Car Corner
GM - How Many Divisions?

June 1, 2009
By Scott Lewis

By the time you read this GM will have hit its June 1st deadline to try and save itself from bankruptcy court. I am on the fence if this will happen. I think President Obama will do almost anything to insure GM survives... at least until he gets re-elected. After that Obama will care a lot less for GM.

But this month I want to talk about GM's Divisions. We have all read that GM is trying to sell off Saab, Hummer & Saturn. It has announced that Pontiac is no more, after initially claiming to make Pontiac a niche market brand. Shunting Pontiac instead of making it a niche market brand is the first smart thing I have seen GM do. It is also trying to sell off its European brand, Opel.

This leaves what GM is calling its core brands: Chevrolet, Buick, Cadillac & GMC. Sorry, but there is not enough differentiation between these brands to justify this many divisions.

The Great 60's

Back in the sixties GM's brands all stood out. Chevrolet, Pontiac, Buick, Oldsmobile and Cadillac all had their own engines. They also had their own division heads to lead them with their own engineers to work on products. Pontiac led the Muscle Car era. Oldsmobile teamed up with Hurst to get around the GM corporate engine limit to put a 455 in a Cutlass. Chevrolet put SS performance on all its cars. Buick trumped them all with the highest torque rating of any engine. These were exciting times.

Through the seventies and eighties each division lost its own engineers to the corporate machine, and they didn't have anyone to champion their brands. The cars became less and less unique to the point of becoming the cookie cutter cars that helped drive GM into the mess it is in. You will notice the start of this trend happened when they started using the "corporate" V-8 engine. In other words, why bother letting good engineers work on their own engines when everyone can use the Chevy V-8.

Two Brands

It is my opinion that Buick cars will muddy the waters between Chevrolet, a mass market brand, and Cadillac, a luxury brand. Why keep Buick? Chevrolet can put luxury features in its cars, such as automatic climate control, leather interiors, heated seats, GPS, iPod docks, etc.) You don't need Buick to sell the same car with a different grill.

Chevrolet can sell far more trucks than GMC, and the difference between them is slight. In essence Chevrolet and GMC compete against each other, not compliment each other.

In the end GM needs to concentrate on two brands... Chevrolet and Cadillac.

It is time to drop to two brands. Chevrolet can handle the mass market with its one niche car... the Corvette. The Corvette can become a true halo car again now that buyers can come in and look at the Corvette and leave with a Camaro. Chevrolet needs to do one thing... bring the Solstice/Sky under its roof. This car needs a fair amount of refinement to compete with the Mazda Miata. With that refinement it can be another alternative for the guy that cannot afford a Corvette. An affordable two seat convertible.

Cadillac should stick to rear drive cars as much as possible. This is a mild dilemma. There may not be enough parts sharing if Chevrolet is building front drive cars (Malibu & Impala) while Cadillac is building read drivers (CTS & STS). Like Toyota's Camry morphs into the Lexus ES350 so should Chevrolet's Malibu should morph into a Caddy. The new Malibu could be the only front drive platform used by Cadillac. I think the CTS platform should be used under an all new Impala. That provide two platforms for parts sharing, but interiors/exteriors should be completely different.

Chevrolet should try to concentrate on smaller cars as well. I like the idea of a Cadillac version of the Volt. I bought a Mini Cooper S Convertible and it was not cheap, but it was small. I just don't think GM can pull this off yet, but it could work in the future if they play their cards right.

Chevrolet and Cadillac are doing just find sharing their truck chassis, so keep that going.

One more thing. Never combine a Chevrolet Dealership with a Cadillac Dealership. As a luxury customer I do not want to be treated the same as a guy buying a $20K Chevy. I want to be treated with more class. Cadillac should also have longer warranties than Chevy, and loaner cars should be standard for Cadillac when customers bring their cars in for service. The Cadillac customer needs to feel special.

On one side note... I think it is a huge mistake to get rid of Opel. Let Opel do its best to survive. Opel is only in trouble because GM is in trouble and the entire global economy is in trouble. Normally Opel does well enough on its own. GM should hold on to that and let Opel ride out its own problems. Then GM will have Opel as a place to tap for European engineering in the future. This one is negotiable on my part, but I would try to keep Opel as a stand alone division doing its thing in Europe.

Conclusion

Can GM be saved? Sure! Will it? Not with the current management that seems clueless as to what to really do. Get rid of all the senior executives at the company that has been loosing market share for the last 30 years and get some new blood in charge. Drop the operation down to two brands, and you have a recipe for success. You can always create a new brand later if it makes sense. It does not make sense now.