By Bob Balderston

Bob Balderston

Yesterday’s Automotive News Europe tidbit was that German car sales leap 21%, while everyone else’s was in the tank. The reason why? Scrappage. While the rest of the world is struggling economically, the German market stays strong, as they have the second largest export market, lead only by China. With high profits from high end automobiles as well premium domestic products, the Germans gave a 2,500 Euro bonus for scrapping cars older than nine years old. February sales were the highest in over a decade. European countries continue to push scrappage bills, much to the benefit of the automakers. Can’t be long before we see these bills here as well…

By Rob Einaudi

Editor-in-Chief

Scion recently told Automotive News that they are planning to add a fourth vehicle to their lineup in the next two to three years. They will also have a replacement for the tC coupe within the next two years. So what should they build next? Something like the Hako Coupe concept that they unveiled in New York last year? Or what? My vote is for a boxy RWD 2+2—a modern day Datsun 510.

Despite reports that 2008 Challengers were "sold out," there are plenty of unsold Challengers out there (746 by the last count on AutoTrader.com). Perhaps absurd dealer markups like the one below have something to do with it… Source: Automotive News and VWVortex.

On Tuesday, the Wall Street Journal ran a major feature on GM’s continuing brand segmentation woes as if it was current news. Well maybe to the readers of the WSJ it was news, but to those of us who live, breathe, and sleep all things automotive, not only was it yesterday’s news, it was the last decade’s news. But more interesting than the article itself was the response over at the GM Inside News forums. More…

As of 11 PM PST there were already seven pages of posts, more than 350 in all. The depth of the posts, and their passion, surprised even me, as someone who seems to spend entirely too much of my time thinking about things like this that I can’t control. Even more than that, beyond the simplistic, one line posts, was the thought that went into many of the posts. The first question I have to ask myself is this, do the GM execs in the Ren Center read these posts or do they simply dismiss these observations as those made by raving maniacs who have no clear understanding of the issues involved?

That GM has too many brands is no secret. That GM has too many dealers, selling too many variations of the same basic model is also no secret.

Having spent a week of quality seat time in the CTS, I’ve come away with the conclusion that when GM applies its resources in a focused, targeted way, great things are inevitable; the CTS is the best example of this process. But I worry, will the CTS be “de-contented” and a lesser version sold under two or three more domestic GM nameplates? I hope not.

There is room for one CTS variation, that’s all and that may still be one too many. But does GM need four different variations of the same large, FWD-based crossover/SUV platform? Absolutely not! The Buick Enclave and Chevy Traverse, that would have been the right solution, especially now that Pontiac is marketed and retailed in conjunction with Buick and GMC.

Why does the Enclave share showroom space with the Acadia, which also competes for sales with its GM cousins? That makes no sense to me. And the Traverse should have been styled like the Outlook and Acadia (both of which should have never been offered in my opinion as they compete for scare marketing dollars) so as to differentiate it from the Enclave. The Chevy Traverse looks more like the upscale Enclave but is priced lower than the Outlook. Again, that makes no sense to me. Am I the only one who thinks this would have been the right product strategy to pursue?

Poster “tgagneguam” in post #34 had this to say and I for one, thinks it makes a lot of sense.

“…few ever address where the billions to close each division will come from. The closure of Oldsmobile should have taught GM a valuable lesson. It cost billions to close the division, there was very little in the way of conquest sales, and GM absolutely is no better off today now that Oldsmobile’s gone. Rather than being a nine division company allegedly with not enough money to get the job done correctly, we have an 8-brand GM with GM-Oldsmobile in sales and GM-Oldsmobile in revenue. If GM were to get rid of Saturn, then GM would be GM-Saturn-Oldsmobile in sales and GM-Saturn-Oldsmobile in revenue; it would be the same financial situation. Clearly, the solution is not jettisoning brands but more effectively managing brands. It’s time to address fundamental issues.

Buick, Pontiac and Oldsmobile shrank dramatically since the 1980′s, yet somehow Honda, Toyota and more recently Hyundai have grown dramatically. So why’s there no room for domestic brands but all this room for foreign brands in the US? We will witness the same scenario when the Chinese enter. There will be more calls to close divisions, while the Chinese gobble up share. Rather than interpreting it as Detroit giving up again, people will assume it’s because Detroit is too large and needs to shrink to survive. I definitely don’t subscribe to that defeatist thinking.”

Product overlap, not always too many brands, is the issue. Managing the brands, having each brand stand for something special, distinctive, is the answer, especially given the cost – as shown with Oldsmobile – that’s involved in shutting down a brand/division. This is not to say that shutting down a brand, or consolidating them won’t work in GM’s case, it’s just that because of the state franchise laws protecting dealers that will make the process cost-prohibitive.

