Filed under: Convertibles, Coupes, Sedans/Saloons, Plants/Manufacturing, Chevrolet, GM, Saab, Earnings/Financials
GM plans to axe $1 billion out of mid-size car budget
General Motors says it will eliminate $1 billion from its spending on mid-size cars by sharing more parts, designs and factories to get 'er done. If this involves a little process called "badge engineering," we urge GM to beware of the inevitable onslaught of negative comments following this post.
Ahem. The platform used for the Chevrolet Malibu, for example, will be shared with Saab convertibles among the plants in North America, Europe and elsewhere. The idea is part of a larger plan to get the General, which lost buku bucks last year (try $10.6 billion), back to profitability as competitors such as Toyota Motor Company suck market share away from them. GM Chairman and CEO Rick Wagoner plans to reduce annualized spending by a total of $9 billion by the end of this year.
[Source: Bloomberg]
Reader Comments (Page 1 of 3)
JZeke 7:06AM (8/09/2006)
You know, it would be easier to avoid "badge engineering" by just dropping some unwanted brands...
But that would be to obvious, wouldnt it?
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ron 7:24AM (8/09/2006)
Platform sharing is fine; blatent "badge engineering" (Colbalt/G5 for example) is not! I believe most people could car less if the Impala and the Lucerne are the same under the skin as long is that skin is marketly different between the 2 vehicles and the perception is that these are indeed different cars.
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ron 7:25AM (8/09/2006)
Correction to previous post -
"could care less"
Sorry, it's early here!
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Buckus 7:27AM (8/09/2006)
I believe you meant "Beaucoup" bucks. But, yeah, GM needs to do something. Toyota shares lots of platforms and makes beaucoup bucks, GM needs to cut the fat.
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Steve B. 7:32AM (8/09/2006)
Ron: It must be early... I think you mean that they COULDN'T care less. After all, if they could care less, they obviously do care somewhat!
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EGS 7:34AM (8/09/2006)
looks like GM will be back to trying to pass sh!t for shinola.
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Stphane Dumas 7:42AM (8/09/2006)
I wonder if Toyota and Honda might have some voodoo dolls with the GM logo on it hidden somewhere in their office and playing with it in their free time? LOL :-D
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Rob 7:54AM (8/09/2006)
i agree that platform sharing is acceptable...but not badge engineering. and i think its sad they're taking that money out of the mid-size car budget and not from the budget for their big SUVs.
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Howard Kerr 8:01AM (8/09/2006)
Interesting... In other media outlets the headline reads
"GM to SAVE about $1 billion on next mid-size sedan's development"
Ms. Mays headline makes it sound as though GM was planning on spending X billions on this car but for whatever reason decided to cut the budget and go with WHATEVER results from that cut.
When I read this YESTERDAY on carconnection.com my reaction then was.........DUH. GM will FINALLY try to save some money by employing various groups with the needed expertise, from within the global reach of it's company? Like, GM before just gave any group at Chevy the go-ahead to design the Malibu, but NOW, they figured they might want to use engine, powertrain, suspension and exterior/interior designers that just might work for other parts of GM...like Holden or Opel because they might be experts AND might be able to do a better and or cheaper job?
No wonder this company has problems.
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jerry weber 8:01AM (8/09/2006)
Look, Saab for 60 years in America had a loyal band of quirky buyers who bought the things because they were different style,ignition on floor etc.They paid more than for a chevy because to them it was worth it. They are generally and educated upper tier group who has already noticed the difference in Saab and has voted with their feet. (check the sales) Why not just kill the brand the up front way?
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Finished.Law.School 8:04AM (8/09/2006)
GM will NEVER stop nor reduce badge engineering.
It is inbred into GM like UAW workers are inbred...
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Dr. Woo 8:11AM (8/09/2006)
There isn't a damn thing wrong with platform sharing. Almost all successful companies do it. It's accepted practice. Look at the Ford Focus (EU) and Volvo S40. Same platform, two VERY different executions.
But badge-engineering...that's a different beast. The present-day foursome of failure (Terraza, Uplander, SV6, Relay) is a perfect example of badge-engineering at its worst.
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dreesemonkey 8:22AM (8/09/2006)
Just what GM needs, less money/development to their already bland cars. Drop / restructure the boring brands (Pontiac, Buick, Saab) and invest those savings in R&D and then make BETTER cars. You know, just a thought.
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Antrow 8:22AM (8/09/2006)
I thought that just a couple of years back GM said it would no longer practice badge engineering and would instead focus on create unique identities for each of its brands. Oh well, anyone that works in the corporate world knows this is typical executive hot air and back tracking. Instead of treating and healing a corporate wound they just keep tacking on different colored band-aids. I guess GM is now in “crisis” mode.
This news will not bode well for the next generation Saab 9-5. Will GM graft a Saab front end on a Saturn or something like a Chevy Impala for the next 9-5?
I can’t even think about it.
GM has had years to put out a Prius like product and to create some more striking designs in their high volume cars. Although some of the recent interior work is a good start, it is too little too late.
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Glancing Aft 8:22AM (8/09/2006)
with the way gas prices are going it make sooo much sence to cut the budgets on mid sized cars.... Way to f'up again GM....
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Finished.Law.School 8:26AM (8/09/2006)
"with the way gas prices are going it make sooo much sence to cut the budgets on mid sized cars.... Way to f'up again GM...."
What, you did not by chance expect a smart decision from GM did you??
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Rev Rick 8:33AM (8/09/2006)
As I understand it this will not envolve re-badging in the USA. What GM will be doing is sharing underbodies with Holden and other GM owned brands in Europe and elsewhere. The new Holden SS will be brought to the US given new sheet medal and sold as a Pontiac Gran Prix. The same body will be used for the new Impala but with intirely new sheet medal. Some of the european and aussie interiors will be used as is(modified for US driving)in American products, but there will be no re-badging as with the Cobalt and G-5. The is more in the vein of what has been done with the new Saturn line-up, they will be taking advantage of Global engineering to better the GM US offerings.
I believe I have heard some of the posters on this blog as why doesn't GM bring certain products over here. Well now guys and gals that is what is going to happen. GM will be selling more of those bodies worldwide, but they will be called something beside Holden, maybe Malibu, or Caprice.
I believe it will make for some very interesting product offerings from GM, this could be exciting to watch. No more stale styling or old ideas, I believe the gloves are off, so to speak.
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Richard Warren 8:34AM (8/09/2006)
If they are considering platform VS badge, then it could work out just fine. If they go they way they did ,grille and tailght differences with the exact same body, then it's a huge mistake.
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mr.ed 8:44AM (8/09/2006)
A few ways to save: Eliminate four of the seven layers of management. Kill the brands dragging down the company, such as Buick and Pontiac. Drop ancient pushrod engines for efficient types offered by virtually everybody else (value produces sales). Stop paying bonuses when losing money. Bloomfield Hills, etc. will survive. Gouge out the eyes of the product planners who okay outdated or bizarre stuff such as the Malibu or Ion.
There's lots more. But expect less from such an inbred lot, each trying to cover their turf and their behinds.
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Alex Nunez 8:45AM (8/09/2006)
GM has shown that it can do "good" badge engineering with Cobalt/HHR, two cars that have distinctly different looks and appeals. If they can get this right and save money in the process, bully for them.
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