GM is re-organizing its corporate structure. It’s putting its eight brands into four divisions under four car czarettes, in a three-three-one-one configuration. For those of you who can’t guess which GM brand will go with which (as there’s no neat, logical way to make these groupings), it’s Cadillac, Hummer and Saab; Buick, Pontiac and GMC; and Saturn and Chevy on their lonesome. “We are further streamlining the organization,” GM’s President of North America announced. “To reduce complexity, align resources to improve the consumer experience and improve bottom line business results." It’s a deeply misguided maneuver.
The problem with GM’s restructuring is patently obvious. What exactly does the Cadillac brand have to do with Hummer? Caddy is supposed to be GM’s upmarket answer to BMW, Mercedes, Lexus and (less charitably) Infiniti and Acura. Hummer offers a limited range of pseudo-military, gas-guzzling off-roaders competing with Jeep, Land Rover and Toyota’s Land Cruiser. Saab– an ostensibly Euro (Nordic?) near-luxury brand– is a better fit with Cadillac. But better doesn’t mean good.
The combination of Buick, Pontiac and GMC (BPG in GM-speak) doesn’t offer even a glimmer of unifying logic. Doctors cars (and a CUV), performance-oriented vehicles and gussied-up Chevy trucks? It’s like lemon maple fudge ice cream. Although no one at GM (or within the automotive media) seems particularly bothered by this bizarre new “sales channel” development, how is the “customer experience” improved by the creation of such an odd trifecta of car brands?
If the customer-facing side of this concept is dubious to the point of dementia, reorganizing GM to “streamline” the bureaucracy to reflect these shotgun marriages makes even less sense. In fact, by placing BPG and, uh, CSH into twin fiefdoms, GM is reinforcing a mistake of gargantuan proportions, guaranteeing that it will forever remain in branding Hell. Think of it this way…
There is no way GM can create compelling products that sustain eight coherent automotive marques by grabbing a generic anycar off the shelf and tweaking it here and there to fit some pre-determined idea of a brand's demands. In theory, perhaps. In practice, the Saab 9-7X. With large scale intra-brand platform, drivetrain and components sharing, the temptation to cut corners, to dumb-down the possibility of brand-specific excellence for “easy money” or the greater good, is simply too great. Ipso facto.
Consolidating BPG and CSH is bound to accentuate this problem. While turning eight hungry mouths into four must be an orgasmic idea for GM’s Beancounter-in-Chief and his Beancounter COO, it will destroy what little remains of GM’s octo-brand equity and sink the company even deeper into its current morass of mediocrity. That’s because maintaining brand independence is not an administrative issue. It’s the key to excellence.
Great brands– and thus great products– are the result of a corporate culture deeply dedicated to particular way of seeing the world. You can argue about BMW’s realization of its "ultimate driving machine" ethos, but this guiding principle dominates every aspect of the German automaker’s existence. You can see it in the choice of office furniture. The pictures on the wall of their HQ’s cafeteria. The hushed tones in the waiting room. And you can feel it around a corner, even in Bimmer’s most “piggish” vehicles.
Compare and contrast this situation with Saturn. If “what is a Saturn” is a tough question, “WHERE is Saturn” is a logical corollary. BMW may have field ops in Spartanburg and Shenyang, but its heart is in Munich. You could make a coherent argument that the Saturn brand died when they left Spring Hill, Tennessee; a southern enclave whose honesty and friendliness informed the entire company.
Putting Buick, Pontiac and GMC under one roof– whether metaphorically or literally– will rip the heart and soul out of all three brands. In many important ways, they will simply cease to exist. The same Borg-like assimilation will afflict Cadillac, Hummer and Saab, with equally disastrous results.
Greater integration of executive control for these six GM brands is the exact opposite of what The General should be doing to guarantee their survival– if their survival is, indeed, the goal. It will accelerate the process of badge-engineering that has bedeviled the company post Alfred P. Sloan. And, ironically enough, the consolidation of power under two executives will exacerbate the executive infighting that has been the hallmark of GM’s long, slow, painful fall from grace.
If you doubt the accuracy of this analysis, re-read Troy Clarke’s quote at the beginning of this article. While the Prez’ suggestion that GM should “reduce complexity” is about as controversial as motherhood, the main, indeed central problem with GM NA is that its products LACK complexity. Or, more accurately, individuality. How does placing six disparate brands into two new fiefdoms create distinct, distinctive and marketable products? Answer: it doesn’t.
Putting Buick, Pontiac and GMC under one roof– whether metaphorically or literally– will rip the heart and soul out of all three brands…
Anyone care to comment on the PBG (and sometimes Cadillac) channel experience in Canada? I don’t have the requisite inside knowledge to make any worthwhile comments.
These new groupings aren’t quite as bad if you look into it a little more:
BPG – They’re kinda stuck with that. That’s been going on for quite some time, to change that now would be too painful. Plus you can view these three as the leftovers anyway: There’s nothing in this lineup that you probably couldn’t get elsewhere. It’ll make it easier down the line just to cut them all and magically be done with the three worthless brands.
CHS – If you remove Saab from this grouping, it’s not so bad. The Hummer brand may be pseudo-military, but really the people who are attracted to Cadillacs are probably also attracted to Hummers too (How many dubs have you seen on ‘Sclades and Hummers? Lots!). So remove Saab from this grouping and what you have left is the “cars that cost too much for what you get” grouping.
Chevy – Well it is (was) big enough to stand on its own.
Saturn – This should be paired up with Saab. They were both “weird” companies in their own little way before being assimilated. Maybe if they were off in their own little world, they could become something.
