By on January 29, 2008

heyes.jpgBack in the eighties, a GM executive congratulated a colleague who worked for the Cadillac brand. “Well done for reaching 300k sales.” The Caddy man was having none of it. “We didn’t sell three hundred thousand Cadillacs; we sold three hundred thousand Buicks.” The remark was prescient in two ways. First, it acknowledged Cadillac’s ruinous move “down market.” Second, more importantly, it reflected the fact that Caddy’s success was Buick’s failure. GM was already descending from a well-ordered familial hierarchy into the madness and chaos of cannibalism.

Alfred P. Sloan’s motto “a car for every purse and purpose” established the framework for this descent. Sloan encouraged GM customers to work their way up from cheaper to more expensive brands. When GM’s brand delineations were rigid, when there was a steady supply of customers at the bottom of the ladder, the system worked beyond Sloan’s wildest dreams. GM was the world’s biggest carmaker AND the planet’s most profitable company. 

Today, GM’s overlapping brand and product portfolio has rendered Sloan’s system meaningless. GM’s eight brands compete with each other for business with similar if not virtually identical products. Saturn Aura, Chevy Malibu or Saab 9-3? Chevy Traverse or Saturn Outlook? Or GMC Acadia?

Honda killed the Prelude when the S2000 came out, then killed the RSX when the Civic went up-market.  Toyota killed the Celica when the Scion-tC arrived. While all of these cuts had something to do with lowered sales, they were more about preventing cannibalism. Conversely, GM doesn’t seem to want to cut anything.

GM’s CUVs are selling reasonably enough, but their SUVs are still out there, somewhere. As GM’s shrinking market share proves, their CUV sales haven’t been anywhere near large enough to compensate for the drop in “traditional” trucks. Even if they were, GM’s unibody CUVs are more expensive to produce than their body-on-frame predecessors. Downsizing customers are downsizing GM’s profit margins, Big Style.

On the face of it, this CUV on SUV cannibalization seems logical and unavoidable. GM’s SUV customers are abandoning the genre anyway, so why not keep them “in the family?” Better some profit than none. But the counter-argument is far more compelling. Overlapping products dilute or destroy the central brand message. Product development and marketing resources are spread paper thin. This kind of cannibalism makes its practitioners weak, and lazy.

New vehicles always draw customers away from rival products. The cars that suffer the most are the least “competitive” in or near that market segment. Unfortunately for GM, they often own both the next big thing AND the tired old timer. Note how the Malibu push mirrors the Impala’s fall. And the Saturn Aura’s. And the Pontiac G6’. And God knows what else.

Sadly, GM executives seem completely oblivious to the problem. The new CTS may be a hit product, but no one in the organization seems to have stopped and considered the fact the bright shiny newcomer will consume Caddy customers who may have (for some reason of other) hankered for a pricier DTS or STS. By the same token, the rear wheel-drive (RWD) Pontiac G8 could well be an exciting ride, but if it’s too exciting, it could steal sales from both the (RWD) CTS and the now po-faced front wheel-drive G6. And God knows what else.

Dealers are active conspirators in all this. Whenever a hot product appears at a rival brand, they demand a “tit for tat” version. This leads to badge-engineering, which further divides the sales pool, which ensures that any successful new car will eat its “father” (or uncle) first. It’s a vicious circle that dooms all its participants to eternal feast and famine.

As GM’s recent history proves, there will always be a “bright spot” in the bigger, bleaker picture. Some vehicle will always be relatively healthy– as it feasts on its predecessors, ancestors and weaker siblings. The success of a new model builds executive careers down at RenCen, but it does the company no good. With GM’s lack of build flexibility, the automaker ends-up overworking 25 percent of its plants while idling another 25 percent somewhere else. 

GM’s not the only example of auto industry cannibalism. Chrysler’s four-door Wrangler has been eating away at the Liberty, while the Compass, Nitro and Patriot all nibble on each other as they vie for the same sort of customers. VW has some issues in the US market (bumping into Audi) and much worse ones back in Europe (SEAT/Skoda). But GM is crazy with cannibals.

There is but one way to end this misery. GM must either return to the kind of rigid brand/product discipline of Sloan’s day, or declare bankruptcy (to void dealer power), kill all but two or three brands and THEN return to the kind of rigid brand/product discipline of Sloan’s day. There is no other alternative.           

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51 Comments on “General Motors Death Watch 162: Cannibals...”


  • avatar
    Bunter1

    Tahoe hybrid- 18mpg – $55K
    Acadia- 18mpg – $35K – roomier

    Brilliant. The hybrid thing seems to really be in good hands at the General.

    (to the nitpickers out there, yes the numbers are just off the top estimates, relax)

    Go GM.

    Or go away.

  • avatar
    andyjanes

    Those who refuse to leran form history are condemmed to repeat it.

    GM, do you rember the British Motor Corporation?

    In the late sixties you could buy the 1100, the biggest selling car in britain as an Austin, MG, Morris, Riley, Wolsley or Vanden Plas.

    The rest of their range had similar veariants (but not as many as the 1100)

    A big factor in the fall of BMC was their product overlap and the extra costs for selling so many versions of the same car (at the time the biggest rival to the 1100 was the Ford Cortina. Not only was it simpler and cheaper to build, but Ford only had 1 dealership network, 1 set of product brochures, 1 ad campaign and so on.

    GMC needs to loose all but Chevy, Caddy and Maybe Buick and Hummer.

    Andy

  • avatar
    Jeff in Canada

    Great point about the up-coming G8 stealing sales from the CTS.
    I think all of the companies have some levels of cannibalism in their brands.
    The BMW 1 Series could steal some Mini Cooper S sales. The Toyota Sequoia must surely steal a variety of Lexus SUV sales. The entire Mercury line-up is a pointless cannibalism of Ford and Lincoln.

