Posted by: David Kiley on May 19, 2005
General Motors sales and marketing chief Mark LaNeve stopped in today and had this to say about GM’s most problematic brands—Pontiac and Buick.
“Everybody asks me if I think we have too many brands? The answer is No, but we have to manage them a lot better.” Buick and Pontiac have been decliining for years. These are not 21st Century brands, if you ask me. LaNeve admits that if GM is going to grow its market share, it won’t be through Pontiac and Buick. Market share stabilization, and maybe a bit of growth, will come from Chevrolet, Cadillac, and Saturn. Sales stablization and likely decline is the best they can hope for with Buick and Pontiac, he says. But they have to make the brands more profitable, even as they get smaller. That’s refreshing. Usually, GM and other companies don’t ‘fess up that some of brands are not being managed for sales growth.
GM, which began closing down its struggling Oldsmobile brand in 2000, has been quietly combining Buick, Pontiac and GMC dealerships into one channel. Some 80% of GMC-Pontiac sales points are combined and 50% of Buick sales points are already combined with Pontiac and GMC.
That channel, which will be nearly 100% combined in the next few years would, today, be the fifth largest channel of car distribution in the country.
GMC trucks and SUVs will be the bread and butter of this channel. Buick and Pontiac would each have only about four core models per brand, says LaNeve. And most important—no stupid overlapping products. No Buick Ranier SUV, which is copycat of the GMC Envoy. No Pontiac Grand Prix, which would be in the same segment as Buick sedan at a similar price point. No Buick Rendezvous SUV and Pontiac Aztek in the same dealership. “All this is Marketing 101,” says LaNeve. “But we have had to keep learning it over and over again.”
LaNeve thinks of the future of Pontiac and Buick in terms of MINI and Porsche. MINI only has one product today, but that’s expected to change within a few years where it will have at least two and perhaps three. “And everyone is clear what a MINI is,” says LaNeve. “Porsche, too…what do they have…three or four core models, and noone is unclear about what Porsche stands for.” “We can do that with Pontiac and Buick over time. Take down the model offerings to ultra focus them on maybe four models at the most per brand and make them part of an overall portfolio of GMC-Pontiac and Buick at one dealership facility.” He also says to look at Hummer for what GM is out to do. Three products at Hummer now, including the original H1, with a possible fourth, and everyone is crystal clear what Hummer stands for. That’s the way we are going to fix Buick and Pontiac.”
If you will allow me this analogy: I do a lot of gardening and I know every Spring, early, you have to clip the rose bushes just right if you want healthy roses and strong blooms. If you dont prune away the dead wood just right, the plants suffer. This is what LaNeve has in mind. It seems like a reasonable strategy going forward if they execute and are serious about saying no to their own executives who want every brand to have a minivan, roadster, sport wagon, etc.
One idea LaNeve was intent on leaving behind during his visit: “We are not looking to cut any of our eight brands.” And he’s not keen to see the number of models go down much either—suprisingly. Taking down three models between Buick and Pontiac, he says, may well result in three being added between Chevy and Cadillac where the growth is.
Laneve earned his stripes and two big promotions in the last eighteen months by fixing the marketing of Cadillac and making some smart product decisions. Rick Wagoner is counting on LaNeve to make sense of the rest of the GM brand stable.