Why so many brands GM?
Okay, so here's a question for a certain U.S.
Automaker: Why do you have to have so many
different brands or makes of car--just for the U.S.
Market? Chrysler has Jeep, Dodge, and Chrysler (they
got rid of Plymouth). Ford has Lincoln, Mercury, and
Ford (not bad-but why keep Mercury). But General
Motors has Buick, Cadillac, Chevrolet, GMC, Pontiac,
Saturn, and Hummer.
Buick and Cadillac, are both luxury brands. Both have
upscale cars, with lots of amenities and lots of price. Is
Cadillac a little more upscale than Buick? Historically
that had been the case. Historically meaning the
1950s! In this economy, who needs two separate
luxury brands? How many of these luxury vehicles do
GM think they can sell? It borders on lunacy. To make
matters worse Cadillac and Buick are trying to compete
with each other for the same market. Maybe that is an
indicator of why they need so many government loans
to stay afloat- they compete with themselves, and both
sides are losers...Pick one (Cadillac) and support it
exclusively. Buick can disappear into the sunset, or to
China where the Buick brand is quite popular. But I
digress, we are discussing the vast U.S. market. Think
of all the money GM can save by not having Buick
Now just when you thought the problem was solved,
GM has yet another luxury brand, Hummer, which sells
upscale pseudo-off road vehicles. Hummers compete
directly with Cadillac SUVs. Good idea for business?
Probably not. As we mentioned previously, competing
with ones self isn't a good business strategy, its called
cannibalisation, and it means higher costs and lower
sales. Sell Hummer, which luckily is what GM claim
they are trying to do. Fingers crossed everybody!
Okay, lets step into the middle market-the car for us
"Average Joes." GM offers four different brands for us
to chose from. Chevrolet, Pontiac, Saturn and GMC.
Someone please explain to me, the difference between
Chevrolet and Pontiac. They target the same market
from economy cars to middle of the road cars. Again
they compete against each other. And they cost more
money to keep around.
Why can't we just call the best cars from each:
Chevrolet? Sounds simple to me? Pontiac only sells a
few models and no SUVs. Chevrolet offers a full line of
cars, trucks, suvs and minivans. Sounds like enough
choices to me. Pontiac should just disappear off into
the sunset...bye bye.
Now the easiest one, GMC. GMC makes the EXACT
same trucks that Chevrolet does, just with a few minor
cosmetic changes. They are like identical twins wearing
different clothes. GM does not need two of them. GM
certainly doesn't need any more cannibalization.
If consumers want to buy a GMC truck, they will want
to buy a Chevrolet truck, because they are, essentially,
the same truck! Duh! Let me repeat for emphasis, Duh!
We now turn to the hard choice, Saturn. Saturn does
compete with Chevrolet and Pontiac for the small to
middle market, so there is some cannibalization. But
Saturn could be shaped into a low cost, youthful brand
for GM, like Toyota's Scion brand. Keeping Saturn
around is only worthwhile, if the development of a
youthful brand is desirable, otherwise its a waste of
resources, just like Pontiac, or Buick, or GMC. Instead
of buying a Saturn, just buy a comparable Chevrolet.
Oh did I mention the cars might be even cheaper
without all that extra corporate overhead.
So what is the downside to all of this? Well, most likely
it's job losses, which is unfortunate and should not be
taken lightly. Those employed by Buick, GMC, Pontiac,
and Saturn would possibly lose their jobs, although
many employees would still be needed to help the
remaining brands handle the increased sales shifting
over from the closed brands.
It is also abundantly clear that due to slower sales in
this tough economy, some job cuts at GM, are
inevitable, whether we shut down brands or not. If we
use the brand shut down to target the job cuts, we end
up with a more efficient company with employees in the
right places to grow the company.
Random company-wide job cuts will only hurt morale
across the company, and do nothing for efficiency or
production costs but save some short term money. No
underlying company problems would be addressed with
random cuts. Strategic targeted cuts are most likely to
result in a healthier, and more competitive GM; a GM
that will need to hire more workers once growth returns
to the marketplace. This would ultimately yield the
more jobs in the company than the alternative.
The other question is that of dealerships. Eliminating
four brands would certainly cause great dislocation in
the distribution channel. But if the overall number of
cars that GM sells remains the same, some of the
Pontiac, Buick, GMC, and Saturn dealers will still be
needed to sell and service Cadillac and Chevrolet. If
given the choice to continue dwindling sales, or to
change brands with an investment in the dealership, the
smart and profitable dealers will chose to invest. The
weaker dealerships will close, or shift to another car
maker. Even losing a few dealerships is acceptable in
view of the ultimate lean mean GM turnaround.
If you disagree or think I am wrong, just look at other
successful car companies in the U.S. market, they all
have one or two brands or at most three brands. For
example Toyota, Scion, and Lexus; Honda and Acura;
Nissan and Infinity; Volkswagen and Audi; BMW and
Mini. Chrysler, Dodge and Jeep; Ford, Mercury and
Lincoln; Mercedes; Porsche; Hyundai; Mitsubishi; and
Mazda. Looks like that might just be everyone else, I
wonder if that means something...hmm.
Come on GM, clean up your act for real this time!
March 2, 2009