Investors Say GM Must Off One Brand

[Guest Josh]

INVESTORS SAY EVEN MORE CUTS ARE NECESSARY

By Michael Ellis and Joe Guy Collier

Detroit Free Press


DETROIT - What will it take for General Motors to return to profitability? According to the experts on Wall Street, the automaker must do a lot more than just cutting 30,000 jobs and idling 12 plants in North America, which the automaker announced this week.

Not until GM gets rid of at least one of its eight U.S. brands, weathers difficulties at its largest parts supplier, Delphi, and forces its unions into more concessions will the automaker win back favor with investors, they say.

They also want GM to cut more of its manufacturing capacity. In other words, idle or close even more plants.

GM's dramatic announcement Monday of job and plant cuts sent shivers through Detroit, but elicited only yawns on Wall Street.

``We were underwhelmed by General Motors' big announcement of future plant closing and job cuts,'' Shelly Lombard, a senior research analyst with Gimme Credit in New York, said in a note to clients Wednesday.

Wall Street's ho-hum reaction was reflected in GM's stock price. Its shares closed Wednesday at $23.52, down from a closing price of $24.05 last Friday.

``We acknowledge that a journey of a thousand miles starts with a single step, but at this rate GM will never get to the land of milk, honey, fat EBITDA, and bonds that trade at par,'' Lombard said. Her reference to EBITDA is a financial term meaning earnings before interest, taxes, depreciation and amortization.

GM Chief Executive Officer Rick Wagoner said Monday that the cost-cutting plan, combined with a deal to cut health care costs and other measures, would save a combined $7 billion annually, and help the company return to profitability.

But he would not forecast when GM would stop losing money.

Full Story: http://www.mercurynews.com/mld/mercurynews...ss/13254818.htm

[aaaantoine]

Serious investment cash is going into each and every brand at this point. On top of that, these wall street nut jobs are asking GM to rehash the Farewell Oldsmobile episode, the one that Mark LaNeve just recently said GM still hasn't recovered from.

Crap, if you think GM is a junk dealer, why don't you start trading its shares like one? Just start charging 2 cents a share for GM stock. It could be a moneymaking opportunity.

Imagine the shock and horror among this group if Ford decided to off Jaguar, or (just for argument's sake) Toyota dumped Lexus.

They don't care about Buick, Pontiac, Saturn, or any GM brand for that matter.

[prototype66]

I still maintain that if the just ditch the hohum sheet metal for exciting innovative designs and keep production of the best sellers under control most of the year they wont have overstock,which would stop shut downs.The quality is in place!Stop sitting on your laurels GM and get with the program. Hybrid tech in the HHR,Cobalt Malibu,Lacross,G6,vue,ion, Colorado and lambda platform(all) as an option to compete,o hell across the board,why not have hybrid on all cars and trucks!Pull $3.00 an hour for insurance like the rest of the workforce. NO MORE BONUSES FOR SUITS!!!PERIOD!!!!! Until profitability returns! Yes I realise im just stating the obvious.BUT, if it is so obvious why don't they see it?!?!?Ditch the jobs bank @ 95% pay. no one else that I know is still using 1970 business plan stratagys.Fair trade agreements HAVE to be faced .When the opposition is using ultra cheap labor the should be made to compete on a equal playing field or they can NOT import their goods to us! signed, Mr Obvious :angry: Edited November 25, 2005 by prototype66

[thegriffon]

Ford dumping Jaguar is a regularly suggested, but then there is the issue of Jaguar's AJ-V6 and AJ-V8 being so widely used by Ford and Mazda.

[Jazzhead]

Each GM brand represents a vast dealer network, a terrible asset to lose. GM shouldn't forget as it cuts capacity that avoiding losses in bad times is only part of the strategy - being able to reap the rewards in good times is even more important. Brand engineering lets GM sell similar products to different demographics. It expands the market when times are good, and helps retain marginal sales when times are tight. I agree with those that believe GM's fundamental problem is a shortage of really good designs. That's changing, but as important as a new deal with the UAW is a class-leading RWD platform for mainstream sedans. Edited November 25, 2005 by Jazzhead

[prototype66]

Each GM brand represents a vast dealer network,  a terrible asset to lose.    GM shouldn't forget as it cuts capacity that avoiding losses in bad times is only part of the strategy - being able to reap the rewards in good times is even more important.  Brand engineering lets GM sell similar products to different demographics.    It expands the market when times are good,  and helps retain marginal sales when times are tight.

