Strange but true: I possess a "GM Card" credit card. For every $100 charged to the card I get a $5 discount against a new GM vehicle (up to a certain amount, not to used in a blinding snowstorm, etc.). I signed-up for the fantastic plastic back when I was a loyal GM customer and shareholder. Two crappy GM minivans later, I've jettisoned both GM stock and vehicles. But the card still sits in my wallet, mostly unused. Saturns and Saabs have always been excluded from the GM Card program. Until now. I recently received notice that "Your GM Card Earnings are now redeemable on an eligible, new Saturn vehicle!" Rethink discounts? How long before Saturn gives up on their vaunted One Price policy? There are already reports of Saturn dealers using inflated trade-in values to get around undercut the no-haggle policy. More to the point, what is so great about no-haggle pricing in the Internet Age? Why would anyone be stupid enough to pay full sticker for an Aura when the Chevy dealer across the way is playing Let's Make a Deal on a Malibu? Hang on; remind me again why both the Aura and the Malibu exist?
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“Remind me again why both the Aura and Malibu exist?”
I have been asking that same question over and over about every set of GM badge engineered clones for as long as I can remember.
re: “Remind me again why both the Aura and Malibu exist?”
Uhh…. to win the North American Car of the Year in consecutive years requires two separate vehicles?
But joking aside, very few people outside of the auto industry (and I’m including blogs and message boards related to the industry) really give two licks to understand which brands are under which auto-umbrella. Well executed brand cloning rarely draws the ire of anyone. And it is wrong to assume all brand clones are foolish.
The majority of people buying a Lincoln MKZ aren’t doing so because they’re too dumb to realize there’s a Ford Edge available for a few grand less. The buy the brand clone because the car is marketed at them and they like the product. Similarly you’ve Acadia buyers who don’t really care that there’s an Outlook out there even if they are priced similarly.
I know it’s hard for a car-fan to understand this… but just because you don’t like brand engineering does not mean the general car-buying population shares the same sentiment. Assuming that GM isn’t dumb enough to get into a price war between itself, they could allow multiple brands to exist with some brand cloning. But of course, moderation is the key to everything. Somebody still needs the foresight to stop abusing the system. When done properly, brand clones are priced competitively, and it’s very likely the brand clones have different ALG residuals simply based on transaction prices and fleet mix. When done improperly, you’ve got disastrous results that become very blatant examples to reinforce the importance of a a long-term vision.
The problem occurs when you have a poorly executed clone that does little for the brand, or the volume of the clones drops below a sustainable threshold (think Aspen/Durango). But the investment dollars necessary to pull off a clone are peanuts compared to a completely new platform. Toyota and Honda have a global vision and share platforms or brand clone their cars across countries. Detroit is myopic and just shared platforms in the USA market.
Most critics of brand engineering quickly point to Oldsmobile and Pontiac as examples of brand cloning gone awry. Yes, these brands were poorly managed, but you should avoid assuming all brand clones are examples of failure.
Pontiac didn’t develop its brand image so it suffers from low sales as it no longer differentiates from its alternatives. When GM had a bunch of N-Body Grand Ams and W-body Grand Prix out there, they still “Drove Excitement” to the showroom and were okay. Rewind a bit and you’ve got Chevelles and 442s as brand clones. The market for GM used to sustain this odd business model just fine.
But they milked it for so long the brands stagnated. Or quite simply they had too many brands. Of course GM sped up the process of failure by adding minivans to Pontiac, and almost ruined Caddy with some stupid red bird pimping Cateras. Anyway, it’s easy to blame brand engineering for ruining Pontiac – but the underlying issue is that it’s poor brand management as well as the public no longer accepting the brand.
Clone-cars allow you to blast shotgun pellets instead of a rifle bullet. And if your aim is to just put holes all over the market, then GM has to keep up their brand gimmick. Not only that, but the amount of investment and research for the clones is peanuts compared to a new platform. But if you don’t have a good strategy, it’s easy for critics to point out how you screwed up. Platform variants are the next-best thing but still require way more money to pull off than a handful of deliberate clones.
Wall Street expects GM to keep a certain share of the overall market… and they must achieve this share with limited financial resources. And this is reinforced as most pundits monitor in-segment sales and bottom line profitability of the automaker. If GM killed brands there would be dozens of articles on websites talking about how stupid GM is giving up share that they could have captured with a well-executed Saturn brand. Some “clever” writers would bring up how there is a market for “European Inspired” vehicles in the USA and how stupid GM is for not exploiting that… etc etc. Then you’d have articles talking about how GM needs to find a way to more effectively utilize their pool of talent and investment. We’d see articles talking about how investing a little bit more money to do a clone is way better than dumping goobles of money to do a new platform.
Detroit dug themselves a pit of problems early on with a mentality that rallied around the notion: “let’s just build a bunch of cars and let’s see if we can sell them.” They set up all sorts of absurd brands to snag as much share as they could. Their long-term vision sucked. Like all tools, brand engineering can be part of an effective strategy, but it can also be misused. However, it shouldn’t be written off just because of its potential to cause problems.
I see a big difference between platform sharing such as Camry/LS300, Edge/MKZ and Accord/TL. In all those cases there is a mass market version and a high-end version. That makes sense to me.
The problem with the Aura/Malibu is that both are targeted at the exact same market, contrary to the smoke GM marketing executives have been blowing all these years. The supposed “brand values” differences between Chevrolet and Saturn are made up nonsense. They are selling vehicles of the same size with the same performance envelope at the same price. That isn’t market segmentation, it is market confusion and dilution of efforts. Even the Fusion/Milan make more sense because the Milan is nothing but a trim option on the Fusion while the Aura and Malibu hardly share a single visible component. That makes the Aura/Malibu much more costly to build and support than it’s competitor Fusion/Milan.
