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Home > Articles > Lookout Point > Thom on GM
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No One's Saying What GM Really Needs To Do
By: Thom Taylor (Motorburg Associate Artist & Contributing Editor)
GM’s woes have been discussed ad nauseam throughout the web, but on the heels of their most recent billions of dollars of losses announcement, I want to suggest what too few are—with apologies to Alfred Sloan. GM needs to shrink. A lot. I’m not talking plant closings or white/blue collar layoffs. I’m talking about paring the company down from its current obese structure set up for selling 40% of the market (cars sold in America) to a more manageable, and far more realistic company selling less than 20%. And that means continuing where they left off the first part of the millennium when they dumped Oldsmobile. In other words it’s time to cut bait.
Chevrolet has always been the bread-and butter, entry level company under the GM banner, and though they have had their ups and downs and weirdness (remember the Corsica and Beretta—why develop two new, completely different cars that overlap what you already have and could have been developed far cheaper if done as a two-door and four-door derivative of each other?) over the years, they seem to be back on the sensible path. Cadillac has benefited from billions of GM bucks poured into a turnabout the likes of which we have never seen in the automobile industry. They really deserve to be the benchmark for somebody—it may as well be GM’s benchmark. These are the keepers—but what about the rest?
Here’s where it gets uncomfortable. Pontiac, Buick, GMC Trucks and SAAB all need to follow Oldsmobile’s lead, I’m sorry to say. Look, GM is selling too few cars to warrant this many divisions. Too many divisions and their resultant costs don’t make sense with too few sales. It’s like having a Starbucks on every corner. Hey, wait—they do have Starbucks on every corner—but not for long. Even Starbucks found that this doesn’t work and are closing hundreds of stores. This isn’t GM, 1965. And with their penchant for divvying up a new platform like the new Envoy/Enclave/Outlook over two or three or four divisions, they never have the budget to do a proper launch the way Toyota or Honda does.
When Toyota launches a new model they can and do budget 100 million dollars to market that model. If GM allots the same amount, it gets spread over those two or three or four variations—resulting in a lost message about a new model disguised as three or four new models. The message—what bits of it get out, becomes confusing. It’s easy to follow one, big rubber ball—not so watching four ping-pong balls boinging around the internet, radio, TV, newspapers, etc. It doesn’t work.
Let’s be honest; Pontiac has no identity. They had one hell of an identity in 1968—but that was 40 years ago. We’re talking now! GMC Trucks are just rebadged Chevy trucks and even your babysitter knows that. And SAAB—who cares? Born From Jets. WTF is that?
Buick is the same as Pontiac with one weird twist. They are selling like mad in China—the emerging market sought after by McDonalds to Trojan Condoms. Buicks were the cars of choice back in the 1940s by China’s Prime Minister or some such thing—and they have maintained this status right up to today. But the Chinese won’t know the difference between a Buick and a loaded Chevy if the Chevy says “Buick” in chrome letters on the hood. So why not make Chevy “Buicks” for China and do away with the inherent cost of a division barely hanging on in the US.
Just as we are denouncing GM for their bloated state, there are hidden treasures mired in the fat and ineptitude—an ace-in-the-hole, which comes to save the day for their other division—Saturn. You remember Saturn—that “different” GM division which in less than 10 years became exactly like its sister divisions. The culture within GM was too strong for Saturn to last as its own corporation within the corporation—something Roger Smith touted as being Saturn’s raison-de-etre. Square peg in a round hole, and all that.
Saturn’s reason to exist in my plan would be as a funnel for some of the great product from both Germany’s Opel and Australia’s Holden. Especially Opel has built some fantastic cars throughout the last 30-plus years. We have not been fortunate enough to have sampled these, stateside, because GM has always felt Americans don’t car for the ride, handling and feel of European cars. That’s evident with the terrible sales of Mercedes/Audi/BMW/Volkswagen. Who wants that Teutonic trash?
Amortized by Saturn, Holdens and Opels would be more of a bargain for GM than in the current, segregated set up. But the deal would be every Opel and Holden henceforth must be engineered to meet US specs—even if they aren’t manufactured with that equipment in their intended markets. Opels and Holdens there become Saturns here. New, unique, well engineered products that give Saturn a good reason to exist in this new structure.
Even though we’re talking about product—it’s not all about product—even though it really is about product. A clean sweep of the board enabling Rick Wagoner to muddle along for years would be required. Since 2006 GM has lost over 50 BILLION dollars. If you blame it on Wagoner, the board needs to take a bite of that, too. If you don’t then it’s all the board’s fault. Either way—out with the bums! And take Wagoner with you. A new day for GM starts with some new faces—and make sure there are some real car guys mixed in with those bean counters and underwear marketers. It’s about more than just the numbers—it really is about product. If you haven’t figured that out then you don’t deserve to have anything to do with the new GM!
So your new GM is Cadillac, Saturn and Chevrolet—kind of like Lexus, Toyota and Scion. Well, sort of like them. All three are different enough in identity and product philosophy to coexist in a much smaller dealer network. And that dealer network will put up one hell of a fight and make many a lawyer richer from this scenario, I’m sure. But GM can’t exist in its current form—why not give this a try and bite the litigation sausage. When it’s over you’ve got a reinvigorated, healthy corporation, as opposed to the bloated mess that is GM today.
We all hate to see it this way, but isn’t a smaller GM better than no GM? They say that roughly 1 in 12 jobs are tied to the car companies in some way. Who wants to jeopardize those numbers for the nostalgic thought of a cool Pontiac “someday”? Packard should never have left either—but do you really care now? In hindsight they were what Buick and Pontiac have become—outdated, anonymous vehicles that didn’t deserve to exist. It’s harsh but true. What did Packard have that Cadillac or Lincoln or even Buick couldn’t do better, cheaper, and with more flair?
You won’t have to wait too much longer because GM’s junk bond status means no more borrowing—and they can’t survive the next three years losing over 50 billion dollars the way they have since 2006—they don’t have 50 billion left. So if you always wanted a new Pontiac or Buick—even if they aren’t the wished-for GTO or GSX, better head on down to that dealer before it becomes the newest McDonalds. Waiting too much longer for “Da Judge”, you may end up with a greeting from Ronald McDonald instead.
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