    I think that Honda is the ‘best’ company for reducing product overlap. As the point was made, they even killed the successful RSX because they were making the Civic Si nearly on par with it, for less coin. A risky but brilliant move.

  • avatar
    GS650G

    RF has been saying this for 160 DW episodes: Too many brands and choices. Even mighty Toyota has not had the knockout success with the Scion brand that was predicted. As times get tougher you want to focus development, marketing, dealerships and ultimately sales into fewer models that are positioned properly. Why can’t GM figure this out.

    On another note, GM and Ford should try to build their successful Euro models here, but the current situation with the Union makes that all but impossible. They won’t give the UAW another lever to pull nor commit to more expensive workers here.

  • avatar
    KatiePuckrik

    GM may have been the world’s biggest and most profitable car maker at one time but I think it’s worth clarifying a salient point.

    GM were the biggest and most profitable car maker, when there was no foreign competition on its home markets (i.e the Americas). The moment the Japanese arrived (after they worked out their reliability and quality issues out) then GM (and Detroit’s) market share started to collapse. I believe the GM model never worked to start with.

    Anyway, back to cannibalization.

    It’s clear that GM have too many brands, but with a little effective management, they could make the brands work a little better for them:

    Chevrolet: Everyday car brand for the Americas and Asia. Chevrolet will have more brand loyalty than Opel in Asia. They like American brands. The success of Buick in China is an example of this.

    Opel/Vauxhall: Everyday car/SUV brand for Europe and Africa.

    Holden: Everyday car brand for Oceania.

    Cadillac: Luxury car/SUV brand for the Americas and the Americas only.

    SAAB: Withdraw Cadillac from Europe and reposition SAAB are a Euro luxury marque. European will take to SAAB, more than Cadillac. Trust me! If SAAB, sold restyled Cadillac CTS-V’s I’d be there like a….er…well, a CTS-V at full throttle!

    Buick: Luxury brand for Asia, Africa and Oceania. Buick must never be put up against Cadillac or Saab. too much brand overlap.

    Hummer: Carry on making ugly SUV’s, globally!

    GMC: All pick up trucks are to be made by GMC. Chevrolet should abandon making the Silverado and hand the plans to GMC.

    Saturn: Carry on in the United States as a “Euro killer” brand (note the inverted commas) but really and truly, it could be culled, but it can still survive.

    Pontiac: Carry on making sports cars, but expand the brand into something more meaningful. A good idea would be to use the template of the CTS-V to make an american muscle car in the vein of a Ford Mustang. I reckon that would be a good move.

    I reckon that would be a more effective use of brand than the current structure they have. I mean, in Europe we have Vauxhall/Opel competing against Chevrolet (why they introduced Chevrolet, when Vauxhall/Opel was doing OK, I’ll never know) and GM trying to position Cadillac as a luxury marque when SAAB could have done that job for it. It’s a mish mash of brands with no coherent vision.

    To be honest, GM should give up any hope of having a global car marque of any value (i.e Honda or Toyota) without expensive (and I’m talking Oldsmobile expensive) re-organisation. Their best bet is to position the brands they do have in markets where they mean something (i.e Buick in China). The brands can survive they just need some, I don’t know, management…..?

    As an aside, VW don’t have any problems in Europe as far as I know with marques. It’s a very simple structure:

    Audi: Luxury.
    VW: Everyday cars with good quality.
    Skoda: Everyday budget cars.
    SEAT: Everyday cars with a performance bent on it. A bit like Pontiac.

    It works and there’s virtually no overlap.

    P.S. Could we change the picture of Anthony Hopkins’ portrayal of Hannibal “I’m camper than a row of tents” Lector to Brian Cox’s terrifying vision of everyone’s favourite people muncher….?

  • avatar
    Skooter

    “The new CTS may be a hit product, but no one in the organization seems to have stopped and considered the fact the bright shiny newcomer will consume Caddy customers who may have (for some reason of other) hankered for a pricier DTS or STS.”

    Absolutely way off the mark on that one, Andrew. CTS attracts a totally different audience.

  • avatar
    Strippo

    “As the point was made, they even killed the successful RSX because they were making the Civic Si nearly on par with it, for less coin.”

    Actually, they stopped crippling the Civic Si because Honda rightly concluded that the RSX isn’t an appropriate niche product for a “luxury” brand. Acura still has big problems with its image, but killing off the relatively cheap RSX was clearly a necessary step for the brand.

  • avatar
    bunkie

    I’ve been trying to talk my wife into buying a late-model STS (with a Northstar, it’s a relative bargain) to replace our CTS. She will have none of it (“it’s too big!”). Her heart is set on a new-gen CTS, preferably the coupe.

  • avatar
    jurisb

    How many minivans does toyota have? aren`t they cannibalizing sales? No. People simply prefer better products..And toyota can make 100 of corolla sized models without losing a morsel of sales. if you make two similarly average dodges, people ar going to buy neither, they are going to buy the best- meaning japanese.Nissan has 34 models. Do each of them represent different audience? no. They build good products, and they can afford to diversify range, and it attracts more and more people.If you think you can sell more by cutting brands, you are wrong, people don`t stop buying cts because of well equipped lucerne, people stop buying CTS when they test drive infiniti, or lexus. Actually problem is that there are no brands , just couple of them, the rest of them are copycats which pretend to be brands. You have already cut Plymouth, Oldsmobile, Geo, Eagle. have those buyers now shifted to Cadillacs or Pontiacs? No! they are byuing the best offers- meaning japanese.Cutting has never meant saving. Cutting has meant withering.The last escape for american car manufacturers was` being American` and people gnashed their teeth and bought local cars for the sake of support or whatever. But this is a dwindling category of conservatives who cared beyond real tangible value. today American means a korean car bearing american name. So people understand that they are barely supporting any local economy or patriotism. And they go for japanese. At least japanese cars don`t pretend to be martian. The last nail in the sales coffin of course is the lack of original sheetmetal. regrille doesn`t count. if you have one model named Suburban it doesn`t matter what you try to sell it as – whether Tahoe, EXT or Exhalade, you are still going to have sales as that of a one model. no different sheetmetal, no sales. honesty, integrity, priciples, hard work- probably are rare instruments used in US businesses. Then get what you deserve. Even if there was no God, funny enough you can`t avoid His justice.

