MT: "The Product GM Needs If it Survives Bankruptcy"

[Scotsman]

DETROIT - I was encouraged to hear General Motors CEO Fritz Henderson evoke Alfred P. Sloan Monday afternoon, hours after his company filed for bankruptcy. Forget what some news outlets say about the unprecedented Chapter 11; GM has been on the precipice before, in 1910, the early '20s and thanks to Roger Smith, in 1992. Henderson said he would take inspiration from Sloan during the Chapter 11 reorganization he expects to be completed in 60 to 90 days. "I ask myself, well, what would he do if he was in my shoes? Well, he never was, but early in his career he did have a crisis. What he did was he did his job."


And his job was to move lots of product. Sloan was promoted to president of GM in 1923, the year he developed the "price ladder" of the five brands the company had that year. He also developed annual styling changes, or "planned obsolescence." Sloan built an auto company that was the antithesis of chief rival Henry Ford's ideas about the industry. After Sloan went overboard in the late '20s, slicing and dicing the collection of automakers that GM assembled into 10 brands and sub-brands, he cut back to six during the Great Depression and handily outsold Fords and Lincolns.

Henderson has four North American brands; Chevrolet, GMC, Buick and Cadillac, and fortunately, Opel/Vauxhall in Europe to help retain GM's global reach. He said Monday that even left with a minority stake in the company, Opels (and Vauxhalls) will continue to share platforms and drivetrains with North American models, with some room for "regional" variations. Global "rationalization" means that an Epsilon-based Opel could be built in a Chevy-Buick factory, and vice versa.

GM didn't "rationalize" in time for the Saturn Astra, which was built in Belgium. Beside its odd European switchgear, the Astra suffered lack of profit margin. It was built for euros and sold in Saturn dealerships for about $18,000 to $22,000 at a very unfavorable exchange rate. Saturn isn't a problem, any more. So what to do with the four surviving North American divisions? My colleagues have been agonizing over the end of Pontiac, but that brand was too easy to cut, if just to avoid funding a next-generation G6. In the '50s through '70s, GM could afford to launch all the cars on one bodysize -- say Chevy Chevelle/Pontiac Lemans/Olds Cutlass/Buick Skylark -- in the same model year. Now it staggers, for example, Epsilon-based cars at different times, so you always had Chevy Malibu, Pontiac G6, Saturn Aura, etc. on different cycles, on different versions of the platform. That probably won't change, but GM won't have to cycle in G6, Aura and Saab 9-3 into the Epsilon platform any more.

Under Sloan, Pontiac was "Chevrolet-plus," A-body cars with optional eight-cylinder engines you couldn't get in the Chevys. Chevy and Pontiac finally got V-8s in '55, and for 1959, Pontiac became the Wide-Track division. It made the easy transition into Grand Prixs, GTOs and Firebirds in the '60s. But by the mid-'70s, it had nothing you couldn't buy as a Chevy SS, until Bob Lutz tried to revive the "excitement division" with the GTO, Solstice and G8.

Buick was the mid-priced brand to keep, because of its success in China. Maybe the fact that Henderson's first car was a '69 Buick Skylark helped, and I'd bet that at least one old timer still shuffling around the Renaissance Center argued that William C. Durant founded GM on the back of Buick in late 1908.

Buick doesn't need entry-level models priced just a few bucks more than similar Chevys, and the 2010 LaCrosse, starting at nearly $28,000 is a good second step after the Enclave. A 2012 Cruze-based Buick compact should start somewhere around $23- to $24k in current dollars, and the division needs a Chrysler 300 killer to replace the slightly better than mediocre Lucerne.

Many of you will argue that GMC should offer something different or go away. That makes car-guy sense, not business sense. Buick dealers need GMC just like Lincoln dealers need Mercury. GMC and Mercury provide volume and even though they're just badge-engineered, provide easy profits at minimal additional costs over Chevy trucks or Ford cars.

Cadillac needs more World Class luxury models like the CTS. Henderson understands that it takes two lifecycles of a good model to change the perception of a brand in a market like Western Europe, so you can't count the first CTS. If the MKIII CTS is an improvement even on the MKII CTS, it will be the mid- to late-teens before Cadillac can become the Standard of the World, again. But it's a worthwhile and achievable goal, even for a bankrupt automaker.

That leaves Chevrolet, the most important of GM's brands and the one that needs the most work. Low-volume '11 Volt aside, Malibu is a worthy Camry/Accord competitor, the Traverse is selling fairly well and the '10 Equinox looks promising. But the Impala is old, and a Zeta-based replacement is off the table and the C7 Corvette has been put on hold. On the truck side, Chevy needs a low-volume Suburban in the future, but probably doesn't need a Tahoe, too.

I've had high hopes for the 2011 Cruze (except for the name) to take advantage of showroom traffic raised by the Volt. Paul Horrell's and Angus MacKenzie's reviews have deflated those hopes. Perhaps the 1.4-liter turbo slated for North America will help. After Corvair, Vega, Citation, Cavalier and Cobalt, Chevy needs to somehow get its act together on small cars.

I blame Roger Smith. Why not? He's responsible for GM's problems from the '80s right up to Monday's bankruptcy. If he had sunk the money he spent on Saturn into a proper Chevy small car program instead, GM might have a real Civic competitor today.

And under Smith, GM went from a mostly rear-drive to mostly front-drive automaker in one quick, ugly decade. Even with the 2012-16 CAFE standards, it needed better balance; front-drive for small and midsize cars and rear-drive for big and premium cars. Besides various-sized premium RWD for future Cadillacs, it needs an affordable small rear-drive platform for a next-generation Camaro to compete with the Hyundai Genesis coupe. And it needs a lighter next-generation rear-drive platform for Chevys, Buicks and maybe Opels.

GM can't spend money on any new platforms right now. It can't afford delaying them, either. Put it off for too long and another recession comes along, delaying everything ad infinitum. The product gets old and looks bad next to the competition, and then GM has to spend more marketing cash to prop up the product and tread water. Product is what Alfred Sloan knew well ... marketing is what Roger Smith thought he knew.

http://blogs.motortrend.com/6548966/...tcy/index.html

[FenwickHockey65]

My dad hates Roger Smith with a burning passion...

[Scotsman]

If they really listen to consumers and respond likewise with products we consumers demand GM will be alright. Turning every car into some FWD full electric/hybrid isn't the way. You'll satisfy Hollywood's sterile elite and those that worship them but not real consumers who desire all around outstanding and emotionally appealing product. Camaro needs to and should be a core product in the GM product stable. It has history, connects with consumers and reminds many why they should buy Chevy, GM, and most importantly help support the domestic auto industry. GM, Fritz, Settlemire...I hope you guys read this. Thanks for the fine work you guys are doing to turn this situation around. Products like the Camaro and CTS validate the progress being made at the "new" GM.

[stovt001]

Hmm, smaller RWD platforms. What a concept.

Great article. I think they need to hold off bashing the Cruze. The complaints they had with the European engines were typical Euro engine characteristics, and the 1.4 turbo engine should work just fine. Otherwise, I think they nailed precisely what GM needs.