Should GM Kill off Hummer, Buick and Pontiac?

[Klaus]

Dead brands walking

Now that it is Number Two, GM has to rethink its strategy, says Fortune's Alex Taylor.


By Alex Taylor III, Fortune senior writer
April 26 2007: 1:39 PM EDT
NEW YORK (Fortune) -- The news that Toyota has finally passed General Motors in global sales is about as surprising as John McCain finally announcing he's running for president. But now that it is officially Number Two, it is time for GM to perform some long-overdue surgery on its brand portfolio. Age has taken its toll, and GM is overdue for a face lift.
In some ways, GM (Charts, Fortune 500) is still built for the size it was 50 years ago. In the United States, GM's market share is half of what it used to be but it sells seven brands - two more than in its heyday. Toyota (Charts), by contrast, gets by with only three brands: Toyota, Lexus and Scion.
Despite its shrinking market share, GM has always argued that there is value in its broad brand portfolio. Consumers want choice, and having a variety of brands allows GM to segment the car market more finely than its competitors. If GM eliminates a brand, it fears losing long-time buyers.
But there is a big cost to maintaining all those nameplates. Buyers increasingly demand uniquely engineered models that are costly to develop. Multiple brands mean multiple expenditures for marketing, advertising and distribution. Still suffering from negative cash flow, GM simply has too many mouths to feed.
So GM should adopt a template similar to Toyota's. Keep Chevrolet where it is - the volume brand that is the heartbeat of America. Maintain Cadillac at the top of the market and expand its product offerings with derivatives of the popular CTS. And continue to use Saturn, with its dedicated dealer channel and loyal buyers, as the brand for import intenders.
Plenty of excess baggage remains. Here are my recommendations:

• It is past time to perform euthanasia on Buick. Successive waves of new models haven't moved the needle on sales and it is unlikely that the new Enclave crossover will make a big difference. For nostalgia buffs, the Buick brand can soldier on in China, where it is uniquely beloved.
• Pontiac should get the same treatment, though without the Asian escape hatch. Its boy-racer image is dated and GM's one-time excitement division has deteriorated into a regional blue-collar brand. In a world that increasingly is going green, there is little upside for its testosterone-laced pavement rippers.
• Whatever noble intentions GM had for Hummer, they have been permanently damaged by the greenhouse gas debate. Hummer should be sold to whomever winds up with Jeep after Chrysler is broken up. More Jeeps fall off the truck on the way to the dealer than Hummer sells in a week.
• Turn GMC into a commercial truck brand. As gasoline becomes more expensive, there won't be enough traffic in personal-use trucks for GMC to share with Chevy. There are lots of opportunities with huskier trucks that a player with GM's scale could exploit in the business-to-business market.
• Say goodbye to Saab. With its perpetually tiny volume and high-cost European manufacturing base, Saab has defied GM's efforts for nearly two decades to make it consistently profitable. The success of Japanese sport-luxury brands Infiniti and Acura has made Saab irrelevant.

GM has been down this road before when it killed Oldsmobile. Compensating Olds dealers was expensive but, in the end, nobody really missed the brand. Other U.S. manufacturers have some soul-searching to do, too. Ford (Charts, Fortune 500) needs to take a hard look at Mercury, and the Chrysler brand may not survive a change in ownership, now that Automotive News has disclosed that nearly half of Chrysler's sales go to fleets. Like Plymouth, DeSoto and Packard, these are nameplates for customers who scarcely exist any more
There may yet be a silver lining in this cloudy forecast. Detroit has mostly lost the baby boom generation, but may have an opportunity to capture their children. Analyst John Wolkonowicz of Global Insight is convinced that since these young Gen Y buyers will never shop the brands their parents did, they may boomerang back to domestic nameplates. What GM and the rest of Detroit have to do is clear out the dead brush and concentrate on brands that still have growth potential.
Toyota overtakes GM as top world auto maker
GM's subprime woes



Find this article at:
http://money.cnn.com/2007/04/25/news...ion=2007042611

[Desert Dan]

Keep Hummer, Chevy, Vette, Saturn and
Cadillac. And offer service and sales for these brands at all Chevy dealerships!

Dump:

• Buick
• Pontiac- Keep the GTO idea under the Chevy brand
• GMC Truck line (why make two vehicles that are competing with themselves)

Chrysler had Dodge and Plymouth and that didn't work

Kill Buick and Pontiac right away. Give Saturn 2 more years max to justify itself, history-to-date is pathetic.

Ford needs to make same decisions with Mercury and Lincoln.

[The Green Lantern]

I don't mind, I got my Green H3, that's all that matters to me!

[wpage]

and revive corvair, olds and other losers!

[jmsspratlin]

Originally Posted by Desert Dan

Keep Hummer, Chevy, Vette, Saturn and
Cadillac. And offer service and sales for these brands at all Chevy dealerships!

Dump:

• Buick
• Pontiac- Keep the GTO idea under the Chevy brand
• GMC Truck line (why make two vehicles that are competing with themselves)

Chrysler had Dodge and Plymouth and that didn't work

[RubHer Yellow Ducky]

Originally Posted by wpage

and revive corvair, olds and other losers!

and what was the matter with the MONZA SPYDER !!

[wpage]

Nothing

[Desert Dan]

They should also service all the GM vehicles at all GM dealerships.

It's crazy, there is a GMC dealer about a mile from the Chevy/Hummer dealer in my area.

[wpage]

People like choices however GM is only fooling itself with different labels on the the same vehicles like chevy colorado and gmc canyon

[Badace]

Originally Posted by wpage

People like choices however GM is only fooling itself with different labels on the the same vehicles like chevy colorado and gmc canyon

They have been doing that for as long as I have been alive. Some people will not buy chevy but will buy GMC. Some people look at Chevy as the Walmart brand and GMC as the Target (A step up). Kill Buick. Kill Pontiac. Kill Oldsmobile. (some of those may be dead all ready for all I know)But I can see the market for GMC. It is strictly SUV and pickups. Those buyers buy GMC because they are a step above Chevy but not quite Cadillac. As far as Hummer, It is a different Market and a different buyer. The people that buy a Hummer would probably buy a different Make than GM. (JEEP, BMW, Merceded, LAND Rover) (Some would buy a Tahoe too but you could do the same with Suburban and Tahoe. If there weren't a Suburban the Suburban buyers would buy Tahoe or Yukon or Expedition. Killing it off would be a drastic move.