I agree with those that believe GM's fundamental problem is a shortage of really good designs.    That's changing,  but as important as a new deal with the UAW is a class-leading RWD platform for mainstream sedans.

[post="48197"]<{POST_SNAPBACK}>[/post]

exactly!

[Mule Bakersdozen LS]

Pikachu, I choose Saabaru (if we had to kill any brands). I like Saab, but not over Cadillac and the others. They have (had?) potential, but it went to useless rebadges and their products are aging.

[Guest buickman]

We don't need to drop a brand, we need to drop a Chairman.

[aaaantoine]

I hear Saab's performance is greatly improving. Oh wait, maybe that's Opel...

[ehaase]

I posted this exact article yesterday here, but no one responded to it.

http://www.cheersandgears.com/forums/index...870&#entry47870

[CaddyRich]

Too bad all the Wall Street types stuck their noses up in the air on the way to the M-B, BMW and Lexus dealers...and now these jerkoffs suddenly know what would fix GM? They are only concerned with what would help their portfolio.

[aaaantoine]

I posted this exact article yesterday here, but no one responded to it.

http://www.cheersandgears.com/forums/index...870&#entry47870

[post="48206"]<{POST_SNAPBACK}>[/post]

It all depends on who catches the thread.

I bet I miss a crapload of stuff just because it's not one of the newest threads.

[aaaantoine]

Too bad all the Wall Street types stuck their noses up in the air on the way to the M-B, BMW and Lexus dealers...and now these jerkoffs suddenly know what would fix GM? They are only concerned with what would help their portfolio.

[post="48211"]<{POST_SNAPBACK}>[/post]

That's the point I was trying to make.

These guys want GM to do better so that they can trade up to that S-Class Mercedes... And they wonder why GM is unprofitable.

[wildcat]

It disappoints me that Wall Street and others are so insistent on having one of GM's brands become a sacrificial lamb. I honestly see GM working its way out of this mess, if they do it right and pay no mind to negativity.

[buickguy]

I don't get the suggestion to cut a brand. Many GM brands outsells so many other brands out there. If GM has to cut something, it should sell Saab. Saab lovers want it to be independent anyway, and its sales in the U-S are extremely weak.

[Cory Wolfe]

Investors, analysts.... they're all idiots if you ask me.

[Cadillacfan]

Saab is going to break even soon according to GM so what would be the point of dropping it? What GM needs to do is continue to merge Buick, GMC, and Pontiac into one dealership and offer unique niche vehicles that aim at different parts of the market. They can do it but GM needs to hurry the hell up.

[cmattson]

If GM has to cut something, it should sell Saab. Saab lovers want it to be independent anyway, and its sales in the U-S are extremely weak.

I couldn't agree more! I don't think these analysts are being fair here. How long ago did they announce their B-P-G plan? I hardly think GM's gotten the ball rolling on that plan, let alone reaped any sort of dividend from it. I don't think the BPG grouping is a bad plan at all: it lets GM keep all of it's historied brands and let it reduce vehicle overlap & the badge-engineering everyone's complaining about (but apparently isn't an issue for the MDX/Pilot or the etc, etc, etc). Saab definately is a different animal of sorts. GM received a LOT of negative press when they removed Oldsmobile from it's lineup. But the sale of it's stake in Subaru? Hardly gathered attention. Matter of fact, more attention was paid to who bought it as opposed to GM selling it's interests. I think Saab would gather a similar response -- especially since it isn't a long-standing GM brand.

[CaddyRich]

Unfortunately, GM's servitude to it's investors does absolutely nothing to help the problem of selling cars now..not when "all this great stuff" finally hits the dealer's lots. "Opening your tent" to the press, investors, and analysts so that they can see what's on the way does nothing but stagnate the units sitting on the ground. For example...cars like the Solstice and Lucerne should have been out 8 to 10 months ago instead of hitting the press circuit for what seemed like forever.

[buickguy]

GM just needs to get cool vehicles to the marketplace, pronto! Cutting a brand will hurt more than it help. Customers of the brand to be cut will go elsewhere, and the bad press will hurt GM overall. Imagine the headlines if they cut Pontiac: "World's Biggest Automaker Cuts Performance Division" Buick: "World's Biggest Automaker Cuts its Highest Quality Brand" What are buyers supposed to think? It will make GM look weak, no matter what brand they would cut. In the U-S, those two brands outsell Mercury, Lincoln, Infiniti, Lexus, Acura, Saturn, Saab, Mercedes and BMW. What f--in sense does it make to cut a brand?

