Now that GM is the Number Two automaker in the world, many analysts are discussing what the automaker needs to do in order to get back on top. Alex Taylor at Fortune wrote an article on what he suggests the automaker do to gain back their title.
The main recommendation from Taylor is for the automaker to kill off their non-performing brands such as Pontiac and Buick. GM has constantly argued that their buyers want a choice and that by having multiple brands they can fill every market segment. If GM does eliminate a brand like they did with Oldsmobile they risk losing ling-term buyers.
Taylor argues that having multiple brands is costing GM a lot of money that the automaker does not have. The days of badge engineering are long gone and it is becoming increasingly costly to develop models that are distinctly different.
Toyota only has three major brands, Toyota, Lexus and Scion. Taylor argues that GM should adopt an approach similar to Toyota. Basically he feels that they should kill off Pontiac, Buick, Hummer, Saab and GMC and only focus on Chevrolet, Cadillac and Saturn.
Here are his reasons for killing off or selling most of GM’s brands:
-Buick hasn’t been high on the sales charts for years and the new Enclave isn’t going to make a big difference. Buick should just focus on the Chinese market.
-Pontiac is extremely dated and their image has deteriorated to little more than a blue-collar brand.
-Hummer’s image is being hurt by the anti-SUV movement.
-GMC should be turned into a commercial truck brand, since gas prices have killed truck sales.
-Saab has never been a success for the automaker due to its small volume and high manufacturing costs.
WIth only three brands GM could focus on keeping Cadillac as their luxury brand, Chevrolet would appeal to middle America and Saturn could fight against the imports.
Taylor’s arguments are interesting and may make sense from a business perspective. But Americans have a strong loyalty to these brands and it may not be easy to just kill them off. It cost GM countless dollars to kill Oldsmobile, so the company may not want to go through that process again.
As of right now, GM has been making great strides in their restructuring process and they do have some promising vehicles on the horizon. It will be interesting to see how things shape up and if Toyota can manage to hold onto their new title.
Besides is it all that bad being the Number Two automaker?