Fortune writer calls for death of Buick, Pontiac, HUMMER, GMC and Saab
Now that GM is officially Number Two, many Monday morning quarterbacks are popping up to "help" the general right the ship. Count Alex Taylor III, Fortune's senior writer, among them. In an interesting article, Taylor outlines reasons why GM should cut loose the anchors of Buick, Pontiac, HUMMER, GMC and Saab in order to move forward and prosper. Reckoning that GM is too bloated with brands and capacity that were fine 50 years ago, Fortune says it's time to move on. Where GM has 7 brands, new Number One, Toyota, has just three. Toyota, Lexus and Scion seem to be good enough to cover most buyers' needs, argues Taylor. But GM maintains that cutting brands would be cutting buyers since there are too many loyalists in the fold. The argument is that people want choice and more brands allows more specific targeting of the audience. But Fortune argues that the cost of that level of specification is too high. Taylor proposes keeping Chevy as the Toyota-equivalent volume brand, expanding Cadillac's offerings to go head-to-head with Lexus, and keeping Saturn to compete with Scion in the import-minded segment.
GMC can go completely commercial, but the author sees no redeeming qualities in HUMMER, Pontiac, Buick, or Saab (he might want to check out Buick's prospects in other regions like China before he shrugs it off so easily). It seems like a pretty logical plan that just makes too much sense in an industry fueled by passion and huge egos. It miight make good business sense on the surface, but these are emotional decisions, too. Nobody likes seeing a brand die, especially ones with such heritage. Chrysler has had to do it a lot over the years and GM has had to do it recently with Oldsmobile, but killing off a brand does come with considerable expense, as well. Buying out dealers, losing brand loyalists, and shuffling/reducing your workforce will hit the bottom line hard, too. .
Click through the Read link for Taylor's argument in full.
[Source: Fortune]
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Reader Comments (Page 1 of 4)
Jay 3:41PM (4/26/2007)
Instead of killing off a bunch of brands, GM needs to better focus them to reduce product overlap. The Enclave/Outlook/Acadia are nice CUVs, but do they really need to add a Chevy version? If GMC and Cadillac are offering near-lux or luxury trucks, does Chevy really need high trimline packages on their trucks? They need to boil each brand down to its core elements and stop trying to offer full product lines in each brand that take sales away from each other and confuse customers. Efficient dealership set ups will ensure that customers can still have good access to a full line of GM vehicles, but instead of having them all in one brand, they can access them under different brands and make each brand more relevant. Pontiac doesn't need to sell SUVs if there's a GMC dealer next door, and Buick doesn't have to come up with an entry-level car if there's a Chevy dealer under the same roof, etc...
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Jro 3:48PM (4/26/2007)
This guy is a complete idiot! First he blanket bashes all European car in February (link below) but now he suggests cutting down GM?? GM's product diversity is what makes the company so appealing. I hate when "automotive journalists" write just cuz they can (cough cough... Dutch Mandel).
CNN Money article from 2-6-07 http://money.cnn.com/2007/02/02/news/companies/pluggedin_taylor_orphans.fortune/index.htm
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Chris 3:47PM (4/26/2007)
I've read the article in Fortune, and I would have to agree with Mr Taylor. I would hate to see the end of Pontiac, Hummer, Saab, Buick (at least here in the US), and GMC, but it makes perfect business sense.
How many different ways does the General sell the exact same vehicle with only minor cosmetic changes? When one figures in the cost for designing and manufacturing the different little changes, the marketing, the dealer network support, et al, it makes sense for GM to cut some underperforming weight? It could take the savings and apply it to making better cars all around.
Besides, the article does not mention GM's Australian or European operations.
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Mr. Oak 3:46PM (4/26/2007)
GM is Officially number two? for what, one week? What happens when GM unleashes all of their new models later this year, and retakes the lead from Toyota? Could it be that there are lots of GM customers that are waiting on the new Malibu or CTS and whatever new models they're waiting on?
Are Toyota's numbers that high for this quarter because fleet sales? are the Fleet sales numbers the same year round, or is there a 1st quarter spike then a levelling off for the rest of the year?
The CTS and malibu really needed to be a mid-year release. They need to get these cars into showrooms now, for the summer buying season.
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porker 3:46PM (4/26/2007)
Just what, exactly, is the benefit of having fewer brands? My Chevy truck was assembled at the Elkhart, Indiana, GMC truck facility, with an option code that identified it as a Chevrolet, and thus it was trimmed out appropriately. It would seem to me that one could capture more sales if one had more choices than one brand. Suppose you had had a bad expereince with the local Chevrolet dealer, but had an outstanding experience with the local Buick dealer. Would that affect your choice of vehicle? Darn right it would!