“Wall Street expects GM to keep a certain share of the overall market… and they must achieve this share with limited financial resources.”
I’m very tired of the Wall Street excuse. Great managers do what needs to be done to run the company well, and well run companies end up with rising stock prices. Period. You never hear Warren Buffet complain about what Wall Street makes him do. Ditto any executive from Intel, Microsoft or Cisco.
GM has been loosing market share almost constantly for over 40 years now. Wall Street’s expectation are not to blame. Changing market conditions and a succession of poor management decisions are to blame. Saturn was created out of thin air in the 1980s to address GM’s market share losses …. and has done exactly nothing to turn things around.
In the latest re-incarnation Saturn is going back to another 1960s/70s strategy by bringing Opels to the US. The last time Buick got the Opel US sales job. Based on the Astra Disastra it looks like more of the same.
If a plastic deal could save them both then is Priceless.
No dicker prcng works for small ticket item, when t gets higher the buyers all wanted to show who calls the shot. And we all see such a big number there got to be some room for negotiations.
jthorner :
There’s research out there that shows the majority of people do not recognize that the Aura and Malibu are the “same” underneath and therefore clear substitutes for one another. Of course, there’s also research that suggests most people don’t even know that Saturn exists as a car brand. But those are two separate issues.
My point is that when done properly, GM may partially compete with itself, but they also compete against other brands. I have no doubt someone out there cross shopped the two and GM forced a customer to make a decision where they stole a sale from themselves. But there’s also the situation where an Aura buyer bought their car but never considered the Malibu at all.
In the process of their brand-games GM delivers two separate promises under two separate brands. There’s a fine line to be considered, but you should not dismiss all brand-engineering. Chevrolet cannot be all things to all people. Chevrolet attracts a different kind of customer than Saturn (at least, that’s what GM believes).
The Wall-Street issue is a key concern and shouldn’t be dismissed just because you don’t like it. What’s ironic is the situation where most people seek easy answers to complex issues. When the easy answer is sourced from pundits then it’s obviously the “right” answer. When the easy answer is sourced by the firm, then the firm is full of BS.
Whether it is financial ratios for financing arrangements, shareholder pressure, or impatience from the public… these things all manifest themselves in the decisions of the company. You’re telling me the shareholders would stomach another massive cash outflow to kill Pontiac, Buick, or GMC? You’re telling me that shareholders wouldn’t blink an eye if GM were to give up their market share in the D-Segment because some people think the Aura steals sales from the Malibu?
I do agree, if a brand exists solely with poorly executed clones that don’t deliver anything good, then that brand is screwed. Again, it’s the execution of the brand cloning with a strategy that is important. Most brand cloning creates upscale vehicles and we all seem okay with it. But clones of cars in the same segment can exist when the brands have different perceptions.
For Toyota/Honda/Nissan, their brand-clones get labeled as homologation for various markets, and we’re all fine with that. Again, their foresight gives them a few brands but great global reach. GM wasn’t so smart in the past, and it’s very likely they will repeat their mistakes if they don’t get their act together. But don’t blame brand-clones for their ineptitude.
We have a GM card with $1,000+ in earnings. Do you think that’s enough to get me to step foot into a Chevy dealer? When there is nothing interesting on the lot that gets over 20 MPG? And the salesmen are frothing at the mouth and look at you like shark chum? Nope. No way.
But for a Saturn? You know, I kindof like the Opel brand. Good idea, GM. Unfortunately, its WAY WAY WAY too late.
Matthew, you could always get a Cobalt SS or even an HHR, both of which achieve over 20MPG. Or you could use that money to get a good deal on a Saturn Astra straight out of Opel’s plant and fresh off the boat from Europe.
I’ve had a GM Card since it debuted and back when you could get earn a few thousand off a GM purchase. I finally used it in 2006 to score an LS2 GTO for a song.
Like Matt I never thought I’d own a Pontiac, but this car is amazing in every respect. I guess that’s because it’s not really a Pontiac, but either way I’m still thrilled with it two years and 25,000 miles later.
holydonut has some good points. Not only do a lot of people not realize that the Aura and Malibu are fundamentally the same, but some people still don’t realize that Saturn is GM. A couple years ago my wife was dropping something off at someone’s house and they noticed her Oldsmobile Cutlass Supreme. “Oh, you drive a Saturn, too!” he said. (Really? Come on, the styling wasn’t that similar.) “No, it’s an Oldsmobile, but they are both GM,” she responded. She said they stared at her as if she had started speaking in tongues or something.
I guess GM had done a really good job of not drawing attention to the fact that Saturn was a GM brand. Of course, then they decided to throw that all away a few years later . . .
Ooh…
I use a GM Card as well ($1600+ so far) and I was somewhat disappointed that I couldn’t use it for Saabs or Saturns, only because I knew of Saturn’s coming lineup, and I dig the 9-3 if I had to choose a GM 4-door.
Now that Saturns are available, the Sky Red Line and the Astra Red Line (if we ever got one) look very tempting. Of course, I just bought a new GTI in late January, so I’d have to wait until that’s paid off for any toy car purchase, which would hopefully be the next-gen Sky Red Line.
I was really waiting for a Vette, but I can’t afford one of those, and would probably only be able to use $1k on it anyway.