General Motors to trim offerings?
Report: Struggling auto manufacturer shifting its brand strategy, will limit portfolio of vehicles.
May 19, 2005; Posted: 9:59 a.m. EDT (1359 GMT)
NEW YORK (CNN/Money) - Embattled General Motors Corp. is changing its long-time brand strategy by cutting the range of offerings from most of its eight brands, according to a published report.
The Detroit News reported that the world's No. 1 auto manufacturer, which has been looking for ways to stem losses from its core U.S. auto operations, will have a full line of vehicles in the future in only two of its brands -- mass-market Chevrolet and high-end Cadillac.
In the past, most brands were expected to offer a full line of vehicles, from compact cars to a range of light trucks such as sport/utility vehicles, pickups and minivans.
GM's other six brands -- Pontiac, Buick, GMC, Saturn, Hummer and Saab -- will exist as "focus brands" with more limited portfolios in the future, according to a top GM sales executive.
"People say we have too many brands," Mark LaNeve, a GM vice president, told the newspaper. "We have too many brands if we try to do the same things with all the brands."
Not all those "focus" brands have a full range of offerings. Hummer offers only high-end vehicles based on the military utility vehicle, the Humvee, for example. But Buick and Pontiac have numerous vehicles that are essentially twins, while Saturn has been expanding its product line as well in recent years.
Earlier this year, GM Vice Chairman Bob Lutz told analysts that Buick and Pontiac were "damaged brands" due to years of underinvestment in new products. While he predicted both would soon be lifted by new products, he also warned that GM could be forced to drop one or both brands if sales did not improve. The auto manufacturer discontinued the Oldsmobile brand following the 2003 model year.
The move to give the GM mid-level brands more focus could give it some of the savings that could be achieved by dropping one of its troubled brands, said David Cole, chairman of the Center for Automotive Research.
"What they're really doing is taking their divisions and shrinking their number in a de facto way," Cole said.
The move would likely be less controversial than actually dropping a brand and buying out that brand's dealers.
"We've made this clear to the dealers," LaNeve said. "Chevy's got to compete heads-up with Ford and Toyota and all the mainstream parts of the market, and Cadillac needs to have everything it can to compete with BMW, Mercedes and Lexus. The other brands need to be tightly focused."
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