  • avatar
    Mirko Reinhardt

    @Katie
    If SAAB, sold restyled Cadillac CTS-V’s I’d be there like a….er…well, a CTS-V at full throttle!

    A RWD, V8, non-turbo, sedan SAAB? It would be the 9-7x all over again.

    Pontiac: Carry on making sports cars, but expand the brand into something more meaningful. A good idea would be to use the template of the CTS-V to make an american muscle car in the vein of a Ford Mustang.

    How could they make a CTS-V based Pontiac coupe compete with the Mustang, when the platform is much more complicated and expensive?

    I mean, in Europe we have Vauxhall/Opel competing against Chevrolet (why they introduced Chevrolet, when Vauxhall/Opel was doing OK, I’ll never know)

    First of all, they didn’t really introduce Chevrolet, they just rebadged Daewoo, which has been in Europe since the 90s. (starting with cars based on old Opel Kadett and Ascona platforms)
    Second, Chevrolet’s lineup is much cheaper than Opel’s. I don’t know anybody who would cross-shop them.

  • avatar
    HEATHROI

    Katie
    Buick: Luxury brand for Asia, Africa and Oceania. Buick must never be put up against Cadillac or Saab. too much brand overlap.

    Presuming to speak for Oceania, no thanks. I would rather go back to the ancient days of Vauxhall than buick.

    The CTS could work as a Saab in Europe which would make more sense. Its nothing more than a turbocharged opel vectra now

    As Toyota does, GM should have just two brands in any market (Chevy or Holden or Opel) and Cadillac

  • avatar
    KatiePuckrik

    Heathroi

    Vauxhall as a luxury marque?! Everyday, maybe, but a premium brand?

  • avatar
    Skooter

    “At least japanese cars don`t pretend to be martian.”
    “Even if there was no God, funny enough you can`t avoid His justice.”

    Please elaborate further…

  • avatar
    Dan

    None of GM’s brand-engineering today holds a candle to what they did in the 80’s. My mom drove an ’81 Buick Skylark (until it self-destructed in ’86). Now, tell me exactly how that was different from any of the other X-body cars at the time?

  • avatar
    Bunter1

    Dan- Today you can use the term “brand engineering” at GM. In the X-body example “brand compiled” would be more appropriate as the company was clearly not “engineering” anything at the time.

  • avatar
    bleach

    “Please elaborate further…”

    No, really no need.

  • avatar
    Culley

    Nobody who is looking at a new CTS would even consider a G8… it has fake hood scoops for God’s sake!

  • avatar

    GM’s brand folly really started in the mid-50’s, when Buick made an aggressive move down into Oldsmobile and even Pontiac price territory. You could get a Buick for less than some Oldsmobile models. Buick rose to #3 in the industry, and Olds and Pontiac responded by trying to push up-market. Then Chevy got a V-8 engine and joined the fray. The heads of those divisions in that era later admitted that they were competing with each other as much or more than with any Ford or Chrysler products.

    It got worse by ’61, when all of the divisions had Y-body compacts (Tempest/Special/F-85, which shared the Corvair’s unibody structure). All were priced below their traditional range, and while there were substantial engineering differences between them (Buick, Olds, and Pontiac all used different automatic transmissions, for example), they weren’t ones that the public really cared about. For the Buick and Olds, especially, there was little reason to choose one over the other, except for styling and whatever value you associated with the brand.

    It’s a long-standing problem, it’s just that GM had such a huge share of the market that the ill effects didn’t become obvious until years later, like a very fat man with a tapeworm.

  • avatar
    Jonathon

    My mom drove an ‘81 Buick Skylark (until it self-destructed in ‘86). Now, tell me exactly how that was different from any of the other X-body cars at the time?
    My first car was a ’78 Chevy Malibu, and my best friend had an ’80 Buick Regal. My brother also later had an ’81 Oldsmobile Cutlass. Each step up brought a quieter ride and comfier seats, as well as a couple more options like power seats. I don’t believe these differences were large enough to justify the existence of all the different A-body cars at the time, though.

    And as I’ve said before, even though it’s theoretically possible to make each brand unique, GM has proven time and time again that it can’t stick to the program. They announce that they’ll stop rebadging so much and that Pontiac will get only RWD performance cars, and then they bring out the G5. It’s the same thing over and over again.

  • avatar
    HEATHROI

    Vauxhall, before the first world war, it actually made very fancy cars before GM got its mitts on it.

    Vauxhall would mean a lot lot more than buick, as nobody has seen a buick since the 30s, Vauxhall slowly died in the early 70s with Holdenization and Isuzuitis (Good trucks, bad cars)

    In one branding disaster GM of the 90s launched the Opel Astra in NZ (made by Daewoo)as the Pontiac Le Manswhen everyones idea of a Pontiac was a Thunderchicken. as you can imagine it went badly.

  • avatar
    CarShark

    The problem to me is exactly what Katie said: the Sloan model never really worked in the first place. GM wasn’t turning people into GM buyers for life. GM was turning people into Pontiac buyers for life or Buick buyers or Olds buyers. And with everyone getting a new car every time they changed platforms, there was no reason to change brands. GM pissed off Pontiac dealers by killing the Montana, and I can only imagine how much they’ll crap themselves when they don’t get a new small CUV to replace the Torrent.

    GM’s platform sharing shouldn’t lead to badge engineering or overlap the way it does. Why they haven’t made a full-size people carrier on Lambda continues to vex me. They aren’t going to make a large sedan with accompanying wagon, either. I thought that would be a good idea since Zeta fell through.

