GM brands on the block

Posted by: David Welch on November 28, 2008

The buzz in Detroit this holiday week is that General Motors will carve up its family of brands like a Thanksgiving turkey and cast away a few as dried bones. One report has GM ditching Pontiac, Saab and Hummer. Well, Hummer is on the for-sale block. That leaves Saab and Pontiac as possible disposables.

On his blog Brand New Day, my colleague David Kiley wonders how GM will get rid of these brands without paying a fortune to dealers. In the case of Pontiac and Saab, it may be fairly cheap, at least as buyout deals go. Many Pontiac dealers are already paired with Buick-GMC dealers. They won’t sue the company they rely on for Buicks and GMCs. Ditto Saab. A bunch of its dealers are paired with Cadillac already. When GM bought out Oldsmobile dealers a few years back, it cost the company $2 billion or so. Many of those dealers had stand-alone stores. GM based payoffs on recent sales volume. Since Saab and Pontiac don’t sell much volume and many dealers are paired up with another GM brand, it may not be that costly.

Since we’re on the subject, I’d throw one more GM brand in the scrap heap. GM should ditch Saturn. It’s been a long time since that brand had magic. With Internet shopping taking a lot of the dealer margin out of the sales process, Saturn has less of a selling proposition. In other ways, the brand actually carries baggage. When GM showed the Saturn Aura to consumers before launching the car a few years ago, it scored a 3.4 on a 4.0 sale. That was with no badge or brand. When viewed with a Saturn badge, it scored a 2.0. Even if Saturn still had equity, GM can’t afford to design and market cars for all of these brands, not with market share headed toward 20%. Plus, Saturn usually loses money, sometimes lots of money

GM may not be able to dump Saturn any time soon. Since its dealers stand alone, they would be costly to buy out. But if GM rides this storm out and gets back to profitability, it’s something the company will have to consider.

Reader Comments

LH

November 30, 2008 9:59 AM

I agree to a certain degree with your comments. Saturn,however has recently produced some good products with style, and improved quality. GM.has been recognized for the last few years with the best truck, best car and highly efficient plants in Canada. Also when they get through this temporary crisis their cost saving will be significant once the union becomes responsible for the benefit package for its members. Cost per verhicle will be much lower and will challenge the Asia products effectively. Also with the sale of Hummer and Sabb their cash flow will improve.

gene dotson

November 30, 2008 9:47 PM

Duplication of lines is killing GM not Pontiac. You can buy Saturn Outlook, Chevrolet Traverse, GMC Acadia and get the same vechile in each. Drop two of those and other duplications. Saturn is a drain and should be halted, along with the Hummer line.

Paul (Vw)

November 30, 2008 11:09 PM

If anything, Pontiac and Saturn seem to have the best new cars lately. (Aura, Astra, Sky, Solstice, G8) I'd say throw Buick with it's 3 current models (yes that's "three") it offers to the trash heap of history.

If the intent is to just get Detroit through the current crisis, then most of this drama is a waste of time and taxpayer dollars. GM should be looking to save the brands which have potential to bring in new buyers. Otherwise we are just delaying (at considerable tax payer cost) the inevitable.

JOSIE

December 1, 2008 10:46 AM

IF WE CAN GIVE MONEY TO ALL THESE FORIEGN COUNTRIES, ITS TIME WE HELP OUR OWN.OUR AMERICAN CARS ARE BEAUTIFUL.I'M AMERICAN AND I WILL BUY AMERICAN.FACTORY WORK IS NOT FOR EVERYONE. MANY PEOPLE COULDN'T DO THE WORK OF A FACTORY WORKER OR WOULD THEY LIKE BEING IN A FACTORY,OR WORK THE HOURS THAT THESE MEN AND WOMEN HAVE WORKED ALL THEIR LIVES.MAYBE OUR COUNTRY WOULD BE MUCH STRONGER IF EVERYONE STANDS TOGETHER AND STOP WISHING BANKRUPTCY ON COMPANIES THAT SO MANY PEOPLE HAVE DEVOTED THEIR LIVES TO. COLLEGE ISN'T FOR EVERYONE AND EVERYONE HAS A RIGHT TO MAKE A DECENT LIVING AND PEOPLE THROUGH ALL WALKS OF LIFE ARE NEEDED AND TALENTED IN DIFFERANT WAYS.I SAY YES THE 3 AUTO INDUSTRIES SHOULD BE HELPED BECAUSE WE ARE AMERICA AND MANY COUNTRIES HAVE ALSO LEARNED FROM US AND WE SHOULD STAY STRONG AND BE NUMBER 1 AGAIN.

