Could GM Be Ready to Trim More Brands?

July 7, 2008
How deeply will GM plunge the knife? As it struggles to halt the hemorrhaging, the ailing automaker is considering just about every option available, and that could include still more job cuts – and the sale of one or more of its brands.

“Nothing is off the table,” a well-placed source tells the Wall Street Journal.

With a goal of returning to profitability by 2010, GM has a lot of work ahead of it. The automaker has already announced plans to halt production at four of its light truck plants, and it has, so far this year, eliminated tens of thousands of jobs, mostly on the hourly side. But it is reportedly preparing to eliminate thousands of additional white-collar jobs and is considering still further plant closings.

Earlier this year, the automaker announced it was considering various options for its struggling Hummer brand. An anti-icon for environmentalists and those who would sharply raise automotive fuel economy, insiders say there is a very good chance GM will either sell or simply close down Hummer.

It would be only the second GM brand to be dropped in decades – the moribund Oldsmobile division was sent to the junkyard a few years ago.

But the cutbacks might not stop there, says the Journal. In fact, the automaker is carefully rethinking the business case for all but two of its brands: the flagship Cadillac and Chevrolet marques.

A few years ago, the automaker came under heavy pressure to abandon Buick, which has seen its market share drop nearly 60 percent – to just 1.0 percent – since 2000. Insiders tell TheCarConnection that the only reason Buick remains in the GM tent is that it has become the automaker’s powerhouse nameplate in China. And, indeed, upcoming U.S. Buicks are being designed with Chinese motorists first in mind.

The Swedish Saab brand is among the most likely to be cut, observers believe. After two decades of ownership, GM has simply not been able to move the needle, and Saab remains little more than an industry afterthought.

The once-powerful Pontiac is another brand that has lost its raison d’etre over the years, and new products have yet to revitalize the marque’s longtime “We build excitement” image.

GM has had some modest success with the GMC brand, but it still sells largely upmarket clones of Chevrolet’s light truck offerings.

And then there’s Saturn. The once-maverick brand showed, early on, that it could attract the import-minded buyers who would normally never consider a GM product. But sorely neglected for cash and products, Saturn lost its original momentum, and even a recent infusion of new models – most developed jointly with the automaker’s European Opel subsidiary – hasn’t done much to revive things.

Only the giant Chevrolet, which has begun reconnecting with passenger car buyers, with products like the well-reviewed Malibu and luxury marque Cadillac, seems immune from the knife.

Eliminating brands would potentially save GM billions in money it must spend to come up with alternative versions of otherwise identical products. There would be some lost sales to brand loyalists, but the automaker is convinced it could win back some of those buyers. And even it couldn’t, the cost of keeping them in the GM world is simply more than it can afford anymore.

Which brand(s) would our readers chop?

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