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GM's brand strategy right on the money
David Kiley, senior Detroit correspondent for Businessweek magazine.
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TEXT OF COMMENTARY
Kai Ryssdal: GM's decision to pull Pontiac off the market that was confirmed today still leaves 'em plenty of models to sell. Even if it shuts down or sells off Saturn, Saab and Hummer, GM is going to have four brands and 34 different models. Still, some analysts think GM should streamline even more. Commentator David Kiley gets where they're coming from. But he says dumping Pontiac goes far enough.
DAVID KILEY: In the parlance of corporate restructuring, GM is aiming to get "lean and mean." Assuming it stays in business, these cutbacks would leave the company with Chevrolet, Cadillac, Buick and GMC trucks.
But is four brands still too many? After all, GM's fiercest competitor, Toyota, does better with just three brands now.
So, no surprise some are questioning whether GM has cut enough. Does it really need Buick and GMC? Who's really buying these brands anyway?
Don't ask me why, but Buick is big in China. It's like how Jerry Lewis is huge in France. No one knows why. It just is. And the theory goes that if GM kills Buick in the U.S., the Chinese will want it less. And China figures big in GM's future.
GMC is another story. New ads for GMC are pitching the brand -- and I'm not kidding here -- as "the unofficial truck of America's infrastructure rebuilding." I used to work in the ad business. I never thought I would see the word infrastructure in TV ad copy.
Since GMC trucks and SUVs are really just Chevrolets with different paint colors and the GMC logo, what's the point? But so help me, there are a couple of hundred thousand consumers a year who, if you took GMC away, would not buy the same truck with the Chevy nameplate. They'd go to Ford, Dodge or Toyota.
So, the four-brand strategy at GM seems right to me. The important thing is this: These four parasite brands GM is cutting only hold about 3 percent of the market, but they're finally leaving the host body.
What GM has been trying to do for too long is spread its limited marketing and management attention across too many brands. It's been the equivalent of trying to stretch rations for four people to feed eight in a lifeboat. The result is malnourishment, sickness and eventual death for all. In other words, what you have at GM right now.
Ryssdal: David Kiley is the senior Detroit correspondent for Businessweek magazine.
Pontiac G8 GXP or Holden Commodore - possibly the best car GM has built in years (with the exception of the new ZR1). I have money on the GM turn around - unfortunately.... I was a little early. In the next 2 years GM will be the car that everyone buys.
I received the news that GM was killing the Pontiac and Saturn brands while driving home from work in my 10-year-old Saturn, a car that continues to look and drive as well as it did on the day I bought it.
Okay, so this leaves GM with four brands: Chevy and GMC Trucks, manufacturers of its SUV lines, and Buick and Cadillac, two brands that suggest images of Grandma and Grandpa cruising in their land-boats to Florida for the winter.
Now I understand why GM’s in the hole it’s in.
Lately, the hot Pontiacs have been nothing but Australian Chevies, with the exception of the 2 seater Pontiac Solstice, shared with...Saturn.
Remember when Saturn was supposed to be the "Good GM", to show the "bad GM" how things would be done in the future? If you want to see how it would work in the future, watch the history of Saturn.
I loved Pontiac, and Oldsmobile even more, which was finally going its own way. But, alas, GM's SOP went to work--as soon as they get any car right, they kill it.
Am I missing something? I see Pontiac G6s everywhere; the new G8 is the best performance sedan that can be had for around $30K and this is the brand that is dropped? I don't see many Buicks nor do I know of anyone who wants a Buick (except for the Enclave). Why didn't GM drop Buick? I was going to buy a G8 but I wouldn't go near ANY GM after this ridiculous decision!
Rumor alert - Silicon Valley Billionaires and VCs eye GM for parts…
(Menlo Park, CA) Combine a moribund IPO, housing, and startup market with idle capital and a large asset-laden American institution like General Motors valued at ONLY $1.3 Billion dollars and you have a recipe for something interesting. Rumors have started to float around the valley, an area populated by many people who could, themselves, buy GM out of their own bank accounts, that GM may make sense as an Icahn style break-up play with some technology leftover to add auto-innovation to the Silicon Valley start-up playbook.
For more details (including the financial analysis) see the article here:
http://invisiblerenters.com/2009/04/27/stripping-gm-for-parts/
For the life of me, I don't see how dropping the Pontiac brand is going to help GM one iota. As long as we have cheap gas, Joe Sixpack is going to look to GM for his cars - and to Pontiac for a 'performance' nameplate. Even as gas goes up, he'll be looking to GM to see how big and how fast he can go under the new rules, and under his new budget. He wouldn't buy a Prius if it were the last car on earth, and - by the same token - Ms Socially Responsible is going to buy a Toyota and wouldn't be caught dead in a Pontiac or Cadillac or anything GM.
Hello,
I drive a GMC van, the Savana. And I intend to buy another one. What troubles me about the GM brands is the Duplication. For example, the Savana Van (GMC), the Express Van (Chevy). It would make sense to take the trucks from Chevy and let Chevy concentrate on developing superb cars. And let GMC handle the trucks, which its good at.
Does GM need a Tahoe and a Yukon, a Suburban and a Yukon XL, etc.?
Think about the reduction in marketing expense. Think about the reduction in confusion.
I drive GMC trucks (vans in particular). Take the trucks from Chevy!!
Regards,
Daniel Brown
Either through deals or bankruptcy, I cannot think of a good reason why GM should not devolve into around four companies (GMAC not included, but it's a big question):
Toss Pontiac to the wolves. Then spin of Chevy+GMC, Caddillac, Buick, and hopefully Saturn to become freestanding. Whatever is left can be sold or allocated to the offspring. Why is this strategy never discussed? Is it that scary?
