MG, the opposite of GM?

In lieu of writing yet another critique of GM, I thought I might go out on a limb and provide my take and suggestions on some of their larger issues. So, in answer to their "So, what the hell would you do" question, here's my opinion.

Branding - Has anyone stopped for a minute to consider what sales of the Solstice might look like if it weren't badged as a Pontiac? There is certainly enough car there to support multi-brands (like Saturn), but what if it were a Chevrolet?

I'm afraid that the company is simply no longer in a position to support as many brands as it does. If there is no fundamental difference between the GMC and the Chevrolet, then why have both? There once was an argument for brand diversification, but those times are long gone. Today there is more than enough competition to go around. Maintaining so many brands simply dilutes the overall attributes of the individual vehicles and alienates resources when synergy would be much more helpful.

History and tradition are all fine and well, but not at the cost of the company's very existence. Pulling the plug on Oldsmobile is a good start, but they ought to take it to another level and swallow Buick, too. The resulting merge into the Pontiac brand should then focus solely on what people consider to be Pontiac's core competency: sedans. Fine, they can have a range going from entry to luxury, but only sedans. Leave the roadsters, minivans, and SUVs to the brands that are known for them.

And while we're at it, SAAB should stop worrying about the small segments around the entry category. If this brand is going to stick around at all, it should be positioned to concentrate simply on "European" sedans. Stop throwing good $ after the bad and leave the SUVs and hatchbacks to the other GM brands. Think of the average SAAB driver for a minute, and then try to squeeze them into a hatchback. Its like merging Frazier Crane with Pauly Shore.

There is a common marketing concept that suggests secretly owning your chief rival is pure genius (think of if Pepsi actually owned Coke). But who is this in the interest of squashing? RC Cola? It just doesn't make sense to allocate all the marketing, advertising and other dollars -- not to mention all of those expensive materials -- to different GMC badges. Please, lets just call it what it is and brand all GMC's as Chevys.

Management – I can't say that I know what the top brass at GM is after, because they have remained defiant with their apparent devotion to SUVs and trucks even in troubled waters. This isn't a comparatively small PR problem, but rather a systemic issue far greater in scope and gravity. One could argue that GM is trying to be everything to everyone, or label its efforts with some other neutral description. What GM really needs is a completely new strategy. Set product development, operations, tradition, and everything else aside for a moment and consider what the company is actually trying to do. Is it trying to remain something (i.e. relive the glory days or simply be the largest car company in the world?). I think it may behoove the company to provide a more tightly defined goal or definition of success. The game has changed fundamentally, though GM's vision has remained the same. It went from being the biggest in the world, to "how do we stop the bleeding?" As much its executives would like to be on the offensive, they simply are not.

The current management style at the top is very thorough, calculated, risk-averse, and contemplative. While it could be argued that such an approach may be prudent when one considers the size of the company, I'm afraid there's no time for slowly sifting through each issue problem by problem. The changes (labor, plants, and brands) need to be swift and large. They are going to be painful, but less so than the alternative.

UAW – Obviously a crucial component of the overall equation. Ron Gettlfinger has stayed on the offensive with harsh words, keeping GM at bay at least until their deadline. But my initial suggestion would be to go after them now. You are going to need some momentum on this (think of the slingshot method of passing someone on the highway).

To start from scratch in the fall of '07 is like riding the UAW bumper until the curve and then timidly pulling into the other lane. Beware of a fast moving Ford or Chrysler coming the other way. A strike is probably unavoidable at this point, so you might as well get the most out of it that you can. Give them a preview with Delphi. You aren't going to need that many parts this fall when the employee pricing promotion ends anyway.

Foreign Direct Investment – Even with the less than stellar performance at Opel, this could potentially be a bright spot. I can't really speak to what happens down under, though I know Holden is a strong brand. Russia and certainly China are very logical extensions of the company. Suzuki and Fuji have also performed domestically -- just don't be tempted to dump these assets like Kirk might if contract talks stall. To do so would be very shortsighted.

The other dimension to FDI is the extent to which GM should produce in China, or any other lower wage country for that matter. Consider the Equinox for a moment, a vehicle with loads of potential. The fact that it is produced in Ontario is actually endearing. The problem lies more with the engine. It would be one thing if GM were saving money on some great performing, fuel efficient technology by procuring its production in China. While there is a fine line here, bringing in an ancient pushrod V6 from China is simply cutting corners.

Obviously China is going to be a huge growth market for GM, and every manufacturer. To what extent and how they manage worldwide production from China is another matter. Robert Farago, author of The Truth About Cars, brings up some very interesting points on China in GM Death Watch XXVIII: Distant Waters.

Operations - Cost-cutting, normal employee attrition, and the promise of exciting new models isn't going to get you there. GM is already treading water with jeans on; adding healthcare costs and suppliers is like adding lead socks. Here is one place, however, where it could take a page out of Kerkorian's playbook. If one in four North American plants are sitting idle or running at less than full capacity, then those should go. The plan to resurrect GM is very unfortunately not the same thing as the plan to save all current GM employees. Selling off chunks of GMAC is only a good idea if you have a specific plan for the money, and GM is already sitting on a wad of cash. To do this just to buy time would be a real shame. To use it to hold out against the UAW could actually be much more constructive.

Design – At this point, we are going to really need to take some chances. The redesigns of the Malibu, Monte Carlo, and Impala are not particularly progressive. The LaCrosse, and G6? Come on. The SSR and the HHR, now that's taking a risk. So what if it is a me-too design, the HHR could sell, and even if the SSR's price made it a flop, this is the kind of thinking we need. We know you have the people to do it.

To paraphrase Lt. Frank Drebin, "It's fourth and fifteen, bottom of the ninth, and you're looking at a full court press." This is no joke folks; GM is facing ultimatums on all fronts. If it isn't a showdown with the UAW, then it's with Toyota. If not Toyota then Ford, if not Ford, then Kerkorian. And the company's friends are nowhere to be found. The EPA and CARB might still throw GM a bone, but it seems the political equity has long been lost. There are no bailouts in sight, especially not when you have that much cash on hand.

One way or another, GM is entering a transformation unlike any we have seen in the industry. Whether it comes out the other end as a much leaner, meaner, focused entity, or not at all is going to come down to how it maneuvers through this mess. Decades of growth and success brought GM to its current position, but it has been its obstinacy over the last 5 years that have done the company in. In any case, if I were making the 100,000 a week that Mr. Wagoner does, this is probably where I would look first.

MG sales under the new Chinese ownership were up 6% in the UK to 810 units. At least they are going in the right direction.