In his second appearance before Congress pleading for a bailout, GM CEO Rick Waggoner finally reversed himself and suggested that GM would sell off or shelve some of the company's poorly performing brands. On the list: sell Saab and Hummer (assuming someone will buy them), turn Pontiac into a niche brand, and discontinue or sell Saturn. That isn't the list I recommended and the timeline is too long. Waggoner told Congress that the new, streamlined GM would be in place by 2012. That is ponderously slow and indicative of the deeper problems within GM. Get it done in 12 to 18 months or get out of Dodge ... so to speak.
Pontiac is slated to be the "high-value performance brand." That translated from Detroit-speak into English is affordable sports cars.Yes Pontiac muscle cars are part of the GM legacy, but the new G8 is one of the three worst-selling cars in the GM stable. One auto-industry writer lamented the potential discontinuation of the G8:
"If GM ultimately decides to pull the plug on the G8, it would likely be the last Holden-made GM product we would see in the States for the foreseeable future. That would be a shame, too, as the G8 has the rare combination of style, performance and value."
You know the industry is a mess when even the critics are part of the problem. Let's keep the bright red muscle car around even though no one buys it. If you want to see how well GM manages a niche brand just look at Saab.
Saab is for sale, if anyone is buying, and no one is buying. Will anyone buy the brand if they stop production and put it on the shelf (even though tey only sell 20,000 units a year)? Probably not for much. But how long can GM continue to operate Saab at a loss if it cannot find a buyer? It is an unenviable position. GM has driven Saab into the ground, and they are trying to sell a luxury brand in a down-economy.
Saturn is a sad story. GM launched a new brand with a clearly differentiated market position. They developed an enthusiastic, and loyal customer base. And then they dropped the ball. Now Saturn is "just not successful" according to statements by GM President Fritz Henderson. Saturn was GM's Scion, but once again, GM is not capable of managing a niche brand to profitability. Henderson can say Saturn is just not successful; I'd say GM's management is just not successful.
Despite the recent announcement that GM was breaking their endorsement deal with Tiger Woods, Buick will remain one of the core brands. Let's look at the Tiger Woods situation for insight into Buick's brand value. GM spent $40 million over five years to secure the most recognizable spokesperson on the planet, pumped many more millions into tournament sponsorships and golf-related advertising, and they still could not move the needle. So they are going to save $8 million a year in Tiger dollars, which is pennies in Detroit, and do what with Buick? Exactly how are the going to focus their resources on Buick in a away that can change Americans' perception of the brand when their best effort over the last three years failed so spectacularly? I still think Buick should be sold only in Asia.
Waggoner plans to have the new GM right-sized by 2012. I think the odds are even that GM doesn't exist in 2012.