By Ed Garsten
May 19, 2005

Only two of General Motors Corp.'s eight brands -- Chevrolet and Cadillac -- will remain full-line marques while the others will offer more limited product lines under a new strategy aimed at building sales, cutting costs and bolstering brand identity.

The move marks a shift away from GM's long-held philosophy that nearly every brand should offer a full array of cars, trucks and minivans, said Mark LaNeve, GM North America vice president of vehicle sales, service and marketing.

The automaker's goal is to clearly differentiate each of its brands and phase out cars and trucks that don't fit in with a brand or are too similar to other vehicles in GM's lineup.

"People say we have too many brands," LaNeve said in a recent interview. "We have too many brands if we try to do the same things with all the brands."

GM is revamping its sales and marketing strategy in an effort to reverse sliding sales and U.S. market share.

Analyst Jim Sanfilippo of AMCI Inc. in Bloomfield Hills said he believes the changes are necessary and could pay off for GM.

"It's like (GM Chairman and CEO) Rick Wagoner and LaNeve putting bricks and mortar back together while they're under fire," Sanfilippo said.

LaNeve said mass-market Chevrolet and premium Cadillac will be the two bookend brands, with each offering a broad product lineup.

In between, Buick, Pontiac, GMC, Saturn, Hummer and Saab will exist as "focus brands" with more limited portfolios.

That means, for example, GM could eliminate either the Buick Terraza or Pontiac Montana SV6 minivan -- which are similar to other GM minivans -- to concentrate on the brands' bread-and-butter vehicles.

Pontiac, GM's performance division, is dropping the Bonneville full-size car at the end of this model year and may see its product line further truncated.

GM is repositioning Saturn as a more upscale brand below Buick, leaving behind its past as a purveyor of plastic-clad compact cars.

"We've made this clear to the dealers," LaNeve said. "Chevy's got to compete heads-up with Ford and Toyota and all the mainstream parts of the market, and Cadillac needs to have everything it can to compete with BMW, Mercedes and Lexus. The other brands need to be tightly focused."

A key part of the strategy has been the ongoing transformation of Pontiac, Buick and GMC into a single sales channel where all three brands are sold at the same dealership. GM says the three brands complement each other and give customers myriad options.

About half of the GM dealers selling the three brands already have reconfigured their stores to sell all three, LaNeve said.

The effect, said David Cole, chairman of the Center for Automotive Research, is downsizing without eliminating brands as some analysts have predicted.

"What they're really doing is taking their divisions and shrinking their number in a de facto way," Cole said.

LaNeve said GM is also backing off big cash rebates that have helped elevate sales in recent years but undermined long-term brand equity.

The mantra now is "value" or "transaction pricing," where vehicles are priced closer to what consumers actually pay for the vehicle. That doesn't mean GM will abandon promotional deals that allow consumers to terminate leases early if they acquire another new GM model, or its current "Hot Button" contest in which GM is giving away 1,000 vehicles.

"We're going to be trying to hit much more compelling price points," LaNeve said. "We're clearly not going to go to the market as the incentive leader."

That sounds like a smart move to Detroit Cadillac dealer Doug Dalgleish Jr., who says "we need to try value pricing. We'll add more value to the vehicles."

Incentives such as cash rebates will be offered a more brand-by-brand and regional basis rather than sweeping one-size-fits-all programs.

A former collegiate middle linebacker, LaNeve has become a combination cheerleader and coach in urging GM's marketing team to come up with "big plays."

He recently bestowed the first "big play" football on Mark-Hans Richer, the Pontiac marketing director who came up with the idea of landing the Pontiac Solstice as the subject of a task on the reality show "The Apprentice."

"All of GM is being asked to think out of the box," Richer said.

Over the past month, LaNeve and Wagoner have met with about 2,500 dealers to discuss the new strategy.

"LaNeve is giving the dealers a clearer picture, telling them 'we know where we are, we know what we're doing and we know what to do,'" Sanfilippo said.

Dealers are weary and wary of the almost daily headlines detailing GM's financial challenges and speculation the company may be forced to drop an additional brand following the elimination of Oldsmobile.

GM lost $1.1 billion in the first quarter and has withdrawn earnings guidance for the rest of 2005.

Rochester Hills Pontiac-Buick dealer Russ Shelton said the combination of the new strategies and the arrival later this year of such products as the Pontiac Torrent SUV, the two-seat convertible Solstice and the Buick Lucerne signal that GM is in better shape than headlines indicate.

