I've been kicking this idea around in my head for several months, since talking to my mother's neighbor (a long-time GM engineer) about the company's woes. I recall CG Hill writing something similar some time ago over at Dustbury, although I am not ready to go plowing through his enormous archives to find it..
GM currently sells vehicles under eight nameplates here in the United StatesBuick, Cadillac, Chevrolet, GMC, Hummer, Pontiac, Saab, and Saturn. There is no reason why they need that many nameplates, and the tremendous advertising resources they expend to promote all those brands could be better used elsewhere within the company. I have some ideas about each of their brands, and what to do with them.
Buickappeals to an aging demographic, and their near-total replacement of their lineup has not translated into increased sales, which dropped 30% from last year. Still, there is some potential there, as much of the shrinkage occurred in the fleet-sales business, as GM cuts back on the discounts offered to volume buyers.
CadillacOne of GM's success stories. They successfully managed to take a nameplate with even worse demographics than Buick and turn it into a desirable brand.
ChevroletThe corporation's mainstay; this division is crucial to the company's success, due to the sheer volume of vehicles they move every year.
GMC and HummerWhy do these divisions exist? Sales are stong, but since they offer a variety of large, not terribly fuel-efficient vehicles, they are vulnerable to volatile gas prices, although most of their affluent buyers are not as concerned about driving costs as their less-affluent counterparts at Chevrolet.
Pontiac the "excitement" division has not offered anything exciting for quite some time now, as their highest volume vehicle, the Grand Prix, is also the highest-volume fleet sales car sold by GM. Their most interesting offerings are not developed in house; the Solstice is a rebadged Saturn, and the Vibe is a joint project with Toyota, essentially the same vehicle as the Toyota Matrix. The GTO was a Holden Commodore, an Australian vehicle also rebadged and offered in Britain.
SaabSaab's niche for quirky vehicles is not large enough to cut it in the cutthroat US market.
SaturnSaturn jettisoned everything that made them "A different kind of car" and saw their sales rise dramatically. Many of their new and future offerings are redesigns of vehicles designed in Europe by GM's Opel division, which is one of the largest auto manufacturers in Europe. In any case, their brand already appeals to a demographic which GM desperately needs to capture the 25-49 buyer with higher income than the Chevrolet market.
My proposal is to halve the number of brands sold here. Here's what I suggest:
Merge Pontiac into Chevrolet. Eliminate the overlapping models and rename the remaining models with Chevrolet-appropriate names if necessary.
Merge GMC into Buick. The two divisions complement each other nicely, with very little overlap in model range or demographics, although both marques appeal to the same income brackets. Getting GMC customers into a dealership that sells Buicks may get them to take a look at what is available and provide a bump to Buick sales.
Merge Hummer into Cadillac. Again, both brands appeal to similar demographics with no overlap in vehicle range at all. Hummer is another niche vehicle that does not need its own division within GM.
Merge Saab into Opel and continue the Opel/Saturn partnership. Since Saab is already selling vehicles based on Opel models (and built in Opel plants in Germany) this won't have much effect on the company, except for the savings in marketing and management. GM's Vauxhall division (its UK Marque), which sells rebadged Opels and Holdens, should also be closed down at the same time, resulting in even more savings.
Obviously, this proposal is not likely feasible in its present form. The issue of dealer networks is another story in and of itself, and killing five brands would raise a huge fuss from the unions, regardless of the impact on manufacturing capacity. And since two of my targeted divisions are European Union-based, there is the possibility of getting the bureaucrats in Brussels involved, which would be a headache GM really doesn't need right now. But GM needs to do something a lot more dramatic than closing a few plants, selling the same vehicle under five different names, and offering "factory to dealer incentives" that eliminate every last cent of profit from their vehicles.
posted on May 07, 2007 12:46 PM