By Deep Throat
May 9, 2008 -
If GM keeps all its brands and most of its vehicles, there is no road map to longer term success. In the end, there just isn't enough money or market share to justify or support The General's North American operations as they exist today– even in their downsized, strike-afflicted form. At some point, preferably ten years ago, GM needs wholesale consolidation to focus on three brands: Chevy, Caddy, and Saturn. Everything else is superfluous. The problem at the RenCen: they can't figure out how to shed brands/products. Alan Mulally has shown the way Fordward, but he's dismembering recently purchased assets. GM's decades old "damaged" brands can't be sold individually, and can't be terminated. Short of C11, GM's going to have to bite the bullet and tell its BPG (Buick, Pontiac, GMC) AND Saab and Hummer dealers that the corporate mothership will honor existing franchise agreements until they expire, but they will not be renewed. Sure, it'll be the letter that'll launch a thousand lawsuits. But there's no other way for GM to survive in NA. None.
Subscribe to Newsletter51 Responses to “ Wild Ass Rumor of the Day: GM to Shutter BPG? ”
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May 9th, 2008 at 3:05 pm
Let me jump in here to clarify a few things…
1. Deep Throat is a real person.
2. TTAC has MANY sources within the industry who feed us tips anonymously, or point us in a certain direction.
3. This particular entry could also be labeled “informed speculation.” We were given a scenario by an expert. I checked its plausibility with some of our other “friends,” two of whom work for GM.
4. I understand if some of our readers find it unacceptable to call this a “rumor.” As in we’re starting one as opposed to reporting one. But I felt the information was important; and it fit somewhere between an editorial and complete left field-ism. (Certainly not a news item.)
May 9th, 2008 at 4:23 pm
Remember, not Saturn- Opel
Saturn no longer exists
Just keep saying Opel, Chevrolet, Cadillac
May 9th, 2008 at 4:39 pm
Without anonymous sources, investigative journalism is impossible. Insiders won’t put their names on information that could cause them to lose their contacts or get fired.
May 9th, 2008 at 5:19 pm
netrun:
“Truth is, whichever brand you choose as your third GM brand to keep will be controversial because there is no good choice for a third brand.”
Olds was in the middle of Sloan’s division hierarchy, so sould it be a huge stretch (especially in the context of the scenario our anonymous contributor has presented as a very real possibility) to axe BPG, Saturn, Saab and Hummer and revive Olds with a mix of Opel and Holden products? For example:
-Opel/Saturn Astra -> Omega
-Opel Insignia/Saturn Aura -> Cutlass
-Holden Commodore/Pontiac G8 -> Eighty-Eight
-Holden Statesman -> Ninety-Eight
As long as the Cutlass and Omega didn’t step on Chevy’s toes and the Eighty-Eight and Ninety-Eight didn’t encroach on Caddy’s stuff, it could definitely work.
Will it ever happen? Doubtful, but a certain Japanese juggernaut appears (mostly) able to make the whole “cheap brand, midrange brand, and luxury brand” thing work…
May 9th, 2008 at 5:20 pm
I’m in doubt about this rumor. GMC sells half a million trucks -high profit per unit- and I’m not at all convinced they steal sales from Chevy. I mean, there’s a Chevy dealer within a stones throw of every GMC dealer, so if people wanted a Chevy they’d be driving one wouldn’t they? Should GM really fool around with the number 2 division?
Pontiac is number 3 in sales, so once again we have the question - where do these customers go? And if they go to Chevy, why aren’t they already in a Chevy? Why don’t they go to the transplants?
I’ll have to repeat what I said yesterday in response to the Titanic editorial - I just don’t get keeping Chevy and Caddy. Caddy isn’t doing much better than Buick, unless you can tell me why the magic number at which noise turns into signal is somewhere between 185K and 214K. Saturn, Pontiac, and GMC each sell more than Caddy.
IMO, Caddy is often chosen for keeping because it fits popular branding concepts - something at the low end, something at the high end, stretch both to meet in the middle and the market is covered.
