I love investing. Not so much the garbage that comes from Wall Street infomercials or the ‘Get Rich Like My Dad’ crapola. I’m talking the real thing. A group of folks that take their money and smarts, and build something awesome. Computers. Schools. Lights. Movies. Paints and Wastebaskets. We may laugh at the minutiae of it all, but if we take the time to look between the lines of any great product, we can always find the beauty that makes that product worth buying. That’s because in certain businesses, those who are passionate about their work can influence the outcome. In the case of Chrysler and GM we’re the investors. But how can we get out?
By taming the ‘legacy’ shrew. GM and Chrysler have for decades hired too many people for too many things, and paid them too much money for it. GM had eight divisions and a multitude of fiefdoms that drove it to bankruptcy. Chrysler? They sold their soul to whatever devil happened by. We see the substandard mediocrity that came with all this. But despite the four figure cost disadvantage these companies hoist, they still make a lot of great products. Many of them are even fun. And unlike most modern day Toyondas, some of them even have a soul.
Today’s question. How would you tame GM and Chrysler’s legacy shrew. If you, Armchair CEO, were to invest your time and money in any five Chrysler or GM vehicles, which would you choose? Since we now own ChryCo and New GM, which five products would you like to have divested in all due haste? You can justify your choice with either passion or profit.
Keep:
1. Pontiac G8 (Must have a full sized RWD)
2. Silverado (Must have a full size P/U)
3. Malibu (Must have hi-qual. midsize)
4. Wrangler (No-brainer)
5. Fiat 500 (May be jumping the gun here but…)
Give the boot:
1. Corvette (Sorry, but business is business)
2. Viper (Tough love – no time for egos)
3. Sebring (Duhhhhh…)
4. Escalade (Good for PR)
5. Compass (WTF IS a Compass anyway?)
I’ll bite for Chrysler. The Keepers are the Ram pickup, Wrangler, Grand Cherokee, 300C/Challenger and Minivan.
The Compass, PT Looser, Avenger, Sebering and Asprango all need to be put down. Given the overlap and cannibilization in the SUV portfolio you could likely kill the Nitro/Liberty.
“That thing got a diesel?”
I’d get a lineup of Diesels federalized ASAP. IIRC Cummins has some tech on the shelf that could quickly be brought to market. The 2.8 VM 4 already goes into the export minivans and Jeeps, it just needs more EGR and/or SCR to meet 2010 emissions.
A good 3-4L turbo diesel makes makes the Jeep and truck experience better while giving me a shot a meeting CAFE. They are already working on bringing in Fiats small cars.
What is that car in the picture?
What does “Hammer Time” mean?
The car in the picture is a hand built one – called Atlantis by the builder. 1986 Lincoln chassis with a 5.0L V8 engine. The body is all metal and hand formed. The same guy built the Duesenberg replica from scratch. Both are amazing. Often seen at events in Calgary, Alberta.
Another Atlantis: http://www.flickr.com/photos/daveseven/849502682/
http://www.flickr.com/photos/daveseven/849502648/in/set-72157600902137217/
http://www.flickr.com/photos/daveseven/133702596/
The Duesenberg: http://www.flickr.com/photos/daveseven/849502908/in/photostream/
GM:
Keep the Impala (best selling car in their stable), Malibu (best car in their stable), Corvette (cause, well, just cause), Sierra (need a full size P/U, and it sounds better than Silverado), Colorado (cause a small pickup is good, just give it a better engine.)
Chrysler:
Keep the Ram (full size P/U), Charger (RWD full size sedan, why not), Fiat 500 (if it ever arrives), and the Wrangler and Grand Cherokee (the real Jeeps.)