    Not to say that only the Big Three do it. For the life of me, I can’t see the point of the Toyota Venza. It’s bigger than a RAV4, smaller than a Highlander and seats five. If it was supposed to be a Camry wagon, why not just build a Camry wagon with the same styling?

    On the face of it, this CUV on SUV cannibalization seems logical and unavoidable. GM’s SUV customers are abandoning the genre anyway, so why not keep them “in the family?” Better some profit than none. But the counter-argument is far more compelling. Overlapping products dilute or destroy the central brand message. Product development and marketing resources are spread paper thin. This kind of cannibalism makes its practitioners weak, and lazy.

    I’m sorry. That’s ridiculous. You’re making the assumption that the person who buys the SUV will also buy the CUV. That’s not true. This is one of the problems with TTAC’s branding articles. Too many assumptions are made about car buyers. Overlap does hurt brands nearly as much as bad cars. Toyota can sell a Sienna to the practical mom or a 7-seater crossover to the image-concious dad or a 7/8-seater Sequoia to the family that wants to tow their boat to their beach house every other weekend. That’s much healthier than selling the awful Grand Prix next to the better G6 for three years. CUVs are going to replace SUVs for most people, leaving behind only the people that can afford the extra gas and want them and the people that need the towing.

  • avatar
    Geotpf

    Clearly, the ideal situation is a mainstream/luxury two brand package. The Japanese Big Three (Honda/Nissan/Toyota) all do this. Scion doesn’t even count, since all their vehicles are sold at Toyota dealers and could be Toyotas if Scion didn’t exist (the tC is similar to the old Celica, as already mentioned, the xB is their small box, which is a unique product that sells (even GM copied it, with the HHR), and the xA/xD is merely a five door Yaris hatchback), although there is a gloss of upscaleness in the Scions that’s impressive in such a low-end product line (probably the lack of stripped down models).

    So, for GM, the ideal would be Chevy/Caddy. But that would require bankruptcy to pay off the dealers. Plus, it would result in a huge drop in overall sales-there are lots of Pontiac or GMC buyers who would never buy a Chevy.

    Basically, it would be folly to start any more brands by any company. But it would also probably be folly to shut a lot of them down. A major problem is that 80%+ of the sales of the shutdown brand evaporate to the Japanese or Germans or Koreans.

    Now, there are exceptions; namely those brands that are clearly failing. Hummer is vastly becoming irrelevant in these times of high gas prices. Shutting it down at some point may be neccessary. Saab’s sales in the US are microscopic (Toyota sells more Camrys alone in a month than Saab sells all of it’s cars in an entire year)-although not much below their traditional levels. But they don’t seem to be willing to upgrade their cars properly, so maybe shutting them down might make sense, at least in the US. And then we get to Saturn.

    GM gave Saturn a whole bunch of brand new product, doubling the number of models offered from three to six. Yet sales only went up by 6.1%. In other words, sales per model went down 47%-every Saturn product bombed. They sell fewer Saturns now than during their peak when all they had was one product (sold in coupe, sedan, and station wagon forms, but one basic model). And, since they just got all new product, they ain’t getting anything else new any time soon-the Astra, released this month, is it for several years. And apparently early Astra sales are quite weak (which is good, in a way, since GM loses money on every one sold due to currency differences). Best case scenerio was that the Astra sold half as much as the old Ion; and I personally believe it will do worse than that.

    The problem is that Saturn is associated with those old Corolla-clones in the minds of most people (ironic that they no longer sell a Corolla-clone at all; the Astra is a hatchback, not a sedan). People aren’t willing to pay twenty or thirty thousand dollars for something with a Saturn badge on it. Plus, people expect to be able to knock a few grand off the sticker price of vehicles that expensive-the no-haggle thing doesn’t work on more expensive models (especially since clones of many of them are sold at other GM dealers that are willing to haggle-speaking of cannibalism).

    So, with the Astra selling much less than the Ion, and all the other products aging, expect Saturn’s sales to go into a freefall. Now is the time to kill it. Decision time is at hand-GM has about a year or so before they need to start thinking about designing new products to replace the existing ones. In Saturn’s case, they probably need to stop throwing good money over bad and shut it down, no matter what the shutdown costs are.

    So, we end up with:

    1. Chevy
    2. Pontiac/Buick/GMC (a slightly more upscale version of Chevy-most dealers of these three are combined at this point-continue to combine them)
    3. Caddy

    That’s a lot better than now, and the amount of lost sales is minimal. You can’t shut down PBG, because the number of lost sales (plus the size of the dealer payouts) would be huge, not worth any advantages. But Saturn (and probably Saab and Hummer) needs to go.

  • avatar
    Dynamic88

    “The problem to me is exactly what Katie said: the Sloan model never really worked in the first place. GM wasn’t turning people into GM buyers for life. GM was turning people into Pontiac buyers for life or Buick buyers or Olds buyers. And with everyone getting a new car every time they changed platforms, there was no reason to change brands. …”

    I respectfully disagree on this point. The sloan model worked beautifully so long as divisions stuck to their niche. And in the early years of the model, they did. So long as the divisions didn’t allow their product to overlap in price with one another, there was no cannibalism. It’s when the divisions all wanted to sell everywhere from low end to near luxury that things went wrong.

    I don’t know that GM has too many divisions (well, yeah, they do) so much as their divisions aren’t different from one another. Come up with 8 different market segments or niches and let each division do that thing. If they can only come up with 6, kill two divisions. If only 5, kill 3…….

    Combining sales channels would seem to offer some hope that GM can stop it’s badge engineering – though we’ve yet to see any results at the BPG dealers.

  • avatar
    50merc

    Re: shutting down Saturn. Might that be the cheapest of all brand-extermination options? When Saturn was created, the stores had to be exclusively Saturn. Isn’t that still the case mostly if not entirely? It’s also likely that many Saturn franchises are held by dealers of other GM brands.

