General Motors: Time to Shed Some Brands

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 (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 (TM) or a Honda (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 (HYMLF.PK) 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 (LEHMQ.PK). 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.

Comments

[PeteK:]

The First thing to Shed is UAW.
Otherwise, not much will work for GM.
Same thing with Boeing. Not good.

Feb 19 04:11 AM

[Miken:]

Your inability to recognize the highly acclaimed Malibu says it all.

Pontiac and Chevrolet are the same cars as long as you can remember? Let me refresh your memory; GTO, Corvette, Bonneville, Impala. Are you able to distinguish which are Pontiacs vs Chevrolets?

Sadly, everyone thinks they're an expert and simply regurgitates an article that they read somewhere with no original thought. This author is an excellent example of my point.

I do agree completely with one thing this author writes:

"I don't really have any business commenting on the auto industry. "

Feb 19 07:17 AM

[Tony C:]

<<<Pontiac and Chevrolet are the same cars as long as you can remember? Let me refresh your memory; GTO, Corvette, Bonneville, Impala. Are you able to distinguish which are Pontiacs vs Chevrolets?
>>>

For many years the Bonneville and the Impala were the same car.......under the skin.

Feb 19 08:51 AM

[Miken:]

<<<For many years the Bonneville and the Impala were the same car.......under the skin.>>>

Don't be naive Tony. There's no "new" car that's different in EVERY respect. Don't think that they don't share engines, transmissions, front and rear corners, etc. The tooling cost would be astronomical.

In terms of powertrains, GM is more diversified than any manufacturer. That's changing a bit with their six speed transmission strategy. With some clever engineering, there are number of variations in their transmissions that make them applicable to a wide range of torque applications.

Feb 19 09:55 AM

[Ron Shuttle...:]

Agreed!


On Feb 19 04:11 AM PeteK wrote:

> The First thing to Shed is UAW.
> Otherwise, not much will work for GM.
> Same thing with Boeing. Not good.

Feb 19 12:55 PM

[Ron Shuttle...:]

I don't claim to be an expert. It should be treated as an observation by a typical consumer (although one with a pretty good idea about branding). I'm actually quite surprised that SA syndicated it.

My inability to distinguish between a Malibu and a Bonneville, or any other GM manufactured product is not my issue. It is (and has been) GM's issue for a long time. It is GM's responsibility to socialize its brands with consumers. And that is the point of the post...it has failed to do this.

BTW, my dad's 5 year old Malibu bears no resemblance whatsoever to the 2009 Malibu. There is no design continuity that helps retain long-term brand identity and bouy resale value.

IF GM can make the appropriate changes, it has hope.


On Feb 19 07:17 AM Miken wrote:

> Your inability to recognize the highly acclaimed Malibu says it all.
>
>
> Pontiac and Chevrolet are the same cars as long as you can remember?
> Let me refresh your memory; GTO, Corvette, Bonneville, Impala. Are
> you able to distinguish which are Pontiacs vs Chevrolets?
>
> Sadly, everyone thinks they're an expert and simply regurgitates
> an article that they read somewhere with no original thought. This
> author is an excellent example of my point.
>
> I do agree completely with one thing this author writes:
>
> "I don't really have any business commenting on the auto industry.
> "

Feb 19 01:22 PM

[Miken:]

"I don't claim to be an expert. It should be treated as an observation by a typical consumer (although one with a pretty good idea about branding). I'm actually quite surprised that SA syndicated it. "

We ALL are surprised that SA syndicated it, it is merely an opinion of one uninformed individual, and you know what they say about opinions. This article adds NO value. Nobody cares what your opinion is Mr. Shuttleworth.

Feb 19 03:26 PM

[Detfan:]

The Chevy Malibu is distinctly different than the Pontiac G6, which are both distinctively different than the Saturn Aura. Great job GM!! The Buick Enclave is distinctly different from the GMC Acadia, which both are distinctly different from the Saturn Outlook, of which all three are distinctly different from the Traverse. Great job GM!! The Pontiac G8 is distinctively different from the Cadillac CTS, which are both distinctivly different to the new 2010 Buick Lacrosse, which all three are distinctively different from the Chevy Impala. Great job GM!!

I have no clue what the authors vision is like, but their are excellent eye doctors throughout this great nation that could help.

Feb 21 11:46 AM