"It tells me I still sell the right franchises and the future is very bright for us," Shelton said.

By combining Pontiac, Buick and GMC into one channel, "we're hoping we'll have you as a customer for life," Shelton said.

The game plan is good news for members of Shelton's sales force who are fatigued with all of the bad news and are anxious to sell the new products.

"GM's made some positive moves," said Sue Farrell of Rochester Hills, who has sold cars at Shelton for eight years. "They're really working to redesign the vehicles and offering fresh products. I'm very optimistic."

Salesman Adam DeJans says some customers are sensing GM is on the ropes, and using that to their advantage.

"They're thinking: If GM wants to stay in business, they better cut me a deal," he said.

Springfield, Mo., dealer Lynn Thompson is being patient with LaNeve and the company. "It's sort of like a giant ship on the Mississippi River," he said. "You just can't turn it around. I know GM has to pull up its bootstraps."

Even as GM's U.S. market share languishes at historic lows, there is hope in the showrooms that upcoming products will pull the automaker out of its swoon.

"They've faced dilemmas like this in the past," said Ed Springs, sales manager at Suburban Cadillac-Buick-Hummer in Troy. "They're strong and they'll find a way."

 

Just wanted to say its nice to have you back on here posting so often It gives a lot of us hope that GM really IS listening

 

This sounds great all around.

The ONLY down side too it is that we will have less choices overall... but, if it means more differentiation, and better products at better prices... I am all for it.

I totally agree that it is odd to see Pontiac with a minivan... Buick with a "luxury" minivan that is 98% identical to the Chevy, Saturn, and Pontiac versions...

Hopefully this new found focus for Pontiac, Buick, etc will help the product.... and I think it will totally help their images.

 

We have stocked 4 Montanas since December. I'm embarrassed to report not ONE has sold, and leads on them are few and far between. The stupid things just DON'T seem to attract anyone. As a Pontiac dealer, I have zero problem with giving up the Montana...I will miss the Bonnie, but don't take issue with it taking off. We've had luck moving loyal buyers to GPs...Bonnies were getting too expensive anyway.

What kills me is NO COBALT FOR PONTIAC. Sunfires are an embarrassment to Pontiac. We don't even stock them. They're a complete joke, and make us look bad. Imagine a dealer saying that about a line they offer!!!!!!!!!!! A restyled Cobalt with the 2.4 as the standard engine and the supercharged 2.0 offered in the upper-level models would be a HUGE advantage to Pontiac against cars like the Mazda 3 and Jetta...its a shame.

 

I'm as big a critic of GM's mishandling of their "new" minivans as anyone, but I gotta say I see a lot of them on the roads around here. Maybe it's just because I tend to travel in Big 3 country, and GM country in particular, more than I do in the real world.

We have the nice little Pursuits up here

 

This is good news. I'd still like to see Pontiac and Buick as car-only if they're going to be closely tied with a truck, SUV and van only line - GMC.

 

With regards to the article posted above, it's definitely the right thing to do IMHO. The only thing is, GM is going to have to suffer through some short-term pain before realizing the benefits.

- No incentives is going to turn off buyers, even if the MSRPs drop by the same amount. People are used to getting a deal and will hold out, just like they've held out at the introduction of almost every recent GM vehicle. Let's see who blinks first.

- Reduced model overlap means there will be lost sales from people who are loyal to only one GM division, e.g. would only ever buy a Pontiac. When there's no more Montana, they might decide to go look at Hondas. This can be especially bad in cities with only one GM marque, at least until the dealerships combine.

- I'm not sure Saturn can, or should, try to go upmarket. You can't just arbitrarily decide to go upmarket; you have to earn it, and you have to have the reputation. The Sky and Aura look to be winners, but Saturn sure doesn't have the reputation to go upmarket. What's wrong with their initial mission: grab the young import buyers? A Scion fighter would be perfect, and fit in with what people currently think of Saturn. Besides, if Saturn doesn't chase that market for GM, which division is going after the young import-intenders? Like it or not, Chevrolet is not taken seriously in that market.

- The comment in the article about waiting for a raft of new products to save GM sounds awfully familiar. We've basically heard the exact same thing for as long as I can remember. And each time they also say "it's different this time". We'll see.

