Automotive News [sub] has a report on future models coming from Cadillac and it provides a lot of dots just begging to be connected. Among other things, Caddy is planning: a four-cylinder small sedan; an expanded CTS lineup that will include a coupe and sport wagon; and a redesigned SRX that only seats five and is between the Equinox/Vue and the current SRX in size. They've also decided to extend production of the DTS and STS without any further development but will eventually replace both with a single RWD sedan that "will be more competitive with the Mercedes E class and BMW 5 series." It's two other two things AN mentioned that really caught my attention: GM is "studying the possibility of Cadillac's sharing GM's Chevrolet Volt technology" and there's a possibility they'll replace the Escalade with "a model or two developed on GM's fwd Lambda platform" by MY 2013. So let's connect those dots: GM's planning a small Cadillac that will take the brand further down the price scale while Chevy introduces a more expensive small car in their lineup. They're repositioning the SRX as a smaller 5-place CUV, just above the Equinox in size. They're keeping the Lucerne's platform-mate DTS around for a while to hang on to older barge-buyers. They're considering Caddy as the only other American division to share the Volt platform with Chevy. They're looking at a fifth version of the Lambda platform which will essentially overlap the Enclave while the upper trim levels of the Traverse do the same with the Saturn and GMC derivatives. To me all those dots form only one picture: they're aligning Cadillac and Chevy so they could cover the entire market with just those two brands if need be. Once that realignment is complete, it's just a matter of time before they can methodically axe Pontiac, Buick, GMC and Saturn. The question is, can they do it fast enough to salvage what's left of the company? Just sayin'
(The Automotive News article is printed in its entirety here.)
With all due respect, Frank, “Uh…no.” The suppositions that you are making would point to a well managed, forward thinking, accountable company that had a good grasp of their industry and their place in that industry. Care to guess which of these apply to GM? History (and my gut) tell me that the current “strategy” involves perpetuating the enterprise for as long as possible while cashing large checks all the while. Once the cash horde is gone, the failure of GM will be blamed on unfair business practices, legacy costs, the medical / insurance industries, the economy, etc. while the current management parachutes off into the sunset. I’m not saying, but I’m saying………..
Hmmm….a conspiracy theory. I see why the dots would be connected as such, but this would take a decade or so to be complete and I doubt GM would be around that long for that theory to work.
But it is interesting to see how GM can cover the entire product portfolio with just two brands (I mean really, the Sierra is a Silverado with brighter trimwork).
Should they: Yes.
Will they: Not sure.
I think they will need to go into Ch.11 to protect themselves from all the Buick, GMC, and Pontiac dealers before they can pull this off. And I think Maximum Bob has to take that golden parachute ride before that will happen.
They might as well axe them all, since there is no difference between these makes other than a name.
–chuck
Here’s another thought. Go back to the 1980’s-1990’s in car offerings (i.e. totally badge engineered) at virtually no cost, and avoid the costs of closing down Pontiac-GMC-Buick and Saturn.
In other words, engineer Chevies and Caddies.
Then badge grills for a few Saturn vehicles, and badge grills for a couple of Pontiac lines (keeping the Toyota built Vibe), GMC trucks are an easy low-cost badge engineering job now anyway, and import a few Buicks from China, where there is actually a market for them (other than blue-haired ladies and guys who drive along with their left blinker permanently on, and you refer to you as “you kids” when you speak to them).
Having said that, after driving through much of Canada, then back to Michigan through Montana, North Dakota, northern Minnesota, northern Wisconsin and the upper peninsula of Michigan, I have to say there are not a lot of Toyota, Honda, Nissan or Hyundai dealers in these regions…
But times are a-changin’ as the song goes.
I’m going to guess that this is business as usual, an exercise in brand overlap as each division fights to try to justify its existence.
I suppose that Cadillac’s brand managers don’t want to be left holding the eight-cylinder bag if the market moves away from that entirely. If it was a movie, we’d probably call it “Cimmarron Revisited.”
Connecting the dots to come to that conclusion would make sense if GM was a competentily run company that wasn’t in the pickle it currently is in, but it’s not. GM wont start shuttering brands because they are worried about what it will mean in the publics eyes and damage their own egos. Plus they can’t afford it, the dealer lawsuits and market share losses. They are stuck between a rock and a hard place.
