2008-2009 was a hard year for the Huge Three Detroit automakers. While Ford technically she never declared bankruptcy – although she did receive some of those sweet relief funds — GM AND Chrysler he did. GM seemed to be having the worst of it, as the automaker had to shed four of its divisions to stay afloat. But how did GM choose these four divisions? A recent interview with former GM executive Bob Lutz shed some airy on automakers’ thinking at the time.
Engine 1 I talked recently Lutz on what inspired GM to kill Saab, Saturn, Pontiac and Hummer instead of, say, Chevrolet, Buick, GMC or Cadillac. Lutz detailed all the arguments and all the logistics that led to the death of each brand.
In the Pontiac case, Lutz says he fought for the brand, but his superiors simply didn’t like it.
I denied it. But they turned off their hearing aids and said: “It’s a indigent brand, unprofitable for years.” I pointed out all the signs of the brand’s health; The youthful enthusiasm of buyers for the brand etc. I just couldn’t get past it. So unfortunately it died. I still consider it a borderline tragedy.
Lutz said that in the case of Saab, he had been trying for years to convince his bosses to get rid of the brand, but things still weren’t working out. He calls the brand “goofy.”
For years I tried to convince my boss at GM that we should get rid of Saab, but I always ended up waiting until next year, waiting until next year, waiting until next year – and next year never came. It was a stupid brand that was out of the mainstream, and every time it became more mainstream, we didn’t sell any. And when it was stupid, which the motoring press loved, only 100,000 people in the whole damn world wanted it.
His comments about the Saturn are fascinating because he admits that the Saturn no longer had a reason to exist, especially in Chevy’s presence. This is true because brands were constantly nipping at each other’s heels. Hybrid Chevy Malibu i Saturn’s green aura line they were basically the same car, for example the price difference between them was $745.
Saturn, which I got rid of, I was ecstatic. The Saturn brand no longer had any reason. The Chevrolet was equally good and reliable. Meanwhile, all dealer networks have learned that you can’t screw a customer if you want to stay in business. The reason for Saturn’s creation has sort of disappeared. Saturn was another mouth we had to feed with constrained capital. So OK, Saturn can go.
As for Hummer, Lutz says they should have done to the brand what GM is doing now: make it part of GMC. Turning Hummer into its own brand meant they had to provide it with a range of vehicles it didn’t really need.
We couldn’t save the Hummer, which was a mistake. Hummer should never have been a brand, it should have been a vehicle in the GMC lineup. It should have been a GMC Hummer and that way it could be added to a GMC dealer body and when it wears out it can be replaced. But the moment we made Hummer its own franchise, we had to feed it a full line of vehicles. We had the H1 which was never sold in significant numbers. The H3 performed well. The H2, which was the size of a Wrangler and Bronco, would be a hit. However, I had to admit that introducing the Hummer brand was a mistake.
Lutz even talked about how both Buick and GMC were considered. In the Buick case, he says, the Obama administration and bankruptcy lawyers wanted GM reduced to Chevy and Cadillac and Buick got the axe. The brand stuck in the market thanks to its popularity in China.
Chapter 11 intervened and Obama-appointed financiers from all over Recent York – who knew nothing about the auto industry – said, “General Motors will consist entirely of Chevrolet and Cadillac.” We argued and said we had to keep Buick because if we abandon Buick in the US, it will die in China, and it is one of the leading brands in China. So don’t do it. So we managed to save the Buick.
The GMC was almost cut because it was deemed too similar to the Chevy. However, the brand’s profitability changed its mind.
They wanted to abandon the GMC because it was the Chevrolet version. We showed them the profitability of the GMC brand and the health of the GMC brand. Many people would not want to own any other GM brand, they had a very good reputation and owned a GMC sports car or truck.
It’s fascinating to get an inside look at why these brands were cut. If things had turned out a little differently, GM could be a completely different company than it is today.
