The Wall Street Journal put itself in the headlines this week. The august paper reported that General Motors may be considering (i.e. thinking about thinking about) shedding brands. While some of us have been saying– for years– that GM should refine, resell and/or retire it's octo-branded U.S. portfolio, this is the first time the mainstream media covered the issue since Oldsmobile was bricked-over in 2002. Not surprisingly, GM issued a flat-out denial, followed by a little deal hand-holding. Apparently, The General won’t shutter brands, only “reduce overlapping models.” Yes, it's the same old song, with a different Beat since you've been gone.
On May 1, 2008, GM Car Czar Bob Lutz claimed GM was moving “beyond brand engineering.” Writing on his ironically named Fast Lane Blog, Maximum Bob crowed that “The progress we’re making is real. It’s not just chest thumping talk. We have a ways to go yet, but we’re getting there.”
October 30, 2006: John Larson, General Manager of the newly-formed Pontiac-Buick-GMC "sales channel" tells Automotive News that consolidating those three brands in dealerships will “allow General Motors to eliminate badge engineering.”
March 5, 2006: Bob Lutz tells the Washington Post bluntly “We've put an end to badge engineering." Maximum Bob's mea culpa: “I can’t believe we were so stupid.”
October 16, 2005, in an interview with The New York Times, Lutz declares “We're definitely not going to badge-engineer Saab.”
Since 2005, GM has killed some of its badge engineering disasters. The TTAC Ten Worst-winning “Crossover Utility Vans”– the Buick Terraza, Chevy Uplander, Saturn Relay and Pontiac Montana SV6– were terminated. And yet… GM replaced these models with the badge-engineered Lambda-platform CUVs: the Buick Enclave, Chevy Traverse, Saturn Outlook and GMC Acadia. The Buick and GMC share showroom space, and Chevy’s Traverse (a.k.a. Maliclave) competes on the floor with the Tahoe, Suburban, and Trailblazer SUVs.
While Pontiac missed the big CUV badge-engineering debacle, they experienced cannibalism elsewhere. For 2006, GM rebadged the not-so-hot Chevy Equinox SUV as a Pontiac Torrent. Difference? Logos and Pontiac's raging bull nostrils. In 2007, GM rebadged the Chevy Cobalt as a Pontiac G5 for the American market. Difference? Ditto. Last month, we discovered that GM was planning to rebadge the Chevy Aveo as a Pontiac G3 in the US. Difference? You got it.
In 2006, Pontiac also rolled out the Solstice roadster. Lutz’s “baby”– a two-seat roadster with a top that would confound an MG owner– began competing with its fraternal twin, the Saturn Sky. Different front ends, different rears, mostly different interiors. And yet how big is the market for two-seat roadsters? Not so big, Mr. Bond.
Also this year, GM introduced the new Chevy Malibu. Great car. Seems a lot like the Saturn Aura. Alike as in engine, transmissions, platform, interior components, size, shape, and price. These couldn’t be more directly overlapping products if they tried. And it looks like they did.
Of course, the badge-engineered and exceptionally slow-selling GMT-900 trucks are still competing for the same handful of buyers: the Cadillac Escalade vs. the Chevy Suburban, Tahoe, and Avalance vs. the GMC Yukon and XL.
More badge engineering is on its way. Saab is testing its 9-4x crossover SUV, which will be closely related the SRX-replacement from Cadillac (and both are in GM’s premium sales channel). The 2010 Equinox looks to be competing directly with its sibling, the upcoming 2010 GMC Terrain SUV.
These aren’t products that were in the pipeline before Maximum Bob joined GM. So now, when MB says GM's “not killing brands, only killing overlap,” there's no reason to believe him. Although GM's corporate structure has been consolidated into four sales channels– Buick, Pontiac, GMC; HUMMER, Cadillac, Saab; Saturn and Chevrolet– it's clear GM doesn't have enough distinctive, desirable products to feed even four hungry mouths.
Did I say HUMMER? HUMMER's dead. Or is it? It's been cut-off from all product development and promotional spending while it's under "strategic review." It's a perfect example of the mixed messages and lack of clarity coming from Rick Wagoner's administration at RenCen. The "sense of urgency" urged by analyst Maryanne Keller MAY have arrived, but it hasn't created the necessary decisiveness. At the very least, GM should cut Daewoo a blank check to build them a small car they can sell. And sell and sell.
This past week, GM made announcements about both the Beat concept car and some product called the Cruze. And for both stories, GM used a bureaucratic passive voice to vaguely imply that they were looking into maybe speeding-up their development. Small cars are the next boom; every engineer should be on them. As President Bush said, “Fool me once, shame on you. Fool me – you can’t get fooled again.”