Plus GM’s product plans seem to change on a daily basis so I don’t know how you could take this as something that is for sure going to happen. I thought last week they were killing the DTS and NOT replacing it with the Zeta platform that is on again off again from month to month. It’s amazing how much money these guys waste because they don’t have a clear plan.
Reducing GM to a Cadillac-Chevrolet nexus is the best idea yet, so it’s doomed for sure. The rest is crazy-talk.
I think 2 brands is to radical for GM.
3 or 4 would probably be best, Their Customer base would be so confused if they went from 8 to 2 in too quick of time. But Buick is already dead.
Yup, you bet GMC Sierra 2500 is exactly like the Buick 2500. But the Caddy 2500 is, well..
Wait. Ummmmm……
Frankly, Frank, even Cadillac is getting very little in the way of future product. They don’t seem to have much of a game plan beyond the CTS.
Pontiac is getting virtually nothing, that’s true. I looked, but could not find, any mention of a second Alpha car, for any division. Shouldn’t there be one?
Even Chevrolet doesn’t seem to be getting much new product.
Overall, GM appears to be cutting way back on new product development, for all divisions. New small cars are coming, and new high-MPG powertrains, but little else. Just compare the future product chart in this week’s AN to those from past years.
Make sure all boats have at least 2 oars, water and provisions in addition to signal flares.
Know where much of the future product development of GM is, Michael? It’s at GMDaewoo, which is (not surprisingly) part-owned not only by GM (via Holden-Australia) but also part-owned by SAIC (the appropriately named Shanghai Auto group) which has a 50/50 JV with GM in China (also a 50/50 JV with VW).
How long before SAIC actually “owns” the remains of GM? Assuming GM can escape Chapter 7 bankruptcy?
My guess – is about 5 years. Or less.
OK…..here’s a dumb question: Can individual divisions go bankrupt? I’d assume the Pontiac, Buick, Hummer, etc. are all individual companies. What would happen if GM moves heathcare/retirement liabilities to, say, Pontiac, then takes Pontiac Chapter 7 or 11? What happens to franchise responsibilities in bankruptcy? And, would GM gain time/cash flow/fewer PR problems by bankrupting a division instead of the whole organization?
This is what this website has talked about for years. Do we really think that it will happen? I think it is for the best, but it will not happen. GM is just hoping for a president Obama to bail them out. The only way this will happen is with Chapter 11 . And for some reason that I cant figure out, they wont file.
They’ve also decided to extend production of the DTS and STS without any further development but will eventually replace both with a single RWD sedan that “will be more competitive with the Mercedes E class and BMW 5 series.”
I thought the CTS was the 5-series competitor? If the CTS was supposed to be leveled at the 3-series and the G35/37…oooh boy! Is it possible they meant the 7-series?
Great idea – for 2002 or 1999 or 1985. Now, it’s probably too late.
”
OK…..here’s a dumb question: Can individual divisions go bankrupt? I’d assume the Pontiac, Buick, Hummer, etc. are all individual companies. What would happen if GM moves heathcare/retirement liabilities to, say, Pontiac, then takes Pontiac Chapter 7 or 11? What happens to franchise responsibilities in bankruptcy? And, would GM gain time/cash flow/fewer PR problems by bankrupting a division instead of the whole organization?”
Umm no. its General Motors. For each brand they write off it will cost them Money (think billions per brand) The only thing they can do is sell off brands to who ever then go from there. But there would be a line of angry assembly workers and dealerships.
Scottie
“Umm no. its General Motors. For each brand they write off it will cost them Money (think billions per brand).
I have heard this argument over and over since about the time GM terminated Oldsmobile.
So, instead of biting the bullet and terminating brands at a cost of several billion dollars, GM is bleeding several billion dollars EACH and EVERY fiscal quarter.
This will go on and on until there is nothing left – excepted empty brands.
I like the picture of the Cadillac Malibu Maxx at the beginning of the article.
Scottie:
I’m no attorney, but since you can’t buy stock in any one of the divisions, they are all one company.
