A Strategy for GM
The General Motors brands
In a recent speech, Obama asked the question, does the GM proposal do enough to consolidate the unprofitable marques. The answer is obviously “no”. In fact, the proposal generated by GM did little to immediate liquidate assets for any of the brands, including Hummer, Saab, and Saturn, which are the first to go. GM is undoubtedly looking for buyers, but what happens when they cannot get adequate capital? You guessed it, more bailout money. This analysis will focus solely on brand management. Financial management, include dealership reductions will not really be covered here.
Perhaps a better strategy for GM is to spin-off Hummer and pitch it back to the military as was originally intended, then force the Swedes to take back Saab (the will do so of course because of their near-socialist governmental structure), then merge Opel and Vauxall, and Saturn, and sell it to Fiat. This would create a cross-border carmaker with particular focus on the low-end green market. Fiat has recently stated that it is interested in buying Opel anyway.
Under this plan, GM assesses the whole product/brand portfolio, not just the three “lesser” American marques. Selling Buick to the Chinese, who seem to think that their country is ageing and could care less about styling, could be the deal of the century. The Chinese buy more Buicks than pretty much anyone else anyway. GMC could stay on as GM’s sole “truck, Van, and SUV maker”. They seem to have competency in building large hefty vehicles anyway. That leaves Pontiac, Chevrolet, and Cadillac as the remaining core assets. GM has officially decided to eliminate the Pontiac division. Some have suggested that Pontiac become a “specialty” vehicles division, producing cars like the Firebird. That may be a waste, however. Perhaps it is better to consider Pontiac taking over the “tuning” segment much in the same way that BMW’s M-division, and Daimler Mercedes’ AMG unit have done. Does your Caddy need more power? Send it to the Pontiac tuning factory. Something like that would give Pontiac a decidedly sporty and meaningful position in the portfolio. This could also position Pontiac to bring out experimental and limited edition cars. Perhaps this division could introduce cars that run purely on hydrogen.
That leaves us with Chevrolet and Cadillac. Here presents the biggest quandary. How do you reposition these two brands? As is, they cannot exist profitably into the future. Cadillac’s future could be in building high-end luxury cars, an equivalent to a Mercedes for example. The challenge here is to make everything about the Cadillac as different as possible to any other car. Materials and components should be more expensive, designs should be classier (but not aged!), and the division must focus on what people with incomes of $80,000 per year or greater might want.
Finally, we come to Chevrolet, which is perhaps the core of the future General Motors. GM has to position itself as the care of ordinary Americans, but it needs to avoid the cowboy “God Bless America” image that arouses nationalism in some, yet turns off others as just being a shame with an American flag on it. Chevy will be the key to developing small-engined, compact cars. This includes powertrains of various varieties including petrol, diesel, electric, natural gas, and hydrogen. The days of producing inefficient, heavy, muscled cars are over. There is some question about what would happen to icons like the Corvette, and the plan will probably end up that they stay under the Chevy nameplate since rebranding it a Cadillac would not really work. The Corvette will remain the lightening rod for the company, but the model should focus on bringing alternative energy to sports cars. This is an area where GM can begin to lead!
To be sure, the road ahead is an uncertain one for GM. This plan will not solve the financing problem for GM, but it will solve the product and marketing problem that has existing for many years within the company. Good luck to GM!