Here’s the thing. If you can’t afford to kill off the brands and you can’t in any timely fashion create distinctive vehicles with a theme for each brand what are you supposed to do?
I could see Caddy, Buick and Saab together. As has been mentioned Buick needs to die off but they can’t afford to do that.
Hummer, GMC and Pontiac have a bit more synergy, at least the target audience in terms of salary will be similar, well for the H3 anyway. Chevy needs to be on its own and Saturn? Well it needs to die of too but again can’t do that so hang it out on its own and see what happens.
GM needs to pare down its brands but it can’t, needs to pare down its dealers but it can’t, I just don’t see what they can do to keep all brands viable. At best they can hope to make enough money in the future to kill off some of these brands.
Actually, Cadillac, Hummer and SAAB, make more sense than it first appears.
Cadillac: Premium cars
Hummer: Premium SUV’s
SAAB: Premium Euro cars.
All of which have similar customer demographics.
Buick, Pontiac and GMC are mid level cars and Saturn and Chevrolet stay apart due to differing values.
The only problem is, the next logical step is to lump the brands into groups and platform share, badge engineer or reskin cars between the group. Whilst this may be good for the beancounters, it does not help GM lack of brand identity, which (apparently) one of the key reasons why GM’s “a car for every purpose and purse” vision collapsed.
This is all old ground. Yes, we know GM has too many brands and yes, we know it’s difficult to close brands, but I have an idea.
Why, instead of CLOSING brands, you re-organise them to markets? Here’s an example structure:
Cadillac: luxury marque for the Americas. Withdraw elsewhere.
Chevrolet: Everyday brand for the Americas and eastern asia, withdraw everywhere else.
GMC: Truck brand for the Americas. Withdraw everywhere else.
SAAB: Luxury marque for Europe, Africa, Western Asia and Oceania.
Vauxhall/Opel: Everyday brand for Europe, Africa, Western Asia and Oceania.
Buick: Luxury marque for Eastern Asia.
Pontiac: Serves North America, nowhere else.
Saturn: Keep in North America to sell rebadged Euro cars.
Holden: Use as a “Pontiac” division in Oceania with possible expansion to Eastern Asia.
Hummer: Keep as a global brand.
Any existing dealers, can be converted to the brand or marque for that market (i.e In Europe, all Cadillac dealers become SAAB dealers).. That way, GM don’t have the expense of closing a dealership down, just rebadging them. They’ll be doing the same job, just with a different brand.
That idea could help avoid the cost of killing brands, whilst saving money on buying dealers out(even though, they have too many and need to kill some) and help brand value.
It’s my understanding that Chevy (even when built by GMDAT) is to be the “value” brand everywhere, including, now, Europe. GM is trying to position Opel/Vauxhall as a premium brand above Chevy in Europe.
Deck Chairs. Titanic.
what about a GM Super store. there is no reason to have 8 full range brands, but 8 brands with bits and pieces would make sense.
the Buick Enclave is doing good so keep that but kill the rest. Caddy has a few good models. etc, you get it.
They could have one large off site service center for a whole area rather then at each dealer.
Can one Czarette annex another Czarette’s brand and establish his dominion, thus ensuring the the rise to power of his corporate “channel?”
Cuz, that would rule.
How about:
1.Saturn-Pontiac-Saab
2.Cadillac-Buick
3.GMC-Hummer
4.Chevrolet
That at least lines them all up a bit more with their supposed target market.
Too late Katie. Holdens are sold in the middle east as Chevrolet Lumina’s the Cadillac CTS is going to be sent to Australia/New Zealand. As for sports division of Holden, HSV covers that quite nicely.
Opel/Vauxhall means nothing anymore in Oceania.
Buick should have a chinese accent.
so heres my plan for the NA Groups Cadillac-Chevrolet-Hummer (the viable one) and Buick-Saturn-GMC The not so…um yeah, hey how about those Sox, division) under my plan GMC & Chevrolet trucks become Hummer.
As for Saab sell it to Volvo as a sport division or something.
Katie
Just for a change of pace, I agree with you today :-) You’re right, CHS are premium brands. BPG are mid level, well sort of.
Chevy can stand on it’s own. (Saturn needs to die)
RF
My impression of the combined sales channels -imperfect as they are- is that it will make cloning less likely. Admittedly there is little evidence of this, as BPG have been combined for a while and GM is still offering clones. But it’s at least theoretically possible to stop. For example, the GMC dealer doesn’t need an Acadia, because he’s also a Buick dealer, and therefore has the Enclave to sell, in a couple different trim levels.
If the sales channels are all separate, then every dealer wants something in every market segment. Or at least something in several market segments.
To my mind, the problem is they don’t combine enough brands into sales channels. I’d combine Chevy Pontiac Saturn GMC and Buick. Later I’d kill off either Chevy trucks, or GMC, and kill off Saturn. That would leave Chevy, Pontiac, and Buick as well as Trucks. There need be no overlap of products. There is something to sell in most segments w/o cloning anything. Plus it may be possible to kill brands at little cost, since the dealers as I’ve combined them won’t loose anything. Ax Saturn, who cares? Ax one of the truck divisions, who cares? The dealer still has ChPB and Trucks.
The other channel would be CHS. The long term plan would be to either let Saab fade back into the European landscape, or make it the sporty luxury divison and let Caddy get back to making it’s traditional wafting cruisers. Just keep making Hummers for as long as Ahnooold keeps driving.
and let Caddy get back to making it’s traditional wafting cruisers
but that puts Cadillac back in the death spiral with Buick.
