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Choice, an American tradition in automobiles
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Can GM survive the accountant's product slashing?
If you like choices, now is the time to look for a new car. Why? Well, our choices are quickly disappearing. In the past two weeks, GM has announced it will discontinue Pontiac and GMC by the end of 2010. GM will also attempt to sell Saturn, Hummer and Saab. And they have already said that they will close Saturn and Hummer if a buyer cannot be found. The folks over at Chrysler have been slashing nameplates quicker than you can say, “What’s an Aspen?”
It was not long ago when choices were limited. If you wanted an American car you picked from several trim levels; two door, four door or station wagon bodies or maybe a convertible. That was it, no mid-size, compacts or sporty cars. Oh, and you could select a pickup truck, that’s as close to a SUV as you’ll get. Back then, if you wanted something different you chose a different manufacturer. This is the reason each manufacturer had many divisions, GM with Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac. In its heyday, Ford split the cars lines as Ford, Mercury, Edsel, Lincoln and Continental. Not to be outdone, Chrysler used Plymouth, Dodge, Desoto, Chrysler and Imperial to divide its offerings. While styling was different between divisions they shared many components including engines. The exception to this was GM where each division proudly flaunted their unique engine designs.
During the 1950’s the big three used their money and position to change styling every year. Such a financial strain was put on the independent US manufacturers that they couldn’t keep up and lost market share, finally succumbing and going out of business. The irony is that by eliminating the choices Americans had with Studebaker, Packard, Crosley and other independents, the big three opened the door to the rise of the imports during the 1960’s. Face it, the American consumer demands a choice. American companies were forced to react by creating model lines within each brand, hence the birth Fairlane’s and Chevelle’s, Barracuda’s and Mustang’s. Later, the import manufacturers utilized the same strategy and Lexus, Infinity, Mini and Acura were born.
For 2009 we can choose from cars made in the US, Canada, Mexico, Europe, Japan, Korea and Australia. And soon we will see cars and trucks from India and China. But we are at a peak. The economy is forcing a retrenchment and with accountants taking control of GM and Chrysler, the first things to go are the marginal car lines. A few years ago, we saw GM eliminate Oldsmobile and Chrysler cut Plymouth. These brands tended to duplicate models with only minor trim and price variations. The situation only drained sales from other brands within each company. But Pontiac is a different story. Targeted to a performance-oriented clientele, Pontiac’s nameplates such as Vibe, GTO and GTP are not sold by other GM stores. The brand has a loyal following and will leave a gap in GM’s lineup. But as performance cars, they don’t have the sales numbers that an accountant would support. So out they go. Even one of Pontiac’s bright spots in sales, the Solstice, will get the axe and that is too bad, as it is a great car, but not too practical. We can only hope that someone will buy Saturn and keep the Sky, Solstice’s kissin’ cousin going. Even that will be difficult as the Sky is one of the few Saturns that is not unique to Saturn, using GM engines and other standard GM components.
My concern is that this will not stop here. With government control of GM’s finances, engineering and production, they will control what gets built, and therefore what is available for sale. The cost-saving temptation is to keep what you’ve got, eliminate anything that does not have a large sales potential, (gee, sorry Corvette) then beat on the suppliers for lower prices. This will certainly lower internal expenses but reduces consumer choices. Unfortunately accountants only see success in lower costs. They are not in tune with consumer tastes, needs and desires. One only has to look at the legacy of Roger Smith’s tenure at the helm of GM to see where this is going. Smith was an MBA and rose to the presidency through the accounting ranks. It was during his tenure that began in 1981 that GM consolidated designs and powertrains, making “look-alike” cars throughout the different brands. It can be said that the current problems are the result of the decisions made during his time. If GM repeats those mistakes now, without carefully studying history, then GM is doomed.
Chrysler faces similar problems within bankruptcy but the Fiat folks have a pretty good product track record and will have enough say to keep things interesting product-wise over at the Pentastar brand.
So where will we find choices? Certainly savvy auto companies will recognize the void and be more than happy to fill it. If it is Ford, then American manufacturing will stand a chance. But it may be a foreign make that can capitalize on the consumer demands and benefit greatly.
Hopefully, there are a few strong voices within GM that can prevail and maintain the style, variety and selection that made GM such a powerhouse in the first place.
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