So GM wants to cut Saab, Pontiac and Saturn lose? If you ask me, just another bone headed decision by Detroit. It is also reported that Hummer is going- well, what took so long? In any case, it is beyond me why GM wants to cut lose the 3 of its most reliable and upcoming labels. Saab is based off in Sweden and is the only GM label known for its high performance, green reputation. Pontiac has a storied past- but an ignominous immediate past- it is not past salvaging. Saturn is getting better, as is evident in the new cars they have on the line. Definitely with superior exterior design and bold looks that should form the template for the renewed GM. Well, why them then?
Just another proof that Detroit is out of touch. Instead of cutting labels like Opel, Buick, Cadillac, GMC, Chevrolet and those dinosaurs perenially sold to populations that have known better times and is fast dying: GM is hanging on to these labels hoping to be revived on the back of their loyal customers (again, who are ageing and are less likely to drive). The truth is - as opposed to what DC and the MSM will want you to believe: GM problems did not start in the 90s when it pointedly refused to make fuel efficient cars; GM problems began in the 70s when it could not compete on quality and reliability with the Japanese auto makers. The irony is that European and South Korean car companies had the same hole- but they all nearly fixed it. VW and BMW once had a reputation for making over engineered and hardly reliable, and expensive to maintain vehicles- but that has changed. European automakers that could not change their ways- sold to China, and yes, India. South Korean companies like Hyundai have caught up with Detroit and left them in the sand when it comes to making Autos that last. Indeed, the net effect was that the brand quality of American cars was rubbished- which put them at competetive loss. Hence a decision on which brands to keep should not be based off what sells best now - at least not only. It also must be based on the brands whose reputation will be easier to build and enhance. The reputation of mainstream GM labels like Buick, Chevrolet, GMC and Cadillac is simply not pretty , and that is a reality; it will take more than making fuel efficient cars to enhance those labels overtime. In fact, it will take decades of making good cars - a time luxury GM simply do no have or cannot afford. GM will do a aweful lot better by keeping those labels that are not more closely aligned with the bad cars of the past- something like starting fresh. In doing so, GM can keep one or two of these dinosaurs- Chevrolet makes sense given its volume.
However, one man's loss is another man's gain. Countries waiting to take the technological/industrial leap into the auto making class can benefit from GM impending firesale. Mexico, Brazil, Dubai (UAE), South Africa, China and India - perhaps Russia will be great buyers for these three labels, and can most leverage on the advantages I have summarized above-especially abroad. Not only do the companies in these countries have the cash on hand (C'mon Sheikh Carlos Slim), they also play host to some of GM's more efficient auto assembly(without the legacy costs) that can come with the sale. If the companies in these countries buy the three labels for sale, one can see a scenario where the three labels can form a strong Auto company with Saturn catering to the entry level, Saab to the mid/family level as well as off roading capabilities (sucking in Hummer under its name) and perhaps some snow mobile, industrial/defense vehicle capability to deleverage it from the cyclical consumer auto business, while Pontiac can cater to the high end becoming somewhat the Lexus of the acquirer.
For Saturn a smart acquirer can scrap that Ion- an Altima wannabe that wanna make me puke, and instead make slim, small autos in the light of the Toyota Fit: small, stylish and efficient designed for students, women and the city dwellers. The newly designed Saturn Vue should adequately cater to those in need of more room and bold style…along with a hybrid/flex fuel model should deliver the Green required. Saturn should also include in its plan to launch a truly four car family size sedan that go head to head with the Accord and Camry- especially in Africa, S. America and Asia. Only price and reliability leverage coupled with design and fuel efficiency can deliver on that promise however. The Saturn Sky should be moved to the Saab Stable as the flagship sports car performance vehicle for that label. For Saab, the target buyer is the young, suave and saavy male- in need of performance and style. Hence, going head to head with BMW and VW is the goal. Saab has a lot going for it naturally, it just happens to be owned by the wrong guys. Smaller autos for the European market to ape the new saturn small car with the Saab label should also be a commercial success. Making Saab Trucks & SUVs for the North American markets, along with a dint of Hummer from Mexico should also help enhance the margin and reputation of the label as the muscle label of the brands. The new Pontiac should concentrate on making luxury cross overs, sport cars and perhaps a limousine. Of all the labels, this will be the mos difficult turn around to execute given the gradual but deep depreciation in the Pontiac brand undertaken by GM in the last 40 years- similar to what Ford did to Jaguar. But it can be done, provided it is kept small and focused. Consumers are fickle and have short memories.
Key Points for a would be acquirer: 1. Create Brand distinction for the various labels: Saturn (Entry Level- Stylish & Efficient); Saab (Mid-Level/Off Road - High Performance); Pontiac (High End - Luxury & Green). Keep the brands narrow, make no more than 3 vehicles per label and avoid cross-competetion amongst them. 2. Build plants in low wage, low regulation markets (stay off North America); utilize latest technologies to the hilt 3. Leverage Swedish national pride in Saab to get and use free R & D Dollars from their semi-socialist government; 70% of R & D for the firm can be done in that European country for free. 4. Concentrate on building a flat supplier and dealer base and 5. Quality is a must and by utilizing the least number of differing parts i.e. share parts you can enhance quality and cost. 6. Exploit the virgin markets of Africa, Asia and S. America for not just suppliers, but also assembly lines and final end user market. 7. Marketing Innovation: Instead of building inventories with the hope consumer with buy, a new marketing model that allows consumer to factory order after in city test dirving can be a win-win and introduce some suave to an industry that is getting stale.
Saturn: New Fit/Small Car, Saturn Vue, Saturn Sedan
Saab: Saab Mid-Size, Saab Convertible/Sports Car (old Saturn Sky), Hummer (include trucks, SUV & off road cars)
Pontiac: Mid size Luxury, Limousine, Luxury SUV