21 June 2008

GM Slowly Coming To Their Senses?

GM Inside News is saying that there are division closures on the horizon for the company.

With Hummer on the auction block, it has apparently come down to GMC or Pontiac. While I applaud a move towards what was obviously necessary years ago, namely to get rid of a division or two, are these really the two that should be axed?

Of course not.

First, let's deal with the GMC nameplate. There are obvious advantages to getting rid of it- the entire lineup is essentially rebadges of Chevy products, and the truck market is slowing to a standstill. However, in my opinion, GMC provides GM with a perfect fleet work truck outlet- a market that wants base model trucks with interiors that can be hosed down and mechanicals that can be used for what they were intended. What's stopping GM from selling GMC trucks solely to fleet, and saving upper trim level trucks (ie. Silverados and Colorados) for the average buyer? Absolutley nothing. By getting rid of GMC, they would in effect alienate a still large chunk of buyers.

On the surface, Pontiac would appear to be far more ripe for pruning. No real retail volume hits, and an increasingly confused strategy- is the company about RWD sporty vehicles or SUVs or FWD milquetoast sedans? Who knows at this point. The pluses to getting rid of Pontiac are many- the negatives at this point are very similar to the Oldsmobile situation. In light of all that, Pontiac is NOT the brand that should be axed. It fits in perfectly with Buick in a shared dealership environment, assuming Buick moves beyond the blue haired crowd to become a reasonable near luxury alternative again, and Pontiac moves towards the more sporting side of the ledger. A Pontiac/Buick dealership with a small/medium/large lineup of RWD true sports sedans and the Solstice and a medium/large/CUV lineup of Buick vehicles would be perfect.

The brands that are obvious axe nominees are Saab and Saturn. The good thing about Saab is that someone will buy the company if GM sells it. The good thing about Saturn is that it can be shuttered somewhat painlessly with a far smaller dealer network, and the lessons learned can be transferred to other GM dealerships (no haggle at ALL GM spots? hmm). Plus, the current neglected by the mass market Saturn lineup could immediately be inserted into the Chevy lineup with little pain and much gain.

The solution is obvious. Will it be obvious to GM?

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