General Motors: Time to Shed Some Brands

 |  Includes: GM, HMC, HYMLF, TM
by: Ron Shuttleworth
On the weekend, while travelling to a local ski hill, it struck me that I could hardly remember any of the models of the various General Motors (NYSE:GM) brands. In fact, I could hardly remember all of the brands that GM sold. While sipping on our coffee, my wife and I contemplated what was wrong at GM, and we agreed that there was no identity to its brands. The product was ubiquitous but invisible.
There seems to be no lineage to any of the models with the possible exception of the Camaro. Long-lived brand names like the Malibu were a mystery to us both. What does a 2008 Malibu look like? What does a 2002 Malibu look like? Why does a Chevrolet "insert model here" look exactly like a Pontiac "insert model here"? For as long as I can remember a Chevrolet and a Pontiac were exactly the same vehicle with a different nameplate. Why? Yesterday, I noticed an article that seemed to echo our conversation.

I don't really have any business commenting on the auto industry. However, I feel that our discussion in the car illuminated some key universal brand management issues, which may be:

1. Focus: In the face of unrelenting competition, GM has far too many brands, models, and submodels to allocate effective marketing, sales and production budgets. GM may have had the largest marketing budgets in the past, but model-to-model, category-to-category the Company had no advantage, and in some cases, even a disadvantage when battling in the trenches for sales.

2. Brand Continuity: When people see a BMW, or a Mercedes, or even a Toyota (NYSE:TM) or a Honda (NYSE:HMC), consumers know it. More interestingly, consumers may have difficulty detecting the difference between a new BMW and one that is 5 years old. Although there may be marked innovations in the product, design continuity strengthens the brand, improves resale value, and carries forward positive attributes valued by consumers. In the 1970s, GM had that with a single model - the Camaro.

3. Brand Identity: This is an item that runs to the core of operations. In the 1970s and 1980s, Honda and Toyota had nurtured a brand identity of low-cost, fuel efficient entry level transportation in North America. In the 1990s Hyundai (OTC:HYMLF) repeated this strategy, while the Japanese manufacturers, through unrelenting cultural, engineering and process focus, were able to evolve brand identity towards unsurpassed quality at reasonable prices.
In the meantime, GM fostered a culture of seeming entitlement (always first to the trough!), and slowly lost its edge. Yes, it was the largest car company in the world, but it was losing market share every minute, and losing mindshare even within domestic markets. The many brands managed by GM were somewhere in the mushy middle...OK...but not distinctive. This is quicksand for a brand.

Granted, all of the automotive manufacturers were blindsided by this recession. It was not caused by the manufacturing sector. It was a one-two punch from Wall Street. First, the rampant speculation in the commodities sector killed the SUV market (and GM's cashcow), and then the collapse of credit started largely by the bankruptcy of Lehman Brothers (OTC:LEHMQ). Almost all of the automotive industry is losing money and there are likely to be many casualties. However, GM's operational weaknesses have been laid to bare, and it looks ugly.

Its appeasement of the unions during the SUV / pickup heyday has left it as quoted by some "a healthcare company that happens to manufacture cars". Its pervasive muddiness, and legacy of bad decisions does not attract people who can make a difference. There is no Steve Jobs, no Bill Gates, no Lou Gerstner, not even a Lee Iacocca or even a Shelby anywhere near GM.

Outsiders like the author of the article that I linked to seem to be able to grasp the obvious. Shed brands, shed models, shed and restructure distribution, and define a brand quality. There is no status quo - dominance is gone. Instead of staying dominant, get great. Look to IBM in the early 1990s for a blueprint.

"We are Chevrolet / Cadillac and we make an entry-level car, a family car, a truck and a van. We also make a really nice family car, truck, van and a sportscar" "We only make 9 vehicles, but they are the most reliable, safest and comfortable hybrids in the world. And you want your friends to know that you drive one". How hard can that be? I guess about a $100 billion hard.

Disclosure: I do not own shares in the Companies mentioned in this post.