Everyone else, notify your next of kin. Bloomberg attributes the all-too usual “people familiar with the matter” with the revelation that GM is “studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer.” And what price are they putting on the three brands? $12b worth of government “bridge loan.” There goes the argument that the bailout is about saving jobs. Of course, proving TTAC right (and doing what they say would happen if the loan didn’t go through) isn’t going to the only tough pill to swallow if the RenCen is serious about going through with this. A nasty little business called state franchise law awaits this oncoming freight train, potentially putting taxpayers (not to mention General Motors) on the hook for billions more. You know, since “bankruptcy is not an option.” Putting 82-year old brands on the block? That’s another matter. Anyway, old-school Saab enthusiasts rejoice, Pontiac faithful start looking for a white knight, and everyone with a job on the line, buckle up. The BOD is scheduled to review a proposal Nov. 30 and Dec. 1, and GM will then prepare a 10- to 12-page public document and a private, more detailed plan of about 80 pages with background material. Until then it’s just one big, white-knuckle thrill ride.
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News my ears. When will someone kill Buick? What have they done that was exciting and groundbreaking besides churning out the Enclave? Pontiac at least got its act together and summed up the G8, put style back into the lineup with the solstice.
Eh, time will tell.
What’s so great about Buick and GMC to keep them off the table? Neither has a single unique product that you can’t buy at another GM dealer.
If it were possible I’d say GM should offer to turn all their soon to be shuttered Saturn, Saab and BPG dealers into Kia, Mazda, Subaru and Mitsubishi dealers. It’s competition but none of those brands have particularly high volume. Beats a Toyota dealer opening up right next to Chevy.
I understand how they can sell Saab but what comes with the deal when you buy Saturn and Pontiac? Use of the name? How do you buy a car company or brand with out a place to build them?
I would think these two would be sent to join the great Oldsmobile in the sky rather than being sold.
Buick, from what I understand, it wildly popular in China – which, unlike nearly everywhere else, has a market that is still growing. It needs to be kept.
Pontiac – well… If Oldsmobile wasn’t working out – why would Pontiac?
I’d have picked Pontiac, Saturn, Hummer, and GMC to go. Saab seems like such a niche product. I’d keep it and cut the rebadged Subarus and Trailblazers from that lineup.
If Pontiac and Saturn go then the Sky and Solstice will have no home – they’d need to be repatriated over to Chevy and/or Buick (like they’ve never done THAT before).
So – GM would be left with Cadillac, Buick, and Chevrolet (Saab is reduced to an asterisk). That seems like a much more manageable product mix with clear delineations of where you stand in the pecking order. Should have happened years ago.
-C
Clargnblost:
If they were left with Cadillac, Buick and Chevrolet have Buick be in any different situation than Mercury?
I think Toyota has successfully proven with Scion that more than two brands just doesn’t pay long run dividends. They should have stuck to Toyota and Lexus, high and low is a lot easier mix to brand than High/medium/low…who ever wants medium?
“A nasty little business called state franchise law awaits this oncoming freight train, potentially putting taxpayers (not to mention General Motors) on the hook for billions more.”
Right, so how (other than through filing for bankruptcy) are they going to ditch dealerships without incurring massive costs? Well, IANAL, but could it be that the legal beagles think Congress can void state franchise-termination restrictions by enacting a federal statute on the subject? Or maybe create dual jurisdiction (as we find in banking with federal or state charters) so GM could opt for a lax federal law on unilateral franchise terminations? The Founders would be spinning in their coffins.
What we need (besides a well-informed lawyer) is the actual language of GM’s franchise contracts. I would think there’d be some kind of termination clause that either side can trigger. An unending irrevocable franchise would seem to violate the rule against perpetuities.
If they were left with Cadillac, Buick and Chevrolet have Buick be in any different situation than Mercury?
True – but apparently Buick is one of the areas doing them right at the current time – just not in the US.
Mercury – tsk… At least it’s more or less scotch taped to Lincoln dealers. Seems like it’d be easier to eliminate.
I think Toyota has successfully proven with Scion that more than two brands just doesn’t pay long run dividends. They should have stuck to Toyota and Lexus, high and low is a lot easier mix to brand than High/medium/low…who ever wants medium?
In the Lexus, Toyota, Scion mix – everyone wants the “medium.” Toyota is the best selling brand. Probably more appropriate to ask “who wants the low.”
The possibility of someday buying a GM product and knowing that there is no other model from another division that is nearly identical is a truly amazing thought. Imagine a Chevrolet being just that.
