HAZ-mat challenged me to come up with reccomended therapy for GM after I made a 'diagnosis & prognosis' on what was wrong with GM. In another thread, Pacerx pointed out that GM has an advantage over other automakers because of economies to scale. I've found that the best way to solve a big problem is to start with an extreme solution, then work your way down till you get to something practical. So, I'm going extreme on this. Things will get practical later.



GM by it's very size has the advantage of economies to scale. However, a smaller company like Ford can make up a substantial portion of that advantage in other ways, such as in marketing.

If Ford creates a specific car, that car is inherently going to outsell any version GM comes up with and make more money per car.

How? Via money saved in marketing. Ford doesn't have to finance multiple sheetmetal stampings for a single chassis & neither do they have to support marketing of multiple divisions and their support staff the way GM does.

Think of the chain of command for, say, Buick. Buick's entire division is currently being outsold by the Chrysler 300 (or Ford's Mustang) alone. Yet, Buick likely has a chain of command of marketers, managers, and executives that is very close to what exists in all of Chrysler.

Ford also has fewer dealers, meaning that not only is an individual dealer making more money because he's moving more cars per dealer, but he's also moving more models in a particular market.

Taurus is still moving 300,000 cars per year. Focus is doint about 200,000. Mustangs were bouncing between 150-180,000. Crown Vics (which is almost pure profit) is still selling at new Pontiac Grand Prix levels.

Ford and Chrysler, when run right & has good products, can easily equal GM in earnings (both have periodically outearned GM, even when GM was in great shape).

That's why GM is sooooooooo painfully cost conscious (cheap) when it comes to it's money, while it seems Ford & Chrysler can come out with more new or coll stuff.

GM tried to fix this somewhat when they combined divisions starting in the early 70s. Fixing this was also the idea behind brand management of the 1990s. This was also the reason why Oldsmobile was killed off earlier this year.

GM can fix itself, but alot of longtime fans won't like it. It involves killing off and combining divisions.

Cadillac and Chevrolet are GM's money makers. GM also needs a division in between the 2. And no more.

Why does GM need Pontiac? It's cars can be sold by Chevrolet & Buick. GM doesn't need Saturn either. It's cars overlap with Chevrolet. GMC? Outside of a rebadged Chevrolet, name the differences. Today's buyer isn't brand loyal (save enthusiasts, which are actually a small percentage of actual buyers).

GM simply needs 3 divisions:

1. A high volume & performance division: This covers everything from Aveos to Corvettes. A car that bridges the gap between the Grand Prix & Impala or G6 and Malibu. It eliminates the "boring" Chevrolet sedan designs, and instead of relying on "halo" cars to bring excitement, Chevy has a stylish carline with value instead of them being mutually exclusive.

2. A near-luxury & sporty division: This would be the "Lexus" division. This would be the divisiopn that would have cars from the Park Avenue-current Caddilac DTS to the current GTO. Eye catching interiors with understated but attractive exteriors.

3. A full Luxury & exotic division: The direction Cadillac seems to be going. A division that is on par with other recognized luxury cars, from mid level BMWs to Bentleys. This line would be sold worldwide through Opel Dealers in Europe, Vauxhall dealers in England, and Holden dealers in Australia and the far east.


Dealers who sold Saturn, GMC, & Pontiac would be folded in with Chevrolet or Buick. The bottom 10% of dealers in customer service would be dropped, beefing up the volume of those that continued, also increasing the earnings of the remaining dealers and the number of regional service representatives.

GM's marketing costs would be slashed by over a 3rd. GM's manufacturing & design costs would be cut by massive amounts. Fewer dealers would move more cars. And finally, volume would be marginally effected, so GM would still be moving massive numbers.

Due to what amounts to draconian cuts in overhead costs, GM's will increase income, development & production costs will plumment, overlap will be eliminated, and the volume on the cars remaining will skyrocket.

 

You might not be far of Guy. Example, the local Cadillac dealer here recently bought out the local Chevrolet/Buick dealer. He now sells Cadillacs and Chevies. (Buick was dropped completely.)

I'm guessing that the economy had something to do with it and they figured they needed the lower cost/higher volume sales Chevrolet has to offer to match his sales of Caddies (higher cost/lower volume).

One question on your model though... trucks? I can see models fitting into all three categories. Does that mean all three will continue to sell them?

 

I think Pontiac would be the brand to keep...and mesh it with products from a killed off Buick and Saturn.


Also GMC is not needed.

 

What about Hummer?

