only.

  • avatar
    folkdancer

    In several posts the clearest thinking comes from Pch101 as it does in this blog.

    All I can add is that Toyota has 1500 dealers vs. GMs 7,000 dealers. Stop to think about the expense of keeping tract of 7000 dealers vs 1500 dealers. They both sell about the same number of cars.

    I am enjoying this discussion about how to break up GM but I can’t see any possible good way to do so. Both the Chevilacs and the middle rangers have fun to think about points.

    The funniest line above is: GMC for trucks because no red blooded american male will buy a Saturn pickup.. How many pickups are purchased by businesses? Do businesses care what brand is on the vehicle they buy? I doubt it. Business people think about what gets the job done or else they don’t stay in business.

    We in the U.S. have had a love affair with being drug store cowboys and buying pickups for a few decades now but I have seen many fads come and go so I wonder what people will be buying in 5 or 10 years.

  • avatar
    NoSubstitute

    ““What’s a Chevrolet?” branding guru Al Reis asks, rhetorically. “It’s a small or large cheap or expensive car, truck, SUV or sports car.” ”

    Substitute “Toyota”, “Honda”,”Nissan”,”Volkswagen”or “Hyundai” for “Chevrolet” and the statement rings just as true (OK, maybe no sports car for Toyota and VW at the moment, but that’s unlikely to remain the case).

    Ah, but Chevy’s competitors have those elusive but desirable “brand attributes.”

    Really?

    Toyota’s is “reliability.” Except that as problem after problem plagues them and even CR backs off, not really, not anymore. Especially after the competition has more or less caught up.

    Hyundai owns “price.” Except that now it doesn’t; current pricing on mainstream products isn’t materially different from the competition. If anything, they own “strong warranties”, which is an attribute that’s hard to keep exclusive.

    Nissan means “value?” Now, that just making stuff up.

    BMW “owns driving pleasure?” If so, it’s part of a co-op that includes Porsche, AMG, Corvette, etc., etc., etc.

    The reality is that virtually every mainstream (including mainstream luxury) automaker has suffered brand dilution through endless brand expansion and cutthroat competition. Remember how strong the “Volvo equals safe” brand was not that long ago? Except now all cars are safe and people know it. Bye Bye Volvo. Remember when Mercedes meant exclusive unaffordable rock solid luxury? My son was picked up for a ride to high school this morning by his buddy driving his pimped out C class coupe. And I got some junk mail from the local MB dealer last night offering $300-400/mo. leases on half their lineup. Some exclusive.

    All in all, Chevy equals “American” doesn’t sound a whole lot worse as a brand attribute than anything else in today’s market. After all, brands don’t have to make sense to work. Just look at the example of Ralph Lauren cited in the article. His brand is something like “classy Hampton’s WASP,” except the founder is really Ralphie Lifshitz, a nice Jewish boy from the Bronx. Whatever, it worked. For a while.

  • avatar
    Hippo

    The big advantage GMC had over Chevy with trucks and SUV’s is that when one had warranty issues one went to the Cadillac dealer as most often they were in the same facility.

    Service was typically much better then at Chevy dealers where they deal with people that drive POS Aveo’s and such.

    At least there was half a chance of getting the problem solved and easy to get a loaner car. Not quite import standards, but halfway there.

  • avatar
    ccd1

    GM seems to be laboring under a pricing misconception, ie, if it can get its pricing lower, everything will be OK. Bankruptcy should address many of GM’s obvious cost issues: too many dealers, too many brands, too high labor costs, and too much debt. But if GM does not build more cars that people want to buy, none of this will matter

  • avatar
    KatiePuckrik

    I’m going to be a heretic (or a troublemaker, I can’t remember which one it is), but I think Buick has a place in “good” GM.

    Cadillac is more placed to compete with the German marques (i.e BMW, Audi, etc) and Buick is more placed for competition against the Japanese luxury marques.

    Cadillac (using the CTS) has more of a sporty flavour to their cars, just like the BMW 3 series and Audi S4, whereas Buick is just a luxury car, just like the the Lexus IS range and Acura TSX.

