GM: The Good, the Bad and the Ugly

These are extraordinarily difficult times for the global automotive industry as the we’re on the cusp of ushering in major change, the likes we haven’t seen before. By this time next year we’ll see the first mass produced electric vehicles hit the market and by 2012, the number of pure electric and hybrid models will skyrocket.

At the same time, the industry is going through a deep cleansing, one that will rid it of excess capacity, inefficient operations and see several brands disappear. I believe that Ford will replace GM as the largest producer of cars in the US followed by Toyota. Hyundai and Kia will continue to gain market share while Chrysler’s future is hinged on its relationship with Fiat, a very precarious one at that.

GM Faces A Deep Challenge

Looking closer at General Motors, I now see its US operations pared to the point where only three brands will survive. Despite President Obama’s optimism, it’ll take years to settle GM’s debt as both bondholders and union members hold firm. Now that the president has signaled that he won’t let GM die, what do these parties have to lose? A lot if they don’t hold their ground.

The Good, the Bad and the Ugly

In keeping with the tradition of Sergio Leone, I offer to you the following categories to define GM’s future, particularly as it relates to its critical North American base:

The Good — Chevrolet comprises a full 60% of GM sales, therefore the Chevy brand is the face of the new GM. If this brand isn’t healthy enough to compete against Ford, Toyota, Honda, Nissan, Hyundai, Kia and Volkswagen then the company will die.

Cadillac is the premium bookend for GM, a luxury division that needs additional assets. The CTS franchise is a success, the SRX a worthy model, but the replacement for the STS/DTS is a mystery. As for the Escalade, it will probably soldier on as a car based crossover at some point. Lincoln wasn’t much of a threat for the past decade, but now Ford’s luxury division is fighting back, positioning itself to leapfrog Cadillac.

The lifespan of Buick depends on how well the company emerges from restructuring, bankruptcy or not. Its Chinese base is upholding the brand, but in order to be a good middleground brand for GM, it needs some product loving. And quick.

The Bad — The Pontiac G8 is a knock out car, but not enough to keep the brand alive.  Cash strapped GM cannot afford to keep Pontiac alive, so may it rest in peace. The G8 could find its way over to Chevrolet…let’s hope so!

The GMC brand can now die, allowing GM to consolidate Chevrolet trucks with GMC. They’ll be a big battle with Buick-Pontiac-GMC franchised dealers, with some likely to gain a Chevy Trucks franchise in their settlement.

The Ugly — No longer relevant and a big embarrassment, Hummer will probably cease to exist unless a foreign, niche manufacturer buys the brand, its dies and assembles Hummer elsewhere.

There isn’t much that can be said about Saab unless the pending new owner of Volvo makes a pitch for the brand to create Scandinavian Motors. Nope, I don’t see that happening at all.

Pity, poor Saturn — it was once a decent idea that should have been dismissed long before a plant in Spring Hill, TN was built for “a different kind of car company.” Okay, I’m biased: I leased a 2001 Saturn L-Series and actually liked the car, body panel gaps and all.  But, Saturn held Chevrolet back and was always a tremendous financial drain on the automaker. I would hate to see it become a supply house for a Chinese or Indian automaker. Peugeot? Maybe.

Ups & Downs With GM

Life at GM will never be the same, a company whose heritage is a mixture of lousy production methods (pre-1980s), cool technology (OnStar) and stiff competition (Toyota, et al).

If the company does survive, it may eventually have to hook up with another automaker to stay in business. Perhaps Carlos Ghosn would be interested in an automotive troika provided that GM comes to the party without financial baggage.

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