Posted on 12/04/2008 5:06:22 AM PST by Cronos
General Motors manufactures eight brands of automobiles. When executives of America's biggest automakers return to Capitol Hill carrying business plans explaining how they would spend the federal bailout they've asked for, the automaker may propose trimming itself to just four
Bloomberg reports that the company "is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said. Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year's end, said the people, who didn't want to be identified because no decision has been made."
The move would leave GM selling just Buick, Cadillac, Chevrolet and GMC vehicles.
Left out of the discussion so far is exactly what process GM would use to eliminate the overlapping brands. Autoblog comments, "The word ‘shedding' is used to describe what GM would do with Saturn, Pontiac, and Saab. But we don't know where and how they would shed them." Selling the brands to other automakers isn't likely. "With the state of lending and credit markets, it would probably be easier to buy a pterodactyl than get a loan to buy one of GM's brands. HUMMER's already been on the block so long it's about to get arrested for loitering." Instead, GM is probably looking at simply shutting them down
Analysts have believed for years that GM needs to shed some brands in order to survive, but the automaker can't simply shut down a brand without a massive infusion of cash. Bloomberg points out, "GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales."
But eliminating Oldsmobile is believed to have cost the company over $2 billion -- money used to buy out dealer contracts and settle lawsuits filed by Oldsmobile dealers whose businesses were ended by the move. As markets open today, GM's total net worth is just slightly over $3 billion, and the company is believed to have less than a one-month supply of cash on hand.
Policymakers considering the bailout must also note that shutting down brands would mean, as Autoblog points out, "some serious upheaval and tens of thousands of job losses," which is what the bailout plan is supposedly designed to prevent.
Eliminating overlapping brands, however, looks like a great idea to investors. MarketWatch reports that GM shares " rallied during Friday's holiday-shortened trading session ahead of [this] weeks crucial meetings in Washington that could lay the groundwork for a federal bailout of the ailing auto industry." The value of GM shares surged almost ten percent after they "caught buyers' interest on reports that the company is considering shedding its Saturn, Saab and Pontiac brands as part of its effort to cut costs and secure the government loans." The company was already widely reported to be looking for a way to get rid of its stake in Hummer.
Colorado's Grand Junction Free-Press says that dealers who sell the cars "haven't received direction or assurance from the companies that make the cars on their lots."
While the bailout debate goes on, automakers are trying to sell cars as fast as possible with deep discounts. Research the best car deals with U.S. News' Car Reviews.
True, that is why some advocate bankruptcy. But the trucks are still the same just different names.
“Most of the Buick and even Cadillac dealers would probably go out of business if they couldn’t also sell GMC trucks.
Someone has to go out of business!!!”
The light duty trucks are one of the few bright spots in GM’s line. That’s the one area they don’t need to cut back.
GM has too many dealers, but that’s the dealers problem, not GM’s. IMHO, GM should combine the brands they would like to dump (pontiac, saturn, saab, etc...) into a single brand (let’s call it Combo for grins) and turn all their existing dealers of those brands into “Combo” dealers. There would eventually be a shakeout of dealers on their own, and it would reduce the number of brands.
I was given a 2003 saturn vue, and hated it. Worst piece of junk I’ve ever driven, and I’ve driven a LOT of junk. I hated just about everything about it.
I now have an Exploder (ford explorer) and love it. I like almost everything about it.
They need to keep Saturn and ditch Buick.
Good point. Back inthe day, people would buy cars on loyalty, from the dealer in their town. People really wouldnt' travel to buy a car. A deal in nearly every town, or at least county used to make sense. Not now.
I’m pretty sure when GM set up Saturn that it was to be a union shop from the start (the UAW wouldn’t tolerate a non-union GM brand). Although the concept was a big success at first, Saturn became much more “GM-like” over time and quality went in the toilet.
I have a 2008 Vue and I’m lovin’ it.
Axe the AUW contract if you want to survive.
GMC brand makes it possible for non-Chevy dealers to sell trucks. I don’t know about other parts of the country, but in the south trucks (pick ups particularly) are the bread and butter of most dealer’s sales. Most of the Buick and even Cadillac dealers would probably go out of business if they couldn’t also sell GMC trucks.
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OK then ,, cancel Chevy trucks ,, just sell them as GMC and let all dealers participate..
Congrats, I’m happy for you. I grew up on pickups, dump trucks and OTR trucks, and have racing experience. The vue never ever drove properly, it was unlike anything I have ever driven, was lousy around town and was scary on the highway. The suspension/handling in mine was scarier than driving a scooter at 70 MPH.
My explorer is substantially larger, and is easier to drive and park, even in crowded parking lots. The all around view is far superior, too.
In any case, enjoy the vue!