    Not to mention that Buick has some good products, like the Enclave and the new Lacrosse.

    Buick does get a right royal kicking from time to time (ok, ALL the time!), but I like their products and there are certainly worse marques out there.

  • avatar
    psarhjinian

    Cadillac is more placed to compete with the German marques (i.e BMW, Audi, etc) and Buick is more placed for competition against the Japanese luxury marques.

    Yes and no. Rather more “no”, actually.

    Lexus (certainly) and Infiniti (perhaps less so) very definitely compete against BMW, Mercedes and Audi. Cadillac is in a position similar to Infiniti’s: they have a decent foundation, but lack the upper-end. They’re just as much a serious a potential competitor for the Germans as Lexus is and Jag used to be.

    Buick would be a competitor for the likes of Acura, and thusly for semi-premium brands like Volvo, Saab, Lincoln and (at one time, without snorts of derision) Chrysler. Buick couldn’t hope to go upmarket without stepping on Cadillac, and the Acura/Volvo market is depressingly moribund, squeezed by the “true” luxury marques on the high and high-trim versions of commodity cars on the low.

    Trying to make Buick an upmarket brand where there’s already one (perhaps two if you count Saab and three if GM gets away with the stupidity of pushing Opel upmarket**) GM brand is not a recipe for success. Buick, next to Pontiac and less than the likes of Saturn (!), Saab (!!!) and GMC, is a redundant brand walking: there’s nothing Buick does that Cadillac and Chevrolet couldn’t also do.

    GMC does have a point, but only if Chevy stops selling trucks, which isn’t helpful. Buick only has a point if Cadillac stops selling the CTS, which would be suicide.

    ** which is a stupid idea that will do nothing except hurt Opel, Saab, Chevy and Cadillac in Europe. But hey, it’s GM: no mistake is so great that they can’t repeat it.

  • avatar
    ccd1

    The ONLY reason to keep Buick around is because it sells well in China. Other than that, GM does not need a near luxury brand between Chevy and Caddy. Psarhjinian’s comments are on point: near luxury brands such as Acura are languishing. There is nothing Buick can offer that would not fit better in either Chevy or Caddy.

  • avatar
    ccd1

    Some of this conversation might have just become academic. Edmunds Inside Line has just reported that an announcement could come as soon as Monday that Pontiac is officially dead. I’m sure the deaths of Buick, Saab, Saturn and Hummer will soon follow unless GM find a buyer for some of these brands.

  • avatar
    johnthacker

    Perhaps the biggest problem GM faces today is the fact that their cars don’t sell for nearly enough money.

    Perhaps. It’s somewhere between that and that they have a legacy cost structure (number of employees, number of retirees, number of plants, especially number of retirees and retiree health care and pensions, etc.) based on GM being much, much larger, and selling a much greater number of cars. Even if every car was sold at a profit, it wouldn’t be enough to pay for all the retirees and idling workers who have contracts.

    So the big point of this solution is to dump the obligation for the retirees onto the taxpayer. The government has already promised to back union pensions and benefits in the case of C11. Funny how GM and the UAW can both agree to make the taxpayer pay for it, huh?

    It’s almost exactly the reverse of the retired NFL players issue. In that case, NFL players who retired with certain promises and pensions when the NFL was poor want to share in the league’s new-found wealth, even though they’re getting what was promised at the time. Here, the retirees want to continue to be paid what they were promised when GM ruled the car market, even though it’s much smaller and poorer now.

  • avatar
    Dynamic88

    If we’re starting fresh, a main question is this – Can GM manage more than one brand. History says no. So, probably their best strategy is to retain only Chevrolet and make it the American version of Toyota – good quality, good value. Full line of vehicles.

    We know this isn’t going to happen, because the PTFOA isn’t going to be significantly more focused and disciplined than old GM.

    Chevillac won’t work, because without a placeholder between them, they’ll both loose their identity.

    Keeping GMC actually makes pretty good sense. Next to Hummer, GMC is the most focused brand GM has. GMC is synonymous with trucks. I’ve often wondered why people buy GMC in preference to nearly identical Chevies. There must be a reason. Flipping it around though, doesn’t seem to me to be a problem. What Chevy truck buyer will turn up his nose at a GMC?