    So GM’s first step could be allowing Saturn stores be folded into P-B-G and Cadillac outlets. The owners of former Saturn real estate could then put it to a new use or sell it. Eliminating duplication of parts inventory, service and overhead functions would give Saturn outlets a better chance of profitability.

    The second step, assuming Saturn continues to be a boat anchor for GM, would be to buy out the remaining dealers. If after all the cost-cutting measures a Saturn franchise is still a dud, then it shouldn’t cost GM so much to buy it out.

  • avatar
    Lichtronamo

    The Sloan model worked 1) as long as the brands stayed in their segments and 2) there was no real competition.

  • avatar
    Zarba

    If I might present a slightly contrarian view for Saturn and GM:

    First, File Chapter 11. This will allow GM to kil off extra dealers and consolidate. There’s no other way.

    Kill Saab, Hummer, Buick (at least in the US), Pontiac, and stand-alone Saturn dealers.

    There’s nothing Ponitac sells that can’t (or isn’t already) a Chevy.

    What’s left:
    1) Chevrolet: Mass Market cars
    2) Cadillac: Luxury, nothing below the CTS
    3) GMC: All trucks, all the time, including Hummers
    4) Saturn: All hybrids/Alternative Powertrains in ALL vehicles.

    Saturn already has a following of granola-eaters, so let’s fleece them for the hybrids they want. Fold Saturn into Chevy dealers a la Scion.

    There may be room for Buick, but only if they take Caddy upmarket in a serious way.

  • avatar
    shabatski

    Keep Chevy, Cadillac, SAAB, Hummer, and Pontiac. Kill Saturn, Buick, and GMC. (In America)

    Chevy is the common man’s brand. They should keep it cheap and reliable. $12k-30k
    Cadillac should move upmarket – starting price around $40k+ (of course they need justified product)
    SAAB is for import buyers. $25k-$40k
    Hummer’s obviously original enough on its own.
    Pontiac should only make 3 models of sporty cars:
    – Solstice convertable
    – GTO Coupe
    – G8 Sedan
    – Price range should stay b/w $20k-$30k as a performance car for the masses.

    Saturn no longer has the credibility to be an import fighter.
    Buick can stay abroad as re badged Chevy’s or Caddy’s but leave those buyers in America to decide to buy Chevy’s or Caddy’s instead.
    GMC buyers would switch to Chevy without blinking an eye.

    I would consolidate Chevy, Pontiac and Hummer dealers together; as well as SAAB and Caddy together.

    Ah, if only I ran GM… (and didn’t have franchise law to contend with).

  • avatar
    LenS

    GM is the last vestige of the post WWII world economy. A time when most of the industrialized world was rubble and the US was completely intact on the home front. Too many large American companies got used to those easy days and lost their ability to compete. Eventually, Europe and Japan rebuilt and by 1965 were back in the game. That’s when the fat and happy big US companies began to crash. Detroit represents the last of those fat and happy companies still unable to compete or change. Their sheer size has kept them going for a long time. But I very much doubt that they’ll ever change. They’ll just continue to shrink.

  • avatar
    Geotpf

    Zarba-Nope, you can’t go into bankruptcy. The moment the general public hears “GM is bankrupt” is the moment they completely stop buying GM products, even those loyal to Detroit or even GM in particular. They will worry about their warranties being worthless and a possible future shortage of spare parts. Chapter 11 will never be an option. It’s muddle on, or a Chapter 7 shutdown.

    shabatski-You can’t kill Buick and GMC without killing Pontiac at the same time-most dealers of the three are combined. Plus, GMC in particular sells a lot of (very profitable) trucks, and many of those buyers are snobbish enough that they won’t buy the exact same Chevy model-they will go to Ford or Toyota instead. In fact, Pontiac and Buick these days exist mainly for GMC dealers to have some cars on the side to sell.

  • avatar
    Shinrah

    I’ve got an interesting idea while we are all playing armchair quaterbacks. Sell Pontiacs at chevy dealers almost in the vein of an AMG model for Chevy. SS means nothing these days so they can sell them as a boutique brand but this relies on a few concessions such as replacing the camaro with a new GTO and keeping the price at the highest 35K. Withdraw Buick from NA in order to prevent overlap with other FWD brands. Saturn is right now a car maker with no identity and though I hate to admit it needs to go. However Saab should stay on as the true import fighter. Saab is like volvo though in the sense that its an upmarket car but it won’t sell as a real luxury car. Therefore they can play in the 30k to 45k territory. Kill the Acadia and bring on the traverse, thats the theme I see for the relationship for Chevy/GMC. Move all CUVs to Chevy and move all trucks and SUVs to GMC. Hummer while I don’t like it can stay because most people who buy hummers don’t care about gas prices. Caddy can run around 45k to 100k and stop chasing the 3 series. Corvette should be spun off into its own brand. I appreciate the idea of the corvette being the super car for everyone else but they can do much more. Corvette would span the standard/Z06/ZR1.

  • avatar
    Thomas Minzenmay

    All those branding advices like “Buick should do this, Pontiac that…” won’t work. It’s just too many brands.

    Honestly, GM should sell off most of their brands. I mean what do they really need? I think Cadillac and Chevrolet would be enough (in America). Both should offer the full line of vehicles, Chevrolet being the “bargain” brand and Cadillac offering luxury vehicles. Maybe GM could also keep Hummer because they don’t interfere with anybody.

    But I really don’t see a point in keeping the rest. What could Buick, Saab, GMC, Saturn, Pontiac really offer GM that Caddy/Chevy can’t do? They’re merely remnants of a business model of which I don’t know if it ever was effective, but which is definitely never coming back.

    So I’d advise them to sell those brands as long as they can still get money for them. GM could also package them together with plants/dealers they don’t need anymore.