veh

December 1, 2008 11:19 AM

"When GM showed the Saturn Aura to consumers before launching the car a few years ago, it scored a 3.4 on a 4.0 sale. That was with no badge or brand. When viewed with a Saturn badge, it scored a 2.0."

This proves a point. Most people who pontificate about American cars being junk have no clue what they are talking about and are simply reinforcing their own preconcieved notions. American citizens need to think about the larger issues of what will happen to this country without manufacturing and at least give the home team a chance.

GM should close down one or two lines, I agree. Tiger-less Buick and GMC would be my candidates.

John D. Trucker

December 1, 2008 10:54 PM

Scion, Toyota, Lexus.
Nissan, Infinity.
Honda, Acura.
Chevy,????, Cadillac.
Any Questions?

jon frieberg

December 1, 2008 11:27 PM

GM should simply ditch every brand except Chevy, GMC, and Cadillac. The rest are simply a DRAIN. Hummerr is simply HILARIOUS and embarrassing; SAAB is UNRELIABLE; BUICK is a CHEVY in disguise, as is Pontiac. If GM is to survive, it must ditch the UAW and become a modern model of manufacturing like Honda. Unless this happens, it will never survive.

Patrick Costello

December 2, 2008 1:54 PM

When GM created Saturn, much fan fare was raised because "Saturn was to be a new type of car company." What happened? GM management has botched the whole idea of Saturn. How many billions has GM loss on Saturn since its inception. They created a new brand and dumped another(Olds). Saturn cars are rebadged Chevys. Because of the dealer network, it is a complicated situation trying to determin what brands to eliminate. Maybe just Chevrolet and Cadillac is all they need.

Dan

December 2, 2008 2:23 PM

Mr Tucker lets look at your list:

Scion is ugly as heck

Toyota i have owned 2: V6 Camry my Ford Focus blows it away in speed and handles like a Eurpean sports car as it corners on a rail. I raced it vs my focus last weekend and the focus easily hit 125mph while blowing a V6 away. Camry has nice bells and whistles but no Sync. Sync is allsome.
Had a toyota Corolla 03 that had no guts it was a joke no power what so ever. 0 to 60 took about ten minutes.

Nissan - Maxima is the only rice burner with power. Nissan sentra see Toyota Corrolla.

Honda - Civic has 0 power and the civic is just about the same.

Lexus, Infinity and Acura i agree.

However, i just bought a Mustang Shelby GT500 that has over 600 horses that will blow any rice burning product away. It pegs out well over 200mph and is a very hot car.

All this Japanese quality to a degree is crap if my Focus can blow away a V6 Camry. The corrolla and civic ( include the Accord) had no passing gear and were really crappy engines. 1.6 liters are junk and have the power of a lawnmower and the Japanese have never produced a real speedy car, outside the Acura NSX. Trucks and Muscle cars are never going to fall in the Japanese laps, they just do not do them well.

Note right now in quality ford is #2, while GM is #3. I just would love to see one muscle car out of Tokyo.

Adam

December 2, 2008 5:55 PM

For years I have thought that GM would be best served by concentrating on Chevy/Buick/Cadillac. If they can't dump Saturn they should "combine" with Saab and position themselves as an "import-alternative," being European, and all (Saturn=Opel, Saab=Sweden).

If GM were to actually spend their cost savings on product development, manufacturing quality and efficiency (no more single model plants), and marketing they might be able to accomplich something in a few years.

sal

December 3, 2008 12:16 PM

what dan doesnt understand is that thinking like that is what has gotten detroit in the trouble that its in. news flash not everyone races around town. it would seems by the sales data that the 'not everyone' crows is well in the millions. why dont we take our egos and shelve them for a while and start building cars that all people will enjoy and take the good from our asian partners who obviously have tapped into something.

