Rick Wagoner has become the casualty of the American car industry’s ﬁnger-pointing with his resignation today, his hand forced by the Obama administration.
The press has centred on this rather than explore the union’s role in the industry’s difﬁculties. For those of us old enough to remember it, it all smacks a bit of the days of British Leyland’s effective nationalization in the 1970s.
If we look at leadership, perhaps part of Wagoner’s behaviour deserved to be lampooned: catching a private jet to Washington to ask for a bailout wasn’t a good look. And it’s true that General Motors did push trucks, but then, so did every one of the American Big Three. Even Toyota joined the Big Three in a lawsuit when California tried to impose fuel economy standards. Everyone’s been complicit in selling large trucks, even the American media’s Japanese-brand heroes.
It is unfair to gloss over some of the good that Wagoner did, when they should be mentioned.
GM’s Adam Opel AG unit has put out some good cars of late, and last year took the Car of the Year award in Europe with its Opel Insignia. Buick sells well in Red China. GM has moved toward a more integrated R&D structure than its rivals at Ford, managing to adopt a model using centres of excellence for engineering platforms—so that the next Opel Corsa will have huge Korean input, and the Chevrolet Camaro was engineered in Australia. The Chevrolet Volt could be a world-beater and GM has been willing to be braver with its R&D processes.
There’s a lot that GM can build on—but maybe someone other than Wagoner should put the next stage into action.
That is, if that person knows what the next stage is.
It’s in the home market where GM, as Ford, as Chrysler, has been making mistakes. If I could see the need for fuel-efﬁcient cars at the turn of the century for the US market, then there’s no way the Whiz Kids at these companies couldn’t. They were fooled by their own excess.
The real problems are reﬂected in how unmanageable GM has become over the years with its subsidiaries and brands. It has let Saab fail without new models—it pales in comparison to the plethora of models Volvo has managed to develop under Ford. Legacy costs with the unions are another problem, which deserves another blog post altogether.
There has been talk over the years about trimming the GM brand portfolio, but I wonder if this is a wise thing.
This is no longer the era when we live by counting beans, but by how brands resonate—and consequently how well they can sell. The problem is not so much that GM has so many brands, but that they have become confusing for customers.
British Leyland—once the world’s second largest car manufacturer, and now a mere unit of the Red Chinese government—shows what can happen when brands are trimmed.
There, the loss of brands such as Triumph meant that the streamlined Austin Rover Group in the 1980s could not compete in the sports saloon and sports car sectors. As people become more greatly segmented, what a company can’t afford to do is lose its brands.
Triumph died with a lot of goodwill still out there—which is why BMW, which acquired the name through taking over Rover in the 1990s, is too scared to ever let the name go. It knows that Triumph occupies the same market it does.
I warned about the demise of the low-cost Plymouth line when DaimlerChrysler killed that—and I bet Chrysler now wishes it still had it to ﬁeld captive imports or smaller models now for entry-level buyers.
The trick is to ﬁnd a way for the brands to resonate with consumers once more, and no one seems to want to talk about that.
GM knows that to kill a brand it would have massive payouts to make to dealers and lose certain segments of the market to competitors. It would also lose economies of scale, and its cost per unit would rise greatly over the next decade.
The other problem with killing brands is the consumer mindset.
A couple of years ago I talked about brand rationality as the new decade began—not rationalization. People only want so many brands in their minds and those brands should only offer so many products. It looks like it’s time to explore these very ideas.
Toyota knows this. While in Japan, a country with a very different buyer behaviour to western markets, it offers subcompacts such as Vitz, Ist, Passo, Porte, Raum, bB and Rush, it knows that to export such a wide range would be commercial suicide elsewhere.
It would rather sell more of a certain model, such as the Yaris, while leaving others to be sold under different brand names such as Daihatsu and Scion.
Ford’s greatest success in markets like New Zealand came when people understood the range of Escort–Cortina–Falcon; and even GM itself experienced sales’ growth when it was able to bring some logic to its range there with Barina–Astra–Vectra–Commodore. Toyota took the mantle when it was able to organize Starlet–Corolla–Corona in the 1980s. And BMW has been doing it for decades with 3–5–7.
In the US, it makes some sense to ﬁeld Chevrolet, Buick, Cadillac, Pontiac, Saturn and Saab; less so Hummer and GMC, which never made much sense during my lifetime.
In each of these brands, there is a way to ﬁnd an ideal selection of models that the consumer can understand.
GM has already made some headway with this by effectively turning Saturn and Pontiac into import brands, ﬁelding offerings from other parts of its empire that appeal to their buyers’ attitudes toward them. There’s no reason this cannot continue: Opel can engineer for Saturn, Holden for Pontiac. It has always amazed me that cars like the Corsa D are not sold Stateside. The Brazilian Chevrolet Vectra—Astra H sedan in Europe—could have been a decent Saturn.
