Posted by: David Kiley on October 29, 2008
General Motors desired acquisition of Chrysler will muddle GM’s brand portfolio even more. And I didn’t think that was possible.
In buying Chrysler, it will absorb Chrysler, Dodge and Jeep.
The deal would give GM about one-third of the U.S. market, but spread across eleven brands. Yipes. GM CEO G. Richard Wagoner Jr. has said many times that he does not think GM has too many brands. It is worth noting, though, that Wagoner doesn’t have the slightest background in marketing or brand management. That’s not a criticism, just an observation of fact. How about now Rick? Too many brands now?
Talking to a few dealers, this is what they expect GM to do. Wind down the Chrysler brand. Then, compel as many of Chrysler’s roughly 2,000 dealers to merge and marry to create a Dodge and Jeep dual showroom. The dealerships that house all three brands now will simply wind down the Chrysler brand. All they care about is the number of vehicles they sell. They don’t especially care if it’s three brands or two. If they are selling 200 cars a month today, they still want to sell 200 or better. It’s that simple. As the number of total Chrysler dealers declines through bankruptcies and buyouts, total vehicles sold per dealer should go up or stabilize even after eliminating Chrysler as a brand.
GM wants to keep the Jeep brand, as well as Chrysler’s minivan business. But to keep remaining Dodge-Jeep dealers properly fed and happy, it might well need to give them some badge-engineered Chevys and Pontiacs. Oh joy! More badge engineering on the market. A Pontiac G8 with Dodge horns on it. Oooooh. Baby. I’m all a twitter.
GM is hoping that the number of dealer bankruptcies worsens as the Recession drags on. They have to whittle down the number of their own dealers, as Chrysler has been doing with its stores. They are not going to pay dealers to go out of business as they did with Oldsmobile.
One of the scenarios gathering steam is that Nissan will buy the Dodge pickup truck business from GM. That would preserve its plan cut with Chrysler to supply the Dodge product in Nissan dealerships as the next Nissan Titan. GM would benefit in the short-term from the cash it can get from Nissan. So, Dodge-Jeep dealers who have been working with Chrysler for years, will find themselves likely dealing with GM and Nissan…and potentially both manufacturers supplying product for one brand—-Dodge.
Of course, this is all what some dealers are prognosticating. What actually happens will be up to GM.