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 It emerges from Chapter 11 unencumbered by outdated production facilities, warring management, befuddled marketing, over-priced labor, restrictive union work rules, astronomical pensions and onerous health care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

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.”