This is a bit of a departure for this blog, but being a Detroiter, I have some issues with an article written on GM’s strategy:
The article notes a few items:
1) Kill Buick:
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.
My response:
This is a bit of a tough call. But the author’s attitude is that somehow China’s like of the Buick brand is quaint and doesn’t need to be taken as a strategic imperative for GM. The reality is that Buick is the biggest luxury brand in China. China’s the future for GM. So weather you care to see it in the U.S. (and apparently you haven’t been to Detroit lately because they’re everywhere), it still is going to be on the forefront of GM’s brand strategy. The verdict is that Buick HAS to stay and GM needs to put in a few Billion to revive the brand. Further, the Chinese should be the ones to revive the design styling for this brand. Wouldn’t that be interesting….
2) Kill Pontiac:
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.
My response:
While I don’t disagree with the thought of killing Pontiac (although it hurts me to say it), the author’s premise is wrong. Apparently, he doesn’t know of the underground racing movement that has developed in major cities around the world. The Fast and the Furious movies are based on this movement. Pontiac has been noticeably absent from this movement and Honda’s Civic has been the central character. Toyota’s Scion brand attempts to tap into this demographic – cheap, highly customizable cars. Pontiac could also be relevant to this demographic, but could not be a big cost for GM. This is a bit of a decision for GM, but Pontiac could be redeveloped into something relevant.
3) Kill Hummer:
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.
My response: This might be right. It was fun while it lasted. They’re great trucks, but at this juncture they’re a novelty. Hummer *could* be a great brand opportunity for GM down the road. The value here can be gained not on the brand side, but on the operations side. Meaning GM needs to be able to have such a flexible manufacturing process that they can throw in the occasional hummer (just as Toyota does in Japan where they can make a Prius on the same line as one of their minivans or Civics). Their distribution model should still hold and create value for GM – even in low volumes. Hummer will be more relevant, however, if they can use it as a test-bed for making alternative fuel technology that provides high horsepower.
4) Kill GMC:
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.
My response:
GMC is a bit of a strange duck. I mostly agree with this thought. However, there is a market for high-level power-trucks. These would compete with the Ford F250 and up series. But they don’t get the benefit of the brand overlap that Ford enjoys. The F-series is the entry level super-duty truck (even though it’s not really). The Silverado holds this post for Chevy. How do they get the overlap? Do they need it? Ford’s brand strategy isn’t actually worth copying in some respects. So this is a tough one. The real problem lies in Chevy’s relevance as a brand (more on that below).
5) Kill Saab:
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.
My response: I agree. It’s a good brand, but it’s not worth it. It’s not clear to me that it’s even relevant in Europe anymore. Saturn and Opel have become more relevant from a design standpoint and they can continue to push their current design direction.
6) Keep Chevy:
I agree that Chevy should be kept. But this brand has lots is design direction. Chevy actually has some interesting cars, but they’re not coordinated in any way. This brand needs to be refocused to compete with Honda. The Silverado is great. The new Impala is good on paper, but lacks the visual appeal that the Accord has. It’s also traditionally a muscle car which isn’t really in-line with the recent developments. The Malibu is a stupid name, but an okay car. The Cobalt isn’t so terrible, but no one would buy one over a Civic (even though a Cobalt would kill a Civic in a race – as though that mattered).
But most notably, the Saturn line has become much more relavent as a brand than Chevy – a crazy development if you think about it. In fact, it’s not clear that the current batch of Chevies should be kept in light of the great path that Saturn is going down. This is a difficult delimma that GM needs to focus on immediately.
Car Tech: Step it up
GM needs to also re-invest in Car Tech. All this horsepower doesn’t help much when you’re in traffic. But car tech is making the time pass. OnStart is a great. Ipod adapters are a good start. But let’s stop playing around – the future is going to be a full UMPC with both WiFi and cellular broadband capabilities. They’re still messing around with DVD-based mapping systems that aren’t even better than Google Maps. Can you imagine a fully capable, broadband PC in your car? That’s the next big thing.
Nuff said. Back to biofuels….