    Of course GM should still keep Opel/Vauxhall/Holden and Buick for their overseas ventures, but 8 brands in one market will never work out without some serious overlaps.

  • avatar
    Dynamic88

    “The Sloan model worked 1) as long as the brands stayed in their segments and 2) there was no real competition.”

    GM had plenty of competition. Ford, Chrysler, Hudson, Studebaker, Nash, Packard…… Often GM divisions competed successfully with their non-GM rivals. Sometimes not. But they didn’t have to compete with each other.

    “But I really don’t see a point in keeping the rest. What could Buick, Saab, GMC, Saturn, Pontiac really offer GM that Caddy/Chevy can’t do?”

    If Chevy is the common man’s car, and Caddy makes luxury cars, then it’s not hard to see there is an opening for something right in between. Nicer than a Chevy, but cheaper than a Caddy. So at least 3 divisions could have a purpose in life. That in between division could be Saturn, or Buick, or Pontiac – but only one of them. Probably Buick, imo.

    GMC ought to be doing trucks. It’s the only division that ought to be doing trucks.

    Want a performance/youth oriented car for the average person’s budget? You just found a reason for Pontiac to exist.

    GM doesn’t need to pare down to two divisions, it just needs to make each division actually stand for something.

  • avatar
    mikey

    Today I was lucky enough to sit behind the wheel of a new Camaro.Even though I’m a lowly hourly employee I know enough to keep my mouth/keyboard shut.
    I’m a proud owner of a 4th gen Firebird droptop and I love it.So I’m sitting in this baby today thinking I can get X$ for my Firebird,and I put an order in today?Hmmmmmm?
    I hate to rain on anybodys parade, but with product like this in the pipeline chapter 11 just ain’t gonn’a happen.

  • avatar
    Geotpf

    Thomas Minzenmay-Nobody would buy them. Why would anybody buy Buick (or Buick/Pontiac/GMC, as it would have to be) or Saturn?

    Dynamic88-Chevy dealers like to sell trucks. Chevy dealers sell a lot of trucks. Most Chevy dealers sell very few cars and lots of pickups and SUVs. GM isn’t going to take trucks from them. Buick and Pontiac are one and the same at this point (along with GMC)-kill them all or keep them all, and the three combined sell too much to kill them.

    mikey-Everybody who wants a Camaro will buy one during the first model year or so. Then sales will crater. Besides, total sales for it will, at most, be half to a quarter as many as Toyota sells Camrys or Honda sells Accords. It’s not GM’s salvation. It might be profitable-then again, it might not, if sales really do start very stong and then collapse, which is the pattern for most of GM’s car models.

  • avatar
    EJ_San_Fran

    GM is asking: how can we offer lots of vehicles in a lot versions to capture as many customers as possible?
    Their solution: carpet bomb the market with dealers, brands and badge engineered clones.
    I looks too unwieldy and inefficient to me. Maybe a GM insider can explain the rationale.

    I like Toyota’s approach better: they surround strong core models with a large number of niche models all within the Toyota dealer channel. That way they efficiently capture almost the same retail market share as GM (in California far surpassing GM).

  • avatar
    Dynamic88

    “Dynamic88-Chevy dealers like to sell trucks. Chevy dealers sell a lot of trucks. Most Chevy dealers sell very few cars and lots of pickups and SUVs. …”

    So sell Chevy cars and GMC trucks.

  • avatar
    Thomas Minzenmay

    Geotpf-Nobody would buy them. Why would anybody buy Buick (or Buick/Pontiac/GMC, as it would have to be) or Saturn?

    Well, of course it’s already pretty late to sell them and it will be difficult in a declining market, but I’m sure there would be interested parties. The best option would be private equity firms (because they would start from scratch), but that’s also the least probable. Apart from that it would be a great chance for Indian or Chinese companies who want to get a foot on the American market. I’m sure that they would pay heaps of money for the know-how and/or the brand names.

    Or maybe even a company like Renault/Nissan. They’ve been looking for new partners all along.

  • avatar
    whatdoiknow1

    Mazda, Honda, Toyota, Nissan, and VW all manage to sell a model range of vehicles under the same brand name with a price range of starting below $15,000 and running all the way up to and above $40,000.

    Needless to say this price range would cover the entire GM brand structure with the exception a few Cadillac models, the Corvette and a couple of high-end SUV/ Pickup trucks. Now considering that Toyota and VW are also capable of reaching prices will into and above $50,000 it is obvious that GM brand structure is beyond repair.

    In a world of $35,000 Avalons and $50,000 Sequioas names like Buick and Pontiac carry zero “speciality” appeal.

    If GM is to survive it is high time to pull its own head out of its A$$ and face the reality of todays marketplace. The japanese automakers success marketing brands with an average price spread of over $35,000 from the lowest to the top of the line models has destroyed all viabilty in the old GM/ Domestic multi-brand model of business.

    GM brand sturcture is nothing more than a Catch-22 senerio today. Each brand only serves to hurt the image of the other brands that have overlaping price structures. If a Chevy is (and nees to be) less of a car than a Pontiac how does GM expect to sell a Impala and G8. The Chevy dealer will require GM equip a new Impala with as many features as possible yet it must somehow magically cost less than a G8 because the G8s image demands that it be a somehow better car than any Chevy. Now there is also Buick with its Lucrene that needs to pretend to be a luxury car yet not step on Cadillacs toes. Since it cant be a Caddy it must sell on price and value. Now WTF is price and value in a Buick if there is a loaded Impala over at the Chevy dealer that is also SCREAMING value?

  • avatar
    Landcrusher

    I think Andrew may state his conclusion a little too strongly, but he did make a good case. We can also argue about what stays and goes (it’s good clean fun after all). I would love to see piece on the likelihood or mechanics of actually getting this done.

    Also, it was mentioned to sell a brand. Could it be done? Could Buick become a chinese company?

    Lastly, I am glad mikey likes the new Camaro. I hope it lives up to expectations.

