Many foreign companies have found great success with a two brand strategy -- a luxury brand and a general consumer brand. Examples of this include Honda and Acura, Toyota and Lexus, and Nissan and Infiniti. GM, for years was the antithesis of this philosophy, merging scores of brands and buying even more, like Saab. It would have 20+ sedan models offered across its scores of brands, leaving consumers with a confusing array of choices.
Now that the company has been forced to restructure, it's being pressured to take a long hard look at this strategy, and consider cutting off its laggard. GM has a base brand -- the Chevy brand -- and a luxury brand Cadillac. It also has a "tweener" brand, Buick, which while seemingly an odd man out has sold well in China and other foreign markets.
GM has already spun off Opel and has plans to cut Saab, Hummer, and Saturn. Now, according to new reports, in preparation for a bankruptcy filing June 1, GM may cut even more brands -- GMC and Pontiac. The move would cut much deeper than the company's rejected February 17 recovery plan, which called for slashing only Saab, Hummer, and Saturn -- leaving five of GM's eight brands intact. The new plan could cut five of the eight current U.S. brands leaving only three remaining.
GMC, a light truck brand, stands a better chance of survival according to sources. However, the brand dangerously overlaps with Chevy's existing truck offerings. Pontiac, while more diverse than GMC, includes sedans, sports cars, and crossover utility vehicles (CUVs).
In 1978, Pontiac sales peaked with 896,980 cars sold in the U.S. and 9.55 million vehicles sold worldwide, including the popular Firebird. GMC started as Rapid Motor Vehicle Co., founded by Detroit, Michigan brothers Max and Morris Grabowsky in 1902, and was sold to GM in 1912. GMC produced, according to GM, the first vehicle to bear the characteristic "truck" design in 1915.
GMC saw its sales plunge 26 percent last year to 376,996 vehicles in the U.S., however, it remains GM's second largest brand behind Chevy.
Renee Rashid-Merem, a GM spokeswoman declined to comment on the possibility that GMC and Pontiac could be cut, but did not deny it. She stated, "We are continuing to assess our global operations, brand portfolio and nameplates, and will take further actions to more aggressively restructure our business. It’s premature to comment on what those actions could entail."
GM is reportedly planning to close 2,100 of its 6,200 dealerships across the U.S., a move that goes hand in hand with the brand slashing. It is reportedly sending letters to dealerships telling them that franchise agreements will not be renewed when they expire June 1.
Ultimately, GM CEO Fritz Henderson says he'd prefer to restructure instead of a bailout. However, GM was reportedly ordered by President Obama's auto task force to prepare a bankruptcy filing. President Obama has stated that he believes a "quick-rinse" bankruptcy is the best option for turning GM around. GM's fate is ultimately out of its hands as it would likely face liquidation without government bailout funding, and thus is forced to comply with the U.S. government's decisions.