It would be one thing if the clones offered vastly improved interiors upmarket but generally they don’t . There are some features available on one but not the other, but drivelines don’t get much better and you can tell. At least the Ford MKZ offers a better engine package for your money.
You can play one dealer against another for the same car really. In the used market it gets worse as you can buy a used high end product for less than a new lower end model, eating into new car sales.
Lexus/Toyota, Honda/Acura, Infinity/Nissan work because they give you a lot more for the money and don’t compete directly with the sibling. They need to understand this.
“I can’t believe we were so stupid.”
I can.
That’s got to be a quote of a lifetime.
Is the dealer base that strong that they can twist GM’s arm to build badge engineered vehicles like the Cobalt/G5, Aveo/G3, etc.?
As badge engineering goes, is whats mentioned particularly with the saab and cadillac models, the same as toyota with the Camry and the ES? different clothes shared underbody? Doesn’t Honda and Nissan do this too?
Lorenzo’s take on AE is that GM is simply going to starve all the brands except Caddy and Chevy.
I don’t think the Solstice and Sky cannibalize each other so much. The styling of the Solstice is so polarizing that those who love it buy one, and those who don’t have the Sky as a sharp-looking alternative. I’m sure a large number of Sky buyers would have bought an MX-5 instead of the Solstice had the Sky not existed.
What is surprising is how much the prices have gone up over the years. Remember when they brought out the Solstice at under $20k? It’s now over $23k to start. yes, they’ve included (a few) more items standard, but that’s a 15% price increase for a car whose hype falls off a cliff after the first year. No wonder they can’t sell them anymore. Seems like they’ll be doing the same thing with the G8. It’s no longer the most powerful car under 30k after their latest price increase.
@Sherman Lin:
But the facts don’t support what Lorenzo has suggested.
Buick is getting a brand new Lacrosse, debuting in January. Looks like a nice car from the spy shots, actually.
Pontiac is about to get the new sport truck version of the G8, and their dealers extorted GM into giving them the Cobalt/G5, Equinox/Torrent and Aveo/G3 in the past few years.
Saturn is going all Opel – the only indication of product starvation here is that the Aura 2 program (Insignia) is on hold for the US. But they are getting the next generation Vue, which is their best selling car, as well as the next gen Astra.
I thought the plan was to combine Buick, Pontiac and GMC dealers into one network, to avoid the costs of closing down 2 of those brands.
This would mean limiting Buick to 3-4 Cars and Crossovers to compete with Acura; limiting Pontiac to 3-4 cars that are cheap fun; and limiting GMC to pichups and real SUVs.
The Torrent, Acadia and G5 really go against the plan. And Buick needs to stop selling vehicles for less than $28K out the door, no matter what that does to volumes.
There’s a great quote from the guy who ran Compaq computers in its heyday, about the need to eliminate unnecessary product lines — “You have to learn to kill your children.”
Another lesson GM hasn’t learned.
I thought the Donner party made sure they didn’t eat their own kin? GM has done nothing but.
“I can’t believe we are so stupid.”
There fixed it for you Lutz, you haven’t earned the right to make it past tense especially since it looks like you guys are becoming more stupid. What a branding mess.
“I’m sure a large number of Sky buyers would have bought an MX-5 instead of the Solstice had the Sky not existed.”
I highly doubt that many people cross shop the Miata and the Sky.
Pontiac has no business having anything resembling an SUV, CUV, Minivan, or whatever on the lot. GM needs to roll back their lines to specific brands = specific market segment.
Chevy = parent
Pontiac = Performance
Caddy = Lux
Buick = Large, slightly Upscale, not quite Caddy
Saturn = economy!
GMC = Professional/heavy duty
Why is this so easy to see, and so obvious to any Auto Industry bystander, yet GM’s brass can’t quite get it right? Hell, I don’t even consider myself an Auto Enthusiast, and I can see this from a marketing management perspective. The ultimate mistake was trying to make every one of the brands a full-line auto maker in and of itself, leading to mindless badgineering, competition against itself, and most of the problems on the whole.
It’s just maddening. I almost feel like I could run GM better than Wag…or at least not do worse, despite lacking much in the way of finance experience and only having about 8 years of professional experience.
Let me run with a hypothesis.
Have the dealers got THAT much of a strangle hold on GM that they can demand certain pick up trucks/SUV’s/CUV’s/cars even if it is not in line with their marque? In the old days, dealers (and GM) stuck to their philosophy of “A car for every price and purse” (or whatever Mr Sloan said). No-one said a word. Dealers sold Buicks/Cadillacs/Chevrolets/etc and GM made them. It worked for both parties. What’s changed since then? Why doesn’t GM just go back to their philosophy of “A car for every price and purse” and the dealers accept what they have to sell? Is there some law that prevent GM from doing this and forcing them to make cars for the dealers which they don’t want to make? I highly doubt it.