Keepers:
1) Chevrolet Corvette (XLR is already dead)
2) Chevrolet Malibu (Kill the platform mates)
3) Jeep Wrangler (The ORIGINAL)
4) Dodge Caravan (Kill the Routan)
5) Chevrolet Camaro / Pontiac G8 (AKA 2011 Chevrolet Caprice)
Creepers:
1) Chrysler Serbring / Dodge Avenger
2) Dodge Caliber / Jeep Compass / Jeep Patriot
3) Chevrolet Impala
4) GMC Canyon / Chev Colorado
5) Dodge Nitro / Jeep Liberty
Jury is out on:
– Chevrolet Cruze
– Dodge Ram
– Chevrolet Silverado / GMC Sierra (There can be only one)
– Jeep Grand Cherokee (Needs to raise its game)
GM:
1. A Malibu with different suspensions/equipment levels competitive or better than those from Japan/Asia. Price it $1000 or more cheaper and give it a long, long warranty. Right now it’s at least competitive, so they’re half there.
2. A F150/Silverado-sized truck… actually, they don’t have much room for improvement, perhaps add a small diesel and/or a small V6 with proper gearing for decent highway MPG.
3. A Cobalt with the quality of a 10-year-old civic. Price it $1000 or more cheaper than competition, give it long long warranty.
These seem like the bread and butter cars, everything else it just a bonus if these are profitable.
Chrysler:
Um… I wouldn’t know where to begin.
Wrangler needs to get small again, and do something with gearing that will give it better highway MPG.
GM has desperately needed to simplify their branding sturcture for a long time. I’ve been calling for the death of Pontiac for years, since that brand has no value with consumers. Additionally, Saab was a bad fit and was brand engineered into obscurity and pointlessness. I still don’t understand the value of GMC in its current iteration, since you can get a Chevy with GMC packages and a GMC with Chevy packages but for differing amounts of money. Their trucks look virtually identical and this smacks of lazy brand engineering that undermines the brand value. Either GMC is a true ‘lux truck’ brand, or it has no purpose and should be removed.
HUMMER was a great idea because it was a true niche product with massive profits. GM jumped the shark with the H3 however and got away from their brand value by no longer selling the H1. The H3 was more brand engineering crapola and depressed the brand value. They need to refocus on being a Land Rover-esque luxury brand but with a different focus. Simply put, the operating margins on each H2 sold were at least $20,000-25,000 apiece and on each H1 were even higher at $40,000-50,000 each. This is a cash cow that needs to be milked properly.
Chevy has several great products – The Traverse and Equinox finally got the crossover right; the Corvette is still the ultimate poor man’s Ferrari; the Tahoe and Suburban still define what a large SUV is; the Silverado is a workman’s truck par excellence; and the Malibu is the first passenger vehicle with a bowtie that doesn’t suck. But Chevy has way too many pointless rental fleet POS’s such as the Aveo, the Imapala, the Colorado, the Cobalt and others. They need to invest in bringing up the engineering and build quality of all their vehicles to make this a truly world-class brand. Toyota and Honda do not have any worthless models, and ought to be the paradigms that Chevy is chasing. Chevy can do it better than them because GM can inject soul and character that is lacking from the Japanese brands, but it must have a complete model range to do it.
Buick is huge in China and finally has a model or two worth writing home about. However, they need to differentiate themselves from Cadillac to have any shot of being relevant in the markets that count – namely the US. GM must define those two brands and make them vastly different going after different markets. For example, Buick could be the small, eco-friendly refined luxury with smaller vehicles and crossovers. The Enclave is a good start and a new LaCrosse and Endeavor Hybrid would move in the right direction.
Meanwhile, Caddy could grow back into the behemoth ‘standard of the world’ that they once were. Forget the garbage Escalade hybrids – go with the Euro-lux-barges like a CTS (5 series,E-Class, A6, GS430, M35, RL), STS (7-series, S-class, A8, LS460), SRX (X5, ML-class, RX350, Q5) EXT (niche w/o competition), ESV (LX590), XLR (SL-class, 6-series, R8) and Escalade (GX470, Q7) to rival Benz, Bimmer, Audi, Lexus, Infiniti and Acura.
