Please read this article before reading my comments
http://money.cnn.com/2007/04/25/news/companies/pluggedin_taylor_deadbrands.fortune/index.htm?postversion=2007042613
This article is suggesting that GM has to shutdown brands - Buick, Pontiac, Hummer, GMC and SAAB. Any joker can say that. What should GM do to move the buyers of these "shutdown recommended" brands over to the remaining brands? That is the real question any productive article needs to answer if they are truly interested in the wellness of American manufacturing or know anything about running a profitable enterprise. These types of nonsensical, fill-the-page articles that do not give any insight into really anything bothers me. Especially coming from a senior writer in a magazine ironically called Fortune is very unfortunate.
Here are the 2006 US sales numbers for the brands that the article suggests that GM discontinue
Buick Sales Volume - 240,657
Pontic Sales Volume - 410,229
Hummer Sales Volume - 71,524
GMC Sales Volume - 481,222
Saab Sales Volume - 36,349
Let's see. Adding Buick, Pontiac, Hummer and GMC we are talking about 1,203,632 vehicles. Let's say we shut this down, how many jobs are affected? How much does the overall American economy lose? How much does the GM shareholders lose? What the author is suggesting is that GM reduce its total American sales by over 29% (total GM sales is 4,124,645).
I have just two questions to you Alex Taylor III - Are you STUPID? Who made you a senior writer at Fortune?
If the buying public did not like the choices offered by GMC, Pontiac, Buick they would not be buying 1.2 Million of them. What GM needs to do is not shutdown brands, but have lesser number of dedicated production bases for a particular model. What they need is more flexible manufacturing bases (where by more than one brand and type of vehicle can be manufactured in the same assembly line based on market needs so that idling and related costs are reduced). Then of course what they need - and are lately improving quite a bit - is better visual design and more importantly better execution (quality of materials, panel gaps, fit and finish, things that you do not see but feel like the thud that the door makes, the feel and sound of the indicator stalks etc.). They also need to better differentiate between their brands - end-to-end. They are doing this in pockets, but not end-to-end. An example would be - You cannot have showrooms selling GMC Acadia (btw, who the hell came up with that name?) and Buick Enclave being sold next to each other and serviced by the same dealership.
SAAB is a different story altogether. It is easy to misunderstand SAAB, especially by an American journalist who does not even understand American Brands or the people - 1.2M of them that buy them. SAAB is s a quirky Swedish brand that was sterilized by GM. There is a template for how to make SAAB successful and that was written by a company called Volvo. Just let SAAB be SAAB and it will grow. It needs money, just like how Ford pumped money into Volvo before it became what it is today. SAAB does not need a re-badged Chevy SUV - no matter what the interior, where the ignition key goes and grille looks like. I'm sure Lutz has learned his lesson. He is smart and I'm sure would not make that mistake again. If anyone wants to know how to do Badge engineering they need not look further than Ford. They have made their share of mistakes, but how many can say that Mazda 3, Volvo S40, Ford focus share the same platform. There may be other cars that share it too, but, that is the whole point, you just do not know.
So please stop writing such idiotic stories just to fill pages. Fortune - you too Brutus?
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1 comment:
I agree that "killing brands" is a poor idea, as GM needs differentiation more than ever. But this blog isn't exactly offering a good argument against Alex Taylor's marketing-centric view of the world.
It is quite simplistic to say that killing the GMC brand, for example, will result in 481,222 vehicle sales evaporating. Don't you think that the significant portion of them would buy the next closest vehicle, a Chevrolet built on the identical chassis, with an identical drivetrain?
If anything, GM needs to offer greater differentiation between brands, and give its engineers some greater latitude over vehicle configuration, rather than beancounters. Parts sharing usually results in cost savings, but today's buyer wants unique styling, interior appointments, and transmission options in their vehicle. An increase in engineering effort by GM would benefit the bottom line by doing two things: increase quality and value to customer, and better utilize company resources, (people and plants). Autoworkers on the payroll ought to be producing something new and different.
But let's talk about what's really wrong with GM. Every showroom offers the same basic formula: boring 4-door sedan or 5-door gas-guzzling SUV. Until GM offers other body styles, with innovative fuel efficient powertrains, then its vehicle sales will continue to slide no matter how many or how few brands it sells. Same goes for Ford, which is in a worse state. Most people have already written off DCX, which will probably be chopped to pieces by an Asian manufacturer that needs some dealerships and wants the rights to the Jeep name, which isn't worth the big plastic grilles on which it is molded.
Finally, looking at vehicle sales is largely irrelevant. Trends in cash flow is all that matters in the long run. This is why the Japanese automakers are in tall cotton, whereas top level mismanagement and union greed has finally caught up with the US manufacturers. Without looking at the data, I'd be willing to call Ford's investment in Volvo just as much of a disaster as GM's investment in Saab. Only difference is that Volvo actually was allowed to some engineering and styling freedome, whereas GM forced Saab engineers to merely restyle other manufacturers' chassis. At the end of the day, though, Volvo didn't exactly make a great profit, probably because savvy buyers CAN see that a cheap Ford Focus chassis does not make for a high-quality european sedan. Saab buyers could not be less interested in an overpriced Trailblazer. This does not represent a reason to kill these brands, it represents a reason why not to force high-priced brands to build cars on inferior chassis, with inferior parts-bin components. Innovate or die.
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