I pretty much completely agree with what you are saying and have often wondered what the point of Saturn and GMC were. the only thing i could think of for GMC is a mid luxury SUV/truck between Chevy and Caddy but i still dont think they are all that important, especially with buick getting into the SUV game... and now SAAB too.

 

I'm all for different brands, within reason.

More to chose from, more styling themes.

The only exception could be GMC, but, since GMC is GM's 2nd best selling brand, I don't see a reason to shut them down.

See, in the real world, A LOT of people have NO CLUE that Chevy and GMC are the same trucks... or the same company.

So, let's say someone has a bad experience with a Chevy, well, they may go out and buy a GMC thinking it's better... in the end, GM still gets the business.

Anyway, I think as long as the divisions have their own identities, the system works. How many Pontiac buyer really would consider a Buick? Very few.

 

Here's something that'd be interesting to know, but would take a little bit of research.

What happened to Chrylser's overall sales numbers when Plymouth was dropped? Did they go up, or did dropping Plymouth cost Chrylser volume?

What about Oldsmobile? Has Buick sales increased to compensate for all the Olds volume that was lost? What about GM as a whole?

 

I don't think GMC has the loyaty that Chevy or Ford does. I mean how many GMC buyers do you think would just buy an uplevel Chevy (assuming one exists) if there was no GMC?

 

I would tend to agree that GMC does not have the loyalty base that Chevy or Ford has, though I don't have any numbers to back it up... but it certainly sounds like that would be true..

I think it is somewhat unsafe, though, to assume that all or even the majority of GMC buyers would automatically roll over to Chevys though... they may shop the market at that point, and then look at Dodge, Ford, etc... you could lose a lot of volume by doing this.

Plus, by closing down GMC, you take all of your trucks and SUV's out of all of those dealerships... shutting down your number 2 volume brand, and their dealerships, when they sell your most profitable vehciles (trucks and SUV's) has got to be a questionable idea.

 

Wow.... Hmmm, I don't see GM doing anything this radical any time soon. I agree wholeheartedly on Saturn and GMC. Their existence alone could easily and quite logically, be absorbed by Chevrolet and Chevy Truck. Until fairly recently, I never really saw any reasons for GMC's existence, since all that really separated them from Chevy was a grille badge and a modest increase in cost. At least now there is some, but not much, differentiation between them. What exactly is it that makes GMC "professional grade" over and above Chevy trucks?

All in all, I think this re-organization is still in line with Sloan's original approach although you are trimming the number of divisions (not that divisions haven't come and gone before). It still covers all his prescribed bases of a vehicle for everyone, at every stage of their life through a vertically successive and integrated structure. So the basic spirit of GM's original raison d'etre is indeed preserved albeit, stripped down and dirty.

I am assuming that Cadillac becoming a cash centre is somewhat relatively recent since I was under the impression that Buick and Chevrolet were traditionally the cash generating centres for the General. Although the flipping of Buick probably isn't that big a stretch given the division's slide into obscurity, made all the much more apparent by the demise of Olds.

It is true that many marketing and other redundant posts exist solely because of the very existence of said divisions but are they equally spread out? Back in the day when GM ruled the roost, Chevrolet sold 1 of every 2 cars sold in the US. At that time Chevrolet's organization was huge. Much larger than all the of the divisions combined let alone Chrysler, Ford, AMC et all. Is the lopsided balance still there, or has GM through it's (many) reorganizations levelled the field any internally?

I only mention this because one of the things that has disappeared is the previous existence of division specific engines, which gave the divisions a degree of differentiation from stablemates that sadly, isn't there any more. So powertrain engineers have been centralized and numerically decreased(?) into GM Powertrain. I am assuming you think this would also occur for other currently redundant departments and their staffing/budgets/overhead if the larger divisions were melded/discontinued.

To sum up, great read Guoin, but I think what you call for is a wee bit too radical an action for the massive, institutional bureaucracy at GM to manage. But then again, I didn't really see Olds going away and it did.

 

Well I am gonna guess and say there are very few standalone GMC dealerships.

Thefore you could take the following approach.

Cars-
Chevrolet=The Toyota brand of GM with some american attitude...Basic transportantion, some performance models.

Pontiac=The Lexus of GM...only a little downmarket and more exciting from a performance standpoint. roll remnents of Buick in this

Cadillac=The BMW chaser...but since trucks don't chase BMW's (not Escaldes at least)..let their trucks be the upscale line.

