When will GM discontinue their extra brands?

With their recent labor agreement with the UAW, GM has started to address their labor costs. However, with total labor; blue-collar, white-collar, and executive combined only totaling 10% of their cost of business, let’s face it, this is not going to fix GM’s problems by itself. When is the upper management finally going to swallow their pride and axe some of their extra brands that do nothing but eat up resources? Wagoner has talked about axing Pontiac and Buick but quickly backed away from such logical thinking.

Let’s take a look at GM’s brands, all 8 of them and their models. When I say model, I’m just talking about a base model, not coupe, sedan, wagon, convertible, etc. I’m also not counting performance versions of the base model like Cadillac’s V-Series. So for 2007 we have:

Chevy --- Cadillac --- Buick --- GMC --- Hummer --- Pontiac --- Saab --- Saturn --- Total---Market Share
---23----------6-----------5----------12----------2-------------6-----------2----------6----------62---------23% ↓

This compares to Toyota with:

Toyota --- Lexus --- Scion --- Total --- Market Share
---16---------8----------3----------27----------16.3% ↑

And with Honda with:

Honda --- Acura --- Total --- Market Share
---9----------5---------14----------9.5%↑

When you look at the numbers it is staggering at just how many more models that GM is supporting than their competition. They have their base brand Chevrolet and premium brand Cadillac and then 6 more brands that consist of nothing more than redundant badge engineered copies of Chevy platforms. GM makes and markets SIX versions of the Chevy Trailblazer! Why waste all those engineering resources and tooling dollars just to make copies that look slightly different than the base vehicle? Why complicate your supply chain with 6 different front clips? Do they really expect the customer is that stupid?

My proposal for GM is as follows:
Chevrolet; Bring your best of the badge engineered vehicles under the Chevrolet name.
Cadillac; continue to improve the brand. It is competitive with the competition, make it superior.
Discontinue GMC; they are just rebadged Chevy’s so why market two nameplates?
Discontinue Pontiac; there is no excitement left and Pontiac has no unique vehicles.
Discontinue Buick; Buick’s demographic is quickly dying out, and again, no unique vehicles.
Discontinue Hummer after the current generation of vehicles; or sell it.
Discontinue Saturn; GM started Saturn to fight the imports with a brand disassociated from GM. Well how do you upsell your new customers to your other brands when you have disassociated them from your core brands? GM should have instead won over the import crowd to Chevy by building good cars that appeal to them. This is the same problem that Nissan create when they originally built their US brand under the Datsun name because they thought Datsun sounded more “American†than Nissan.
Sell Saab; (if anyone will buy it) Saab has never made money from GM, cut it off.

BTW, I also think that Ford needs to dump Mercury and Lincoln and sell Volvo along with their pending sale of Jaguar and Land Rover. With Ford rapidly dropping towards single digits in market share there is no reason to sell the Fusion and Taurus in 3 different trim levels under 3 brands.

Toyota is started down GM’s foolish road with the Scion brand that was meant to attract a young audience that finds Toyotas too boring. Why not just sell the new, attractive Scion product as Toyotas and build your brand instead of creating a sub-brand that needs its own marketing effort? What happens when that 20 something gets some kids and wants a family sedan or SUV? Is Toyota planning to grow the Scion brand along with their new target market and create a redundant product line or just expect these new customers to suddenly jump from Scions to Toyotas?

 

<div class='quotetop'>QUOTE(malorn @ Oct 5 2007, 03:42 PM) [snapback]521924[/snapback]</div>

I understand that killing a brand is very expensive. If I remember correctly, GM paid billions of dollars to divest itself of the Oldsmobile brand. However, with GM's market share realistically looking to bottom out at about 20% they cannot continue to support 8 brands. GM brands have been slow to refresh models specifically because they do not have the money and resources to support all of their brands. It takes time and money to make 6 versions of the Trailblazer so that all of their brands can have a SUV to sell. If they had kept Oldsmobile then they would have had 7 versions of the Trailblazer. They are taking the same pie and cutting it into smaller pieces and in the process spending lots of money.

What would the dealers do? Sell the new GM product line, Chevy / Cadillac. The GMC dealers wouldn't see any difference in product except the badge on the grill and the name on the sign. Buick and Pontiac are on the way out whether or not GM decides to axe them.

--------------------2001------2002--------2003------2004-----2005--------2006----% of Sales
Buick-----------405,678----432,017----336788---309639---282288-----240657------6%
Cadillac--------172,083----199,748----216090----234217---235002----227014------6%
Chevrolet----2,689,954--2,642,786--2655777--2763238--2669932---2415428-----59%
GMC------------554,753----560,868----578783---602064----566322----481222-----12%
HUMMER-------------768-----19,581------35259----29345-----56727------71524------2%
Oldsmobile-----233,745----155,112----125897----28851-------1866----------96------0%
Other - Isuzu----15,346-----13,708------13123----15707-----15787------15751-----0.4%
Pontiac----------533,402---516,832-----475614---474179---437806-----410229-----10%
Saab--------------37,556----37,805------47914-----38159-----38343------36349------1%
Saturn-----------260,730---280,248-----271157---212017---213657-----226375------5%

For 2007, as of Aug-2007, Buick is down 26.7% and Pontiac is down 14% from Aug-2006. So both brands have had a steady decline in sales even though all of the cars in the Buick and Pontiac lines have been replaced since 2005. These are dead brands.

Saturn is actually up the past 2 years due to new product.

Hummer was booming until 2007 and is off by about 20% this year. It will remain because it is still profitable to charge someone an extra $15K to $20 for a Chevy SUV with a new body.