  • avatar
    Sanman111

    I think Buick is primed to become a Chinese company right now. Their introduction into China has done well and the brand is pretty much dead averywhere else. In the next couple of years, a cash infusion from a sale or partnership of Buick in China with whatever company emerges as the dominant player would go a long way to helping their bottom line. Now, would it be better than keeping powerful inroad into the Chinese automotive market, I don’t know.

    The Camaro seems nice, but I don’t see it doing much for GM. It will likely steal Mustang buyers and a few others, but not much else. The health of the company is beyond being saved by a one hit wonder. A complete restructuring at this juncture would be the best idea. Either GM needs to badge engineer more or less. By more, I mean they need to pretty much hang GMC badges on Chevy trucks and then half the production. Dump the Chevy SS models onto Pontiac. By doing trim differences only, like Chrysler did with the Neon, they will at least save a little dough on the way to a brand restructure. Now, fighting with the dealer netwrok on what goes and what stays is going to be a mess.

  • avatar
    Geotpf

    Dynamic88-I’m sure the Pontiac/GMC/Buick dealer across town would have a problem with his truck franchise taken from him and given to the Chevy dealer.

    Thomas Minzenmay-Another problem with selling brands is the whole cannibalism thing in the first place. That is, the designs for Buicks and Pontiacs and Saturns are based on Chevys and vice versa. The nameplates and dealer network alone are basically worthless without the car designs, which GM won’t sell. Plus, many different brands are made on the same assembly line. You simply can’t break them apart like this. Even Saturn, which used to be seperate from the rest of GM, is now completely tied to the parent corporation.

  • avatar
    Jonathon

    “Dynamic88-Chevy dealers like to sell trucks. Chevy dealers sell a lot of trucks. Most Chevy dealers sell very few cars and lots of pickups and SUVs. …”

    So sell Chevy cars and GMC trucks.
    You’re assuming that customers will happily go down to the GMC dealer to buy a truck instead of getting one from the Chevy dealer. That’s an awful big assumption when you’re talking about the lifeblood of the company.

    It seems far more logical to me to shut down GMC and try to move all those sales over to Chevy, since they sell several times as many trucks as GMC, but even that is probably a lot trickier than it sounds.

    Here’s a really crazy idea: why not merge GMC/Pontiac/Buick into not only a single sales channel, but a single brand? You could call it simply GM and position it between Chevy and Cadillac. Of course, you’d have to restyle all the vehicles to make them look like a coherent brand, and you’d have to cut some overlap, but it makes more sense in my mind than simply killing off all three and hoping the sales end up going to one of the other divisions.

  • avatar
    Skooter

    Let’s face it. All the chatter of GM bankruptcy is pretty much only talked about here. Any rumors are probably eminating from here as well. There is virtually nothing in the press. Or on the “street”. I don’t think it is on anyone’s mind other than here.

  • avatar
    Dynamic88

    “Dynamic88-I’m sure the Pontiac/GMC/Buick dealer across town would have a problem with his truck franchise taken from him and given to the Chevy dealer.”

    Who said anything about taking GMC away from anyone? I’m saying GM needs to consolidate sales channels. Each division needs to do one thing. Few if any divisions will be able to have stand alone dealers.

    As it stands, the Chevy dealer and the GMC dealer compete with each other anyway. They’d still compete if they both sold GMC, but at least Chevy and GMC could develop separate brand identities.

    “You’re assuming that customers will happily go down to the GMC dealer to buy a truck instead of getting one from the Chevy dealer. That’s an awful big assumption when you’re talking about the lifeblood of the company.”

    See above.

    “It seems far more logical to me to shut down GMC and try to move all those sales over to Chevy, since they sell several times as many trucks as GMC, but even that is probably a lot trickier than it sounds.”

    Chevy sells more trucks because there are more Chevy dealers. They’re the same trucks. If you have Chevy doing the common man’s car, and the common man’s truck, then who makes the upmarket truck? Meanwhile, Chevy is also selling the ‘Vette, which is anything but common, and the Impala which is full sized and near luxury if you get a nice one, so what is Chevy’s brand identity?

    Here’s my armchair quarterback calls-

    Caddy: Makes luxury wafters. Wafters only. No carvers. Forget the V series cars, they are absolutely the wrong immage for Caddy.

    Saab: Badly needs a reason for it’s meger existance. Saab should make Luxury Carvers. No wafters. Saab and Caddy can be sold from the same store.

    If you want to waft down the boulevard, you get a Caddy. If you want to zoom through twisties in luxury, you buy a Saab.

    Hummer: A stupid vehicle that probably won’t exist in 10 years. But for now, it’s a pricey and unique offering. It can also be sold at Caddy stores, because those are the customers that can afford one.

    GMC: Trucks. Only trucks. Any size truck. Basic work trucks and fancy gentleman’s trucks. Trucks. Trucks. GMC is the division that does trucks. They can also do truck based SUVs. The brand identity here is – Trucks.

    Chevy: Basic transportation. Subcompact, compact, and intermediate sized cars. 2 door, 4 door, and wagons, CUVs.

    Pontiac: Sporty cars. Not clones of Chevy’s models. If you want to zoom through the twisties and beat others off the line, but you can’t afford (or don’t want) luxury, you buy a Pontiac. No way can this division stand alone.

    Buick: Full sized cars, Minivans, non-truck based SUVs. As someone mentioned above, a loaded Impala is the functional equivalent of a Buick. Everything that is full sized is near luxury today. Hell, everything of any size is near luxury today. Divisions can’t be differentiated on equipment because everyone wants a nice ride.
    Buick concentrates on the big cars.

    Saturn: has no reason to exist.

    Corvette: So unique it becomes a Marque, rahter than a model. Logically it should be a Pontiac, but it’s too late for that. But it can be sold right beside Pontiac’s sporty offerings.

    Caddy/Saab/Hummer is a sales channel.

