GM vs Hog

Want a bit of an idea as to the trouble GM might be in (and by extension, Saab as well)?  With the announcement today that GM is cancelling it’s Zeta platform and doing a reshuffle, the news that follows seems quite timely.

10 years ago, Harley Davidson was in financial trouble.  Big financial trouble.  10 years ago ‘The General’ was, as it is now, the world’s biggest car maker.  But big doesn’t necessarily mean strong.

From Just-Auto.com:

The great big truth of the motor industry became even clearer on Friday when General Motors became a smaller company than Harley-Davidson: premium brands rule OK. GM is famously involved in trying to nurture 16 brands simultaneously ranging from the once-great Chevrolet to the recently well-regarded Saab.

Harley-Davidson meanwhile is the once-bust Harley which was revived in one of the most famous motor industry TLC operations of all time. Ten years ago, it really started to reverberate and if you had bought a share for $6 then you would be delighted to find that you could sell it for $60 today. A ten-fold improvement in 10 years means that owners of the stock are as happy as owners of the bikes.

Admittedly Harley is now more about high-margin belt buckles and T-Shirts than retro-bikes, but whatever the profit ingredients – the management of one automotive brand had created a company worth $17,562m by Friday. GM on the other hand was valued by the world’s stock markets at $15,889m on Friday. Had you bought a GM share for $32 10 years ago you could sell it for $30 today.

To those of you out there that wave your hands and say that without GM, Saab wouldn’t exist any more, I give you Harley Davidson.  I give you Porsche.  We’ll never know, but perhaps with a few different twists and turns in the road, things could have turned out alltogether different.

Whatever the situation, we’re in it with GM now.  The question is: how to turn it around?  Labour costs are high and will remain so for some time, in the US at least.  So it comes down to the cars.  How many different brands and how they’re developed.  GM may be able to massage some more profitable margins over the next few years, but in the meantime, they’re going to need to bring out some damn satisfying cars in order to maintain customer loyalty and thereby take advantage of those margins in the future.

GM management have come out and said that they’re committed to the Saab brand as their globally distributed premium product.  Yet they’ve contaminated a predominantly Swedish lineup with hybrids from Japan and the US that don’t translate directly into the Saab ethos.  Yes, an AWD variant was a necessary model to introduce and time will tell whether the 9-2x and 9-7x will be regarded as Saabs or as anti-Saabs.  My money would have sat safer on an AWD addition to the 9-3 Sport Combi.  But that’s just me, a humble blogger.

There’s been a bit of discussion on the BB’s around the Saabosphere about how Ford have done it properly with Volvo.  They’ve developed common platform vehicles but allowed Volvo to retain it’s identity.  There’s little to suggest that some Volvo models share their basic structure with some of their blue-oval cousins.  This has taken some courage, but has paid off with Volvo retaining a reputation for safety and an individual identity – appealing factors for the discerning, cashed up car buyer.

Except for the 9-3 Sport Combi, GM’s most recent dealings with Saab have all been met with some cynicism, a factor that often overshadows whether the cars are decent or not (which the 9-2x and apparently, the 9-7x are).  Normally, you have a situation where an influential premium product will have a trickle-down effect, making it’s lesser siblings better.  What GM have done with these two new models is let the common-ness trickle-up.  Call it automotive snobbery if you like, but as the story above indicates, premium brands sell.

I’ve said it before and I’ll say it again:  GM needs to let Saab lead from the front.  Let them design and produce fantastic cars that inspire and satisfy their drivers.  They’re really good at it.  Don’t expect huge numbers.  Expect killer products.  Expect new technologies and designs that can trickle down and improve the rest of the range. 

Allow for some individuality, some expression.  Grab hold of the fact that customers can be Free Thinkers.  Ask the guy who’s tossing up between the 9-3SS and an Audi or BMW – the days of buying an American vehicle just because it’s American are over.  They’ll buy what they need/want because it’s good.  GM is currently synonymous with the words ‘corporate giant’ and ‘badge engineering’.  Until GM becomes synonymous with style, innovation, safety, power and quality, it’s going to be a declining case of same-old, same-old.

Let Saab lead from the front.  Race them.  Get some credibility with the motoring press and more importantly with the customers, the ones whom you’re asking to shell out some not-insignificant amounts of money.  Tap into the grass-roots support you’ve already got and build on it with superb cars that stay true to their origins and meet their customer’s needs.

GM smaller than Harley Davidson.  Whodathunkit?

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6 Comments

  1. GM don’t have much history nurturing brands. They have used so many badges in NZ that I doubt many non-auto types even know what GM make. GM here have used Holden, Opel, Isuzu, Pontiac on mass market cars and have dabbled with a few other brands.
    I wonder if Fiat Auto’s “escape from GM” will save its character or hasten its demise (or both!). I think no Fiat may be better than whatever GM Fiat would have been & perhaps the same for Saab.

  2. G’day Robin. You doing raindances over there in NZ? Enquiring cricket minds want to know!!

    I’m not sure I get your last paragraph there. Do you think that a GM Saab would better designed and built than an independant Saab if they had been able to go it alone and been well resourced?

  3. HI, I don’t follow cricket, insane game. Mind you given the state of the NZ team I’m not missing much!

    What I was trying to say was GM seems to kill any character in the brands they own. Perhaps the best way to retain brand identity is to remain independent but its very tough for small companies to survive. Look at the mess that is MG Rover.

    You mentioned Porsche and BMW but Porsche is all high margin product and BMW isn’t really that small. Last figures I saw were about 1 million cars for BMW, 150k for Saab.

    If you can’t maintain the character that “is” the brand perhaps its better to close down.

    For example: Does it matter if Alfa Romeo are using Holden sourced GM engine components? If you fire up the engine and get that distinctive Alfa sound/feel/performance then I’d say no, but if its just a Commodore engine in an Alfa body I’d rather they didn’t bother at all.

  4. Robin, hopefully we can all take some heart in the news above….i.e. that Saab’s designers are back on track and looking into new vehicle concepts. Like you say, it’s about the distinctiveness of the brand. I’m hoping they can maintain it.

  5. Ok, believe it or not, I am a GM employee in the US. I agree w/ Robin. In the states the similar thing happened to Oldsmobile, the oldest vehicle manufacturer in the US. Legendary racing, technology, innovations. Always a GM brand, virtually from start up, however, after the 80’s, which all Gm brands shared the same car with a different name badge/tag emblem on them, they decided to individualize their brands, and although they still share the guts, the cars started to get their own styling on the outside. Wahtever, they all still had that distinct “GM” look, nothing that got away from the big GM Umbrella. Eventually, they messed up Olds, a good product, by trying to make it competetive with other brands, mainly the imports, Toyota, Nissan, Volkswagen, etc.

    What happened to Oldsmobile, a long time GM brand, distinctive, innovative segment that put out a good product. It’s gone, along with it’s heritage and history, the oldest auto manufacturer in the US was phased out, becase according to GM, it was no longer profitable. Saturn, Saab and Pontiac seem to be following.

    There it is.

  6. Thanks Mo. always god to get an insight from the coalface. One of the disadvantages of being stuck downunder!!

    I was reading yesterday how even Bob lutz is forecasting that another brand may have to die soon. It’d be a real shame if it was Pontiac. I don’t think it’ll be Saab because of their global position, but Saturn’s a comparatively new brand, right?

    It certainly seems like there’s too many to manage effectively.

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