They swim or sink together.
Right. GM North American auto divisions are not “subsidiary companies” but “divisions”.
“Subsidiary companies” can be sold off, can go bankrupt, etc., whereas corporate divisions are like that guy we all read about when we were young who was literally a siamese twin with his brother, in both literal senses. They can’t be divided out and become individual without major surgery, costing tons of money.
Interestingly enough, Saturn WAS a subsidiary company at one point and was morphed into a division as a cost-saving measure (interesting since I understand Saturn has never made a penny for GM – ever). Perhaps they should have said “as a reduction in money losing measure.”
Of course, now that Saturn is not a subsidiary (separate wholly owned) company, it is now tied to GM’s listing Titanic.
Plus the Saturn factory once touted as being so “Saturn different” is now not making any Saturn cars at all…
GM has ADHD.
Whenever someone suggests that GM get rid of everything but Chevy and Cadillac, they always respond with the “But is costs us over a billion to get rid of Oldsmobile”. What is never said is that it was a mistake, otherwise they’d bring the brand back. They never state how much money was saved by getting rid of Oldsmobile. How many more billions would they be spending on if Oldsmobile existed today? How many billions could they save by trimming a few brands?
I’m not 100% on this, but this is how my understanding goes (bear in mind GM is a giant corporate entity and this is a VAST simplification):
Let’s say Pontiac has a bad year. The product offerings aren’t exciting and sales are slumping. On the other hand, Chevrolet has a great year. “Car X” is a hit and is selling like hotcakes! I believe profit will be taken from Chevy to support Pontiac during its bad times.
One Potential Problem (henceforth, O.P.P.), of course, is there are many brands going through hard times needing support by the few exciting market offerings. Who’s down with O.P.P.? GM, baby…
Sorry about that last Naughty By Nature pun – I had to do it!
Wild Ass Rumor or not, it does seem like a credible option today.
GM has watered down the brand identities of its cars over the past 30 years up to the point where it wouldn’t matter anymore which brand would be killed or saved. It would still sell the same cars if not any better.
Chevy and Cadillac would also be at risk of expiring if it weren’t for their past unforgettable cars like the Camaro and the Corvette; in Cadillac’s case, the V-16 of the 1930’s, the grand 1949 Series 62 and the flamboyantly-finned 1959 Series 62.
Pontiac seems to get it right with the G8, but God knows what happened after gas prices spiked and someone panicked and green-lighted the G3(a copy of the Chevy Aveo/Daewoo Kalos). Yet, no other brand within GM seems to have a clue of the values their own respective nameplates seem to stand for.
Buick doesn’t seem to remember the elegance that the 1963 Riviera inspired. AND NO, slapping “porthole” faux vents on the side of a LaCrosse DOES NOT count as a testament to its identity.
Saturn and GMC have NO individual brand identity whatsoever. Saturn was born as a result of brand dilution and will remain as an example of brand dilution(ironic) until death, unless their product managers drag their asses out of the overseas Opel/Vauxhall offices and think of something truly new and inspiring to offer the public.
GMC is just dead. I cant remember the last truck GMC sold that did not bear resemblance to its Chevy counterpart.
Kill it.
To its mourners: get over it and buy a Chevy truck.
This might be the only way to really save this auto-industry giant. By cutting the unnecessary weight that the blue GM badge bears, it opens up precious GM resources to focus on improving quality, development, and design in a more efficient manner.
Once that realignment is complete, it’s just a matter of time before they can methodically axe Pontiac, Buick, GMC and Saturn.
What about Saab?
in response to thebeastofrock:
“what about Saab?”
Saab should go back to its niche of making quirky hatchbacks, but hatchbacks don’t sell well here, and GM will not support a niche maker, not in its current state.
So the way I see it,
1. Saab must come up with something new and exciting(Aero-X concept), which seems unlikely as their improved(one would hope) future offerings may not sit well with GM executives as the brand would perpetually be limited by the low-end Cadillacs in the coming years.
2. Saab must be sold.
3. Saab must die.
I’m hoping it doesn’t come to the third option, as Saab has a great potential for growth if it were not for the overwhelmed lumbering giant called GM holding the reins.