Just because CHS are all premium doesn’t mean they belong together. You might as well group Chevy and GMC together because they both sell pickups, or Saturn and Saab just because they sell Euro cars. It’s arbitrarily picking one aspect of the brands’ identities and then lumping them together. It sends the message that this one aspect is what each brand boils down to, which makes you wonder why you even need all those separate brands in the first place.
As Robert said, they need to be working to make the brands more distinct, not less (since they appear committed to keeping them all). But on the other hand, if you’re going to go partway and start grouping brands together, why not go all the way and merge a few of them?
For example, why not make BPG one unified brand, so that GM can send one strong message about what kind of cars they sell? Imagine how much better it would be if they cut the overlapping BPG products and gave them a unified look and feel and message. You just can’t effectively send three distinct messages from one sales channel.
I only know two non-retired people who have recently purchased Cadillacs. One also owns a Hummer. Noone else I know owns either. Based on that exhaustive sample, I conclude that pairing Cadillac and Hummer makes sense.
Adding Saab to the mix could also makes sense if it prevents Cadillac from building Saabs of its own. Let the Swedes build turbocharged four and fewer cylindered small light whatevers. Cadillacs need to be imposing. Like Hummers. See, more sense.
That Chevrolet is a “channel” unto itself is manifest.
The rest is more problematic. The GMC/Buick/Pontiac grouping can properly be thought of as “other.” GM can’t buy out the franchisees or otherwise shut them down, so they need to supply some product.
Buick isn’t that much of a problem since the Chinese inexplicably love the damn things, and economies of scale are therefore attainable. Plus, all you really need are two models, the Enclave and the Invicta. Or add the Riviera if you like. They’re distinguishable from Cadillacs by being plush but sleek; not imposing. And cheaper. It’s doable.
Likewise, Pontiac could work with two models: the G8 and Firebird (aka G8 coupe). The brand would finally denote bargain bin American (er, Australian?) powered BMW’s, as long promised.
GMC? Um… like Oakland, there’s no there there. But still lots of volume. My suggestion? Follow the brilliant example of Chrysler with the Neon, which lead a double life as a Dodge and a Plymouth. Call all the big pickups Silverado’s, and put Chevy badges on the Chevy’s and GMC badges on the GMC’s. Likewise with the rest of the GM truck line. In one fell swoop, all of the corporate energy wasted on the expensive and futile effort to “distinguish” GMC products would be unnecessary, and the Silverado, Tahoe, Traverse etc. model brands strengthened.
Finally, there’s Saturn, whose brand is their dealerships, not their cars. Using Saturn as an Opel remarketer works for now, but shouldn’t shortly as Opels and Chevrolets become indistinguishable (or ought to). What to do, what to do? Well, if GM has no use for a national dealership chain with great “dealer brand equity” for fair dealing on starter cars, would anyone else? How does the Saturn Nano sound? The Saturn Chery? It kinda works. After all, wouldn’t a Chinese or Indian Saturn be “a different kind of car company?”
“Deck Chairs. Titanic.”
I laughed so hard I nearly had to change pants.
The damage started when the Motor Divisions went away and the BOC/CPC nightmare began, gained steam when the first Chevy V8 found its way into the first Olds 88 (around 1978, wasn’t it), and was completed when all the marketing divisions moved into their tidy new quarters in the RenCen. I’ll argue on the GM side all day long and twice on Sundays when it comes to quality, productivity and technology, but on this topic….I got nuthin’….
My master plan:
Division C: Chevy, Cadillac
Division GH: GMC, Holden, Hummer
Division OP: Opel, Pontiac (they could bring back Oldsmobile too!)
Division S: Saturn, Saab
And the rest: Buick, Vauxhall.
GM’s new tag line could be “We’ve Got Most Of The Alphabet Covered.”
BPG makes sense, especially the PG portion of it. Basically, it’s Chevy Part Deux. Chevy sells cars (so does Pontiac) and Chevy also sells trucks (so does GMC), so a BPG dealership sells everything a Chevy dealership does, more or less. In theory, BPG will be slightly more upscale than Chevy, especially Buick is also attached, although in practice, the PG portions of the dealership are almost identical to a Chevy dealership. But there are still people who will buy Pontiacs or GMCs who won’t buy Chevys, so keeping them open allows GM to keep their plants running full blast, and also allows GM to not have to pay billions to buy out dealers. Same reason why Mercury continues to exist-hard to screw up selling rebadged Fords with more chrome for a grand more each.
CSH also makes sense, in the sense that they are all fairly high-end, niche brands. Might as well stick all the luxury, niche brands together.
The one brand of the bunch that really doesn’t make sense is Saturn. It didn’t make sense when all they sold was Corolla-clones, and it doesn’t make sense now that they are trying (and failing) to go upscale. It’s a big hole in the ground GM tosses money into.
If “sales channel” is code for “merged dealership” then these kinds of groupings can make sense as a compromise for killing brands. Instead of maintaining 8 complete lineups, they maintain 4. Then each brand can winnow its model list down to a core that really does represent a coherent image. I would move Saab with Saturn, though:
Chevy is a complete line of everyday American-style cars, trucks, and SUVs.
Saturn/Opel sells an everyday small car, midsize car, CUV, plus the Sky/Speedster. Saab is reduced to the 9-3 and 9-5, which are more premium and sporty than the Saturn/Opels.
Pontiac is reduced to the G8, a more hardcore G6, and GTO/Firebird. Buick keeps its mid/large car and mid SUV lineup. GMC maintains the trucks and SUVs.