Let's hope the GM has the nerve to continue riding out this rough period in their history because things will likely get worse before they get better. As much as I think this is the right strategy, they've got some rough waters ahead before things improve.

 

I also wonder how many plants will be closed due to this re-alignment?

All in all I totally agree with this shift though.....no pain, no gain......

 

They want to make saturn up scale? I thought saturn was supposed to compete with honda? They should have just cut saturn entirely. Its styleing is about as attractive as oldsmobiles was. I cant possibly see how you cant take an economy car division and bring it up to buick/lexus level. Could this be a trend of GM shying away from affordable cars?

 

I disagree. They're trying to hang on to their loyal Saturn customers. You know, the folks that bought Saturns because they were affordable and who have loved the whole "Saturn Experience". Now they're a few years older and have a little more money in their pocket. So rather than lose them to BMW, Lexus, etc... they can offer up an upscale Saturn for their customers who love everything about Saturn but want a more mature (and more expensive) vehicle. It's brilliant IMO.

Cobalt will force people to take notice of Chevrolet. Chevy will be the "affordable" brand and vehicles like the Cobalt will capture the youth market. Just wait... you'll see.

 

I could definitly see Saturn going more for a scion contender. especially if a lot of their cars take on a Red Line version. I'm not a big fan of scion myself, but i do see quite a bit of those tC's around, i really hope the re-alignment works for GM.

They definitly have the potential to "get back in the game" with great vehicles, and street cred (which is on the most basic level, word of mouth advertising)

I've only had my camaro for a few weeks, and I've recieved more compliments on it then i did in 3 1/2 years of ownership of my celica. Hopefully other cars in the GM lineup will start getting praise like that if GM gets their affairs in order.

 

If Pontiac really is going to be pure performance, when are they need to get something besides the GTO out there fast. The supercharged Solstice is not enough. Looking at it in this light, it almost makes more sense to bring back a Firebird and not a Camaro.

 

Wow, those moves are going to pay off well for GM. I'm glad that they have listened and are actually doing something real to change the perception in the market. It's actually right along the lines of what I think GM needs to do. The only one I have hesitation with is Saturn. It might be hard to bring that brand upscale. One way I see doing it is do make one FANTASTIC uplevel vehicle and put the Saturn name on it. It will need to be a special vehicle that draws a lot of good press in order to swing people's predispositions of Saturn.

Jason E, to answer the question on why the Montana's don't sell well, it's because they are more expensive than the Venture, but are virtually identical except for the looks. I believe this is exactly what people complain about with GM. Too many nearly identical vehicles at multiple brands, but at different prices. We bought a Venture back in 2001, and even though I liked the looks of the Montana a little better, the Chevy was less expensive and offered everything we wanted. By the way, the Venture has been an incredible vehicle. Hat's off to GM. It has not had to go in for service ever, and has around 50k miles. The only thing I've ever had to do are oil changes and wiper fluid. It gets great gas milage and hauls people extrememly well even when fully loaded down.

Dan

 

i don't know what i'm going to do now that i can't go and look at the exact same minivan at pontiac, chevrolet, saturn, and whatever hell else brands they sold it as. the world is comming to an end!



but in the meantime, its about time GM took its head slightly out of its ****

 

I'm all for these changes. If this is going to be carried out, then that is probably why we have not seen too many changes recently. The old model must be phased out and that will depend on how long current model runs have left. The Zarella plans must finally be fully extinguished before pure Wagoner plans can be executred.

As we've discussed before:
-Chevy just needs to get rid of its older platforms (W, GMT-800) and fully embrace RWD and GMT-900 to have a full visual transformation.
-Cadillac is doing awesome and I love seeing STS's everywhere on the road like I do now.
-Pontiac should move more upscale and while sharing the platforms of many Chevy cars, offer sportier engine/tranny/wheel combos to become more like a Mazda or a Nissan competitor. I imagine them as priced higher than a Chevy but you get more sport out of it.
-Saturn I agree with on going upscale. Saturn buyers are very loyal and they do have more money to spend now that they're older. They should move more towards the yuppie look and feel of a Volkswagen. It should be something every cheerleader, sorrority girl, and city-dwelling trendy guy should want.
-Buick should not focus on engine but the overall interior and quietness of the ride. It should be your living room leather sofa in a soundproof box. This is the Lexus of GM.
-GMC and Saab I'm not really sure about, but there should be a role for them too.