The solution: Every dealer becomes a "GM" dealer. GM builds a model and gives it a brand, and that's the only version of that model they build.
Example: Instead of a Pontiac Solstace and a Saturn Sky, make one model, call it a Pontiac or a Saturn, and let every dealership in the country sell it.
Instead of a Chevy Silverado and a GMC Sierra pickup truck, make just the Chevy or the GMC and let all dealers sell them. (If this were done, the GM pickup would outsell the Ford F-150.)
Caddilac would get their unique CTS and STS, Chevy would keep the HHR, etc., but there wouldn't be an Esclade and a Tahoe and an Envoy, but just one.
So you go to your local GM dealer, and you will find a Chevy Tahoe next to a Cadilac CTS next to a Pontiac Solstace next to a Saturn Astra.
Part two is to reduce the myriad of options available. Instead of literally hundreds of permutations of options and trim levels, make three trim levels, and the options are predetermined for each level. (With maybe a couple of exceptions like a sunroof.) This would lower GM's manufacturing costs, parts inventory costs, and it would be easier for dealers to swap inventory between them.
Yes, your list makes more sense.
I have owned more GM vehicles than any other make. They included a 70 Buick (first car), two pickups (98 and 00), an 2000 Cavalier and a 2004 Impala. The Buick was a good car, the 98 truck got totalled in 2000, the 2000 pickup had various problems, the Cavalier was a POS, but I didn’t have any problems with the Impala.
Today I own three vehicles. 2007 Nissan Titan, 2008 VW New Beetle Convertible, and a 1969 VW Beetle Convertible. the 2008 VW is just months old, so I have no opinion yet, but I really like the Titan, and I LOVE my little bug.
GM really needs to do something. You can go to different GM brands and get the same car at greatly different prices. When I bought the Impala I also looked at the LeSabre. Same size car, same options, etc. but the Impala was priced same as the mid-sized Buick Century. My Dad bought the LeSabre in 2004 and I couldn’t tell the difference in the ride, handling etc. between his Buick and my Chevy. Why make three or more different versions of the same car? Same with the other two automakers. A Ford is a Mercury is a Lincoln just different prices. And Chrysler/Dodge.
Plus Plymouth, if they still market that.
If the Lucerne is so popular, it could be sold as a Pontiac Bonneville, or under the latest Pontiac model naming convention, G10.
Pontiac is a much more identifiable brand name than Buick, IMO. And the G8, which comes from GM’s Holden division in Australia, is a great car. Holden also supplied the most recent GTO. Although it wasn’t a “real” GTO in the tradition of the original, it was a good performance car. It was simpoly too plain-vanilla styled and too expensive. GMC still needs an “excitement” division, and Pontiac is the natural.
Saab needs to go. It’s a low-volume Swedish manufacturer, and GM needs to find a buyer for it. Volkswagen might be interested.
GMC should either go, or all trucks made by GM should be branded as GMC. There’s extra cost involved in having GMC and Chevy versions of the same truck models.
The rationale for GMC was always that non-chevy dealers needed a truck brand to sell. But if GM is serious about cutting down on the number of its’ dealerships, they should be consolodated so that every GM dealership sells every GM brand.
Ssturn should go. It was intended to be a different kind of brand whose dealers did business differently. Now it has become a brand that is nothing but re-badged Opels, Saabs, GMCs and Chevys. No need for that.
Hummer could probably be sold to BMW or VW as a specialty brand. BMW already owns Lamborghini, for example, and VW has Bentley.
Chevy, Pontiac, Cadillac - those are the only three brands that GM needs. Or four, if they decide that all GM trucks should be branded as GMCs.
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Ford needs to do some housecleaning also. Sell Volvo. BMW was interested in it at one time, but Ford wasn’t serious about selling at the time. Perhaps BMW’s interest vcan be rekindled with a good offer. Ford should retain enough stock in Volvo to keep the cross-pollination going that has heldped Ford recently. Using Volvo’s structural ideas, for example, Fords aced the latest crash tests. Ford also learned from Volvo’s engineers how to build a proper seat.
Mercury needs to go. Mercs are just re-badged Fords with different front clips and tail lights. Drop the brand or do something creative with it, Ford.
Keep Mazda, or at least keep enough stock in it for cross-pollination purposes, as with Volvo.
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Chrysler - abandon hope, all ye who enter here. The Dodge Challenger is really hot, but it won’t save the company. Someone needs to buy Jeep to rescue the brand. Perhaps Ford can buy it with the money it gets from selling Volvo.
Dumping Hummer may be a little hasty, considering what fuel prices are doing.
Ironic, since Jeep was the only brand to survive the AMC failure.
15 or 16 hours ahead of us.
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