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Jay Evans 3:48PM (4/26/2007)
"Pontiac doesn't need to sell SUVs if there's a GMC dealer next door"
Uhhhh, Pontiac, Buick & GMC is one dealership now.
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BLS 3:51PM (4/26/2007)
I am not going to read the article. But...
What about Daihatsu, Hino, and now Toyota is going after Subraru via parent company Fuji? Scion is practically brand new. So, Toyota is actually adding brands. Lexus is not long-in-the-tooth.
All of GM's brands have some sort of history (except HUMMER). They may be neglected (Pontiac I am looking at you). But, americans haven't forgotten what they were (yet). Saab is a world wide brand. HUMMER is profitable (correct me if I am wrong). Buick has great service, reliability, and customer satisfaction. And if the new performance Pontiacs are more than mullet accessories then there is life yet. GMC is GM's second best selling brand.
I could go on. but I will leave it at that
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bmoredlj 3:54PM (4/26/2007)
Chevrolet would have overtaken Ford in numerous car categories long ago if it didn't have to compete with Pontiac and Olds for cars and GMC for trucks. Hummer is a niche brand; Saab is a niche brand; Buick...I hate to say it, but there's a place for Buick, even outside China. So if GM were to compromise with Fortune's demand to shed everything, I say the most expendable brands are GMC and Pontiac. The only Pontiac and GMC models not copying off of existing Chevys are the Solstice, Vibe, and Acadia, and all three can easily be transferred to Chevy, being very young model names - the rest is simply clones that serve no purpose. Do consumers really care about choice that's so skin deep, it's rarely more than a different grille? I doubt it. GM has nothing to lose. Emotions aside, the "Professional Grade" and "Exciting" thing to do would be to dump 'em.
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BOB 3:56PM (4/26/2007)
-- SMART ASS FORTUNE ARTICLE, with a few good points. He and Frank ignore that Toyota has a huge variety of similar models in Japan, similar to the Ford/Mercury or Chevy/Pontiac cousin cars.
MY VERSION:
HUMMER -- stupid idea, shxx can it
SAAB -- peddle it off
PONTIAC --Might have a chance, needs dynamic vehicles with a purpose, not necessarily made in the USA.
BUICK -- obviously destined to be a world brand made principally in China.
SATURN -- it looks like some life is coming back into the expensive flop they killed Olds for, so let's see.
CHEVY AND CADILLAC -- I agree, the only 2 certain brands. Chevys will end up being Chinese, I am afraid. Cadillac is getting stronger again, but will have a problem to live without sharing domestic factories, as the other brands go Import.
TRUCKS -- for the forseeable future, we need them, and they are better off made in here, but the health care cost/UAW thing wont go away.
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Bert 4:02PM (4/26/2007)
II smell a bit of plagiarism here. Canadas TSNs "Mototring 2007"s Jim Kenzie had the same thing to say in one of his recent rants, err. editorials.
Hozer, like take off, eh, and see the report at:
http://www.motoringtv.com/kenzie/ (2007 episode 8) and
http://video.motoringtv.com/video/kenzie/2007/jan6-kenzie-sm.mov
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Nick 4:02PM (4/26/2007)
In my eyes, GM's line-up should be as follows -
Chevrolet: Everyman's car, and of course the Corvette (though Corvette is really just it's own sub-brand now).
Pontiac: More performance-oriented vehicles, directed towards younger buyers or performance enthusiasts.
Cadillac: Luxury/performance-luxury
Saturn: Euro-mobiles
Buick: Keep it in China, kill it off in North America. Ever since the dealers voluntarily kept out the RWD Holdens, I don't see why they deserve to stay in the line-up here. Hell, you can get a CTS for essentially the same money as a Lucerne.
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Seminole 4:01PM (4/26/2007)
Taylor need to go do homework.