The elimination of Buick and Pontiac dealers would cost GM a fortune it simply doesn’t have. It’s easier to starve them for product and let them turn into, in effect, used car dealers – much as Chrysler has done with many of its unwanted dealers.
If Cadillac is extending the production run of the DTS, then where is it going to be built? Was not the plant currently producing that vehicle the one slated to build the Volt in 2010?
And, the news about the CTS variants and the SRX replacement is hardly hot news. They showed the SRX replacement as a concept last January in Detroit, along with the CTS Coupe. They killed off the engine which had been scheduled to replace the Northstar just before it was time to order tooling, ostensibly because it wasn’t a direct injection engine. It’s been reported that the 2010 DTS/STS/Lucerne replacement is on hold, if not outright cancelled – which appears to be corroborated by the AN report that DTS/STS production would be extended.
Apart from the rumored little car, that’s saying that GM has no new product in the Cadillac line up. The DTS is supposed to be the top of the Cadillac line, but will be a decade old platform this fall (as the platform was introduced originally in the ’99 Seville/STS). The current STS has never sold well and DTS sales have tanked, because it is an old design and is viewed as having poor fuel economy.
Moreover, it’s a safe bet that most DTSs and STSs going out the showroom door have been leased, as the terrible resale value makes them unattractive as purchases, even compared to the CTS.
So, how, precisely does GM figure keeping these things around is going to improve matters?
All of this is a very strong sign that GM is just flat-out out of money. They appear to have absolutely no product plan for Cadillac, beyond the cars that are already set for introduction this fall. Putting off the DTS/Lucerne replacement is wishful thinking – if the case existed for building a RWD vehicle in that market slot, there would be no reason not to do it for introduction in 2010 as originally scheduled.
What I’m betting GM does, instead, is cease production of the current DTS and facelift the STS extensively, giving it a new set of letters, so that it replaces both the DTS and STS in the line-up, and giving a version to Buick, as well.
Driving Cadillac down market with a sub-CTS priced car is an enormous mistake. However, there is one good reason to think that it does fit the overall strategy you’re advancing in this post. Cadillac’s general manager told me that most Caddy dealers could not survive as stand-alone dealerships, unlike Lexus stores. So, if Cadillac is seriously contemplating a car below the CTS in price, that certainly fits with the notion that Cadillac dealers, if they are not to have Pontiac, Buick or Chevy, to pay to overhead, will need something else to sell to the less affluent.
Re: the question of division versus subsidiary, this is an issue I’ve wondered about on occasion. GM became huge by acquiring other firms, such as Oldsmobile and Cadillac. In view of what I know of Durant’s empire-building, I’m pretty confident the big acquisitions were generally done by swapping new shares of GM stock for the shares of the acquired company. Some small outfits might have been bought using cash; this would be the case if a sole proprietorship or partnership sold a business to GM.
Incidentally, when Ford established manufacturing operations in the UK and Germany back in Model T / A days, the ventures were new corporations in which, if I recall correctly, Ford had less than 100% ownership.
I’ve never heard whether GM retired the stock of acquired companies or held it as an asset. It seems likely the stock was retired, with GM absorbing the assets and liabilities. But apart from the nuisance of continuing to have multiple board of director meetings, etc., taxation and financial reporting (by issuing “consolidated statements”) is the same either way.
Finally, there’d be no legal obstacle to spinning off Buick, Pontiac, etc., even if those brands are divisions rather than subsidiaries. GM would just have to identify related assets and liabilities, assign those to a new stock, and issue those new shares to GM shareholders as a dividend. In theory the GM shareholders would be just as well off: in sum the two kinds of stock would equal the value of their previous GM-only shares. In reality, I would expect a torrent of lawsuits from quarters.
Re: chapter 11
Autos are not airlines. No one will buy a car from a company in Chapter 11 for a price comparable to a car from other companies.
If GM would go Ch 11, even their best cars (the CTS and the Malibu) will have to be sold at half price to attract potential Camry/German buyers.
Would I buy a CTS for half the price of Audi A6? Hell, yeah, even 2/3 of the price. Would I buy it for the same price as the new A6? Hell, no.
So, IMHO, they are kinda screwed.