General Motors Death Watch 190: Kill Everything but Chevrolet and Cadillac

Ken Elias
by Ken Elias

BMW doesn’t need to advertise their “ultimate driving machines.” After decades building and selling vehicles offering sporting luxury, BMW has trained its customers to intuitively understand their products' appeal. Brands take years if not decades to develop, millions to billions of dollars to engender, and require careful stewardship to sustain. Contrary to much of this website’s commentary, GM’s management is not stupid. They know that Buick, GMC, Pontiac, Saab and Saturn are “damaged brands” in North America. But unless General Motors’ execs follow Bimmer's lead, and soon, the company will fail.

Branding isn’t metaphysics. It’s simple economics. Well defined brands lower the costs of customer acquisition and retention. Last year, GM spent some three billion dollars marketing and advertising in North America. But with eight supposedly unique brands, the vast majority of these dollars are wasted. (This doesn’t include the billions spent engineering and/or badge-engineering dozens of also-ran products to fill-out the eight brands’ portfolios.) Question: why bother?

In 2007, Buick/Pontiac/GMC’s combined market share stood at 6.4 percent. That’s roughly the same share as Dodge (6.6 percent) and only slightly more than Nissan (5.8 percent). Despite a largely revised lineup, Saturn’s mustered a 1.5 percent market share. Saab barely shows up at 0.2 percent.

These five GM brands combined account for 8.1 percent of 2007 total U.S. light vehicle. Honda’s U.S. market share was 8.5 percent. In other words, five of GM’s seven domestic brands (assuming HUMMER goes away) don’t even equal the total sales of a [growing] competitor with a single, well-defined brand image.

All of these five money-sucking GM brands are damaged beyond repair. Buick’s website doesn’t even offer a strapline (“When better Buicks are built…”). GMCs are all Chevy clones. Pontiac is car? How generic can you get? Again, Saab isn’t on the radar– even if it is “Born from Jets.” Saturn never made money and consumers shunned/ignored/never heard about its recent Euro-flavored makeover.

Here’s the rub: it’s too late to cut the deadwood. Even with GM’s four new “sales channels” (Buick/Pontiac/GMC; HUMMER/Cadillac/Saab; Saturn and Chevrolet), the automaker can no longer afford to euthanize its zombies. Chief Financial Officer (now COO) Fritz Henderson admits the math doesn’t work; the cost to terminate the brands (a decision that would launch a thousand franchised dealer lawsuits) and the loss of cash flow would doom GM.

It’s the ultimate quandary. GM can’t afford to bolster its brands with distinct and appropriate vehicles and effective marketing. But The General can’t not feed them– else the brands will wither and die and take GM down with them. This is, of course, exactly what’s happening right now.

Bankruptcy protection provides one way out: an escape from all GM’s dealer and brand commitments– at an unknown but cataclysmic cost to consumer confidence in the company. Otherwise, there’s only one option. GM must replicate their HUMMER strategy and stop all corporate support for Buick, GMC, Pontiac, Saab and Saturn dealers.

We’re talking about cutting off all product development and advertising– other than promoting current sales. Crucially, GM must also refuse to pay its franchised dealers to close; the store owners will eventually see there’s no future and take appropriate action to shutter their stores (i.e. disappear like Isuzu).

As GM slices spending on soon-to-be dead brands, it must also pour all of its remaining resources into Chevrolet and Cadillac.

Any forthcoming product refreshes should be channeled into these two remaining brands. For example, the Traverse CUV remains a Chevrolet, the GMC Acadia and Saturn Outlook go away, and the next Buick Enclave becomes a Cadillac. In this case, GM pares four vehicles into two, and the Lamda- platformed Chevy and Caddy are clearly differentiated in price, design and amenities.

By the same token, the Australian Pontiac G8 becomes a limited edition Chevrolet, while the rest of Pontiac’s lineup takes a dirt nap. The next Buick Lucerne becomes Chevrolet’s large car (which its current lineup lacks).

GM can and must rearm Chevrolet and Cadillac with unique, differentiated vehicles supported by marketing that best defines each brand. Vehicles that will make consumers stand up and notice.

Chevrolet can take the fight straight to Toyondissan with refined, value-priced Chevrolet products, boldly and widely marketed. Who knows? Chevy might even start a genuine American Revolution. Meanwhile, with unique styling, concentrated engineering and “American” comfort, Cadillac could return to its upmarket roots as the “World Standard,” competing with the Germans and Japanese.

As the Robert Burton said, there’s many a slip 'twixt the cup and the lip. There’s no guarantee that GM could survive with two excellent brands. But it’s a sure bet that it CAN’T survive with any MORE than two brands. The old adage recommending concentrated firepower is no less true for carmakers than military campaigners.

Ken Elias
Ken Elias

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  • GLH GLH on Aug 09, 2008

    The biggest difference in the American Cars today and yesterday is character and soul. General Motors had what BMW has now and lost it – recognition of the brand without the emphasis of advertising, and telling folks whom they are. But something changed. Without regard to future needs, GM kept building what they told us we wanted, and it has them circling the drain. Eliminating brands won’t save the company. The same badge engineering continues when everything is labeled a Chevrolet or Cadillac. Chevrolet and Cadillac don’t have the reputation of quality anymore. In the past, American cars had souls, stories and unique recognition. All of this is gone for GM. GM needs a moniker that gives recognition similar to what Chrysler has barely managed to keep with their four letter world – HEMI. A simple word representing a part – or engine - can go a long way in creating a soul, and it’s not something you can invent and shove at people.

  • PhilR PhilR on Aug 11, 2008

    I can't imagine myself buying any of the current offerings from GM. There should be no need to cut brands. GM just have to find out what those brands were in the sixties when GM was the healthiest manufacturer in the world and make them like that again. That means: -Saturn could be renamed "Opel", -Saab could produce cars powered with 3 cylinder two stroke engines (ok maybe not!), then how about 4 cylinder FWD compact car like the Saab 99, - Cadillac should make luxury barges, stretched limos, other speciality cars like funeral cars, flower cars and a FWD luxury flagship coupe like the '67-69 Eldorado. -Buick should be making only RWD cars mid-size luxury cars, Sportwagons, Fullsize cars with a sportier image like the Wildcat and Riviera. -Pontiac should make more afordable cars with performance image too. -Chevrolet should make the fleet cars, from small rental cars to the large RWD cars with small engines for taxis and with big engines for police officers and also the Corvette! -And maybe Oldsmobile, the FWD king that reintroduced FWD cars to North America in 1966 should come back with an all FWD lineup for FWD lovers who can't afford buying a Cadillac Eldorado!

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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