They still need to make profit-making niche products with soul to build brand value. Top 5 vehicles to invest in:
1. Corvette (improve the interior to make it more luxurious and keep up the base, T-top, convertible, Z06, ZR1)
2. SSR (could’ve made it a great Corvette-like brand with a cult following; no other car quite like it)
3. Suburban (still the official car of BAMF secret services around the world – pure profit)
4. Malibu
5. CTS (Good start – keep it going)
GM – Keep:
1) Chevy Malibu (need a 4/6cylinder family sedan)
2) Pontiac G8, rebadged as Impala (offer AWD, and you’re good to go)
3) Silverado (need a truck, lots of loyalty here as well)
4) Cadillac CTS (luxury, RWD, sport)
5) Buick Enclave / Chevy Traverse (kill the other two)
GM – Kill:
1) GMC all together
2) Chevy Aveo
3) Current Impala
4) Escalade (only keep the hybrid)
5) Cadillac DTS (Buick is supposed to offer this type of FWD luxury car)
Chrysler – Keep:
1) Caravan (last domestic to even built something competitive)
2) Ram (new one seems like a leap forward)
3) Wrangler (there’s only one)
4) …I’m struggling here
5) Grand Cherokee (the new one looks promising)
Chrysler – Kill:
1) Compass / Patriot
2) Nitro
3) Caliber
4) Sebring / Avenger
5) Lincoln Division (whoops)
Hmm…Five cars will be tough
1. CTS/G8 – I think some sort of rwd sport or luxury car is needed. I would attempt a cammryesque luxury and sport suspension option for the car to accomodate diff tastes rather than different models.
2. Chevy Malibu – Large car
3. Dodge Caravan – Family haulers are bread and butter
4. Chevy Silverado/Wrangler – pickups still do well in this market; See Ford F-150. However, a Jeep branded line of heavy duty trucks will still sell to businesses. How about a return of the scrambler using the streched 4 door wrnagler platform?
5. SAturn Astra makeover – I think this is the best small car in the GM/Chryco stable. However, it needs a full line of engines, options, etc (and possibly a trunk) to make it work.
Chrysler Keep
Minivan
Jeep Wrangler
Jeep Grand Cherokee
Jeep Liberty
Dodge Ram
GM Keep
Full Size Pick Up
Full Size SUV
Corvette
Malibu
Either Lambda or Sigma (depending on which makes more $$$). Really, a modernized B-Car would be better (i.e. more marketable) than either.
Chrysler’s entire Pass Car Line can go away.
GM:
Kill List:
1. Bag the Volt.
2. Bag the Aveo. Sure, it gets your foot in the door with the customer but the ownership experience probably drives most of them away.
3. Get rid of about half the SUVs/CUVs.
4. If the chassis is not suitable to extend to other vehicles, bag the G8.
Keep (or Do) List:
1. Resurrect the Value Cobalt. Make it a decent car.
2. If the chassis is suitable, consider rebuilding your large car family around the G8 chassis.
3. If it’s as good as you say, put some resources into DI on all your products. Follow that up with aerodynamic makeovers on all your cars. Aim for 4mpg highway improvement and don’t settle for less than 3.
4. BAS is not a bad idea. Look into building it into the Cruze and other small cars but it must be cheaper. If you don’t see a way to get a decent hybrid on the road in less than two years on your own, bite the bullet and license HSD. Maybe you could put it into the Chevy Matrix. It wouldn’t directly compete with Toyota.
5. Treat all the employees like partners. Eliminate all executive perks and remove any trace of class distinction. Toyota gets tremendous value from an engaged and innovative workforce. I believe they get tens of thousands of employee improvement suggestions per year.
One Uncertainty:
Unless the Corvette loses a significant amount of money, I would keep it. I think it’s a sign of excellence that GM needs. Reliability and durabilty issues aside, it’s quite iconic, it’s actually very good at what it does and I think it would hurt morale to lose it. However, if the Corvette is to see further development, it needs to come down in size and work with a more normal passenger car engine. That may be too expensive to do (like the way the Kappa platform went). If it’s making money, milk it until it’s ready for death.
