GM is folding its Saturn division. Remember, "A different kind of company, a different kind of car?" Saturn was established to compete with Honda and Toyota 19 years ago. So much for that. The once innovative division will be gone by 2012.
GM isn't just shedding jobs; it's shedding entire brands, some legendary.
The company is also hoping to sell Saab and Hummer. Good luck with the latter, fellas.
Most amazing is that Pontiac will be folded as well. It made some of the most famous and prestigious muscle / sports cars in US history (Trans Am, Firebird, Grand Prix, GTO). The name and a couple of models may survive, but not the once vaunted division.
The company is also hoping to sell Saab and Hummer. Good luck with the latter, fellas.
Most amazing is that Pontiac will be folded as well. It made some of the most famous and prestigious muscle / sports cars in US history (Trans Am, Firebird, Grand Prix, GTO). The name and a couple of models may survive, but not the once vaunted division.
Though still GM’s third-best-selling division, behind Chevrolet and GMC, Pontiac’s sales peaked in 1984, when it sold almost 850,000 vehicles, roughly four times as many as it sold last year.
Pontiac was once the cool, hip brand, desired by young drivers. Obviously, that’s no longer the case.
Folding a brand is a very expensive proposition. GM spent more than $1 billion to buy out dealers at Oldsmobile, which built its last cars in 2004. In 1992, when GM began discussing the end of Oldsmobile, the division sold 412,000 vehicles. Except for Chevrolet, none of GM’s current brands sold that many vehicles last year.
It's hard to reconcile that GM was once an American giant that dominated the US car business. But, it had just 22 percent of US auto sales last year, with more than half of its share coming from a single division, Chevrolet.
It's hard to reconcile that GM was once an American giant that dominated the US car business. But, it had just 22 percent of US auto sales last year, with more than half of its share coming from a single division, Chevrolet.
This once unimaginable turn of events now seems quite emblematic of America's plight in general today. And it may just be a sign of worse things to come.
To most previous generations, the notion that any of the Big Three (much less all of them) could actually go under was unimaginable. In retrospect, their problems seem so avoidable. These companies used cheap credit to sell people SUVs for the last 15 years, knowing full well that we import most of our oil, and that oil is a finite resource. The idea that we have reached "peak oil production" has been discussed for years.
The American auto manufacturers are like lethargic dinosaurs. They haven't been able to respond to the economic realities facing them. Ford and GM have so much overlap in their product lines; identical Fords and Mercurys; identical Chevys and Pontiacs. Some of these brands, and their numerous and redundant models, should have been folded years ago. It would have been sad, disheartening and disappointing to all of the companies involved, but it may have helped save them.
The American manufacturers never faced this kind of foreign competition, or pressure, until the '80s and '90s. You simply can't have five native GM brands while market share is decreasing, and a plethora of foreign brands are increasingly eating into that market share. That's just Economics 101.
The bottom line is this; America can't afford to pay auto workers a livable US wage, in addition to health insurance benefits. Foreign auto makers can make cars much cheaper overseas and here at home because they don't have the health insurance and retirement costs that burden the Big Three.
Advantage; foreign auto makers. Result; they win.
A case for universal health insurance?
Copyright © 2009 Sean M. Kennedy. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the author’s consent.
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Comments: 8
Everybody likes to rag on GM or Ford etc. as dinosaurs being the reason, not really so in reality... Until the price of oil went gonzo, and the economy tanked, everybody was doing fine.
Nissan took its first annual loss in nine years, a whopping $2.9 billion, and Toyota reported its first operating loss in 70 years, $1.7 billion. Japanese sales are at their lowest point in 35 years. The yen’s 23 percent gain against the dollar last year just made a bad situation worse. Japan is getting crushed right now because it has relied heavily on exports, especially to the U.S., to drive economic growth.
Germany's Daimler posted a $2 billion loss or the fourth quarter last year.
These are tough times for all automakers, but the US companies' legacy costs and healthcare costs are a weighty burden.
But, no matter how you slice it, having so much repetition and redundancy between brands has hurt Ford, and especially GM. What was Pontiac anyway; a sports car brand, a modest sedan brand, a cheap economy brand, or the maker of a really ugly SUV, the Aztec?
Pontiac should have been two or three premium sports cars; Chevy should have been a couple of compact economy cars and family sedans; Buick should have been two or three mid-level luxury cars; and Cadillac the premium brand. GM just couldn't figure that out. The brands were muddled, and that's adding to their deep troubles.
New and shiny doesn't have the curb appeal it used to. There is no need for as many brands as there are.