    The trick is to get GM to build actual brand identities. GMC already has an identity. Make GMC the only truck brand and let all the Chevy dealers be Chevy/GMC dealers. This at least takes away some of the lack of focus at Chevy.

    I don’t know what to do with the rest of it. I’m too tired to come up with any more ideas.

    I’ll go back to my first thought – just Chevy. It will be hard enough for GM to do the right thing even with only one brand to manage.

  • avatar
    amadorgmowner

    Freed Mike and Paulie Walnut are right. Where is the bitching and complaining about Toyotas badged as Lexus, Hondas badged as Acuras, and Nissans as Infinitis? The silence is deafening.(BTW, The Lexus RX is a Highlander) GM should keep Chevy, Buick, Cadillac and GMC, and I would throw in a reduced Pontiac line. Reis and anyone else who is suggesting dumping Chevy needs their head examined. Why don’t we kill Ford and they could sell only Mercurys? Come on! All of this talk about what GM should keep or dump is a moot point until the the following happens: A. Economy improves, layoffs stop and people go back to work. B. Credit loosens and C., Confidence builds in the public. When all of this happens, people will start buying cars again. Until then, very few cars made by any company are going sell.

  • avatar
    rcory

    C’mon, RF. You’re putting stock in the words of a “brand guru”? Gee, is this Al Reis guy as smart as other infamous brand gurus like John Smale and Ron Zarella? Sure hope so. You remember how much good they did GM, don’t you?

  • avatar
    Pch101

    It’s somewhere between that and that they have a legacy cost structure (number of employees, number of retirees, number of plants, especially number of retirees and retiree health care and pensions, etc.) based on GM being much, much larger, and selling a much greater number of cars.

    There are numerous mistakes with that comment, which I quantified in detail elsewhere on this site.

    Toyota is a good proxy, because it produces a similar amount of cars and GM (theoretically) competes against it in the same segments.

    Toyota spends more on operating costs per vehicle, yet makes a profit during periods when GM generates losses above the line, not including pensions.

    Interestingly enough, Toyota also has a substantially larger number of employees. (I’ll bet Rick Wagoner never told you that.)

    Based upon a normal year of operations, Toyota could fully fund GM’s pension and VEBA obligations with three years’ worth of business.

    GM would not have a “legacy costs” problem if it had good products that generated the revenues that would allow it to hurdle the costs. GM already spends less than does Toyota to build roughly the same number of cars, but it sells its cars for one-third less.

    GM has lower revenues per unit than either Toyota or Honda. That’s quite something when you remember that Honda does not have a well defined luxury brand that it can use to sell high-margin vehicles at high prices. That should be a hint of how poorly positioned GM is to sell products at a decent price point.

  • avatar
    davey49

    “Truly superfluous at this point: Saturn. When a Toyota owner is more willing to buy a Malibu than an AURA, Saturn’s done.”

    Saturn is done only because of product. The brand is still good. Bring back the Saturn of 1991 and we’ll line up at the dealer’s doors.

    “Hummer’s done. Their sales are in the toilet, and their brand just seems to stand for the good ol’ American excess and waste that helped drive the economy into the ditch. Nobody needs a huge macho-styled gas guzzler that barely seats five. I think people are starting to be a little more conscious about image, and a Hummer isn’t the image many people want to portray any longer. Shutter the brand.”

    More the reason to keep HUMMER around. Now that the poseur HUMMER owners are gone people who want HUMMERs for their superb all-weather and all-conditions capability combined with luxury can buy their cars. Plus the styling does stand out.
    And no one will ask a Traverse owner to rescue people from a natural disaster.

    Is the Malibu really all that great? Sales aren’t any better and reliability is mediocre.

    I didn’t know that Buick and GMC were part of “bad” GM. In that case “bad” GM will kick “good” GMs booty.