Cadillac sticks to the BMW-style sports sedans, plus the XLR and Escalade. Hummer sticks to two models of extreme/status-symbol SUVs.
Every lineup is complete for its demographic: Chevy has barebones everything, Saturn/Opel/Saab has everything except trucks and SUVs, PBG has everything except small cars, and Cadillac/Hummer only has extravagant cars. Every brand except Chevy can focus on 2-4 core models and there’s no need for badge engineering, except for GMC.
They should go one step further and combine not only the brands but the vehicles themselves: Humsaabilac, anyone?
Robert Schwartz :
April 17th, 2008 at 5:40 pm
Deck Chairs. Titanic.
Yep.
I guess I sort of see the logic of BPG. They kind of compliment each other the way Chrysler, Dodge and Jeep are supposed to in the future. Luxury, performance and utility. I disagree with Farago’s intimation that these “channels” will necessarily lead to the automotive equivalent of a runny TV dinner. Truthfully, I think it’ll reduce overlap. I wonder if the Acadia was OK’d before the BPG channel became official. I wouldn’t be surprised to see it die quickly.
“…too many brands, too many dealers…”
*unknown ;)
Following that logic, one would hope this is a ploy to reduce dealerships then cut the weakest/least profitable brand from the trio (North America). Maybe someone at GM has some sense, and would NEVER say this publicly.
Priority number 1 right now: fuel efficient, class-competitive or better cars on the lot yesterday. All this restructuring won’t matter at in the future otherwise, as it would easier in the resulting bankruptcy. So far on the checklist (imo): Malibu. Find a way to make it a smidgen more efficient, less ugly in the front, and up conquest rebates. At least they have one thing in hand they can mold the beginnings of a comeback/survival.
Now they can sell both Acadia’s and Enclaves that they don’t have due to the Delta Township strike through the same dealership. Is it some sort of secret strategy to drive 3 brands out of business at once?
Looking at the way GM has been going, the constraints it is under and it’s deteriorating financials, this is exactly the kind of move I would expect them to make. They really need to axe brands and reduce dealers but they can’t so they re-organise the deck chairs so the passengers have a view of the stern (pointing skywards) instead of the bow (somewhere in the depths). There will be a lot of hype and a flurry of showcase ‘channel’ dealerships with new signs and hoopla. However the gash in the hull is still there. It’s all smoke and mirrors but hey it looks like they are doing something drastic (like they really need to) but they are not. The more things change, the more they stay the same.
I don’t understand what grouping is going to do, other than add one more layer of management to GM (GM->Group->Brand). The other suggested grouping arrangements proposed in the post make about as much sense as trying to arrange your CD collection by artists, or genre, or year, etc., etc..
Is the grouping supposed to breed a better product? Then this grouping is like breeding Pandas. Lock them in a cage together and wait… and wait… and wait. Nothing happens.
Or perhaps it is suppose to be a death match? Three brands enter… but only one comes out!
How about this? Rather than grouping brands, break up GM. Make each brand become its own company, each free to compete, thrive, or die on their own. If a brand fails, then the dealers for that brand are free to sue the nothing that is left of that brand. That is one way to close excess dealers.
“Perhaps GM’s crowning folly during the ’80s was the reorganization of its North American operations into two clumsy megagroups. The plan gave responsibility for small cars to GM’s Chevrolet, Pontiac and Canadian divisions, and handed large cars to the Buick, Oldsmobile and Cadillac units.”
http://www.time.com/time/magazine/article/0,9171,976990-4,00.html
It didn’t work then and it isn’t going to work now.
Since they can’t get rid of all these brands, they need to look at all the successful models that sold great, and what made them so successful and great.
Hummers and Caddies at the same dealer, I can see that. Saab is the odd car out. Buick, Pont, GMC: Now there’s a tough sell from every angle. Those dealers are doomed.
Chevy and Saturn; that’s too funny. Reminds me of Toyota, Scion.
Since Saturn is just four bangers, they should take that brand and only offer them in hybrid models or full blown electric. Wasn’t the EV1 based off some Saturn model?
We’ve been through all this a million times. Until GM changes their ways(and products), the story will remain the same every time. The only progress they have made since this series started is a slight improvement in the quality of the vehicles they are making now. A bit better then they used to be. Still not best of class or stand out products. We want worlds best and they give us average. As long as the competion builds the better vehicles, they will sell more vehicles.
There are the bones of 2 or 3 great car companies inside the ugly monolith that is GM. I wish they would start spinning off divisions and just break the damn thing up.
In Canada Buick/Pontiac/GMC has been around for countless year. Canadian GM dealers have always been “multibrand” it used to be Chev/Olds/Chev trucks.
Cadillac is the brand for which the franchise is given to any dealer be it Chev or Pontiac depending on the location.
Perhaps GM should start experimenting with a “GM centre” where all the brands are represented expecially in major metro areas.
How the brands are organised behind the scenes (internal)who cares, does the customer care that so and so runs CHS.
Since there were always more brands under 1 roof in Canada, in many instances with the demise of Oldsmobile bringing all the brands under 1 roof has been easy to do especially in smaller communities.
With many megadealers owning dealerships in the US it should be relatively easy to do a GM Centre in a major metro area and put all the brands under 1 roof.
Many customers would prefer a multibrand outlet.
As I’ve said before, PBG can only survive if the person walking into the PBG dealer sees SUVs,CUVs, and trucks under the GMC brand ONLY; FWD “Old People’s Cars” under the Buick brand ONLY; RWD/AWD “sporty cars” in a range of prices from just above Chevy to just below Buick in the Pontiac line ONLY.
