Editorial: General Motors Death Watch 245: Core Competency

Robert Farago
by Robert Farago
editorial general motors death watch 245 core competency

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 It emerges from Chapter 11 unencumbered by outdated production facilities, warring management, befuddled marketing, over-priced labor, restrictive union work rules, astronomical pensions and onerous health care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?


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.”

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  • Jim Cherry Jim Cherry on Apr 26, 2009

    "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

  • Guitronics Guitronics on Apr 27, 2009

    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.

  • Redapple2 Cadillac and racing. Boy those 2 go together dont they? What a joke. Up there with opening a coffee shop in NYC. EvilGM be clowning. Again.
  • Jbltg Rear bench seat does not match the front buckets. What's up?
  • Theflyersfan The two Louisville truck plants are still operating, but not sure for how much longer. I have a couple of friends who work at a manufacturing company in town that makes cooling systems for the trucks built here. And they are on pins and needles wondering if or when they get the call to not go back to work because there are no trucks being made. That's what drives me up the wall with these strikes. The auto workers still get a minimum amount of pay even while striking, but the massive support staff that builds components, staffs temp workers, runs the logistics, etc, ends up with nothing except the bare hope that the state's crippled unemployment system can help them keep afloat. In a city where shipping (UPS central hub and they almost went on strike on August 1) and heavy manufacturing (GE Appliance Park and the Ford plants) keeps tens of thousands of people employed, plus the support companies, any prolonged shutdown is a total disaster for the city as well. UAW members - you're not getting a 38% raise right away. That just doesn't happen. Start a little lower and end this. And then you can fight the good fight against the corner office staff who make millions for being in meetings all day.
  • Dusterdude The "fire them all" is looking a little less unreasonable the longer the union sticks to the totally ridiculous demands ( or maybe the members should fire theit leadership ! )
  • Thehyundaigarage Yes, Canadian market vehicles have had immobilizers mandated by transport Canada since around 2001.In the US market, some key start Toyotas and Nissans still don’t have immobilizers. The US doesn’t mandate immobilizers or daytime running lights, but they mandate TPMS, yet canada mandates both, but couldn’t care less about TPMS. You’d think we’d have universal standards in North America.