Merge The Brands!

09-08-2004

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Merge The Brands!
Editorial by Ming
GMInsidenews.com



"Merge the brands" The idea is nothing new. GM currently has a manager of Pontiac-Buick-GMC. But GM continues to try and make every brand capable of standing alone - giving Buick the Rainier, for instance, while GMC has a very similar vehicle in the Envoy, or giving Pontiac the Montana SV6 when Buick is also getting the Terraza. By playing to the demands of single-brand Buick / Pontiac and GMC dealerships and attempting to round out each portfolio, GM is adding more complexity that doesn't need to be there. Complexity adds cost - and time. While the Grand Prix got a redesign, the Lacrosse took longer to work out - and the Impala sat on the back burner. Someone will point to increased sales for Buick for its Rainier - but at what cost? What happens when the Envoy and Rainier need to be redesigned? Toyota, Honda, and Nissan with their 2-3 brands each can afford to put much more R&D into each vehicle than GM with its ever bloating portfolio. And according to often quoted sources around the web, Toyota and Nissan already spend a larger percentage of revenue on R&D than GM. How can GM spend less, and continue its quest of having a fully rounded brand for each dealership showroom? Answer - they can't, not without producing Badge Engineered product like the CSVs. The death of Oldsmobile was supposed to eliminate wasted expenditures, or so I thought, but now we see Oldsmobiles popping up in other brands - each demanding its own attention, time and resources.

I say simplify the lineups, but pull the brands together. Make it a mandatory thing, and if individual brand dealers don't like it, they have a choice - adopt another "Partner brand", or face having a sparse, dedicated lineup. There should be no individual brand managers pushing for more product and more of the same offered in partner brands (Montana SV6, Rainier). They should only push for the uniqueness of each individual brand - and QUALITY over QUANTITY.

What does this "Partner Brand" ("As my partner, you complete me") strategy accomplish? For one, it allows dealerships to have a full line-up, without each individual brand needing to have one of every type of vehicle in all segments. Pontiac has no trucks or large SUVs, but GMC provides them. Buick and GMC have no sporty cars, but Pontiac provides them. GMC and Pontiac have no cushy luxury cars, but Buick provides them. Cadillac has no compact-sized car, but Saab provides one (9-2x). The benefit is that GM does not have to spend millions of dollars restyling 5 different versions of each vehicle they make, and get blasted by the press for "badge engineering". It allows GM the opportunity to spend more on each vehicle and make them the best suited to each brand they represent. In addtion, with less models, instead of making 3 models of Bonneville, GM can axe the Bonnie and make a luxury-appointed version of the nearly same sized G8 (Grand Prix) - giving the appearance that it didn't lose as much, and playing to the segment that might still want something like the Bonneville GXP. But if they want a large, plush sedan like the base Bonneville, head next door (literally) to the Buick showroom.

Consider Saab. GM is trying to save the brand by giving it the 9-2x, and the 9-7x. While the 9-2x is suitable for Saab's brand character, the 9-7x is a well disguised Trailblazer with the same powertrain as a Chevy. If Saab was "partnered" to Cadillac, the 9-2x would still make sense, but the 9-7x wouldn't. If you want an SUV in that general price range, get a Cadillac SRX, or an Escalade in the showroom next door. The 9-2x would also preclude the need to have a Cadillac even further down market than the CTS. Here, GM saves money by not developing the 9-7x, and potentially saves money for Cadillac with the 9-2x.

The hard and fast rule to save GM money and time? No duplicate or too-similar product within Partner Brands - brands that cover and compliment one another.

"Partner Brands": (other possibilities are equally acceptable, if they follow the rule of non-duplication and compliment each other)

Cadillac, Hummer, Saab

Pontiac, Buick, GMC

Chevrolet (True stand alone brand, but can add all of the above except Buick, GMC - possibly Saturn)

Saturn- requires own showroom, salespeople, but can partner with any of the above.

1. GM makes it easier for stand-alone dealerships to add another brand to diversify their product portfolio.

2. GM does not allow or encourage new dealerships to break from the pattern above

Brands:

Chevrolet - Value priced vehicles covering every vehicle type. Emphasis on volume sales. Sporty models do not match or surpass Pontiac's performance (Corvette excluded), but are priced lower.
HUMMER - Off-Road capable SUVs / SUTs - limited to H1, H2, H3. Several variants of each. Fuel efficient diesel engine a must for H2.
Saab - Euro-feel entry lux, small-displacement turbocharged engines. Replace 9-7's OHV V8 engine with 300+ HP Turbocharged Inline-5 and a transmission with more gears.
Pontiac - Sporty sedans, wagons, coupes - mix of engines and platforms from other GM brands tuned for performance and priced affordably. Manual transmissions standard.
Buick - Big, American entry-lux sedans and medium sized SUVs and crossovers, emphasis on heritage, quality, quiet, and comfort. One or two flashy designs that harken back to Buick's styling glory days of the 1940's & 50's.
GMC - Trucks and SUVs with an emphasis on new technology, upscale trim. Emphasis on resale value with more standard amenities/features, slightly higher pricing, and lower rebates than Chevy trucks.
Saturn - Opel designed vehicles, entry level Euro-feel. Attempts to directly compete with the leading Import brands -- no OHV engines, no 4-speed transmissions (only allowed on lowest level entry vehicle), no column mounted shifters. More VVT, Turbocharging (less supercharging), HID headlights, Hybrid engine technology, 6-speed manual transmissions. Saturn is the odd brand out. It must not attempt to make a full lineup, but needs its own showroom because of its unique sales strategy.

Eliminate: (Some of this has already come to pass since I wrote this in 2004)

Cadillac: None
HUMMER: None
Saab: 9-7x, unless it is made more like a Saab (no trucky V8s).
Pontiac: Bonneville, Sunfire, Aztek, Montana (Add Solstice and Lux-level G8)
Buick: Rainier
GMC: Near identical pricing and packaging with Chevy trucks.
Saturn: Relay (unless given a much more suitable powertrain)


This simplification is absolutely needed to hold back the tide of better competiton. Consider this (SOURCE):


Quote:
Merrill Lynch auto analyst John Casesa expects Ford and GM will continue trailing Japanese, Korean and European automakers in replenishing their model lineups.

Over the next four years, Casesa estimates GM and Ford will replace 66 percent of the vehicles they sell, compared with a 93 percent replacement rate at Toyota, a 99 percent rate at Honda and a 141 percent rate for the Korean carmakers.


GM cannot continue the trend of going from brand to brand, infusing hundreds of millions in each, then moving on to the next brand. It worked for Cadillac, but how many brands are left in the GM lineup before GM can return to once again focus on Cadillac? Having less brand divisions might allow GM to match the short redesign cycles of the top Japanese automakers, instead of revamping each brand every decade or so.

My plan potentially cuts the number of "divisions" in half (From 8 to 4), and doubles the effect of GM's research and development. That has to be a good thing, and I hope that GM considers it.