    “Freed Mike and Paulie Walnut are right. Where is the bitching and complaining about Toyotas badged as Lexus, Hondas badged as Acuras, and Nissans as Infinitis? The silence is deafening.(BTW, The Lexus RX is a Highlander)”

    You’re bitching and complaining right now.
    No Infiniti, Lexus or Acura is a rebadged Nissan, Toyota or Honda that I know of. They may have similar design platforms but they are all quite different from each other. The “standard” and “luxury” brands of the Japanese companies also have separate cutomer bases. 2 different people will buy a Lexus and a Toyota. 1 person will buy a Chevy, or a Pontiac,or a Saturn, or Buick or GMC
    (depending on type of car desired)

    Buick’s current appeal seems to be lost on the here and now types. Maybe it’s a youth thing.
    Buicks are the most reliable GM cars.
    Makes for a lifelong commitment.
    BTW, killing the LeSabre and Park Avenue nameplates, enormously stupid on GMs part.
    The LeSabre was the only GM car that garnered the same praise the Camry does.

  • avatar
    davey49

    “But if you do this, you have to keep GMC for trucks because no red blooded american male will buy a Saturn pickup.”

    Good, because I want no car that said “red blooded American male” would buy anywhere near a Saturn dealership. Saturn wants the RBAMs nebbish older brother. Saturn has no point if it is not cars that people with social phobias can be comfortable with purchasing and proud of owning.

  • avatar

    Has Al Reis or his daughter (no nepotism there) ever developed, produced and sold a product to the public?

  • avatar
    Happy_Endings

    More the reason to keep HUMMER around.

    Like it or not, Hummer needs the “posuer’s” to make money. If people want all-weather capability, they can get a Subaru. GM is no position to keep a brand that has little chance to make a profit.

    It’s kind of like sports. The NHL has as many hard core fans as any other major sports league in the US. The problem is that they have few part time fans. The hard core fans of any brand are rarely in great enough numbers to keep the brand around. At some point, you need the “posuers” to spend their money or else the brand will collapse.

  • avatar
    rhino26

    This is what i think:
    Chevy should transfer all of its non-car products to GMC. They should focus on cars. The first thing to go should be the impala with a few small design changes i think the lacrose could be used as a replacement for the aging impala. Leave it at the price range with the avalon. The cobalt needs to be replaced with the cruise yesterday. They should build a two door malibu. This brings there car count to four(malibu sedan and coupe, lacrose, and the cruise) Buick can go the way of the cows out to pastor. Saturn should get the volt to go along with its two mode hybrid vue, and addition of a real hybrid for the aura would be nice. The sky should be given a hybrid powertrain. A real player for the yaris, fit, versa game would be nice too. the aveo is on the jokish side. Pontiac should recieve the vette and the camaro in the form of the firebird and drop the rest(G5,G3, and G6). For all this to make sense i think action from congress about the cafe standards would be nice. This is becuase saturn would have no trouble but pontiac would be more of a challenge and so would gmc. The key would be developing turbo charged engines for both companies. The biggest problem with gm and gas milleage on certain models would be weight. The vue, cts, malibu are examples of heavy vehicles that would do better with a few hundread pounds taken off.

  • avatar
    davey49

    “The sky should be given a hybrid powertrain”
    Where would you put it?

  • avatar
    davey49

    Happy_Endings- true HUMMER needs the poseurs. so does Jeep, and Jeep poseurs are the biggest HUMMER haters out there.
    Plenty of poseurs around for H2 production. Maybe not for the H3 but I suspect that will be gone shortly. I like it though. I like HUMMERs now because they stand out even more than when they were first introduced.

  • avatar
    davey49

    The Aveo might actually make money for GM. It was one of the better ideas GM has come up with. Not the greatest car but Chevy has had a subcompact sitting in it’s showrooms since the 1970s
    Chevette-Sprint-Metro-Aveo
    Even during the SUV craze
    Only Toyota I can think of matches it in the US
    Tercel-Echo-Yaris

  • avatar
    Dave M.

    Saab hasn’t had a hatchback since they re-designed the 9-3 in 2003. And “intelligent design”? Give me a break. All of their models have been stale designs based on someone else’s platforms since the GM takeover. Face it, GM ruined your favorite car company.