[usa1]

Saab is an easy choice to dump. It's never made money, and it has promised profitability for years. It's nothing but a costly distraction to GM. It's hard to see any future in Buick. It's products don't appeal to new buyers and I don't see that changing. Mark

[aaaantoine]

Investors, analysts.... they're all idiots if you ask me.

[post="48228"]<{POST_SNAPBACK}>[/post]

We are sort of analysts in our own right, you know.

Granted we don't get paid for our opinions...

[Cory Wolfe]

Granted we don't get paid for our opinions...

Exactly. They don't deserve to get paid. That's why they're idiots. :P

[prototype66]

Ive said it before and ill say it again. You dont dump an entire division! You streamline each division and drop copycats and dead wood. If three or four division make esentially the same car, take the best of all and condence into one or maybe two cars. If it has a truly loyal following, they dont care what division its under, especially if they see its greatly improved and retains the features that drew them in to begin with. The next step would be of course, GOOD PR AND REALLY GOOD DISCRIPTIVE ADVERTISING!!!imp of corse

[carman21]

I hate to be harsh but, if GM must off a brand it should be Saab. Saab is the least useful brand for GM. Saab has potential but,Buick should be GM's Acura so to speak. GM should sell Saab to DCX or anybody who'll buy it. GM needs cash. I don't think GM needs to kill or sell any brand.

[Flybrian]

Here's the question: Okay, you 'off' SAAB...kill it, sell it, donate it, whatever. How much benefit does that provide?

[CaddyXLR-V]

Here's the question: Okay, you 'off' SAAB...kill it, sell it, donate it, whatever. How much benefit does that provide?

[post="48285"]<{POST_SNAPBACK}>[/post]

It provides alot less investment, for only 40,000 less sales per year. That investment could go into another brand, which could easily make up those 40,000 sales, with the lower costs from not having to market a separate brand.

[jbartley]

gm raelly can't cut any brand, they've made their bad, now they must sleep in it...

[VenSeattle]

hard to see any future in Buick.  It's products don't appeal to new buyers and I don't see that changing. 

Mark

[post="48242"]<{POST_SNAPBACK}>[/post]

About 50% of LaCrosse buyers are NOT considering other GM vehicles. Lucerne is receiving amazing reviews. The Rendezvous has always had a high percentage of conquest sales.

I know there isn't another GM brand that I'm really interested in.

[FUTURE_OF_GM]

It's a very sad day when the media and analysts, who know nothing of GM's future product strategy, DEMAND that GM destroy another one of it's historic divisions...

This is ridiculous.... That GM is being hounded by the press and people not associated with the industry to kill off another brand. When will it end?

I'd bet never...

GM has too many divisions, said Erich Merkle, director of forecasting for IRN, an auto consulting and research firm based in Grand Rapids, Mich. ``As they fix one, another one comes undone.''

You know... I think this statement might hold water IF GM had fixed any of it's divisions in the first place...

The only division remotely "fixed" is Cadillac.

GM will finally replace its full-size sport-utility vehicles early next year, seven years after the current models were launched in 1999. Toyota often replaces its vehicles after four or five years on the market.

LMAO... Yeah... Like the GM trucks weren't a good enough design to last 7 years and as if Toyota has put out a new Tundra (Which is a failed product in the first place) in the past 5 years (Not freshened... NEW. GM "freshened" the 800s a few years ago)

[FUTURE_OF_GM]

I still maintain that if the just ditch the hohum sheet metal for exciting innovative designs and keep production of the best sellers under control most of the year they wont have overstock,which would stop shut downs.The quality is in place!Stop sitting on your laurels GM and get with the program. Hybrid tech in the HHR,Cobalt Malibu,Lacross,G6,vue,ion, Colorado and lambda platform(all) as an option to compete,o hell across the board,why not have hybrid on all cars and trucks!Pull $3.00 an hour for insurance like the rest of the workforce. NO MORE BONUSES FOR SUITS!!!PERIOD!!!!! Until profitability returns! Yes I realise im just stating the obvious.BUT, if it is so obvious why don't they see it?!?!?Ditch the jobs bank @ 95% pay. no one else that I know is still using 1970 business plan stratagys.Fair trade agreements HAVE to be faced .When the opposition is using ultra cheap labor the should be made to compete on a equal playing field or they can NOT import their goods to us!

                                                            signed,
                                                            Mr Obvious :angry:

[post="48169"]<{POST_SNAPBACK}>[/post]

I agree 100%!!!

The cars must ATTRACT people befroe they can ever hope to sell.