I think the end result is two brands which are indistinct from one another -at least in the middle of the market. If you don’t want the high end and low end product meeting each other, there’s a need for a “tweener” brand.
Again repeating from yesterday, Caddy is a microcosm of GM. Caddy makes luxury barges, sporty luxury cars, pickup trucks, SUVs, and has it’s V series to appeal to performance minded buyers. Caddy is also pricing it’s CTS too low.
So why keep this poor performing muddied confused brand, along with Chevy? I mean, if the goal is to focus, why keep the exteremely unfocused Caddy divison?
If I were taking the slash and burn approach to fixing GM I’d slash and burn all of it, except Chevy.
Slash and burn isn’t the way to go, imo. As someone said above, killing off divisions at least has to be done one at a time to avoid the sudden revenue loss. But I think GM only needs to kill a few brands. I’d keep Chevy, keep the BPG dealers -making GMCs a bit more luxurious than their Chevy cousins (noticeably), making Pontiac the performance division, and keeping Buick as near luxury. Saturn I’d kill. Caddy I’d keep as a direct competitor of Lexus. That’s the brand they need to emulate, and not the silly “F” cars. Saab and Hummer I’d kill. That would leave five divisons, but only 3 sales channels.
May 9th, 2008 at 5:43 pm
Robert Farago:
The Day After…
Would send this in as email, but seems more relevant here:
Can you assemble and sythesize for us all that is known about the collateral put up by Ford and GM for its various lines of credit obtained in recent years ?
The big question is what the world looks like the day AFTER a ‘big 2.8′ bankruptcy or implosion.
If Citibank, say, ends up with a whole plant in Mexico, can they, would they keep making the products ?
Can they sell them in the US ?
How would all this go down ?
Possible to ‘reconstruct’ the crash site, do a damage report before the crash, spin a few scenarios for us as a Death Watch ?
‘Hal Holbrook’ can help !
May 9th, 2008 at 5:49 pm
Dynamic88: I think the idea of a tweener brand works in theory, but how often does it work in practice? Mercury has been reduced to rebadged Fords with slightly nicer trim. GM’s middle brands are a mess, and none of them are in particularly great shape. What else is there?
But I’ve suggested essentially the same thing TomAnderson said: fold all the middle brands together into one. I don’t think I’d revive the Oldsmobile name, because it has too much baggage. My suggestion was to call the new tweener division simply GM, but maybe the Saturn name could work. As Robert Farago and others have pointed out, it’s still somewhat of a blank slate, so it’s got some potential. And if GM could focus all the advertising money from four or more brands on one, then maybe they could really build it up to something meaningful.
May 9th, 2008 at 5:54 pm
Jonathon
That’s not a bad idea. And you’re right, the “tweeners” don’t have their own identity now, but if GM is reduced to Chevy/Caddy then those two will become indistinct.
May 9th, 2008 at 6:01 pm
Juniper,
Check yourself. Is your name Juniper? If not, why should we believe you when you say that anonymous authors are not to be trusted? If you are indeed named Juniper, you might want to make fun of Madonna for having to fake having only one name.
At any rate, I don’t put any more credibility in anyone in journalisms name anymore. That ship sailed years ago. The words speak for themselves.
May 9th, 2008 at 6:12 pm
GM should be broken up so that the various companies inside it can be allowed to compete and realise their potential. “BPG” doesn’t need to be shut down - it could be spun off to shareholders as a separate firm and look for investment from private equity or foreign groups who want to enter the US and Chinese markets. (Buick in China is GM’s crown jewel so they wouldn’t let it go but I can hope).
Opel/Saturn/Holden could be broken out too and Corvette left independent (an American Porsche!)
A rump GM would be Chevrolet/Cadillac/Daewoo.
Hummer and Saab can be sold to a Russian.
So maybe you would slice and dice differently but there are at least three viable global automakers trapped within GM. Wagoner wouldn’t put himself out of a job though, captaining the sinking ship is lucrative.