    Sadly you are right. I still love the uniqueness of my 9-3 ‘vert. Don’t see many at all.

  • avatar
    Packard

    Too much is being made of “brand” strategy. Some of the reason GM is where it is goes back to the notion that took over the company at one point: that all there was to selling cars was creating “brand” identity.

    Customers do not define themselves by the vehicle brand they drive, these days. Cars are commodities to most, not icons or symbols – and this will be even more true after the current economic crisis. Sure, there are people who make a statement with a Prius and those who do it with an Audi A8, but the majority of the market is buying Corollas and Civics and they don’t have brand loyalty.

    GM needs products that offer quality, and they can sell if they do that. Here in Berkley East – Madison, WI – the land of the Civic and Corolla, we’re seeing a lot of new Malibu’s on the street, a particularly remarkable development because GM’s promotion of that vehicle has been terrible.

    Unfortunately, it is not realistic to see GM actually accomplishing this across the line, because it has no money and has systematically decimated its engineering ranks. It has very efficiently killed off its capacity to survive as anything beyond a patient on government life-support, waiting for the plug to be pulled.

  • avatar
    GTIKLLR

    GM must get their hands on the plans from the new Opel Insignia. Badge tune it a Chevy, take it under the arm and run forward for a reasonably priced (remember the Saturn Astra pricing debacle) home run.
    Recently I drove an Insignia through Germany and regretted leaving it at the airport. Being in the consulting business, I practically drive every brand, every mid to large sized car there is at one point. It’s the car I know the wife and kids would like to drive. Preferably a sixer Diesel…

  • avatar
    mawz

    how about this idea:

    Ditch the brands entirely. Bring them back as model names. Ditch most of the dealers, the rest become GM dealers.

    Malibu becomes the Chevrolet, the upcoming Cruze becomes the Chevette (or another Chevrolet-derived name). The Equinox can be the Chevrolet Wagon.
    CTS becomes the Cadillac
    The full-size trucks become the GMC, sell the Burb as the GMC Suburban, sell the current small truck as the GMC Lite.
    Either the Lucerne or Lacrosse becomes the Buick.
    The Aura Hybrid becomes the Saturn, eventually gets replaced in this role by the Volt.
    The Camaro end up with a screaming chicken as the Pontiac. V8 versions are the Trans Am trim level.
    The Corvette is pretty much the idea here. Each vehicle gets its own badge (from the Brand) and the GM badges on everything now make sense.

    Jeep gets merged into GM after Chrysler goes C7, provides the Wrangler and Grand Cherokee as the ‘Jeep’ and ‘Jeep Grand Cherokee’. Lose the rest of the SUV’s from all the brands.

  • avatar
    "scarey"

    The problem with GM is NOT the products themselves. The problem is that bean counting replaced car making as the culture at GM. When GM dominated, each brand made basically ONE or two models. Drivetrains were mostly interchangable, NOT high-tech, and bulletproof. Want proof ? Look at Volkswagen. In the 50s/60s, the Beetle dominated import sales. Two models, car and bus. They sold every one they could make. They minted money. Now look at VW. Toureg ? Routan ? Passat ? Huh ?
    GM is making good cars again. But maybe too late.

  • avatar
    Jim Cherry

    Death by bean counters. The only surprise is that it took so long. GM has to change its culture in order to survive: http://www.examiner.com/x-6882-LA-Classic-Cars-Examiner~y2009m4d17-GM-near-bankruptcywhat-happened

    And now, auf wiedersein, Pontiac!
    http://www.examiner.com/x-6882-LA-Classic-Cars-Examiner~y2009m4d25-The-Pontiac-story-death-of-an-American-classic