Pontiac and Cadillac would be pushed into the same dealerships like Lincoln and Mercury....only with enough brand differation to work.

Trucks-

Chevrolet Trucks- Create a upmarket segemnt within Chevrolet trucks...like make LS trucks what a current Chevy is, and make LT what GM trucks are. Do optional interiors like the F-150.,,and bring all the current GMC options to the plate.

I think if you eliminated the Envoy, and cleaned up the interior, the Trailblazer could outsell the Explorer in this setup.

Get rid of GMC and put Pontiac (as described above) and Cadillac dealers togethor. Then use Cadillac's truck line to fill the extreame upper market. Look at giving Pontiac some sport wagons or something. Hell even make it so if a Cadillac/Pontiac dealer wants, the they can have a Chevy Truck franchise at their dealership.


Then you have two types of dealers-

Chevrolet/Chevrolet Trucks dealers

and

Cadillac/Pontiac (possibly also Chevy Trucks)

Then every dealer gets a good mix of volume, performance, and trucks.

Also, the new Chevy truck line would stand a chance at outselling Ford's.

 

Important point:

GMC is GM's second best selling division. They won't be going away any time soon.


I could see Saturn going away and Buick and Pontiac being rolled into one whole.

So, you would get three kinds of dealers:

Chevrolet.
Pontiac/GMC.
Cadillac.

 

Doing what you suggest, guion, would cost an incredible amount on its own. The money that was spent to dissolve Oldsmobile was enough to make me choke. My question was why spend so much money on getting rid of a division when you could put all that funding toward fixing the lineup itself with marketing and product?

Here's a little food for thought: When Oldsmobile put a salesperson spiff on their cars ($400 if I remeber correctly), they were outselling the Grand Am hands down (at least in our zoning). If the General would put their money were it counts, a whole lot of new cars would get sold. We are at the climax of the rebate game. GM has to realize that the people on the dealer ground level have a lot, if not the most, impact on the sales cycle. GM also has to realize that to a dealer, why sell a new car when you can make twice, maybe three times a much on a used car? By putting a little in the pockets of those on the ground floor for the sales of new cars will domino the affect to selling more new. This is fact.

Consolidating divisions would (if feasible) be somewhat of an answer, but likely not the one to keep GM number one. My proposal is cutting the fat in GM, big time. Loosening the UAW's excess control on decisions would be a big help too. It's all about money placement, where to put it and where not to. And you could spend the same amount and get a whole lot more if it would be placed in some different areas.

GM is coming back into its own, we just need to give it some time.

 

My point is that GMC is GM's second largest brand simply because it is there.

Take it away, and give Chevy trucks upscale options, and different choosable interiors like the F-150, and Chevy will overtake Ford in both truck sales, and midsized SUV sales....without marketing two brands.

I do not see why Chevy Truck could not be sold in a Pontiac dealership?

 

We could just go to the total extreme and roll everything into Chevrolet.

From my side (the consumer), why on earth would I want less choice of product from General Motors?

Plus, people have different views. Here's a nice example:

Guy suggested killing Pontiac and rolling it into Buick... already, others want to kill Buick and roll it into Pontiac instead.

Again, I don't think a lot of Buick buyers would shop Pontiac, and vice versa.

Branden, you bought a new Grand Prix like we did... would you go out and buy a nice new LaCrosse if Pontiac were gone? I doubt it. I know I wouldn't. This right here is the very reason why having different brands and images are important.

As for GMC, again, you take one hell of a risk by simply pulling the plug on GMC and all it's volume, and just hoping those customers will drive to your Chevy dealer instead.

And as far as putting Chevy Truck (only) with a Pontiac dealer... talka bout confusing the customer! If I want a Chevy, I go here, but if I was a Chevy, I go there? If anything, this is more a reason to kill Chevy truck and keep GMC than the other way around!

 

I would have to agree that getting rid of so many brands would be a bad idea for all of the reasons already mentioned. The only brand that i do see could go is Saturn. Those products are easily absorbed by Chevy, Pontiac, and maybe even Buick. The only problem with killing Saturn is of course the people who love the customer experience and friendliness of Saturn. From what I understand, there is a pretty loyal Saturn following, just not too many new buyers.

Also with GMC, you have to think that just about every GMC dealership is paired with Pontiac and/or Buick. This brings in people to the dealerships that are looking for trucks and while they are there they can see the cars that the other brands(Pontiac/Buick) have to offer and vice versa. Without GMC, the large truck buying population would just pass by these dealerships and I think a good number of sales would be lost.