I see just as many GMC ute's on the road as I do Chevy. The Sierra and the Yukon sell good, and the Acadia is nice. Hummer is a specialized brand, and with the forthcoming H4, will just gain more buyers (Though I think the H3 needs a massive interior overhaul like they did to the H2). Buick is coming around again, and the Enclave is definitely the best of the new crossovers. Saab, well thats the only one I can see justified. Cadillac serves the same area as Saab, and I think the new 9.3 is ugly. They need to ditch the black body molding. As far as making Saturn compete against Scion he's even further off the mark. Anyone sat in a new Aura or a Outlook? Those are some dang nice vehicles. I drive a Volvo S40, and I would trade it in for a Aura in a heartbeat. No way can Scion even be mentioned in the same breath as Saturn. Toyota has some rough waters ahead of it. Look at there stock over the last couple of weeks. Down down down, not buy much but enough to screw my portfolio up. Now that they are #1 they are going to find out what it's like to be GM. The Tundra (Which I think is a beautiful truck) is just too expensive in my opinion, when a loaded extend cab is more than a loaded crew cab of either a Silverado or a F-150 theres a problem. Not to mention the inside of the Tundra looks a bit funky (I am in love with its exterior though.) Camry, good car, bland design. Whats up with the weird clear blue on the radio area of the center console? The new Highlander I like a lot but once again can get very expensive. But the ultimate sign of problems in the future is the Corolla. The new one should be coming out this year. Instead when Toyota saw the new Civic they had to go back to the drawing board completely. What does that say about a company? They had to swallow the losses of the millions and millions they had spent in developing the Corolla up to that point. Now we will be lucky to get one by 2009. At that point the Civic will have been out for 4 1/2 years. The 9th Gen Civic will be following within a year of the launch of the Corolla and will render it old again. Last but not least is the lack of a replacement for the Scion tC, the only truly desirable car in Scion's lineup. I'm not calling on Toyota to collapse, but they have some serious bugs they need to work out.
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Mr. Oak 4:02PM (4/26/2007)
"Pontiac doesn't need to sell SUVs if there's a GMC dealer next door,
-----------------------------------------------------
That where they need to be headed, condsolidate the dealerships under one roof. Make them GM Dealerships. Every GM dealership sells every GM brand, with Cadillac as the only standalone dealership. Even if it's on the same lot, but housed separately.
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BOB 4:03PM (4/26/2007)
--- EVERYONE PLS READ THE ARTICLE AND CLICK ON THE LINK TO THE IACOCCA INTERVIEW.
He states the obvious: that this year's UAW negotiations and the healthcare issue are crucial.
Ideally, the President of the United States would step in, and tell all the parties to get it fixed -- that is a perfect example of the leadership of the office. I suggest all car fans write to him and your Congresspeople now.
The obstacle: Union members vote, pharmaceutical companies, doctors, etc are big contributors. In other words, there is no reasonable obstacle, only a political one.
IT IS SERIOUS -- YOU CAN COUNT THE DOMESTIC IDUSTRY OUT IF WE DONT PUSH POLITICIANS TO MAKE IT WORK.
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Bebee 4:54PM (4/26/2007)
Personally, I do not think consumer and auto industry will miss anything if Chevy, GMC and Saab disappeared overnight.
I disagree with the list: I rather see Pontiac and Hummer survive, but Chevy go. Besides the Corvette, Chevy hasn't release a decent (or good looking vehicle for those looking for design) for decades. Instead of saving GM, we need to focus on compelling Toyota and Honda to re-hire the workforce.
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roadside observer 4:07PM (4/26/2007)
Someone tell me again - how many years does Mr. Taylor have running an automaker?
Armchair quarterbacking from the writer's desk is easy. Running an automaker is hard.
Perhaps Mr. Taylor should take a turn at being GM CEO before telling the current CEO how to run his business.
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Bryan 4:11PM (4/26/2007)
This is about the most ignorant thing I have heard all day.
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Jay 4:17PM (4/26/2007)
>> Uhhhh, Pontiac, Buick & GMC is one dealership now.
They're governed under the same umbrella, but there's no guarantee you'll find a GMC dealer next to a Pontiac dealer or in the same building. That's the case in a lot of places, but a quick Google Map search of my area shows several Pontiac dealers, GMC dealers, and Buick dealers independent of each other.
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Aaron 4:18PM (4/26/2007)
easy for that armchair retard to say. How much did it cost them to shut the doors on oldsmobile?
They would be out millions with closing dealers, suits etc..
Does this guy write for truthaboutcars?
lol..
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Jeff Banks 4:21PM (4/26/2007)
I don't think this guy plagurized anything. This idea has been kicking around for a while, even on autoblog.
My opinion?
GMC - kill
Buick - kill (just in America)
Saab - restructure (like Volvo's relation to Ford)
HUMMER - keep
Pontiac - keep (put it head to head with Acura)
Therein lies the problem...how do you get Pontiac/GMC/Buick dealers to keep some brands and stop carrying others? Theres no question GM needs some restructuring. Spending so much money to develop a bunch of mediocre cars does not make sense at all when you could be putting that same amount of money to develop one really good car.
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