  • avatar
    guitronics

    GM’s problems stem from it’s hourly workers.
    ***********************************************
    “over-priced labor, restrictive union work rules, astronomical pensions and onerous health care obligations”.
    ***********************************************
    Every problem GM has ever had is due to it’s hourly workers.They make too much money! The work rules make the cost of production much too high!(Less than 10% of the cost of any new GM vehicle is due to all forms of labor). 10% !
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    They don’t deserve their wages and benefits! The pensioners are living like Kings! They have much too generous health care plans!
    ………………………………………….
    GM would not even have unions, if they had 1)Treated their workers humanely, and 2)made a commitment to keeping their hourly workers employed.
    =================================================
    Before the UAW, the assembly line worker turnover rate was 300%.The first strike happened because GM Management was in the process of moving plant equipment (Presses, etc) to “other locations” by rail. That’s why the workers had their “Sit – Down” strike. Job Security.
    ””””””””””””””””””””””””’
    The UAW leaders did not want to go on strike at the time…but the workers took over the factory (Fisher 2) because they knew that if the equipment was moved (by rail)…there would be no way to have an effective strike!It was the workers’ who forced the UAW to support THEM.

    These facts are a part of Labor History.

    :::::::::::::::::::::::::::::::::::::::::::::::::
    Apparently, conditions were poor at most, if not all Auto plants….the sit – down strikes spread.Do you really think people would have risked doing these unprecedented actions without sufficient cause?
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    Why is it that every time there’s a problem in the automotive industry, it’s automatically agreed that it’s the Hourly workers’ fault?
    ++++++++++++++++++++++++++++++++++++++++++++++++++
    At one time, yes, when GM had over 50% of US market share, hourly workers were ALLOWED by Management to abuse the system.

    Maybe,that happened because Management had grown accustomed to abusing the system themselves. Those days have been long gone…since the start of the ’80’s.
    “””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””
    With each “concessionary” contract granted to GM since 1982,not ONCE has GM reduced it’s prices of vehicles and/or parts. NOT ONCE.
    ————————————————-
    It is incredibly difficult to hold down an average hourly job inside GM. I would not want my Grand – Children working there.
    ………………………………………….
    There’s no respect from the general public, (who have their nose into any and all hourly workers’ work lives), no real job security, no real power in the UAW (Toothless, in fact, they now do Management’s dirty work),dirty, hot/cold, and loud working conditions; and a worklife of stress.
    “””””””””””””””””””””””””””””””””””””””””””””””””
    Work Rules? LOL…there are precious few work rules at all. A worker is either 1) Skilled Trades, or 2)”Unskilled”. #2 is a misnomer, since most jobs are continually re-assessed by the manpower coordinators, who time test the production of workers and constantly look for new ways of adding work onto “non-skilled” workers.
    :::::::::::::::::::::::::::::::::::::::::::::::::
    I defy anyone to walk in and do any assembly line job without intensive and extensive training.
    “““““““““““““““““““““““““
    The Skilled Trades have been reduced to very few trades, and cross – training reduces the types of trades needed.
    “””””””””””””””””””””””””””””””””””””””””””””””””
    Millwrights weld,Electricians move heavy equipment , Pipefitters do electrical conduit and some electricians’ work.
    ————————————————-
    All skilled trades carry 2 – way radios,and are directed to wherever needed in far – flung areas of a department.
    There are fewer Skilled Trades people, they are being “Reduced out by attrition”. I fully expect that by the next contract, they’ll be replaced by outside contractors.
    /////////////////////////////////////////////////

    Some “Non-skilled” workers also carry radios…Paint booth robotic technicians (Non – skilled!),Team Leaders, parts chasers,etc.
    :::::::::::::::::::::::::::::::::::::::::::::::::
    My plant – Flint Assembly – had, in the ’70’s, 8,500 employees, consisting of computer support people,salaried (Management) people, and 2 assembly lines (Line 1 : Pickups, Line 2, Suburbans and Blazers), on 2 shifts.
    +++++++++++++++++++++++++++++++++++++++++++++++++
    Now, Flint Assembly has 2 Lines (900 series 2500HD and 3500HD Pickups, and the 560 Commercial Truck line).
    **************************************************
    The 560 line has one shift only.

