With the Bush adminstration announced to provide short-term loan of 17.4 billions of bridge loan to both General Motors and Chrysler Corporation today. GM will be the one to watch as Chrysler, whose future remains in doubt, given their lackluster product portfolio. As for Ford, this company already on the restructuring process of cutting dealers and improving their products significantly in recent years. It should be the most healthy and strongest down the road.
So, what do we at DirectShift think of how GM should restructure themselves in order to survive? GM products have improved significantly in the last couple of years, since Bob Lutz and Rick Wagoner have taken the helm of this company. The biggest improvements have to be the exterior and interior styling, dynamic abilities, refinement, use of materials and level of fit-and-finish. Take the Chevrolet Malibu and Cadillac CTS, these 2 cars are head-and-above those of their unremarkable predecessors.
With General currently having 8 brands but with less than 20% of market share, they have to reduce to 3 brands maximum in order to substain its profitability. It isn’t like 2 to 3 decades ago when GM still had 50% of market share to substain the profitability of so many brand overlapping each others.
Here is what we think which brands should go and stay within GM’s portfolio:
Hummer: With full-size SUV sales in the toilet, this brand should ditch as soon as possible. It has absoultely no viable future holding for Hummer whatsoever.
Saab: Before GM became the major stockholder of this once-proud Swedish niche carmaker, Saab products have flair, character, performance and dynamic qualities with its tiny but interesting 2 product line-up. This brand is the classic example of how an American giant mismanaged an unique Swedish brand. They simply have milked their current line-up for way too long with infusion of new technologies and designs that used to be the hallmark of Saab. The rebadging of previous Impreza and Trailblazer as 9-2X and 9-7X also have pissed many long-time Saab loyalists without gaining new customers. While 9-3 and 9-5 were once considered as contenders to German heavyweights when launched couple of years ago, they haven’t aged gracefully with all of their competitions received new design or already facelifted. GM should sold Saab back to Swedish company, by maintaining its uniqueness and niche. We are pretty damn sure Swedish firm will know how to manage Saab far better than what GM did. Give this company enough resources, their engineers are able to come out with innovations to stand out.
Pontiac: This is another GM brand that should be going away. The Solstice can give it to Chevrolet as Corvette “Junior” and G8 replaces Impala as Chevrolet’s flagship sedan. There aren’t any vehicles in this brand that aren’t overlapping with other brands.
Buick: Except for Mainland China, Buick doesn’t have much brand recognition and cachet anywhere in the world. While keeping the exciting Mainland Buick portfolio like the upcoming Opel Insigina rebadged Regal, take the entire Enclave/Lacerne/Allure with it to China. Kill this brand in North American market.
GMC: GMC is basically a rebadged Chevrolet Truck. This is the classic example of how GM loved to have product overlapped each others. Kill GMC and leave Chevy Truck is more than enough. Even with only Chevy Truck, its market share and profitability are enough to substain its market share given both full-size truck and SUV sales are tanking.
Saturn: GM have got Saturn really really right in the last 2 years. This company will be well-served as an alternative to another affordable European brand: Volkswagen. All the Astra, Aura, Vue, Outlook and Sky are all great cars. It will also be served well for customers who want more European flavor as an alternative to more mainstream Chevrolet. Given Ford will be bringing the European models like the Fiesta and Kuga sometimes next year, By merging Saturn with European Opel, Saturn will likely be the one that customers will cross-shopped. Its going to be sad if GM decides to ditch this brand. As Saturn has the freshest and strongest line-up in the industry right now.
Chevrolet: This has to be the mainstream brand that GM needs to tackle Honda and Toyota. The new Malibu has proved to be a real contender in mid-size family sedan segment. The upcoming Cruze is going to be a hot contender. Electric car Volt, performance-oriented Camaro and Corvette all serve as its halo cars.
Cadillac: The new CTS has proved Caddy is coming back. CTS-V is a really wonderful sports sedan that can easily give any AMG, RS and M a-run-for-their-money. GM should market Cadillac as a comfort and luxury-oriented brand instead of performance-oriented brand, say Lexus/Mercedes versus Audi/BMW/Infiniti/Acura. Their core products should focus on both refinement and comfort. Leaving the V-Series to go after performance crowd is more than fine as halo cars. First the new CTS, the upcoming SRX also looks promising.