[FUTURE_OF_GM]

Too bad all the Wall Street types stuck their noses up in the air on the way to the M-B, BMW and Lexus dealers...and now these jerkoffs suddenly know what would fix GM? They are only concerned with what would help their portfolio.

[post="48211"]<{POST_SNAPBACK}>[/post]

EXACTLY!!!

Wall Street is just as much of a business as anything else. If people believe that these analysts have GM's best interest in mind then they're crazy.

As always it's a lose/lose situation for GM...

[daves87rs]

Imagine the shock and horror among this group if Ford decided to off Jaguar, or (just for argument's sake) Toyota dumped Lexus.

They don't care about Buick, Pontiac, Saturn, or any GM brand for that matter.

[post="48166"]<{POST_SNAPBACK}>[/post]

Why should they? They are in it for the money, that's it. It's not like they are going to get all touchy feely about GM or any company...

[daves87rs]

We don't need to drop a brand, we need to drop a Chairman.

[post="48202"]<{POST_SNAPBACK}>[/post]

We need to drop more than that....

[daves87rs]

Saab is an easy choice to dump.

It's never made money, and it has promised profitability for years.  It's nothing but a costly distraction to GM.

It's hard to see any future in Buick.  It's products don't appeal to new buyers and I don't see that changing. 

Mark

[post="48242"]<{POST_SNAPBACK}>[/post]

I can agree with Saab-but Buick could still be useful.....

[Flybrian]

These investment analysts...how many of their members are made up of people who've worked in the auto industry? Serious question. Any? Or all they are fresh-out-of-B-school grads who formulate textbook theories?

[daves87rs]

Here's the question: Okay, you 'off' SAAB...kill it, sell it, donate it, whatever. How much benefit does that provide?

[post="48285"]<{POST_SNAPBACK}>[/post]

You sell it and cut your losses.That's it.

the benefit is that there is less money wasted on a dying brand....

[daves87rs]

EXACTLY!!!

Wall Street is just as much of a business as anything else. If people believe that these analysts have GM's best interest in mind then they're crazy.

As always it's a lose/lose situation for GM...

[post="48546"]<{POST_SNAPBACK}>[/post]

Yep. :(

[Sixty8panther]

[BuickEight]

About 50% of LaCrosse buyers are NOT considering other GM vehicles. Lucerne is receiving amazing reviews. The Rendezvous has always had a high percentage of conquest sales.

I know there isn't another GM brand that I'm really interested in.

[post="48535"]<{POST_SNAPBACK}>[/post]

I'm not interested in anything but Buick either. Caddy is nice, but too flashy and too expensive. I've been driving a Pontiac for the past nine years now, but they just don't seem to get me excited anymore. I'm really looking forward to getting a Buick again. It would be nice to have something more refined than the typical shoddy built Pontiac. They're good, reliable cars, but both have started to rattle like all hell once they had about 10 miles on them...seriously.

[bobo]

Oldsmobile was my brand, and now it's gone. Buick was also one of my favorite brands because there were so many Buicks in the past that I liked--the G-body Regal, the '90 Park Avenue, '79 Riviera, '87 LeSabre T-Type, '86 Buick Century T-Type, '80 Buick Skyhawk, plus the classic Buicks like the Wildcat and Boattail Riviera. However, I started losing interest after the T-Types went away and it seemed that Buick was just trying to meet the needs of the geriatric set. The newer Buicks are doing a better job of attracting buyers in their 40's, but I just don't find a whole lot that's special about them, like a Velite would be.

[daves87rs]

Gee thanks. <_<

Seriously, Buick or Saab should be deep sixed.

[post="48780"]<{POST_SNAPBACK}>[/post]

Don't worry buddy..I'd bet they would beat anyone at this point... :(

I agree with the Saab axing..though I wonder if anyone (not counting people
here) would even noticed if they stopped making the last few Buicks.... :(

[daves87rs]

Oldsmobile was my brand, and now it's gone.  Buick was also one of my favorite brands because there were so many Buicks in the past that I liked--the G-body Regal, the '90 Park Avenue, '79 Riviera, '87 LeSabre T-Type, '86 Buick Century T-Type, '80 Buick Skyhawk, plus the classic Buicks like the Wildcat and Boattail Riviera.  However, I started losing interest after the T-Types went away and it seemed that Buick was just trying to meet the needs of the geriatric set.  The newer Buicks are doing a better job of attracting buyers in their 40's, but I just don't find a whole lot that's special about them, like a Velite would be.

[post="48679"]<{POST_SNAPBACK}>[/post]

A sporty Buick..there would be an idea...