So now, let me run with a second hypothesis.
What’s to say it WASN’T the dealers forcing GM to make badge engineered cars/SUV’s/CUV’s/Pick trucks but actually GM’s greed?
I can easily see GM having a hit SUV, say, for instance, the Chevrolet Tahoe; then decide to palm it off on Pontiac/GMC/Buick/Cadillac/Saturn so that the customers who would shop at these marques would also buy the same hit vehicle. Thus, making more money for GM out of the same vehicle (in the short term) but also damaging brands and diluting portfolios (in the long term).
This kind of short term thinking is prevalent at GM. Maybe their new vision should be:
“A buck at any cost”…….?
In my opinion, apart from Chevrolet and Cadillac, all the other brands are damaged beyond repair or irrelevant in this day and age.
But GM ARE doing their best to make Chevrolet the global brand for GM. This is why they are introducing Chevrolet to Europe. Hopefully, it will cannibalise sales from Vauxhall/Opel to the point where they can’t retire both marques and swap dealers over Chevrolet cars. Hopefully, they can do this in time.
Having said that, GM could align current cars to either Cadillac or Chevrolet, retire the other brands and swap current NA dealers over to either Chevrolet or Cadillac and there’s no need to shut them down. They’d still be selling cars and GM supplying them, but just with a different marque.
Can someone please explain the “Car Czar” and “Maximum Bob” names used in every article quoting or refering to Bob Lutz? Where did they come from and why are they constantly used?
big difference between badge engineering and platform sharing. GM doenst get that.
Katie,
GM’s dealer network is actually fairly powerful and very, very shortsighted. They want a vehicle to sell to every customer, but they don’t want to have to compete–directly–with another GM dealer in the same locality.
Put it this way: if a Pontiac dealer feels he/she is losing econocar sales to Chevy, they’ll demand a version of the Aveo, optioned ever so slightly differently than the Aveo, so that they have a product to sell but can’t be exactly compared.
GM will maintain this artificial duopoly for two reasons:
* They have to keep building cars. GM’s gross size and stupid labour contracts result in their making little (or losing a bit) of money on every car sold. If they don’t make anything, though, it hurts much more. They’re like a shark: they have to eat to survive, long-term; but they have to swim to survive right now. So they’re slowly starving to death.
* In some jurisdictions, franchisees can sue on the grounds that GM is doing them a disservice by starving them of product.
GM should have started efforts to cull dealers ten-plus years ago. As part of that, though, they would have had the management wisdom to address their operational restrictions so that there weren’t obliged by contract or cash-flow to push metal.
Of course, this would have required GM’s management to, well, show some backbone and actually take the risks. Instead, they stayed the course. Remember, to an certain type of accountant, risks are bad. One must avoid risks until it’s otherwise impossible to do so.
Δεῖμος καὶ Φόβος
In the Latin (but still Greek) alphabet are: Deimos kai Phobos
In English they are “panic and fear”
Is GM’s management there yet?
PS
For 26theone;
A Car Czar is an executive given great sweeping powers, usually to correct a serious problem, and is often parachuted in to the organization from outside.
Maximum Bob for many reasons, including that no exaggeration is too great for Mr. Lutz. – See Lutzism.
Pontiac is about to get the new sport truck version of the G8.
Ha, yes they will. And since the morons decided not to have a Chevy El Camino redux with this thing instead (the only “badge engineering” that would make sense for GM right now) you will hear Chevy dealers, and the Old (getting Older) Guard of nostalgists pressure GM for an El Camino.
GM, if it survives long enough, will acquiesce and we will then have an El Camino competing witht the G…G-what are they gonna call this thing? Even now people look at a half-car and a half-truck and they think “El Camino,” with “Ranchero” coming in a distant second.
So what is Pontiac to call this thing? They seem kinda G’eed out…G-8-Truck? G-Kinda Truck? How about G-Sorta Car? I wonder…
Bob Lutz has a death grip on TTAC’s annual Bob Lutz award. I wished he’d allow us just a little suspense.
Meanwhile today GM just hit an all time record low in stock price, mid 9’s, and thier CEO is now directly denying they will seek BK (which probably means the attornies are working up the filing). Ford also sand huge today. I am no expert and certainly know far less than Mr. Farago, the other editorialists and people who input here, but I know business, and I don’t see how GM/F/C get out of this mess without BK. I seriously doubt the government is going to hand over $15 billion to $20 billion to bail them out.