And improve the Solstice/kill the Saturn Sky.
Well, just down the road from me is a Hummer and Cadillac dealer next to a Buick/Pontiac/GMC dealer. The BPG dealer was there before I was born (over 30 years), and the Caddy/Hummer just went up in the last 10 years.
So I’d say they’re just announcing to the world what the franchise owners have been doing all along?
When you are a) over-branded, and b) afraid to make tough decisions, you come up with something like this. People (marketers, agencies, consultants, etc.) can always rationalize these 8 into some combination, step back, and say it makes sense. Look, I’m sure there are dozens of other brand/channel combinations that someone can make an argument for (and GM will gladly pay for that study!!). But what doesn’t, and never will, make sense is 8 brands, 50-60 odd nameplates, for 20% market share. This 8-brand constraint drives bad decision-making at every level. Like everyone has said ad-nauseum, too many mouths to feed. Even with some sort of combined strategy channel, you still have all these brands that need advertising support, engineering support, product/service support, etc.
The only way this makes sense is as a means to an end (of 3-4 brands), but i’m not sure it is….
I only see one reason that this current re-alignment could make any sense. BP&G are the brands that need to be killed (in NA) without question. Hopefully, accelerating the combination of these brands into one channel will make for an easier(cleaner) break with the dealers once they finally pull the plug.
SAAB should remain with C&H at the moment, so it can preserve a little premium cache’- and fetch a higher price when sold to any number of Indian bidders.
I think semantics also plays into this….People would feel better if GM killed “BPG” rather than “Pontiac” or “Buick”. Think about Ford- they did not sell Jaguar or Land Rover to “the Indians” they sold PAG…where’s the harm in that?
All that would remain…Chevrolet, Saturn and Cadillac- which looks not dissimilar to Toyota, Scion and Lexus….
How about TWO brands: Chevrolet and Cadillac?
and,
“Deck chairs,
Titanic.”
a brilliant man-of-few-words.
I’ll play the role of Mr Pessimistic here and let’s just say that if the economy does take a further swan dive, GM will be forced to try to keep all of these dealers moving product.
Bearing in mind that oil prices are soon going to be $125 per barrel and gas prices will exceed $4 per gallon, as well as a potential for more US auto strikes and a CAW shut-down of GMCanada –
Chevrolet – could bring in more four cylinder GMDAT product, especially since Suzuki is doing to drop their Forenza line (sold elsewhere as a Chevrolet Epica); thus, so what if Lordstown strikes? Ship more product from South Korea (and China where they are also slapped together)
Saturn – bring in some Brazilian Chevrolets (nee Opels) rebadged as Saturn, in order to take advantage of some lower costs vs. Europe. Once again, four cylinders, Opel DNA. Otherwise, just kill the brand – it makes no sense to keep a division which has never made penny one for GM, and sell the Astra as a Chevrolet.
Buick – soon this will be so dead in the water… look at big RV sales (similar buyer demographic to Buick buyers) – off a cliff face right now. Leave it for China, only.
GMC – truck and SUV sales are tanking. Let it die, already.
Pontiac – in order to keep Buick-Pontiac-GMC dealers from suing the cr*p out of GM, supply them with the (Toyota built) Vibe and whatever other current Pontiacs are viable to sell in the numbers they’ll sell. Sink or swim, baby!
Oh, yeah, GM? Bring the actual manufacturing quality out of the d*mned basement?! That “might” help (deep sarcasm).
egg man:
I only see one reason that this current re-alignment could make any sense. BP&G are the brands that need to be killed (in NA) without question. Hopefully, accelerating the combination of these brands into one channel will make for an easier(cleaner) break with the dealers once they finally pull the plug.
I’d like to believe that killing GM overlapping dealers is the whole point of this exercise. Step 1: combine three brands into one. Step two: reduce model overlap between THESE brands. Step three: kill two brands and rebadge all. Hence this sentence:
Greater integration of executive control for these six GM brands is the exact opposite of what The General should be doing to guarantee their survival– if their survival is, indeed, the goal.
[If you recall, GM Marketing Maven Mark LaNeve floated a trial balloon earlier this year, suggesting the creation of GM “metro megastores.” That idea lasted exactly one day.]
But the grouping simply doesn’t make sense for that strategy.
A Saab rebadged as an “entry level” Cadillac? Sure. But Hummer is Hummer is Hummer. Combining Hummer with Caddy and/or Saab doesn’t work at a dealer OR brand level.
If you wanted to kill GMC, wouldn’t it have been better to blend it with Hummer? Or Chevy? Trucks go with trucks. So.. Chevy, Hummer, GMC?
And as some here have suggested, don’t Saab and the Opel-ized Saturn make a better couple?
Strange to say, but Pontiac might have made a nice combo with Caddy. Pontiac could take the sporty thing (a la CTS), Caddy could return to plush-mobiles.
Or put Buick, Pontiac and Caddy together, reduce down to a car model apiece, keep the pricing distinct, then kill Buick and Pontiac and make them all Caddies.
In fact, the combo GM has unleashed on the car buying public is one of the weakest of all the dozens of possible conglomerations.
My guess is that the BPG sales channel evolved without any GM intervention/guidance, leaving The General with BPG as a fait accompli, and five brands to group together. Or, better still, not. But stupid ideas have a strange sort of momentum in large companies. At some point, everyone stops asking “should we do this?” and begins asking “how do we do this?” Or, more accurately, “how do I protect my career while the company does this?”