[wildcat]

quoting AH-HA: Seriously, Buick . . . should be deep sixed.

<_< Gee, thanks.

I thought you were one of the people who said the Buick Enclave was very nice. Edited November 26, 2005 by wildcat

[Northstar]

quoting AH-HA: Seriously, Buick . . .  should be deep sixed.

<_< Gee, thanks.

I thought you were one of the people who said the Buick Enclave was very nice.

[post="48802"]<{POST_SNAPBACK}>[/post]

Well, just because he think's that the Enclave is nice doesn't mean he thinks Buick should stick around. Maybe the Outlook and Acadia are just as nice, which would mean there would be very little reason to buy the Enclave other than styling differences and the Buick badge if the Enclave is more expensive.

Personally, I think Saab should go before any other brand is even close to being on the chopping block. First, they have very few models (and the 9-5 and 9-3 are the only ones that cost GM very much to develop, the other two are badge jobs), and second, the dealer base is much smaller than that of Pontiac or Buick, which would mean less dealers revolting like they did when Olds was killed.

[4gm]

Saab really should go. Maybe Chrysler could buy it so they'd have a division between Dodge/Chrysler and Mercedes. With Saturn's Euro, upscale move, courtesy of Opel, the 2 divisions will be positioned too closely together in the marketplace. Aura = 9-3. New Ion/Astra = 9-2. They're getting Lambda and Theta crossovers which are supposed to be great. Unless GM finds a new and very distinctive design them for Saab, which I honestly don't see happening, I don't see much point in keeping it. I do think there's a place for Buick at GM. The Lucerne is a good start for revitalizing the brand, though I do think the design is a little too conservative. What I'd really like to see would be for Buick to make cars that resemble the Opel Omega concept from a few years back and the Bently coupe. Their designs convey an upscale, somewhat conservative, solid image but are eye catching. It might be the combination of the high beltlines and seemingly low rooves that do it. Whatever it is, I see Buick when I think of those cars. Edited November 26, 2005 by 4gm

[turbo200]

Well, just because he think's that the Enclave is nice doesn't mean he thinks Buick should stick around. Maybe the Outlook and Acadia are just as nice, which would mean there would be very little reason to buy the Enclave other than styling differences and the Buick badge if the Enclave is more expensive.

Personally, I think Saab should go before any other brand is even close to being on the chopping block. First, they have very few models (and the 9-5 and 9-3 are the only ones that cost GM very much to develop, the other two are badge jobs), and second, the dealer base is much smaller than that of Pontiac or Buick, which would mean less dealers revolting like they did when Olds was killed.

[post="48805"]<{POST_SNAPBACK}>[/post]

ah, but Saab is one of GM's only global players, and has potential for a much stronger presence in Europe. Trying to think from a GM exec's perspective, I don't really see a reason to cut any of the brands. Hummer is profit central, and has a great future as long as they can continue to execute Hummers with undeniable Hummerness. Buick, Pontiac, and GMC, well they can continue to coexist happily in the dealerships, and will most definitely, as long as the right products are introduced, increase volume, not decrease. Saturn has a bright future thanks to great products and hopefully an expanding dealer base. Saab is doing poorly, but only has two, outdated, fully Saab-like vehicles. Saab has been hemorraging for a long time, but has never been given a chance to succeed, much like Buick, or been given the wrong chances, much like any GM brand.

[Newbiewar]

investors are wrong... let the gerneral make vehicles with high apeal like the solsice and you will see that no brand needs to be cut... but with pisspoor managment and lackluster styling... all brands need to be cut...

[mrmonte]

Saab and Saturn should go . I really feel there was no need for Saturn in the first place. There was no reason those cars couldn't have been developed for Chevy not Buick not Olds or Pontiac just Chevy. Big new thing at the time to spend money on marketing them and it was supposed to be some great car and all. Waste as far as I am concerned.

[Flybrian]

See, I always thought Saturn had the great potential to spearhead the environmental side of General Motors. Just as Oldsmobile was the perennial testbed for new equipment and performance innovations, Saturn could've been GM's place to test alternative fuel technology. Its tiny lineup with one car was perfect for experimentation with early hybrids. If it fails, dump it. If it succeeds, spread it around. In fact, I could've easily seen Saturn paired with Oldsmobile as 'technology' brands - Olds showcasing new engines, new gadgets, and hot designs with Saturn leading the way in fuel economy, smart technologies, and borrowing some of Olds' styling. Both could've been the 'safe' brands, too.