GM and Chrysler

If GM acquires Chrysler, here is what they are likely to do post acquisition.

• Align Jeep with Hummer
• Align Dodge Trucks with GM trucks division and the rest with Chevy
• Align Chrysler brand with Buick

Its very easy for anyone to say why this will not work. GM is struggling currently and has struggled in the last 20 years to create significant differentiation between its brands in terms of offerings (product, packaging, warranty, price, end-to-end brand experience, communication). The oft used term badge engineering comes to mind. They would badge-engineer the hell out of the brands and in the process kill them just like what they did to Oldsmobile and in the process of with SAAB.

If this is not what they would do, I would like to know other alternatives along with why GM put to death the Oldsmobile brand just when it received a full line of good vehicles.

I think GM will buy Chrysler for one simple reason that I have not heard anyone mention. That reason is legacy creation. Now that Mr. Wagoner has endured the worst days that GM has seen and things are starting to look up, he is likely more emboldened. With this new found confidence that the Board has in him and knowing that Toyota is likely to pass GM as the largest automaker under his watch, he would not want history to mention him as the guy who let Toyota overtake GM after being the #1 auto manufacturer for 76 years.

Acquiring Chrysler would raise the lead over Toyota overnight. More importantly, in his mind, it would raise Mr. Wagoner's Legacy to the level of Sloan and the possibility that he would be mentioned as the person that saved the US auto manufacturing industry. He would be peerless - Dieter Zetsche, Carlos Ghosn etc. can not come close to his legacy.

Of course there is ample Historical evidence suggesting that the minute someone thinks about creating a legacy that is the beginning of their end. I hope I'm wrong and that if GM acquires Chrysler, it will be for reasons other than Mr. Wagoner wanting to create a legacy.

If it does acquire, here is what I think they need to do.

1. Integrate Chrysler's R&D into GM's and centralize platform development.
2. Continue to keep the Dodge and Chrysler brands separate and not align with any existing brand
3. Continue to position Dodge as the niche "Bold" brand with "Bold" design
4. Create Chrysler as a bridge brand between Chevy and Buick

In the end here is the themes for each of the brands that I think they need to cultivate:

1. Chevy - every man's accessible full line brand - the quintessential no-nonsense, fairly bland but functional mostly front-wheel drive American brand i.e. the American version of Toyota. 14K - 27K for cars. 18 - 31K for SUV's/minivans. Trucks - as is today.
2. Dodge - bold design but affordable full line brand. 1-1.5 K premium over equivalent Chevy. One chooses Chevy or Dodge based only on the int/ext design. Mechanicals are identical.
3. Pontiac - bold design but limited line and rear wheel drive only. Affordable BMW's. No Trucks, SUV or Minivan. Cross overs and cars only. 24 - 35K.
4. Saturn - sharp design, sharp execution, minivans and re badged Opel cars and cross overs (i.e. continue on the current path without wavering). Import fighter with Honda Dynamic characteristics but much better dealership experience. 18 - 32K.
5. Chrysler - Affordable Lexus. Match Lexus offerings - i.e. few front and few rear/all wheel drive cars and cross overs. mid to large in size. 24 - 35K
6. Buick - Entry level luxury, bland design, good execution, good customer service. Positioned above Saturn and Chrysler but below Cadillac. Age target is 40+, high income. Front wheel drivers or awd only. Mid size to Large cars and small, mid-size cross overs. This is the differentiator/bridge brand that does not exist today from any manufacturer. price range - 27 - 40K
7. Cadillac - rear wheel drive and awd only. Full line Luxury - Think Audi from a benchmark perspective. Cadillac should be edgier Audi's. Quit pretending Mercedes or BMW. 27 - 62K. Don't bother trying to sell anything at higher prices for 2 model cycles. Just don't call it a luxury car, prove it. American market will respond. Its not prejudiced like Europe.
8. Jeep - Keep it relevant
9. Hummer - whatever!
10. GMC - Luxury versions of high margin Chevy's with a 2.5 - 4K premium over Chevy.
11. SAAB - Sell it back to the Swedes.
12. Vauxhall - Sell it to the highest bidder.
13. Holden - Leave the Aussie's alone. They are doing fine.

Engines - Follow Nissan's Strategy - small 4 - cyl, large 4 cyl, med v6, large v6, large v8, x-large v8. Diesel and Petrol versions as appropriate.
Platform - Follow Toyota's Strategy (not Honda's)

Just remember, we did not move from horses to automobiles. there was horse drawn carriages in-between. Hence we need Hybrids, before we move to full-spec alternative fuel economy. Create a separate mid-size Hybrid vehicle (car and cross over) under Buick and Saturn brands.

Why not do this?

Of course I understand the structural issues. They exist no matter what happens and needs to be dealt with either by GM or by someone else. Who would Ron Gettlefinger rather deal with? GM, the Chinese or Canadians?