GM in freefall?
I am an auto enthusiast. However I don't have the monetary resources to go out and buy cars that I like. So I own a 96 Honda Civic that can't go up a hill with five people in it. But it's a stick shift, so I burn some rubber occasionally.
So, with me being an auto enthusiast and all, I plan to talk about cars on this blog from time to time. But I haven't really done that, so I figured that today was as good a day to start as any. First off, let me provide you a list of auto sites that I visit regularly:
News and Reviews
www.autoblog.com
www.caranddriver.com
www.motortrend.com
www.roadandtrack.com
www.detnews.com/autosinsider
Prices, Reviews and Ratings
www.edmunds.com
auto.consumerguide.com
www.kbb.com
Ok, recently there has been a lot of talk about the problems being faced by the big three automakers out of Detroit. While it's true that only GM is in big trouble, Ford and Daimler Chrysler are not far behind. Let's talk about GM in this post.
Ever since I came to the US, I have been surprised by the number of brands in the GM stable. Let's go through them:
- Chevrolet: Basic brand, with pretensions of being the performance division because it has the corvette. Also makes trucks.
- Buick: Semi Luxury brand, which translated into old people's brand. Now trying to be hip, don't know where that puts them.
- Pontiac: Performance brand, but many of the offerings are less sporty than regular Hondas and Toyotas
- Saturn: Projected as cheap brand with good quality, also trying to be a performance brand
- GMC: Makes Trucks. But doesn't Chevy make trucks too?
- Saab: European performance brand. The only problem is that the cars now share the platforms with cheaper GM brands.
- Cadillac: Sleepy luxury brand, now reborn as a luxury performance brand.
- Hummer: Kickass SUV brand.
- Oldsmobile: Another basic brand, thankfully discontinued.
- Opel: In Europe only.
Notice some overlap above? Get the feeling that some consolidation might be needed? Well it has been argued that, that each of these brands sells a sizeable number of vehicles and if GM gets rid of a brand it will just lose all those sales. Well first of all the vehicles across different GM brands are so similar, that such a scenario seems unlikely. For example, GM sells identical truck models as both Chevys and GMCs, and the same minivan across 4 different brands. So it seems like this kind of redundancy can be removed. And that'll leave a few brands with zero or one unique models, so those brands can be done away with. And this can be done gradually. GM has to realize that the current structure doesn't make much sense and should do away with it.
Another major problem has been the quality and the appeal of the vehicles produced by GM. GM made big profits from it's trucks and SUVs over the last decade, and the development of new models, especially cars, was overlooked. Now that truck and SUV sales and the corresponding margins are dropping, deficiencies in GM's car lineup have become apparent. And the new products introduced by GM over the last year haven't been very successful. The result: a whopping $1.1 billion loss in the last quarter. And with the current lineup of vehicles, things might get worse before they get better. GM certainly has the resources to build quality vehicles, and should do just that rather than spend time juggling numerous brands. They have some promising models on the horizon, so let’s see if they can turn it around.