Avi

December 11, 2008 3:46 PM

I think there needs to be consolidation in the way GM operates, it has lost its focus as it has too many brands to manage. It will be foolhardy to drop Pontiac as I think it has the most appeal of any GM cars with its latest designs (solstice for example). Keeping smaller and slick cars and eventually moving to electric cars (volt) is the way to go for GM to put itself back on the auto map.

markmallard

December 11, 2008 7:14 PM

I HOPE GM IS NOT SERIOUSLY CONSIDERING ENDING PONTIAC, IT IS A LINE THAT THE SOMEWHAT YOUNGER 35+ PEOPLE HAVE SOME INTEREST IN. NOT IN BUICKS. PONTIAC CAN BE KEPT FOCUSING ON THE G8, G6,SOLTICE, AND MAYBE THE VIBE. A VERSION OF THE NEW CHEVY KRUZE COULD BE ADDED. THIS WOULD ALLOW BUICK DEALERS A ALTERNATE LINE THAT HAS GREATER APPEAL AND MORE FLEXIBILITY IF FUEL PRICES, AND DESIRE FOR PERFORMANCE CHANGE.
BUICK,PONTIAC,AND GMC BELONG TOGETHER, IT IS THE VIABLE COMBINATION THAT CAN ADAPT TO CHANGE. THERE ARE A LARGE NUMBER OF ENTHUSIASTS THAT ONLY DRIVE PONTIACS, NOT OTHER GM PRODUCTS. IF GM KILLS OFF THE PONTIAC NAME, THAT JUST GAVE AWAY A CHUNK OF PONTIAC BUYERS THAT MAY START LOOKING AT THEIR, SECOND FAVORITE CARS. AND I AM ALMOST POSITIVE THAT WILL VERY VERY RARELY BE A BUICK, GM SHOULD NOT EXPECT THAT PONTIAC BUYERS WILL GRAVITATE TO CHEVY'S, AND AT PAIN OF DEATH DRIVE A SATURN.
P.S. I HAVE WORKED IN THE AUTO INDUSTRY, SERVICE, PARTS, AND AT DEALERSHIPS FOR OVER TWENTY YEARS, I HAVE A PRETTY GOOD FEEL FOR WHAT MIDDLE CLASS PEOPLE LIKE AND DO NOT. SAVE PONTIAC AS A NAMEPLATE WITH ASSURANCE IT WILL NO BE TERMINATED IN THE FUTURE. PONTIAC AND BUICK DO NOT NEED TO BE HUGE DIVISIIONS, WITH TO MANY MODELS 3 OR 4 EACH, AND TOGETHER HOPEFULLY A RESPECTED AND LOYAL GROUP TO RETAIN AND ADD TO IN THE FUTURE.

Walt

December 12, 2008 11:18 PM

I bought an 08 Pontiac Torrent....listed for 29k...discounts over 6k...great crossover...good fit and finish....5 yr war...wanted to buy an all-american car...whats more American than Pontiac....The engine was made in China....the transmission came from Japan...the Torrent was assembled in Quebec......

Ken

December 13, 2008 4:12 PM

Buick is a point of contention here. GM should keep Buick because it has been a huge success in China for decades. That's brand recognition. In addition, the Enclave continues its sales momentum (that is one good looking vehicle). Also, the next-generation LaCrosse coming out in February of 2009 is drop-dead gorgeous. It's even better looking than the new CTS and Malibu.

I always felt that Pontiac is a damaged brand, and that's one brand GM should get rid of.

GM should keep GMC. The Professional Grade image resonates well with consumers and studies have backed that up. I think the new Sierra is really nice, even better looking than the Silverado. The Acadia always gets excellent reviews.

I actually think that Hummer is an excellent brand to keep. The customer attraction rate and the customer loyalty rate is phenomenal, best in the industry by far. Not to mention, that Hummer is differentiator like no other brand. Keep Cadillac. Get rid of Saab.

LynniePooh

June 2, 2009 1:30 PM

Losing money on Saturn because it doesn't require you to FORD-FIX OR REPAIR DAILY!! Or replace rusting sheet metal!! Should NOT get rid of SATURN! SL2's were the best darn cars ever!!!!

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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