Saturn could have the current models plus Corsa, Meriva B and Zaﬁra; Pontiac might survive on a future rear-wheel-drive mid-sized car and the VE Commodore.
Chevrolet, the all-American brand, has adorned Korean- and Japanese-designed models over the years. It’s the core line that should ﬁeld a full range, but do three of each type: three passenger car lines, three SUVs and three minivans. Of course, it should keep iconic hero models such as Corvette and Camaro.
Cadillac has become better organized than most with its tiered range. It just needs to improve its quality. It certainly has more cachet than Lincoln.
That leaves Buick and Saab. GM has done its level best to kill Saab. While it should remain it really should be considered alongside Saturn. If Saturn ﬁelds smaller import models, perhaps the Saab name could be used for larger ones. The problem is that competitive, newer models are still some time away. Stateside, GM might not have much choice but to rebadge the Opel Insignia with the Saab name and see if this attractive new model can ﬁnd buyers, as a stopgap. Its large US-only SUV ﬁlls a gap in the market-place as a performance model with some of Saab’s cachet.
Buick, meant to plug the gap between Chevrolet and Cadillac, still needs to do that, and its latest Lacrosse and Lucerne models are competitive for now. Some think that Buick should be China-only—just as Holden is Australasia-only and Vauxhall is UK-only—but we run the danger of losing the premium segment that neither Chevrolet nor Cadillac can sell to.
Cost-wise Buick could continue with smaller models and have a twin spawned off the Holden Commodore platform. Already Buick in China sells the Holden Statesman as the Park Avenue, a far more advanced car than anything sold Stateside with that name. While it may offend Buick loyalists, Chinese exports could sell Stateside—especially if the choice is killing off the brand versus sustaining it. The quality of models such as the Park Avenue is considered high, and a tiered range of Regal–Lacrosse–Park Avenue (or more accurately their successors) could work in the US in the 2010s, just as it does in China today.
The key is to make sure GM cars get sold in as many markets as possible, as sensibly as possible. It’s just that few have taken a look at GM globally, preferring to base their solutions on what they can chop among the US range. And since GM’s failures have been in part down to its inability to put its international models on sale, it seems foolish to not consider models that the company has already spent billions on elsewhere. It’s do or die time, and it’s stupid to put the blinkers on just because a vehicle was NIH—Not Invented Here—in the US. Posted by Jack Yan, 10:46
Hi Mr. Yan,Post a Comment
I think the first thing that I noticed is the level of auto product history that you display, contextually to Global and American consumer needs and brand position.
Saab still carries a strong nameplate among select consumer segments. While, Pontiac for many years has had a tough challenge to create market space attention, sales - and has lived because of its brand legacy. Pontiac's Solstice was able to grow in part because of the Trans Am story, it was a fine auto .. that may have been positioned incorrectly in the Vette market. Meaning, it lived to long in that space and it did not evolve into a sustainable position. Then at times it was placed near the 944 Porsche. My brother who is older had red one, his best buddy had a red 944 Porsche. Trans am was no Porsche!
I recall British Leyland and their Tr3-Tr8 series. "The shape of thing to come.." was the American brand tag for the Tr7 ... funny I was just reviewing those adv. the other week as I considered how American Auto Makers may rebuild attention for specific products. I did not know they were the 2nd largest car producer, wow... I need to study more... ;)
The BIG 3 should reduce parity quickly, and reinforce the buy-in of Americanism. Chevy tried, and executed in a marginal fashion. Well, they over killed the "American Heartland" concept. Where as the Japanese - seemed to present a more diverse American landscape. Toyota did an amazing job in presenting many lifestyle segments all in one 30 sec story. In my view much better then even Honda.
One thing you taught me...the brand always moves from the core, hence the start/ launch must be sustainable, and tightly focused. As you may know.. I attend a church that is Japanese American and diverse Asian-American segments. The parking lots are filled with Toyotas, and Hondas. These folks are very loyal consumers. And, sadly the US BIG 3 can't speak Asian American..;)
GM's CEO was driven by ego. not insight, or activating consumer attention.
Nissan is a near perfect example of a brand executing in a relational manner. And, they also had management and product issues until Carlos Ghosn came in and forced a turn_around by building transparency from bottom to top in the corporate culture. Plus... their Agency of Record (tbwa/ chiat day) are masters of highlighting brand details to diverse segments, while they advanced the brand in context to Japanese consumer lifestyle, and the trend of "drifting".
I bet if Carly Fiorina was [healthy] she could help the restructure of GM.
# posted by Anonymous: 3/31/2009 05:52:00 PM
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