    Corvette, GMC, Buick, Pontiac, Chevy is a sales channel. Dealers can sell any mix/match/combo of these they want.

    It’s not a perfect scheme, but at least every division has a clear purpose and isn’t replicating the efforts of other divisions. This is necessary if there are to be coherent brand identities.

    A good alternative model, that several people have mentioned, is jettison everything but Caddy and Chevy. Chevy can sell from 10K to about 30K or even 35K. Caddy takes it from there.

  • avatar
    jthorner

    “Each division needs to do one thing.”

    There are no divisions anymore. GM completely eliminated the division structure many years ago. The only place the individual brands exist is in advertising campaigns and dealer signage. Behind the curtain there is just one big dysfunctional family.

    GM only needs three brands in North America, Chevrolet, Cadillac and Hummer. Everything else is noise, dilution and distraction.

    As others have said, the new Camaro is at best a short-term hit, and it isn’t going to save GM’s financial bacon. Remember all the excitement about the Sky and Solstice? How many dollars do you think they are sending to the bottom line, and why the **** did Saturn get a version?
    BTW, Isuzu just announced that January 1, 2009 is the end of their new vehicle marketing in North America.

  • avatar
    dastanley

    Contributing factors to GM not getting it and being lost in space:

    1) No consequences for poor upper mgt. performance. Waggoneer, Lutz, and the other stooges in the puzzle palace have their golden parachutes, penthouse offices, stock options, etc. regardless of if they make money or not. If they f— up, who cares?

    2) Waggoneer and his peons (except for Lutz) have only known GM culture since day one. Because that is their only frame of reference, they are truly unaware that Toyota, Honda, etc. do a better job in running a car company.

    3) Waggoneer and company don’t have to rely on bread and butter GM products to make it to work. If they don’t have limousine and driver service, they are provided (free of charge) a brand new company car as a rolling GM advertisement. These top of the line cars are replaced annually to keep up with the latest and greatest models. Hell, they don’t even lose the new car smell before they are switched. Not to mention the fact that they are washed, waxed, and maintained to mint condition on company premises. Because Waggoneer and company never have car trouble and don’t have to rely on a 15 year old Chevy Cavalier for their livelyhood, they are convinced that the quality gap between GM and Japanese cars is merely a “perception” problem. Those stupid customers.

    4) Waggoneer and company are not evaluated on long term quality and long term customer satisfaction. They are evaluated by the Board of Bystanders and shareholders on quarterly and annual performance. Hence the emphasis on the next new thing (whatever that is THIS month, whether in the USA or China) just to jack up the stock prices short term rather than on building a solid long term vehicle for sustained customer loyalty.

    5) Waggoneer and company do not read TTAC. It is beneath their arrogance and dignity to take constructive criticism and apply it to fixing GM. By changing GM, they would be admitting fault – God forbid!

  • avatar
    Sanman111

    Skooter,
    The reason that you don’t see anyuthing about it in the mainstream press is that they only report things until right before they happen. If they did, everyone would have known that many of today’s corporate bankrupcies were coming long ago. GM isn’t going to collapse tomorrow, but within the next 20 years is a different issue. GM is like the chip leader at a poker table that that has gone on tilt. Sure they still have a lot of chips, but they are no longer then leader and if they continue to make bad decisions they will be the short stack (see Chrysler). If they wise-up now, they might still have a chance to survive. I simply can’t figure out why they don’t remove redundancy and use the money saved to produce one really good product instead of continuing to produce three mediocre ones.

  • avatar
    Macca

    dastanley:

    “3) Waggoneer and company don’t have to rely on bread and butter GM products to make it to work. If they don’t have limousine and driver service, they are provided (free of charge) a brand new company car as a rolling GM advertisement. These top of the line cars are replaced annually to keep up with the latest and greatest models. Hell, they don’t even lose the new car smell before they are switched. Not to mention the fact that they are washed, waxed, and maintained to mint condition on company premises. Because Waggoneer and company never have car trouble and don’t have to rely on a 15 year old Chevy Cavalier for their livelyhood, they are convinced that the quality gap between GM and Japanese cars is merely a “perception” problem. Those stupid customers.”

    Very strong point.

  • avatar
    ppellico

    Truth be told, as much as the US big guys overlap their cars, is it me or is an Infinity an Acura or an Acura a Lexus or a Lexus an Infinity…God, I am so confused by all of these look alike same front, same rear cars from the Japanese.

  • avatar
    SherbornSean

    Ummmm, I’m not convinced that Toyota is the example of whom to follow in terms of not cannibalizing.

    Let’s see, the Highlander is Toyota’s midsized SUV. Just like the RAV4. Just like the 4Runner, and I guess the FJ Cruiser, which are a little tougher. And also the RX350, which has leather, and the GX470 which has leather too. And the LandCruiser, and the LX470, again with the leather. But you can get a Highlander with leather too, it just costs more.

    Yes, I know, they are all a just a little bit different. But not that much, really.

  • avatar
    2nd opinion

    SerbornSean, You are right-on with your opinion. Take a look at the Toyota lineup in Japan. Until recently Lexus didn’t exist in Japan, and all the Lexus models we know here were sold as Toyotas along with many, many models we never see here.

    dastanley….5 points….4 1/2 totally wrong ones.(the only correct half-a-point you made was the following) Congradulations.

    3)”Waggoneer and company don’t have to rely on bread and butter GM products to make it to work. If they don’t have limousine and driver service, they are provided (free of charge) a brand new company car as a rolling GM advertisement. These top of the line cars are replaced annually to keep up with the latest and greatest models. Hell, they don’t even lose the new car smell before they are switched. Not to mention the fact that they are washed, waxed, and maintained to mint condition on company premises. Because Waggoneer and company never have car trouble and don’t have to rely on a 15 year old Chevy Cavalier for their livelyhood,…..”

    80% of what I read here is bunk…

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