By Brendan Moore
11.27.2008
Bloomberg News is reporting that General Motors is now thinking about dropping several of its brands in order to increase its chances of getting government aid.
GM officials have not yet commented on the report.
GM was rebuffed by government officials last week in their attempts, along with Ford and Chrysler, to secure $25 billion USD in bridge loans for their businesses. GM’s portion of that $25 billion number is approximately $12 billion. Government representatives were not happy with any of the Detroit 3 in the meeting last week, stating that there didn’t seem to be any good plan to exit the hole the car companies are in, and basically told them to regroup and come back later.
The Bloomberg article stated that GM directors are scheduled to review a proposal to shed the brands next week – November 30 and December 1. Lawmakers have scheduled a meeting during the week of December 8 in order to again consider aid to the Detroit automakers, so the dates reported for the GM directors meeting would certainly dovetail with that timeline.
GM has repeatedly stated that it will probably run out of money in early 2009 at their current burn rate and is desperate for federal bailout money. If the discussions regarding the dropping of brands are occurring, it is yet another sign of GM’s growing desperation. Critics of GM have called for reducing brands for years, but with the exception of Oldsmobile earlier this decade, GM has resisted pruning brands. An announcement was made months ago that GM was trying to sell Hummer, but apparently, no buyers have yet raised their hand.
The Bloomberg article cited “people familiar with the plans” in reporting this development, and therefore this could be nothing but a rumor at this point, but the scenario reported could just as easily be accurate. The situation at GM is fluid on a week-to-week basis, depending on just how bad the numbers get.
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I think GM will have an easier time absorbing/eliminating Pontiac, Saturn, and Hummer brands than Saab. The three former brands are US-based divisions, whereas the Saab brand is a subsidiary. It would be easy to discontinue Hummer vehicles altogether, and to market viable/successful vehicles currently sold by Saturn or Pontiac as just “GM”, Chevrolet, or Buick brands. Saab will be more difficult absorb, the brand would have to be killed outright, which doesn’t make a lot of sense as Saab is known as an upmarket brand around the world.
Of course, this is probably just my viewpoint as a die-hard Saab fanatic. These are interesting times, indeed.
I just want all these bad things to stop happening. It’s just one piece of bad news after another.
I don’t care about Saturn so much, and I actually want Hummer to disappear, but it would be a crying shame to lose Pontiac and Saab.
Although a shame, it makes sense. I always thought Pontiac would be next to go. Chevy already makes cars with sporty intentions, why have another brand do the same. Merely basing it off of styling doesn’t work anymore as Pontiac does not have that following anymore. Future plans of the G8 and Solstic’s successor have been cancelled before the market dropped. And there is no successor for the G6 in the pipelines. In fact there is nothing in the future Pontiac, so it seems as though GM already planned to send Pontiac to Oldsmobile heaven. Saturn is another over-lapping division. Hummer was a bold move at the right time 5 years ago, but now is considered an embarrasement/thorn in the ass. Hell, even Buick is treading on thin ice as far I see it.
GM can be two things: Chevy and Cadillac and cover all basis with two names. I even agree with Kevin Miller by deignating them as GM, but I think those two names carry enough positive weight to continue to “rebuild” upon.
If worse comes to worse, hopefully the Swedish government will nationalize Saab. As to Pontiac–who cares? If unavailable, most Pontiac shoppers would buy a Chevrolet. Saturn was a great idea. Too bad it didn’t pan out. But what about GMC trucks? They’ve never been anything but ‘tarted’ up Chevy trucks. What purpose do they serve? Hummer? Oh, please…
I don’t know if the Swedish government will nationalize Saab but there was some old rumors from 2005 who mentionned then Renault once eyed Saab, I wonder if Renault might jump on the occasion?
Saturn still has very positive brand equity–unlike Pontiac and Buick–so it’s a keeper. GM needs to give it a good, inexpensive entry-level car that reminds people of the S-series.
As a consumer it really doesn’t make any difference to me if you eliminate Pontiac or Buick. My concern is the greed that is rampant in the automobile industry. I realize that the new technology is expensive, however I can not accept the high dollar price tag that is on all of the automobiles on the market today. I will not spend another dime on a new car until I can purchase a reliable new car with a more down to earth price, and know that it will be serviced with truth and integrity and no tricks to sell more parts. I am sick to death of not being able to trust the car sellspersons, dealers, and service departments. So, until the car is built that does not empty my wallet each month and take almost a decade to pay for, and the service department learn how to be honest I will not purchase a new car. I know I speak for many. When I say reliable new car I’m not speaking of something the size of a oversized roller skate. Something with resale value and class is what I am talking about. The automobile manufacturers have gotten way off track with the word profit.
When GM crushed the electric cars, which appeared to be the answer for the future of the world as we know it, they sealed their own fate by letting Toyota and Honda take the lead in energy saving vehicles. Plenty of people were interested in owning an electric car even with it’s limitations at the time of their manufacture