I was compelled to comment on David Brooks’ critique of Obama’s approach to General Motors, in which the Prez gave Big Blue a limited window to restructure contracts and also guaranteed their warranties. Brooks thought Obama would have done better to keep his distance, and keep taxpayers out of a long-term welfare project for the company.
“I’m tempted to disagree with you David, but when I look down the line of GM’s makes and models, the road to viability becomes harder to see. GM has decided to bail on Saturn, Saab, Pontiac (partially) and Hummer. Hummer was a good cut, but the other three?
Saturn makes affordable cars, and could be for GM what Scion or the Toyota Matrix are for Toyota — reliable entry-level cars that earn lifetime customer loyalty. Saab makes (or made until GM got their paws on it) cool cars that had a euro cache. Marketed well, Saab could take upscale buyers away from makes like Volvo, Volkswagen, and even BMW and Mercedes Benz.
Saab doesn’t cannibalize other GM lines, which are very American, and provides high-margin sales. But a Saab provides no rush of recognition to GM execs birthed in the back seats of Tempests and Delta 88’s, and so it got the axe.
Pontiac makes cheap cars that at least cost what cheap cars should cost, and could have been a distinctive brand that targeted the fun-car buyer. It’s alive for now but if its history, and that of Saturn, are any indication, it’ll get de-prioritized, starved of resources, and maybe sold off.
Now look at the lines GM has kept around: Cadillac, Buick, GMC, and Chevrolet.
Chevrolet, with the solid, well-priced Malibu, is otherwise loaded down with low-end uncompetitive cars (the HHR, anyone? How about an Aveo?) and still top-heavy with SUVs. Pickups are no savior now that a) the construction biz is dead, and b) the Ridgeline and the Tundra are competitive. This brand shoots for low-end buyers and hopes to make its money back selling Avalanches.
GMC makes expensive SUVs (all over $30,000), and pickups. Retooling the plants and rebranding GMC are out of the question right now, so keeping GMC is a big bet on rest of 2009 looking exactly like 2004. Not a smart bet.
Cadillac is like a flashback to 1986. Except for the Escalade, which will probably benefit from Hummer’s demise. As for the rest, you can almost see Reagan/Bush stickers on the bumpers. In addition to being out of touch, it is also unable to decide what it is. Is it aggressive, for the hotshot, or classy, for the hard worker who made it up the ladder and deserves the right car? Is it Sinatra, U2, or Jay Z? When I see a car marketed as a luxury sedan that goes 0 to 60 in 4 seconds, I only think, “why?” Rescue Pontiac and put that 0-to-60 in the new Firebird. Then go back and tell your design team not to let another Caddy look like a Knight-Rider update.
Finally, Buick. What’s to like? Expensive, uninteresting, compromise-laden vehicles. The midsize sedans aren’t Camrys, the crossover fails to inspire, and the big car is for your granddad. Buick is a triumph of dedication to the past. It should have gone to run and play with Oldsmobile.
So after cutting three and a half brands, they’re still overloaded with SUVs that cost too much, substandard car options that can’t compete, and pickups that face unprecedented competition in a market (driven by construction) that probably won’t rebound for at least 18 months.
Consumer demand has to show up for GM to rebound. Where is the product that can be as popular as the Camry, the Accord, the Jetta, or even the Prius? Saving GM is going to take a) a culture transplant, and b) at least six years of external support.