It’s scary to think about the millions of dollars that will be spent on another dubious re-organization.
Management teams across GM will have countless meetings trying to sort through new business processes, roles and responsibilities, governance issues – the whole gamut of “who does this now?” planning stuff.
But that is what management does – constant re-organizations to prove that they are doing something to earn their big pay cheques while, conveniently, providing an excuse for poor financial results down the road (“we lost money due to one-time re-organization costs”).
Meanwhile – is anyone designing and engineering better small cars? Lighter CUVs? More fuel efficient trucks? Compelling mid-size cars? Who is working on the product?
There is no coherent way to group these eight brands because most (all?) of them are damaged. This is obvious from the comments posted here: Everyone has a different idea what each brand means and how they should be grouped. The average joe who doesn’t read TTAC probably can’t or doesn’t care to differentiate between them. Given GM’s sales volumes, they should maintain two brands: standard and luxury (just like Toyota/Lexus, VW/Audi, Nissan/Infiniti). Call them what you want (I’m thinking Chev and Caddy make the most sense). Anything more complicated than that and customers will lose interest and shop elsewhere. Oh right, they already have.
I don’t know whether I’ve said this before, but I reckon it could be a good idea.
Why not use some of the current brands as packages? For example:
Buy a Cadillac CTS, but you can buy a “Pontiac” sports package (for $3K, say) and beef up your car? That why the brand lives on, but its line up can be culled to help eliminate overlap. Any existing dealers can be changed over to more mainstream brands (i.e Chevrolet or Cadillac).
Here’s another example: Buy a Chevrolet Malibu (if you can find one) but pay extra to get a “Buick” luxury package?
Just a thought……
Dealerships should react to what buyers are in the market for — people shopping for a truck are not cross-shopping for cars. Folks shopping for a Cadillac are not cross-shopping Saabs.
People on this thread truly have some great ideas. Let me add my two cents:
GMC/Hummer: Trucks only. Diesel across the lineup. No Lambda.
Cadillac: STAND ALONE dealerships. Move upscale to compete with Audi and Mercedes. Needs a new game-changing STS that starts at $50,000. CTS / STS / Escalade / Lambda CUV
Saab/Saturn: Affordable and expensive European cars. 9-1 / 9-3 / 9-5 / Corsa / Astra / Aura / Vue / Sky
Chevy/Pontiac:
Chevy = Bread and butter value-based autos. Aveo (Corsa or Agila) / Delta car / Malibu / FWD Impala / Theta CUV / Lambda CUV / Trucks / Camaro
Pontiac = All RWD/AWD. Affordable performance. Sell only G6 / G8 / Firebird / Solstice
No Buick. The market will shrink and die.
In this proposal, very little within the dealership overlaps, while pairing brands gives the customer a range of options in his or her general market preference.
Too much “management” and not enough “action”.
All you get with all this micromanaging is overly complicated bureaucracy and red tape that makes it impossible for anyone to efficiently do their job.
I agree with AGR’s comments, franchises in Canada have combined marques for decades. Since SAAB, Saturn and Isuzu all came into the picture around the same time, GM setup these three in the same dealers, although this undercut Saturn’s brand-defining retail philosophy.
At this point, GM needs to eliminate badge-engineering and pare-down platform shared cousins, reducing it’s model lineup to a third of what it is today. Then, put all the brands under one roof, but provide different entrances and separate showrooms for premium marques. Franchises will have to undergo a massive rebuild, but many are long overdue for renovation.
Chevy: Malibu, Impala, Camaro; no rebadged Daewoos, no trucks. Pander to fleet sales (RWD Impala = Taxi Cab & Police Interceptor)
Pontiac: 2 rebadged Holdens, RWD
Saturn: 3 rebadged Opels (hatch, sedan, minivan)
Buick: one large sedan, FWD; one CUV (think Roadmaster).
Caddy: one gargantuan sedan, one luxury convertible, RWD
GMC: trucks!
Hummer: one ridiculous truck!!
Saab: two models (9-3 hatch/convertible and 9-5 sedan)
Corvette: on its own
That’s still a lot of models, but a company as big as GM needs volume to survive. And when I say rebadge, I mean that they’re captive imports that bear no resemblance to models from other divisions.
@rjones:
You are so right. I still think that GM could use its brands as an advantage to cater do different people, but part of me wonders if they’d be better just selling Saab and killing everything else. That’d be what…$8 or $9 billion? I mean, they’re going to alienate someone by managing a brand badly (because they don’t have enough money per brand to do it properly) or killing it. So just do it that way. Just get it right! At least that way we wouldn’t have to hear Farago say Cadillac should be a bunch of outdated 20-foot party boats again.
CarShark:
Just get it right! At least that way we wouldn’t have to hear Farago say Cadillac should be a bunch of outdated 20-foot party boats again.
Reductio ad absurdum, eh? Well, consider the fact that the Escalade saved Caddy’s bacon. If that ain’t an outdated 20-foot party boat, I don’t know what is. OK, 18.5 feet. Close enough.
The Escalade saved Cadillac?!
Blimey, my money would have been on the CTS….
“Think about Ford- they did not sell Jaguar or Land Rover to “the Indians” they sold PAG…where’s the harm in that?”
Sorry, but that simply isn’t correct. Ford’s Premier Automotive Group (PAG) as constructed consisted of Lincoln, Aston-Martin, Jaguar, Land-Rover and Volvo. Lincoln was pulled out in 2002 and put back with Ford (and moved it’s headquarters twice within a decade as a result). Aston-Martin was sold. Jaguar and Land Rover were just sold. The only remaining member of the “Group” is Volvo.