-C
I am not kidding when I say that a government run eminent domain take over of the usable assets of GM might be the only viable solution at this point. Restructure the company under a receivership and then re-privatize it after the dust settles.
Governments seize property and pay market value for it all the time. In fact, Cadillac’s factory at Hamtramck was built by the local government seizing the entire neighborhood (previously known as Poletown), clearing everyone out and then turning the land over to GM to build a new plant. The justification at the time was “the public interest”.
What goes around comes around.
-Clargnblast. re “Buick wildly popular”
Yes in 2006 they were. But the bloom is off the rose with that one. The Chinese are now finding problems with them. That’s what a chinese acquaintance said who just spent the last year working in his homeland finishing up with a 6 month tour in the southern provinces. He saw lots of VWs and just about all the European marques were represented as well. With that competition around let’s hope Buick can solve their reliability issues soon.
I’d go one step further and drop the Buick name in the US. I’d replace it with a less stigmatized brand like Holden or Opel. GM needs to experiment with a brand that doesn’t have the baggage of the old brands. It would also be a way to deal with the former Saturn, Pontiac, and Buick dealers.
The Holden Australian brand might work well since there are other products (restaurants, hair care products, beer, and Subarus) out there taking advantage of an Aussie connection. It’s a proven marketing tactic for selling products to the US consumer. Just don’t forget to downplay the GM connection.
Going the German route with Opel is the other option. The entire Saturn line is already Opel anyway, so it would make sense. Just create an Opel USA division and let the Germans run it. It would also add value to Opel and give them the option of selling entire division if they needed to raise cash later. Besides, they’re probably not going to get rid of Opel anyway, so why not use it.
A three division strategy with a premium brand (Cadillac), a value price brand (Chevy) and a brand for disaffected buyers might be the way to go.
It’s possible that some in the RenCen actually knows some automotive history and are reluctant to dump Buick because Buick was the start of General Motors, the first car company controlled by Billy Durant. He lost control of GM due to debt acquired in his buying spree of other companies (the origins of GM’s many brands), left GM and started Chevrolet with the Chevrolet brothers to compete with his former company. With the money he made from Chevy and help from the DuPont family, he regained control of GM, brought Chevrolet into the fold an subsequently was forced out by the DuPonts who owned 43% of GM at one time.
As Clargnblost said, as marginalized as Buick is in the US is the GM brand in China. A lot of the Chinese popularity has to do with Buick’s tradition in America as a maker of quality, comfortable but reserved and unpretentious cars. Killing Buick in America would not be good for that.
I still think it should be Chevy and Cadillac only, but if an additional brand is saved Buick has as good a case as any.
Buick does have a lot of flexibility. They probably have among the highest perceived quality of any GM brand. The brand is also very versatile, it has sold everything from mid-luxury (everything recent) to muscle cars (Grand National, Grand Sport) to Buick-Opels.
I don’t think that GM will keep GMC; I think they probably just forgot about that brand. Honest mistake, there are a lot to remember.
SirRoxo:
The G8 is hardly a Pontiac. It started as a Holden Commodore, then became a Buick Park Avenue in China (http://en.wikipedia.org/wiki/Image:New_Buick_Park_Avenue.jpg), then it became various Chevys in the Middle East and South Africa, and only last did it become a Pontiac G8 in the US. Here it would make a damn good Chevy Impala SS or Buick Roadmaster. And the Ute needs to become a Chevy El Camino.
A nasty little business called state franchise law awaits this oncoming freight train
Given that the Treasury just changed the tax code for Banks to swallow their toxic brethren a little easier, I would suggest that state law would n’t even scuff the paintwork if the Fed’s loco was coming through.
The Hummer is the 21st century Dodge Powerwagon. It would be great to see it get back with its kin folk.
With the money he made from Chevy and help from the DuPont family, he regained control of GM, brought Chevrolet into the fold an subsequently was forced out by the DuPonts who owned 43% of GM at one time.
Just a little addendum: he was forced out because he ran GM into the ground again and DuPont and other creditors didn’t want, or couldn’t afford, to have GM fail, and one of the prerequisites of bailing GM out was kicking Durant to the curb.
General Motors: bring you scatterbrained leadership for 100 years.
More interesting is the Buick Authorized Service from the 30’s. Valve in head is OHV, common now but not when introduced in 1929 Buicks. David D Buick inventor circa 1904. Harley Earl streamlined the 1936 Special and with a Dynaflash Fireball straight 8 it could cruise at 100 mph. Big deal in the day of 7:1 compression ratios.
