The General's mess

What it's all about:

You must remember this: Pontiacs weren't always just rebadged Chevys, Holdens, Daewoos and Toyotas.

Not so long ago, each of General Motors' brands produced distinct cars with dedicated engineering. In fact, in 1977, when Oldsmobile underestimated demand for the famed Rocket 350 V8 in its Delta 88, it substituted similarly sized motors from Chevrolet (which, it will come as a surprise in today's world of cross-brand duplication, were distinctly different engines). Owners -- truly fanatical, to be sure, but isn't that the point of marketing? -- successfully sued General Motors for misrepresentation.

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Indeed, what does it say when Pontiac's lineup consists of a front-wheel-drive econobox based on a Daewoo (the G3), a mini-minivan engineered by Toyota (the Vibe), the uninspired G5 liberated from Chevrolet and a brutish rear-wheel-drive muscle car built by Holden? How in the blankety-blank-blank (please feel free to insert your own expletive here) does this gel into vice-chairman of Global Product Development Bob Lutz's assertion that Pontiac would be GM's BMW?

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Selling all those brands -- Chevrolet, Pontiac, Buick, Cadillac, GMC, Saturn, Saab and Hummer -- in North America alone has proved ruinous. The redundancy, for instance, stretches GM's advertising budget; while Toyota must market but two brands in North America (three if you count Scion), GM must plump up eight.

On a macro level, while Toyota can focus its advertising budget on its Highlander SUV, GM must spread its ad dollars among four competitors -- the Saturn Outlook, Buick Enclave, Chevrolet Traverse and GMC Acadia.

Some will wonder why Buick, which sold only 535,700 cars last year, remains undiminished and Pontiac is restructuring. Though its worldwide sales are not significantly higher, more than half -- 333,000 -- of those Buicks were sold in China, one of GM's bright lights for the future.

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It's obvious GM doesn't have the time or the money to fully develop eight brands for North America. There's no question a radical downsizing has long been inevitable. The question remains whether these steps will be enough...

Chrysler's crisis--an example:

Beefy Ram suffers from bad timing

Chrysler rolls out half-ton truck in spite of downturn

Stay of execution?

Treasury stands ready to aid auto sector

White House shifts stance on TARP funds' use

Strange days indeed. The Democratic-supporting union leader in bed with the Republican White House:

The United Auto Workers union said it is encouraged by the White House's decision to consider rescuing troubled auto companies by using funds set aside to bail out Wall Street.

"We do appreciate the positive statement that was released by the White House this morning that says they are reviewing all options that are necessary -including TARP - to help the industry," said UAW President Ron Gettelfinger...

Mark C.

Update: Back in Canada, $3.3 billion of government money (federal and Ontario) is on tap.

Posted by markc at December 12, 2008 09:52 PM