Now that GM is officially Number Two, many Monday morning quarterbacks are popping up to "help" the general right the ship. Count Alex Taylor III, Fortune's senior writer, among them. In an interesting article, Taylor outlines reasons why GM should cut loose the anchors of Buick, Pontiac, HUMMER, GMC and Saab in order to move forward and prosper. Reckoning that GM is too bloated with brands and capacity that were fine 50 years ago, Fortune says it's time to move on.[Source: Autoblog via Fortune]
Where GM has 7 brands, new Number One, Toyota, has just three. Toyota, Lexus and Scion seem to be good enough to cover most buyers' needs, argues Taylor. But GM maintains that cutting brands would be cutting buyers since there are too many loyalists in the fold. The argument is that people want choice and more brands allows more specific targeting of the audience. But Fortune argues that the cost of that level of specification is too high. Taylor proposes keeping Chevy as the Toyota-equivalent volume brand, expanding Cadillac's offerings to go head-to-head with Lexus, and keeping Saturn to compete with Scion in the import-minded segment.
GMC can go completely commercial, but the author sees no redeeming qualities in HUMMER, Pontiac, Buick, or Saab (he might want to check out Buick's prospects in other regions like China before he shrugs it off so easily). It seems like a pretty logical plan that just makes too much sense in an industry fueled by passion and huge egos. It miight make good business sense on the surface, but these are emotional decisions, too. Nobody likes seeing a brand die, especially ones with such heritage. Chrysler has had to do it a lot over the years and GM has had to do it recently with Oldsmobile, but killing off a brand does come with considerable expense, as well. Buying out dealers, losing brand loyalists, and shuffling/reducing your workforce will hit the bottom line hard, too. .