Anything more than Chevrolet and Cadillac is a huge waste of resources and brand cannabalization.
Thanks, RogerB34, for reminding us of Buick’s great heritage. And as Ronnie Schreiber noted, Buick is the foundation on which GM was built. For people like me, that counts for something.
What a shame GM has squandered its heritage. I see a lot of people driving 1997-2005 Centuries. Looking back, it seems dropping it for the LaCrosse was a bad decision.
People who constantly call for GM to axe GMC Trucks always forget one key element of their existence-commercial truck. While not as heavily marketed as the Arcadia or Sierra, the Light-Duty and Heavy-Duty Cube vans, 6&10-wheelers, flatbeds, RV-chassis, Top-Kicks, W-series, T-series make good margins for GM and tend to have a very cyclical yet loyal customer base.
Yes, it would be possible to convert all of those vehicles to Chevrolets, but once again you run into those dealership franchise rules. Most of the medium and heavy-duty truck dealerships are standalone dealers for several reasons, but among them are; 1: commercial truck dealerships usually have a lot of very expensive equipment to service these larger heavy vehicles which adds a lot of overhead that your typical car dealership does not have 2: commercial truck dealerships are not basing their business on location and drive-by customers as they are usually located way off the main roads and typically are very large pieces of real estate. If you were to suddenly allow all Chevy-branded dealerships to carry medium and heavy-duty Chevy trucks instead of GMCs being sold exclusively at GMC Commercial Truck dealers, you may soon create a new glut of dealers all selling the same products and some of which most current Chevy dealers would not be equipped to service which would add to customer frustration-Not good…and 3: If point-2 becomes true then GM will break the convenant to dealers who currently have some modicum of exclusivity to a region’s GMC Commercial truck business as theirs. These unique dealerships rely on the profitable selling and servicing of these larger commercial vehicles and you would not believe the kind of money made in the service departments of a Commercial Truck dealer. A good friend of mine is a service writer at a commercial truck dealer on the east coast and rarely do his customers ask ‘how much?’ they only want to know ‘how soon?’ and 4-figure repair orders are the norm, not the exception.
I have always thought that GM and Ford both do not put enough resources into this high-margin portion of their businesses. GMC could be a cash-cow for GM if properly run.
Happy Thanksgiving !!
the Light-Duty and Heavy-Duty Cube vans, 6,8,10-wheelers, flatbeds, RV-chassis, Top-Kicks, W-series, T-series make good margins for GM and tend to have a very cyclical yet loyal customer base.
The question is: would those people buy Fords? If the answer is no, then what’s the point of GMC? I’ve heard the “GMC buyers are loyal” argument a lot, but I’ve never heard anyone suggest that, in the absence of GMC, those buyers would have gone anywhere else.
That was a risk with Oldsmobile, and it certainly is with Saturn, Buick or Pontiac. Heck, even Hummer devotees would probably shop outside GM. But a GMC intender? Mercury is probably safe by comparison.
I’m surprised it takes this kind of desperation for GM to consider shedding brands. This is the kind of non-action that tells me GM NEEDS a bankruptcy to force it out of complacency.
All of GM’s brands have negative cache with import buyers. For every G8 that Pontiac gets right, they put out a bunch of half-baked also rans like the G3, G6, and Grand Prix. As long as that’s the case, they will NEVER regain their reputation with import buyers. Better to just dump the brand.
Saturn has a cleaner recent history than Pontiac, but that’s about all its got going for it. It’s pretty clear from the disappointing sales from all their new models that the brand has very little pull.
I think Saab is a decent brand that makes decent cars, but there’s no way it’s a worthwhile venture when they basically only make 2 cars. Trying to prop up their volume with reskinned models by Subaru and Chevy was a really half-hearted attempt to prop them up. Better to sell them or let ’em die.
Hummer is dead whether GM chooses to shut it down or not.
There’s nothing that says that if GM kills Buick in North America, they have to kill it in China, too.
Although, as some have said, killing the oldest American brand (only Mercedes is older worldwide) could be tough emotionally.
Now if they sold Buicks like this in North America maybe they could do better (bear market/recession not withstanding)
(That’s a picture of latest Park Avenue, for the curious)
No, the goal here is not to shed brands. That would be expensive and a lot of work.
The goal is to TALK about shedding brands, and to put this talk on paper when they go to DC next week to demand taxpayer money. This talk will be sufficient to get them free money from congress.
Actually doing something about shedding brands would be akin to actually doing something to sell cars- like reducing the too-high price, the primary overall reason cars are not selling. This would involve work.