—
The problem with most such lists is that GM has really limited resources. Steve Lang has the right approach… what to cut and what to keep but the cutting probably cuts revenue and not all the development is going to be possible. GM can’t be all do this and do this and do this…
They’ve got to make some really intelligent choices. And the problem with that is GM’s culture; once the influential exec decides it’s a good idea, it’s a go whether the market and business plan is really there or not.
They delude themselves into thinking that a $13K premium for a gas guzzler hybrid can be supported by the market.
They delude themselves into thinking a hybrid badge on a car works magic, that people buy hybrids for some nebulous green image and that they can put a $4K premium on a “hybrid” that offers no material advantage.
They delude themselves into thinking Toyota loses money on the Prius, that it’s a “halo” car, that its distinctive shape calls greenie-wannabes to buy it and ignore the fact that it’s a mid-size car at a midsize price plus really amazing fuel economy and that the price point really helps sell the car. Consequently, they green-light a $40K competitor.
They forget that they’ve cancelled two two-door coupes in the last 7 years because of low sales and build an expensive new one. That’s butt-ugly, too.
They ignore the fact that two-seaters don’t sell and develop two, at great expense.
But, while they’re trying to pay attention to market realities, they shouldn’t ignore their own success.
I’m not a fan of tne New Malibu but it is selling, relatvely, better than the old one. That’s largely because they did a quality job, enough to leverage some residual domestic preference, anyway.
If they also baked in the durability and reliability that people expect from Toyota and Honda, market share is going to be gained. And if they back it up with prompt customer service and good warranty service practices, people will come back.
If they got those things right, it’s a recipe to copy for the Cruze and other upcoming vehicles.
‘Hammer Time’ – refers to my work as an auto auctioneer.
Oh, and, for God’s sake, rename the Cruze to something else. The name on that car must be another example of GM deluding itself into thinking they’re “hip” like the kids by misspelling words. Call it the Nova. Or Chevelle. Actually, Nova would have been a good name for an advanced-tech vehicle but instead we get the lame “Volt” for an EV. How imaginative. Not. And Opel was to get the “Amp.”
Keep:
1. Corvette
2. Camaro
3. CTS
4. Malibu
5. G8, renamed as the Impala
6. obviously keep the pick-ups
Match the Hyundai bumper-to-bumper and powertrain warranty and throw in three years of scheduled maintenance for free (this can’t be that much of an incremental cost versus the traffic it should drive to the dealers).
Abandon the small car market (anything smaller than 180″ in length). A GM/Ford/Chry executive who lives/works/plays in suburban Detroit/RenCen will never appreciate a small car as much as his compatriot in Toyota City or Wolfsburg until gas hits $4 in America for longer than just one summer.
The purpose of bankruptcy was to shed legacy costs so that GM doesn’t chase volume, so stick to profitability.
Small cars will never make money for Detroit unless small cars are developed outside of Detroit (say Southern California) and outside of the conventional Detroit mindset……(oh, $(@* this sounds like Saturn circa 1989).
@MikeyDee :
What is that car in the picture?
I thought it was a combination of a Plymouth Prowler and a Pontiac Solstice. My dad told me it’s a Morgan.
GM “invest in”
1. G8/Impala/Biscayne/Catalina/Caprice/WTFEver: GM needs a competitive full-size and the RWD layout gives obvious marketing avenues vis-a-vis the glory days as well as leads to taxi/squad car sales.
2. IMO, Cadillac needs an S-class/750/LS competitor. I’m assuming it will be based on the chassis above.
3. Cobalt/Cruze. GM HAS to have a competitive small car. Period.
4. Malibu. They must compete with the Camcord.
5. Buick. If Caddy is going to be the “world standard”, and Chevy is the Wal-Mart brand, Buick must be able to compete in the entry-lux/exit base market.
GM “divest in”
1. Deville. Manages to hurt two brands at once. If they’re going to keep it, re-do the grill and call it a Buick.
2. Aveo. If you can’t even pretend to compete, quit.
3. Retail GMC. Focus on the industrial market and leave luxury trucks to Caddy and the “regular guy” market to Chevy.
GM keepers:
Chevy full size trucks – Okay, so I cop out and lump Silverado/Tahoe/’Burban together. They make money, and that’s the name of the game.