    The 900HD line has 2 shifts.
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    There are a grand total of 2000 employees at Flint Assembly….That number includes Computer support personnel,Management,”Outside Contractors” such as BASF paint support personnel,sanitation workers, construction workers, and all (UAW)Hourly workers.
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    The plant is incredibly automated,there are literally hundreds of Fanuc robots.
    #################################################

    FUD.That’s what it’s like working in an assembly plant.I know, I spent 36 years working in one,now I’m laying back enjoying my big, fat,undeserved pension; concocting ways to spend GM’s money with my astronomical health care benefits.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    How much money do YOU make? What are YOUR benefits? What are YOUR perks? Finally, What makes you think YOU DESERVE your income? I, for one; don’t buy it. There’s always somebody who’ll do YOUR job better, who’s more conscientious, and will do a better job than YOU, for less money and benefits.They will do it without a pension, and without health care.
    ##################################################
    When the 9 week – long layoffs start, we’ll see what happens to the US’ economy.
    /////////////////////////////////////////////////
    Are you still working?

    KEEP BUYING FOREIGN AUTO’S!

    And/or- KEEP BUYING AUTO’s FROM FOREIGN OWNED CORPORATIONS!

  • avatar
    cdandy

    It is the natural evolution of designing and building anything, including, cars to adopt the best practices to minimize costs of building products. Early on, no one knows what those best practices are and a we see a great variety of unique ways to get the job done.

    Well that was 50 years ago. Now, cars are like refrigerators. We know what they need to do. We know how to build them and /or are told how to build them by government. Any if you take any of the standard sedans and trucks apart you can see they are built pretty much the same.

    Well GM was a giant when they weren’t the same. They marketed a variety of unique products under one corporate umbrella that satisfied the masses.

    Now, government, competition and technology has wrung the ability to build something different, even if it incorporates such useless things as tailfins and poor gas mileage, as too risky.

    Given that the cars are going to be mostly the same anyway, then it is the marketing that will be the most important. In GM’s case, emerging out of bankruptcy carrying its “heritage” baggage may give reason to just dumping all brand names and start anew.

    Just like Daewoo. Except no one will remember the bad head gaskets in a 1981 Daewoo because there weren’t any!!! Hence the value of reinventing oneself.

    Reinventing oneself, having the ability to build cars out of the gate and reemerge as a different, albeit new, company may be the best route to go. That way you can rest on a new set of laurels instead of the tainted ones of the past.

    I’m so glad, as an Oldsmobile enthusiast, that Oldsmobile went out with some kind of dignity, even though they were a guinea pig of the most unlearned kind.

  • avatar
    Jim Cherry

    “Given that the cars are going to be mostly the same anyway, then it is the marketing that will be the most important. In GM’s case, emerging out of bankruptcy carrying its “heritage” baggage may give reason to just dumping all brand names and start anew.”

    Have to disagree. Though cars look similar and are engineered fairly the same, the quality of their construction and its impact on operating costs will be more important than marketing. This is not to discount the importance of marketing, but to put things in a real world perspective.

    U.S. companies disdained Demmings’ quality systems while Japanese companies thought them the equivalent of holy writ. Now we see who was right.

    For more details, http://www.examiner.com/x-6882-LA-Classic-Cars-Examiner~y2009m4d17-GM-near-bankruptcywhat-happened

  • avatar
    guitronics

    cdandy: I think your assumptions are unrealistic.Auto’s aren’t “Like Refrigerators”. A refrigerator is required to cool,and do that efficiently while standing in the same spot for most, if not all; of it’s useful life.Even refrigerators must add technology from time to time, such as in – door water and ice,interior lighting, improvements in electrical efficiency; ease of cleaning (inside and heat exchangers), and decreasing noise.

    The point I was trying to make is that almost everyone is expendable.Bankers? Do it over the Internet.Supervisors? Mostly unneeded.Architects? Use the plans already on file.Real estate agents? “The WEB”. Auto Mechanics? Reduce their ranks by employing “Diagnosticians”(Plug and Play).

    GM may indeed be in it’s death throes, but then so is the U.S.A.

    That will become evident in the next couple of months.

    While all of the armchair experts are arguing amongst themselves, the country is coming apart.

    Even the wealthy are losing in this economy, and big.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Jack Baruth, United States
  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States