PAG has been dismembered piece by piece, not sold. It is now hardly a group as there is but one member remaining.
First of all, let me just say that this thread has been a very interesting read…many great ideas thrown about.
I actually think GM’s strategy is really good..except I would put Saab with Saturn. Saturn has realtively few dealers and with Saab’s added volume you could actually have healthy, profitbale dealers selling Euro tuned FWD/AWD cars/CUVs
Cadillac/Hummer makes sense to me…bold, American, premium marques
Chevy – strong, global brand
BPG – This is harder to justify, but with the three brands combined you just need a couple of good products in each brand…Buick Enclave, Buick Invicta, Buick halo coupe, Pontiac G8, RWD alpha Pontiac G6, Solstice is a good line-up. GMC has a strong brand equity among truck buyers..take it slightly more upmarket than Chevy trucks. Maybe some exclusive products like the Denali EXt concept would help.
Katie: I think there are a couple of problems with turning the weak brands into packages for the main brands. First of all, almost every brand already has its own sports line—SS, Red Line, Aero, Super, V-series—so what would be the point in using the name Pontiac instead?
And further, I think the Pontiac name is so damaged that people wouldn’t want to buy a Cadillac CTS Pontiac. For those people who have a mental image of Pontiac at all, it conjures up images of plastic body molding, mullets, and screaming chickens. Same with Buick—they’re bloated, plush cars with overly soft suspension. Why would I want to associate that with a brand-new Malibu, especially since Chevy already has a top trim package called LTZ?
Time and again in my corporate career, I saw this type of thing happen to companies wherein management no longer understood either their customers or their products. Retreating to the refuge of the wood paneled offices, they acted on the only thing they thought they understood: the organization chart on the wall. Usually the company would be functionally paralyzed for six to eight months while the people who really did productive work figured out the new power structure and how to protect their turf. Mismanagement, not the unions, will kill GM.
Robert,
What brands get sold at what outlets doesn’t matter much when no one is paying attention/buying your product. Only changes at an industry leader really matter to the marketplace. Administrative changes like this are just to shave some cost out of the tree, not to improve it’s growth and the general public won’t care either way.
Why not take this opportunity to look at the the real “Deathwatch” issue at hand: cash flow? Or lack therof. Right now GM is selling down the remainder of high profit trucks, paying a ton of plant workers to sit home and watch Oprah, and they will (likely) have to pay more than they’d like to solve some of these strike issues.
Why not take a look at where their year-end marketshare will end up and what affect all the lost sales will have on their bottom line? Are the UAW close to breaking the bank? Does the Delphi money-pit plus the UAW’s demands fall on deaf ears because the well has run dry? Are some of the UAW strikes timed to help GM avoid having to pay workers to sit idle? That kind of analysis is what I’d be interested in reading.
Here’s another idea: Keep only Chevy and Cadillac as retail brands. Saturn, Buick, Saab, and Hummer become _models_, not brands. This eliminates all the overhead of separate dealerships, management, marketing, etc. A “Saturn” is a small, efficient coupe/sedan/hatchback/wagon — basically a new S-series. A “Buick” is a big, cushy, FWD sedan, i.e. Lucerne. A “Saab” is a 9-3 hatchback. A “Hummer” is an H3.
This has been the situation with Corvette for a while, now, and it seems to be working pretty well.
Like KatiePuckrik suggested, “Pontiac” becomes a tuner marque, similar to SRT/AMG/SVT/etc., and replaces V-series, Red Line, etc. GM Performance Parts becomes part of Pontiac, and from now on all of GM’s motorsports sponsorship is done under the Pontiac name. Then Pontiac really is “driving excitement”.
GMC is the odd man out and gets axed as a consumer brand. The commercial trucks might as well stay.
This way GM still has something to sell to the (few) Saturn/Buick/Saab/Hummer/Pontiac purists that still exist, but doesn’t need to maintain all the overlapping brands and models.
GM is just doing this to try and cull stand alone or two brand dealerships while giving the rest full vehicle lines to sell instead of making every brand into a full line brand.
Stand alone Pontiac dealerships have no trucks to offer, so GM gives them GMC franchises. That’s the rationale behind this. This also isn’t new.
GM has grouped all of these brands together for over a decade already. The news here is that they have a corporate building design they want dealerships to adopt or use, good luck with getting the old ones to invest in renovating though.
Everybody is missing the point.
GM needs to have overlapping brands at this point. Basically, there are quite a few people out there who will buy a GMC Sierra but not a Chevy Silverado, a Saturn Sky but not a Pontiac Solstice, a Pontiac G5 but not a Chevy Cobalt, even though each pair is basically the same damned vehicle. This allows GM to keep their assembly lines running at something resembling full-blast, and also reduces GM’s engineering and design costs. The shut down of Oldsmobile proves this; almost all of those sales evaporated, going to Honda or Toyota or BMW or Ford or who knows where, instead of going to other GM brands as predicted.
Also, if they started shutting down lots of brands, especially the older ones with lots of dealers (namely, Buick-Pontiac-GMC) the dealer buyouts would be in the billions of dollars. While it might make things nicer, shutting down brands or reducing the number of duplicative models would cause GM’s market share to insantly drop five more points, and make them lose even more money.
Now, I say Saturn is the exception here. Saturn is a giant black hole where GM’s money enters and is then never seen again. They got all-new, expanded product line, and it all bombed. They have yet to sell a thousand Astras in a month (and lose money on every one they do sell). The contrast between the slow selling Outlook and it’s red hot triplets (the GMC Acadia and Buick Enclave) is dramatic. The Aura is selling at maybe half the level of what GM expected.