Malibu – Arguably the best American midsized sedan. Definitely the best Chevy’s ever had, and the best overall product in their stable.
G8 – The death of this car will be proof that GM isn’t focused on getting the best products to the showroom. I’m not a fan of axing the current Impala since it sells well, but the G8 would make a good Caprice (as it is in other countries).
CTS – This is another car that GM just got way too much right on to let go to waste. Where does it belong in a lineup that should really include just Chevrolet? I don’t know, but it’s a great car.
Corvette – Yes, I know it’s not mainstream, and maybe it’s not even hugely profitable, but it’s GM’s heritage and is starting to become a pretty great car. The Blue Devil nee ZR1 stands up to any supercar in the world from a performance standpoint, and at half the cost of many of them. Other than that, the rest of the lineup is a pretty solid value top to bottom, and the cars themselves have more to offer than just price. The interiors are still so-so, but driving one isn’t a disappointment.
Death to all brands outside of Chevrolet.
Chrysler keepers (this is tough):
Ram – Maybe the only easy one. See Silverado.
LX Cars – Make a few improvements (interiors, PLEASE!), but overall they’re ChryCo’s best cars, and still hold their own. Maybe a more luxurious 300 to raise Chrysler’s image.
Minivans – Strong sellers for Chrysler, why would you axe them? Although Dodge is the only brand that needs them. If all dealers are CDJ, then there don’t need to be 2 versions of the same van.
Wrangler – No explanation needed. It’s an icon.
Grand Cherokee – Just because. It’s not horrible, and the new one looks like it might actually be pretty good.
That’s all I can come up with for Chrysler. They desperately need a midsize and a compact. I’d like to see them hit the market with a compact like they did with the original Neon when it came out. Something small, economical, uniquely styled, and fun to drive.
Axe Durango, Dakota, Sebring (and all relatives including Journey), and Caliber. Nobody will miss any of them.
Chrysler:
Keep:
Caravan. Thats a good seller!
Ram pickup. Forget the Hemi, just sell diesels!
Wrangler. Gotta be the best icon brand of all time! Quit bastardizing the name by sticking it on anything else. Forget calling it a wrangler and just call it the “Jeep”. I’m surprised at how many want to keep the Gr. Cherokee….? Why? with a 4dr. Wrangler, (“Jeep”) who needs it? Liberty? Now that it’s been so grotesquely bloated, it’s basically a Gr. Chero. too! Completely redundant! I don’t even want to talk about the Patriot and Compass… Uhgg!
If they canceled the Commander already, That’s good! If they didn’t, they should!
A small truck. Based on the “Jeep” available in two or four doors is a great idea that somebody already mentioned. Call it the “Jeep Truck” and leave it at that! They’ll sell like hotcakes at a Fireman’s breakfast!
Bring on the Fiat 500! They’re going to be hot sellers! I’ll bet! I’m going to buy one! (if they ever show up)
Everything else in their lineup can go away!
GM:
Keep:
Corvette. A lot of bang for the buck there!
Full sized truck. PLEASE re-design them though. Those are the most god-awful-ugly things in the industry! I mean, what is with those fender bulges?! and consolidate the brands. Who cares, GMC, Chevy, whatever! Just one though…
Hummer H1. BUT!, with a diesel engine! C’mon man! you’ve got that beautiful Isuzu diesel engine at your disposal…. Why not put in the hummer?! Transform a disgustingly inefficient gas guzzler into a relatively economical, go just about anywhere, multi passenger, multi-purpose vehicle. That way you can forget all about the stupid Tahoe cadillac hybrid piece of crap waste of money probably doesn’t even get 20 miles per gallon monstrosity! If you really want an economical hybrid!? Start with a DIESEL engine, and go from there!
