How GM should restructure for a Government Bailout and streamline Brands and Cars

How can GM save itself from Implosion? Which GM brands and cars should bekept and which should be cut?How many jobs can be saved in Detroit? Should GM, Ford and Chrysler be saved at all? Will the consumer demand for vehicles (cars) ever pick back up again? These are all good questions.

Everyone is all a buzz about the American Car companies and their pitch to the Government saying that “bankruptcy isn’t and option” so give us billions in free money that has no strings attached and we can spend on anything we want. Ouch! I think congress was right to send them packing the last time they showed up in private jets and asked for money, and we have learned that in the other bailouts, the banks aren’t spending their money on what it was “proposed” for so more oversight is needed for any government bailouts of companies.

Back to my thoughts on GM specifically, since I am not an expert on Ford or Chrysler.

GM has some opportunities to be successful in the future but much of that opportunity comes at the cost of getting rid of the past, completely and starting over from scratch.

Almost every GM car or truck sold in the last 10 years has been either: inferior in quality, reputation or design. They also tend to make cars for segments that people don’t need and then wonder why people won’t buy them even when pushed. (Hello: SUVs) I read yesterday that the 4 brands that GM intends to keep are Buick (yay!), Cadillac (ok), Chevy (a necessity) and GMC (WTF?). 

I think they should throw all the brands out and come out with 5 new ones with distinctive market segments and niche products. Here are the segments in automobiles that I think will be big in 10 years that GM or any car company needs to invest in, and cut everything else:

1. The new shiny reliable car below $8,999. Developing countries and low income people in developed nations will need this kind of transportation as the cost of transportation increases consistently. (think college kids and retail hourly wage workers) It isn’t sexy or cool or updated every year. It is a 5 year design of an extremely reliable and simple car and only available in 1 color and maybe with 2 seats. If people want variety they can customize on their own. These cars are cheap super basic transportation and low cost is what sells them and fuel efficiency is also important. They have to be more reliable than a used car or this won’t work. Think old VW Beetle, Geo Metro, India’s Tata, China’s Cherry Motors or simpler version of a Honda Civic/fit.

2. Super eco friendly green cars. This segment has a product range from cheap eco friendly basic cars to luxury eco friendly status comfort cars. Performance isn’t really a priority but style and design is. Comfort comes at a price but miles per gallon is always in the 50-75 mpg range for all vehicles. Leather heated seats is an option on the lux ones. Think Toyota Prius and GM Volt. A 5-door option is nice here too. Eco people are practical people. Plug in charging in your garage and solar panels in roof are also great pluses if the cost can still be comparable to a non-eco car. People need to have one of the eco cars start at $15,000.00. Then fancier ones can be higher priced. Pricing people out of the market is bad for business, you loose sales and customers to people who do have the affordable eco cars.

3. Business/Industrial/Delivery Trucks & Vans. No consumer needs a truck unless they live in the mountains of Colorado or live on a ranch, but telling people they needed huge over-sized utility vehicles for their family use has been a strategy used in the past 15 years to re-purpose existing designs to new markets. This era is over and the SUV needs to die except for people who have 5 kids. (relatively few) There is a continued opportunity to sell trucks to businesses that deliver, transport and create large products in the US but it is a far smaller division of the company and of sales. And living in the US and seeing firsthand how people use these vehicles for business should give GM an insight that the Japanese, Chinese and German car companies don’t have and lead to building and innovating better vehicles.

4. And most importantly: The everybody car. I think GM has no way of recapturing a significant part of the 4 door family sedan but there is an opportunity to innovate it. There have been a few cars that are appealing to everybody because they contain multiple category characteristics. (um, crossovers without the truck part plus luxury) The everybody car I am talking about is the 5 door hatchback sedan. Don’t think 1970’s! Think of the Prius and Saab 9-3 when it was a 5 door, think Subaru WRX. More needs to be done in developing practical sexy cars like this because they take over where SUVs left off. You can haul things in them and get good fuel economy at the same time. You can even structure them for performance and luxury and fuel economy at the same time. So, the 5-door sport/luxury/green/family sedan is the everybody car of the future. Will GM make it and market it properly? (it could be the volt if they lux it up a bit)

5. The Luxury Performance car. Lastly, GM needs a super-car or luxury flagship vehicle that basically walks on water and inspires a generation. (more than the Pontiac solstice) These cars aren’t always profitable themselves, but they make the other brands you own more profitable and can make your brand one that people believe in. How Toyota and Honda don’t have one I don’t know, but maybe that is why they do so much racing now?  The Corvette makes Chevy feel cool, the R8 made Audi sought after. Vipers dying off made Chrysler seem even less cool and less reliable. Plus so few people will be able to afford a luxury performance car in the future that this will need to be a niche business with limited production.

And for fun here is what I think of the brands GM currently has:

Keeping Buick: Buick makes an extremely reliable car (yes like Honda/Toyota reliable) so this is a good place to start and they get 25-30 MPG. What Buick needs is a few smaller car options and even better fuel economy without sacrificing the comfort, luxury and quality that people need and love. They do need a new logo though, that doesn’t look like the 3 old 80’s shields.

Keeping Cadillac: Caddy is all about Flagship dream cars and it may share a few parts with Buick so there are manufacturing cost efficiencies there.  Caddy needs to keep innovating on performance, style and (surprise) eco materials and fuel economy.

Keeping Chevrolet: Chevy has been the all American fleet of everything (soup-to-nuts) vehicles for a long time. Many of the other brands aren’t needed because Chevy offers most everything. They cover work trucks, family sedans, performance cars with the Vette and with the Volt an eco car of the future. They should make them less fugly though, because they aren’t selling against other lux GM brands anymore, they are selling against Toyota and Honda’s flagship cars. 

Keeping GMC: Wouldn’t it have better to just sell trucks under one brand as Chevrolet since we need so few trucks? I am at a loss on this one. GMC offers nothing new, interesting or innovative at all. (yuck)

Cutting Saturn: Apparently this is just Opel cars from Europe now.  The Saturn brand name needs to die since it means cheap, flimsy, crappy, cars that break down a lot and are ugly. Re-release Opels under the Opel name? How about Vauxhall in the US? We like them.

Cutting Pontiac: Well Pontiac has been loosing it’s battle to streamline its designs and be a sleeker performance division of GM because of it’s cheap finishes and lack of quality. Plus the dealers don’t really help here either when they don’t look like a performance dealership. I think the concept of performance only exists at the same time with luxury because who will pay all that money and not want to be comfortable in their car? And quality in finishes and reliability is ultra important. As Pontiac is now, it should be cut and their logo scrapped.

Cutting Hummer; Duh! Sell it to the Norwegians or Russians or UAE or something. Wherever it is cold and has mountains or endless oil. The military division of Hummer should be retained and put into Chevy for developing military/industrial products.

Cutting: SAAB Well we saw this coming. They made an over engineered car un-reliable so GM deserves this one. From personal experience I will never buy another Saab again because of the reliability problems and obviously no one else is either. This is typical GM strategy, cut quality, save money, increase profits in the short term, piss off customers, loose customers, wonder why they can’t win customers back after costing them 5K in repair bills. Basically if you screw someone over financially once, they never forget it. This should not have happened because Saab had a lot of potential, but it’s pretty impossible to fix now.

 

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One thought on “How GM should restructure for a Government Bailout and streamline Brands and Cars

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