I have friends who live in Michigan and they tell me that is is getting pretty grim (job wise) upthere). I told them they haven’t seen anything yet.
Redbarchetta Says:
July 10th, 2008 at 10:52 am
“I can’t believe we are so stupid.”
There fixed it for you Lutz, you haven’t earned the right to make it past tense especially since it looks like you guys are becoming more stupid. What a branding mess.
Perfect shot.
Kudos.
Bunter
“Its the same old song………” – Love the Four Tops reference. I was still a teenager.
I don’t think that the problem is that GM has too many brands, but that it has only one product line with many names. Each brand should have some sort of identity and their versions of the cars should reflect that.
If Pontiac is their ‘performance’ division, then all Ponitacs should have sport-tuned suspensions, more power, and available manual transmissions. They can develop joint platforms to save development costs, but I shouldn’t be able to tell that they have done so when I am sitting behind the wheel.
The last time I compared GM products (about 15 years ago), they were all identical aside from their sheet metal.
Katie,
I think it is absolute genius to rename all GM dealers Chevrolet/Cadillac and phase out duplicate products. Genius!!!!!
Whether GM can’t or won’t eliminate some brands is irrelevant. They’re damned if they do (no money to cover closing costs and franchise lawsuits) and damned if they don’t (stuck with too many brands and too many unpopular vehicles). GM’s is too large and inefficient to keep up with the times. They’re just beginning to develop more viable vehicles but they’re still years from hitting the market. And the Volt is just a desperate PR stunt to keep the public’s – and the shareholder’s – faith. I’ll eat my shirt if that thing ever sees the light of day. GM needs to become a much smaller company if it is to survive but even that cost’s money, money they just don’t have. If the government doesn’t bail them out – and I hope they don’t – they are surely destined for extinction.
The idiots in the GM upper echelon think that the buying public can still recognize some sort of brand identity between divisions. We (the marketplace) are not stoopid, and we know badge-engineering when we see it. Why the hell would anyone buy a Buick with its multi-$$$ premium over a Chevrolet? (Certainly not for the image it projects, let me tell you that.)
These sun-deprived, tie-wearing, pinched-faced old dudes have been out of touch for 20 years, and they’re buying the screed their Marketers are feeding them like it was Matsushita stock at a Dollar Days sale.
GM Consolidation plan A:
1) Create Saturn to compete in the small car market.
2) Kill Oldsmobile.
3) Gain half decent reputation with S-series Saturn.
4) Replace S-series with garbage (ION) and make
Saturn into another bloated division (Like Oldsmobile).
5) Buy Daewoo to sell another car to “compete” in the small car market (See item 1).
6) Create Hummer division to sell supersized Suburbans.
Makes sense 2 me.
Boston: They don’t COMPETE with each other. See GS650G’s post.
I bet the overall master plan over at the RenCen is for GM to coast along as it is until it either sinks of it’s own volition (Ch. 11) or runs into the veritable iceberg that is Chapter 7. At any rate, the execs all have their golden lifeboats stocked with all the goods they want, so they could care less. Depending on the outcome of the November presidential elections, there may or may not be a bail-out. Of course there could be a lot that changes between now and then.
It’s like watching a painter paint himself into a corner, even after he passes opportunity after opportunity to leave an exit for himself. Now that he’s gotten himself boxed in, he’ll have to wait for the paint to dry….if the fumes don’t take him out first.
There’s really no way to consolidate the slated-to-be-killed-off marques without dealers flexing their own muscles. After the loss of Oldsmobile, they’re not so willing to take another brand phase-out on the chin. Otherwise, I would love to see GM pared down to Chevy, Caddy and GMC.
There’s really no way to shrug off the union and pension hell they’ve created for themselves without bankruptcy proceedings. And even then that might not work.
There’s really no way for the company to put out great product at the right time with no compromises thanks to the management and the overall culture that permeates GM.
So in short, there’s really no where but in the grave for GM to go…and it’s got one foot deeply sunk in it. It might be Chrysler that takes the plunge first, but GM wont be far behind.
Again, see you at GM Death Watch 200.
SherbornSean Says:
July 10th, 2008 at 10:24 am
I thought the plan was to combine Buick, Pontiac and GMC dealers into one network, to avoid the costs of closing down 2 of those brands.
This would mean limiting Buick to 3-4 Cars and Crossovers to compete with Acura; limiting Pontiac to 3-4 cars that are cheap fun; and limiting GMC to pichups and real SUVs.
The Torrent, Acadia and G5 really go against the plan. And Buick needs to stop selling vehicles for less than $28K out the door, no matter what that does to volumes.