The problem is that setting up a dealer network to just sell Corolla-clones was a guaranteed money loser. And, after a decade of doing that, expecting people to buy your higher-end product after everybody thinks “Corolla-clone” when they think “Saturn” is never going to work-especially since the same stuff can be bought with a “better” badge at the dealer down the street-and you can haggle at those dealers and get a discount, unlike at a Saturn dealer. No haggle pricing simply doesn’t work at price levels above 20k or so.
The Saturn dealer network is fairly small (and getting smaller), so shut down costs would be much less than trying to get rid of Buick or Pontiac. Plus, since their product is all-new, the timing is easy-just wait until that product would be due to be replaced, in three or four years, and simply don’t replace it.
No dealer buyouts. Just stop making Buicks.
Robert Farago
Reductio ad absurdum, eh? Well, consider the fact that the Escalade saved Caddy’s bacon. If that ain’t an outdated 20-foot party boat, I don’t know what is. OK, 18.5 feet. Close enough.
It’s the reincarnation of the Eldo people!
Geotpf
Also, if they started shutting down lots of brands, especially the older ones with lots of dealers (namely, Buick-Pontiac-GMC) the dealer buyouts would be in the billions of dollars. While it might make things nicer, shutting down brands or reducing the number of duplicative models would cause GM’s market share to insantly drop five more points, and make them lose even more money.
I concur. The closing down brands argument is a red herring. Just make better products from top to bottom, GM!
“GMC is the odd man out and gets axed as a consumer brand. The commercial trucks might as well stay.”
Um, too late. GM has agreed to sell what is left of it’s commercial truck business to Navistar:
http://www.marketwatch.com/news/story/navistar-buy-medium-duty-gm-truck/story.aspx?guid=%7B10EAAD0C-B259-41AD-B606-9E3863FB25BE%7D&dist=hplatest
GM already sold off it’s large heavy duty truck line to Volvo years ago (the Volvo commercial vehicles business is still owned by the original Swedish company, only Volvo cars went to Ford).
I’ve never understood why GM has been selling off it’s commercial businesses like tanks, big trucks, buses, locomotives, etc. I guess they were just selling anything they could get cash for.
On another point, Saturn was a stupid idea from the get go and is one of the few Roger Smith legacy decisions nobody has had the nerve to euthanize. GM needed to make it’s existing brands competitive with the imports, not start a whole new company within the company to try and do the job that the existing structures had to learn to do right. Just about every major strategic decision Smith made was a blunder, and most were latter undone (EDS and Hughes purchases come to mind). The Saturn money pit needs to stop.
Basically, there are quite a few people out there who will buy a GMC Sierra but not a Chevy Silverado, a Saturn Sky but not a Pontiac Solstice, a Pontiac G5 but not a Chevy Cobalt, even though each pair is basically the same damned vehicle.
Which is why I say that the Sloan model never worked. The instant you stay with one brand and stop moving up the chain, the other brands above you get screwed. If you buy a top-spec Pontiac because you like them, what the hell does that do for Olds and Buick? That undoubtedly led to every brand dipping into whatever they called “entry level” then, with the Buick Special and Oldsmobile 88 and others.
And as for the Escalade, the big difference though is that the SUV segment was hugely popular then. The floaty barge segment hasn’t been a big one in America for what…10, 15 years? When did the Detroit Three officially give up on the Caprice, Crown Vic and whatever Chrysler had?
All this realignment of the brands does not mean much to the average consumer. The problem is not whether the matched brands in each new group will have any affect on cross shopping, the problem is that too much of the buying public is not shopping GM. There is only one way to fix that and it is product. Improve the product, add an industry leading warranty to entice those who are dubious about reliability, and price aggressively until the public perception is strong enough to eliminate incentives. Sound familiar? This is the only way you are ever going to regain the reputation that GM once had many many years ago. Some of GM’s vehicles are good enough to start this right now (trucks/suvs, CTS, Vette, Malibu come to mind) but all need to raise the bar. The Pontiac G6 is a classic example of what NOT to do.
Read some news this morning that said that Saturn’s sales last year were WAY up and Hummer’s sales were WAY down. Less profit for GM to be sure but obviously Saturn has some relevance to GM. Now if they would just stroke their business plan so that they could MAKE SOME MONEY on these Saturns…
Saturn’s sales were only up in calendar year 2007 because they went from three models in model year 2006 to six models in model year 2007. They would have had to screw up big time to have lower sales with double the models for sale. In any case, their sales were only up by 6.1% in calendar year 2007. So, sales per model were down dramatically, and overall sales are down 15.3% so far in calendar year 2008. Saturn’s recent success is a mirage.
If they dumped all of the brands (I know, impossible) and grouped the product as General Motors only, then things might make sense. You should be able to buy the Caddy, the Hummer, the SAAB, the Malibu, and the Vette under one roof. Each “body style” gets one iteration. End the pointless multiple types…no one cares, and has not since the mid seventies.
Use some of the money saved to make a decent car. Put a hundred dollars more at the assembly side per vehicle and you would exceed the competition.
IN the alternate, just keep up making pointless differences, stock the same parts three times, and wonder why no one in the more desirable areas buys your cars.
I was raised on GM. We were a GM family. was.
Deckchairs. Titanic.
Admirably apt.
Time to start wondering who the survivors will be.
If there was any justice (or class) Rick and Bob would go down with the ship. But I fear there is neither.
Sad really.