Not to worry, however, since automakers are not in the car selling business and care not whether they sell another car. Because they are in the welfare queen business, and their main revenue comes from taxpayers.
This will be sufficient for congress to give the autofakers money. Congress just needs to save face and act tough. The very fact that they cowed the autofakers into actually putting a ‘plan’ on paper demonstrates that.
In three months, for the next round of autofaker bailouts, none of this will be necessary. Congress will just roll over and hand it over, already having proven their toughness.
We have already seen this with Citibank, in which an initial one-time emergency bailout of some tens of billions of dollars becomes now an every other week event of handouts all over again. Congress nor Bammy nor Bushy nor the media raising not a peep of concern.
Since we’re armchair-re-inventing GM – here’s a wild thought – they could do what many companies did in the late ’90s. Pull sales out of the dealer networks entirely (for GM this entails broken contracts, red-hot pissed off dealers with teeth, and gov’t laws to change, but stay with me here for a sec) and go completely to … internet sales.
You could configure your new vehicle completely on the web – press “buy now” and the shiny new thing shows up in your driveway a few days later. If it’s a gift – click the “huge bow” option on the web site.
I’m not talking about the phony “internet sales” that a lot of the dealers have as a front to the same ol’ crap. Picture a factory with real-time TV screens like in McDonald’s kitchens indicating whether Joe Q. Customer wants that passenger seat heater or not. Maybe a web cam can let you see it being built – I dunno… I mean if you are going to re-invent yourself – go nuts.
GM gets more of (i.e. all) the action and the customer is entirely spared the ugly exposure to plaid sports coats and white wingtips. Wouldn’t THAT be nice.
The dealers (though not so many of them) are still needed for service and maybe have a few cars laying around so prospective customers can see what they really look like before surfing the web for one.
The landscape would be spared thousands of unsightly inflatable gorillas and our precious airwaves void of uber-obnoxious salesmen screaming at us.
-C
Ronnie Schreiber:
“It’s possible that some in the RenCen actually knows some automotive history and are reluctant to dump Buick because Buick was the start of General Motors, the first car company controlled by Billy Durant.”
Ronnie, you may also remember that Buick was once run by Walter P. Chrysler, he made it one of the most successful car lines at the time.
You can buy a car over the internet (or from through a professional car buyer) if you know exactly what you want. To get to that point you need to test drive several likely candidates.
When I was car shopping last year, I started looking at Porsches and ended up buying an Infiniti G37. Although they are all fine cars, the Infiniti suits me better than do the Porsches. Learning this required test drives.
Ronnie Schreiber:
“It’s possible that some in the RenCen actually knows some automotive history and are reluctant to dump Buick because Buick was the start of General Motors, the first car company controlled by Billy Durant.”
Ronnie, don’t forget that Buick was once run by Walter P. Chrysler and was one of the most successful car lines at the time.
You can’t kill Pontiac-Buick-GMC (basically one entity at this point). Of course, there’s the state franchise laws, but beyond that, there’s other reasons. Almost every Chevy has a PBG version, which typically sells 20 or 30 percent of the total of that model. If you kill PBG, those sales will most likely disappear, and not go to Chevy. (People said that Oldsmobile buyers would buy Buicks after Olds was canned-that really worked out, didn’t it?) The loss of that twenty or thirty percent of sales is the difference between a factory breaking even or even making money, and a factory becoming a huge money pit. If GM cans PBG, it’s game over; I would predict a complete shutdown of GM within a year afterwards.
Now, killing Saab, Hummer, or, in a couple years when their products are due for a redesign, Saturn, is a different matter. Fewer sales, fewer dealers, less overlap with Chevy. Those brands may be so small, and costs to keep them running may be so high, that it may be cheaper, in the long term, to shut them down (or sell them, if they can find a sucker willing to buy them) than to keep them running.
…revelation that GM is “studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer.”
It’s one thing to study it, it’s another thing entirely to DO it. Which they won’t. They’ll say anything to congress to lend them the cash and then come up with unforeseen excuses as to why they did not follow through. GM will say anything, but not do what is required of them.
Stu Sidoti,
Please drop me an email
rokem@netzero.net
The question is: would those people buy Fords? If the answer is no, then what’s the point of GMC?
I don’t know who sells more, but Ford has a line of medium duty trucks too, like the F-450, 550 and 650.
Ronnie, you may also remember that Buick was once run by Walter P. Chrysler, he made it one of the most successful car lines at the time.
Hey, I’m old and decrepit but not that old to remember when Walter P. ran Buick – though I do remember when Eisenhower was president.