You misunderstand the point of PBG a bit. A PBG dealer is a full line dealer. They need to have everything that a Chevy dealers has. They are Chevy Part Deux, just slightly more upscale. Very slightly. Hence, the G5. Now, the other two you mentioned are true overlaps, but Pontiac needs a small car, because PBG dealers need a small car to sell.
If the G5 didn’t exist, can you imagine the screaming from PBG dealers at GM Corporate right now, now that small cars are hot?
Now, Buick will never have more than 3 models ever again-but they are probably going to stick with the three they currently have. The Torrent will be dropped when the Equinox is redesigned. Looks like the Acadia might be as well. But Pontiac will have a complete line up of cars, including a compact car. GMC will have a complete line up of trucks and SUVs. And a PBG dealer will have a complete line up of everything.
A PBG dealer is a full line dealer.
But, they shouldn’t be. As Katie pointed out, in the old days, each dealer sold his marque. GM needs to get back to that. Some marques don’t get an econobox. Some don’t get a PU.
A BPG dealer sells vehicles in enough segments that they should be able to make a comfortable living w/o an Aveo clone.
When BPG combined I was hopefull that badge engineering was over. But I see no evidence of it. This is one reason I’m sceptical of the Chevy/Caddy concept of a future GM. What makes anyone think GM can keep Chevy and Caddy separate? They’d soon have model and price overlaps. They’d end up with a low end Chevy, a high end Caddy, and a bunch of indistinct Chevillacs in between.
It’s a pitty GM can’t make distinctions between marques (I won’t say they have brands, because brands stand for something) When I see people buying Acura I get the impression there is a market for near lux. When I see people buying Mazdas I get the impression there is a market for sporty/performance oriented transportation. There are market niches to be filled by well defined brands, but GM just doesnt get the idea.
when you hear all of the conflicting advice for Gm and it’s brands you get a headache. First, Bob Lutz did put better cars in the GM barn. However, the crazy patch quilt of branding has negated much of this foreward motion. The axiom is simple in the successful art of selling cars. You establish brands and build on them. Over the years the brands sell themselves for what they become. ex. Honda civic. (a little jewel box of a small car with good performance and fuel economy. It further has high resale value.) Will the civic be replaced next year with say a “gascolator model”? Not a chance, however, Honda’s branding was slowly honed over 30 years with 4-5 year increments in updating. Can you buy a civic from the acura store? NO. The problem in a nutshell is that GM does not have the time for “brand building”. So, they do brand ‘carpet bombing’. ie. build something with 3-4 different grills and names and hope your several thousand very weakened dealers will each sell a few per month and the total will see you through. It is a good short term strategy, but has no future. Especially when the parent company is so weakened that it can neither advertise all of this stuff correctly or update the product on a regular basis.
“I highly doubt that many people cross shop the Miata and the Sky.”
I did, as well as the Solstice. The GM twins have better and certainly more macho styling, about equal handling(better with the race suspension packages), and more torque… bottom line being that they are good toys, but the Miata is a superior car(IMO of course).
From http://www.freebuck.com
Thought my fellow best & brightest might be interested.
“Private sector policy of insolvency: look no further than GM (General motors) for years now they have made cars and LOST an average of 2000 dollars upon them, and actually they only made money on the financing of them. They maintain jobs banks where employees are given FULL pay to stay home and not work. GM in one form or another has 390 BILLION dollars of bonds outstanding. THEY ARE TECHNICALLY INSOLVENT.”
# showbizkid Says:
July 10th, 2008 at 9:12 pm
(…)
These sun-deprived, tie-wearing, pinched-faced old dudes have been out of touch for 20 years, and they’re buying the screed their Marketers are feeding them like it was Matsushita stock at a Dollar Days sale.
I totally agree with the opening of your post, but have a comment when it comes to “they’re buying the screen their Marketers are feeding them…”
No such thing, I know from personal experience. When you tell GM top managers that their “rational” decisions on their brands are killing them, you are told to go chew some wallpaper and get lost.
It’s GM telling their marketers, not the other way around.
I can care less if a car is badge engineered or not. A G5 or Cobalt, same car ok, I can pick one grill over the over. Aura is a litte different than Malibu, subtle but I have a choice on again looks. Either way I really just need a good car. Make the fucking cars better is what I’m saying. I do not care if 5 Cobalts exists but make them better than a Mazda3, please. Oh well. whatever. I’ll buy a used car anyhow.
@DearS:
But this isn’t about overlapping or about rebadging. I think those are bad, but even if they aren’t…
It’s about Bob Lutz lying regularly. He comes out and says “No X” and then GM does X. Many times over.