Solstice. I believe there is a place for the car. It is a beautiful car. Fix the top though. Really. Back to the drawing board with that. What a screw-up! I guess that’s the whole problem with GM. They just can’t quite get it right!
I can’t think of anything else worth saving… I’m done…..
Regarding the car in the picture, that’s a pretty good interpretation of the Chrysler Atlantic concept car.
KixStart: “Nova would have been a good name for an advanced-tech vehicle but instead we get the lame “Volt” for an EV. How imaginative. Not. And Opel was to get the “Amp.””
It’s a tradition. There are lots of GM cars I’ve looked at and thought “Watt”????
Now, with respect to picking surviving nameplates: we don’t have enough information to do so with profit as the metric. GM and Chrysler desperately need to bring in more money than is going out. If Aveo or Compass makes a profit, keep it. If Impala or Sebring doesn’t, drop it.
GM would truly demonstrate “new” if they simply killed the Volt. It is an icon for their continuing deathmarch to oblivion. All courage for other cuts and new products would derive from that decision alone. But they won’t.
And Chrysler would look new if it killed the Sebring today, and gave away all existing Sebring inventory on Oprah.
GM should keep Hummer because it is distinctive. I’m glad Chrysler is keeping the Viper for the same reason. Somebody has to drive a non-toaster.
Sorry – can’t give 5 of each for both.
Hellooooooo?
Anybody in Detroit listening/reading this??
Rebrand New GM as Chevrolet and match Hyundai’s 10 year warantee. Chevrolet focuses on the basic transportation needs of American families, but with more style than the equivalent Toyota.
Continue to invest in:
1) Chevrolet Cruze (entry level small car)
2) Chevrolet Malibu (average sedan)
3) Chevrolet Silverado (need a full size pickup)
4) Chevrolet Transverse (need family transportation)
5) G8 as new Chevrolet Impala (bigger, better than average sedan)
I like the Camaro, but for a volume brand it makes more sense to build RWD G8 based Impalas in North America instead.
Spin off Cadillac/Corvette/Volt as a separate lower volume luxury car business that buys Chevrolet engines, transmissions, heaters, and air conditioning, but zero interior parts. Separate the higher-end luxury business from the Chevrolet bean counters.
Spin off Buick to a Chinese company.
Chrysler is Fiat’s problem now. Let them sort out the inevitable liquidation.
I’m going to suggest something counterintuitive. What GM needs is a Cadillac flagship, maybe the Cadillac Sixteen with a dual mode hybrid drivetrain for green cred.
The Lexus brand has been a tremendous boost to Toyota’s image. Going head to head with Mercedes and BMW with the LS sedans gave them great credibility. Hyundai is trying the same strategy with the Genesis and Equus, taking it a step further by dispensing with a separate luxury marque like Lexus or Infiniti and selling the luxury cars from Hyundai stores.
Right now GM has no flagship sedan. Cadillac once indeed was the standard of the world. Companies in other industries named themselves “Cadillac” to bask in the reflected brand equity of GM’s luxury marque. Such was the reverence for the old Caddies. The CTS may be a fine car and hold its own in that market segment, and the CTS-V, like the ZR1, puts many Euro sports sedans to shame, but Cadillac needs a full size sedan. They already have a fine RWD platform that underpins the Camaro, G8 and the Australian cars on which they are based.
Then, as long as every car they introduce from here on out is at least as good as the Malibu, GM might survive.
BTW, I wouldn’t kill the Jeep Patriot, though obviously the Caliber and Compass must go. It’s available with Jeep’s credible “trail rating” and an entry level Jeep below the Wrangler isn’t necessarily a bad idea.
Actually, Nova would have been a good name for an advanced-tech vehicle but instead we get the lame “Volt” for an EV. How imaginative. Not. And Opel was to get the “Amp.”
Actually, Nova would be a questionable name for the Volt. The first time a battery catches fire, the car would be nicknamed “Supernova” (ie:exploding star).
GM should’ve branded the Volt as a Buick so they could revive “Electra”. An appropriate name with historical significance!