Monday, April 30, 2007

GM Brands - Live or Die?

I'm sure you've heard by now about the piece in Fortune (my least favorite source for automotive content) about what GM should do to get back in the game...

It's strange to me how a company that is as large and successful as GM, is the only one of the 'big 3' that isn't either in serious trouble or for sale...is considered by so many journalists as a failure.

So, Toyota sold more cars world-wide than GM in the first quarter of 2007...okay. The margin is still tight and with GM's turn-around plan fully in motion, there is no reason to believe that their market share slide will not slow, stop, or even turn around soon.

But, let's accept for a moment the concept that they have not changed enough structurally and need to do more drastic things to match the Toyota machine...do they need to slice off brands and shrink down to a more manageable size?

Fortune suggests killing off Saab, Hummer, Buick, and Pontiac. Moving GMC to a commercial-only vehicle brand, repositioning Saturn as a Scion killer, and leaving Cadillac and Chevrolet as full-line brands to compete against Lexus and Toyota.

Well - I doubt I'd go nearly that far. But, the idea of bringing some coherency to the GM lineup has some appeal.

Here's my plan for GM's brands:

Saab - this brand has no place in GM's future. As a global luxury brand - it competes with Cadillac. As a competitor to Volvo - it ends up in the no-mans land between Buick and Cadillac. As a beloved quirky brand of hatchbacks and a favorite of college profs everywhere...you're killing me with a lack of attention/attempts to mold the brand into something it isn't and shouldn't be. Find a company that could understand what Saab is about and sell it to them ASAP.

Hummer - the brand everyone loves to hate, but a success story if ever there was one. Who would have ever thought that GM could have a viable competitor to Jeep so soon after launch. Sure, there are other GM brands with trucks, but Hummer has such focus and such credibility as a producer of off-road vehicles that this brand will go down as one of the success stories of the early 21st century.

Will it sell in huge numbers? No. Should GM keep it anyway? Yes, yes, a thousand times yes. This brand shows exactly what laser-like focus on a brand's mission gives you. Everyone knows a Hummer on sight, everyone knows what it can do, and it is true to these brand traits from top to bottom.

Not to mention, that it doesn't cost a lot to keep them around and they don't compete at bit with anything else GM sells (incremental profit - thy name is Hummer).

GMC - in the dictionary under 'redundant'... GMC sells rebadged Chevrolet trucks and, in the case of the Acadia, a rebadged Saturn. I understand this brand is cheap to maintain and successful in certain markets...but unless GM is serious about 'Professional Grade' enough to drop the crossovers and light-duty trucks from GMC and drop all heavy-duty trucks from Chevy - leaving GMC as a heavy-duty and commercial truck division, then just kill them and let Sierra buyers get Silverados. I can't imagine that the extra dealer body and marketing efforts are made up for by the incremental GMC buyer who would not ever buy a Chevrolet.

Chevrolet - full line, all the time. Assuming that Chevrolet keeps their truck line (it will), then Chevy can easily become the full-line brand that Toyota is. Chevrolet should be your source for everything from micro-cars through leather-lined Impalas. It is a hodge-podge brand that can be just about anything to anyone with a smattering of high-performance products, mainstream front and rear-drive product, trucks, etc.

Cadillac - 'Standard of the World' in the making. Cadillac will be a major beneficiary of a lean, mean GM. The money saved by not supporting Saab product development and GMC can be funneled into an expansion of Cadillac into a true Mercedes/BMW killer. A smaller-than-CTS sedan and coupe, a CTS coupe and wagon, a smaller-than-XLR sports car, a small SUV, as well as an ultra sedan and coupe on the upper end would book-end GM's offerings on the upper end.

Pontiac - focused like Hummer only for the on-road enthusiast. Word is that Pontiac is going all rear-drive. This is going to tick off the Pontiac dealers that are used to being a sporty Chevy...but the success of Pontiac needs to be by offering something focused. A rear-drive line, from a sub-compact through a Grand Prix sized rear driver (the new G8) in sedans/coupes/convertibles...allowing for a resurrected GTO, the Solstice, and possibly a Firebird (as more of a 2-seat, smaller, V-8 equivalent to the GTO) - then Pontiac will mean something. Think of Pontiac as a rear-drive Mazda without the SUVs and minivans and you will see the idea.

Buick or Saturn - pick one. As you have likely heard, Buick is going after Lexus (but given Lexus is totally in Cadillac price territory...why?). Saturn is expanding with sophisticated and stylish product to compete against imports (how antiquated a niche is that in this day and age?). Both are aiming at front-drive for the majority of the lineup. However, Saturn is going for everything from mid-teens hatchbacks (the Astra) through mid-30's crossovers (Outlook).

Buick is at the early stages of a resurgence with the Enclave SUV (based on the same platform as the Saturn Outlook) and will have mid and large sedans (and coupes?) as its basis.

GM needs to make a decision here. Buick or Saturn, but not both.

Saturn is becoming a full-line manufacturer (which seems to get in the way of Chevrolet). However, on the plus side, they have a young buyer and a great reputation through their dealer body and no-hassle philosophy.

Buick, on the plus side has decades of history, loyal buyers, and would carry a stately, elegant, American Jaguar aesthetic quite well. As a softer, less sporty, front-drive alternative to Cadillac's rear-drive lineup - it could work. However, with its aging buyers and less focused niche, I'm not sure how it will fit in with smaller Cadillacs and larger Chevrolets.

I can make a case for either, but better if Chevrolet is limited to softer, middle-of-the-road, tuning for their larger stuff and by merging Buick and Saturn into a single entity that sells sophisticated, stylish, near-luxury product.

So, for me, the ultimate GM would be one that sells Saab, kills GMC, merges Buick and Saturn, moves Pontiac into a hard-core sports brand, and gives the savings to Chevrolet and Cadillac to compete with Toyota and BMW, all the while spending a little bit of money giving Hummer 3 or 4 models that are various sizes of the hard-core off-roader concept.

It isn't as shocking and likely to get me press as Fortune's story...but it might be the one that gives GM an even better shot at long-term success.

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