It’s the same dilemma that Jim Press now faces at Chrysler; he has to get his dealers to consolidate under one roof, and have each brand, Chrysler, Dodge, and Jeep stand for core values that are distinct for each brand. There, the Jeep Compass is the poster child for wrong-headed thinking. The damage to the Jeep brand from the Compass, which always had the best defined brand values within Chrysler, can not be calculated. The Patriot was as far, and maybe even it went too far, as Chrysler should have gone from deviating from Jeep’s 4X4 heritage, its core brand values.   

Getting back on-topic to GM’s problems, look at this post from FLA-USA, post #37:

“The saddest part is that even with eight divisions, sales are dismal collectively. Case in point:

There are a lot of cheerleaders screaming from the mountaintops that the Lambdas are a runaway hit. When are people gonna get their heads outta their azzes? Want proof the opposite is true? Here it is:

Sales last month

Acadia: 5,933
Enclave: 3,862
Outlook: 2,181
Total: 11,976

Honda Pilot: 12,880
Ford Edge: 11,640
Toyota Highlander: 10,515
Nissan Murano: 10,100

I’m not even including numbers from their luxury divisions.

Doesn’t anyone else see the problem? Three models from GM that must each be engineered/developed/marketed/supported (that costs $$$$) and they still can’t outsell the Pilot (only months from replacement), barely outsell one Ford model, barely outsell one Toyota model, and barely outsell one Nissan model (one month into a redesigned model). And yet everyone on here calls these things a homerun.

GM needs only a few divisions with distinct differences and those division’s models need to be compelling enough on their own to produce big sales.”

If Honda, Toyota, Nissan and Ford can, why not GM?

I bet that had the Lambda been marketed as a Chevy from the start (with Outlook/Acadia-like styling) along with the Enclave for the luxury sector, that the Traverse would have sold at least as many units as the Pilot, Edge, Highlander, or Murano (owning to Chevy simply having more dealers, more than anything else) and that the Enclave would have sold at least as well as the Lincoln MKX or any of the more upscale crossovers. Net result? More Lambdas sold through two brands – with proper marketing support – than three or four sold without proper marketing support.

As far as the perception that the Lambdas are a success, it’s only within the context of the sales of the miserable minivans which in essence they replaced, that their current sales velocity can be viewed, even within the Ren Center, as some sort of success. That the Ford Edge alone sells as many units (and lacks third row seating capability) as all three current Lambdas shows how mismanaged the program has been from the start. Again, a proper measure of success might be to calculate how many of each model, each dealer sells, but that only tells just a part of the story.

What does all this mean? That GM has to get its head out of the sand, which I think they’ve done, and first start managing the brands they have as short-term, that’s all they can do. Hummer and Saab are being consolidated, which makes sense, but possibly Saturn needs to join them, in much the same way that Buick, Pontiac, and GMC are retailed together.

As far as knocking off a brand or two, in this game of musical brand chairs, Pontiac appears to be the one left standing, the new G8, not withstanding. Many GM “experts” in the thread have suggested starving it of new product and letting it whither away. That might be a low cost solution, especially if the non-redundant products, Solstice and the G8, are folded into Buick and the rest allowed to expire at the end of their product life cycles. By 2012, Pontiac would be history, joining Oldsmobile and Plymouth in the graveyard of once great automotive brands. Painful? Certainly. Necessary? Absolutely.

With one less brand, and eliminating product overlap, GM can make strides, but only if they discipline themselves and not cave into their dealers who each want a version of every single platform that rolls off the line. With dealership consolidation into Cadillac, Chevrolet, Buick-GMC, and Hummer-Saab-Saturn groupings, marketing dollars could be better (I didn’t say best) allocated while the product overlap issues are addressed. And by 2012, with the Volt family of products hopefully gaining traction in the marketplace, GM can hopefully stabilize itself with a 25% share of the North American marketplace.

Is this a viable plan? I certainly hope to hear about others who have their own ideas of what GM must do to reinvent itself.

Two kids street racing caused a serious wreck outside Seattle last night. One driver was taken to the hospital, and the other was taken to jail. Remember, take it to the track. Here’s the news:   

• Israel is joining Sweden in the effort to get off oil. Renault is signed up to help, and they’re shooting for 2020. Paging responsible American leadership: Motor Trend
• It’s been too long since BMW has made a drop-dead sexy car, but their Gran Turismo project could be a perfect apology. Just look at the concept it’s based on: Winding Road
• Will our power grid be able to handle the demand if larger numbers of drivers switch to plug-in hybrids? Um, maybe: CNet
• PETA is giving Chevy props for a new ad where a flex-fuel Silverado is described as vegetarian.    Automotive News
• While McLaren paid a $100 dollar fine for spying on Ferrari last year, their drivers were allowed to finish the season. In the future, that won’t happen: BBC News

Generally, the only way I get comments on these posts is by making embarrassing grammatical gaffes. The good news is that on Friday, I got a comment unrelated to a typo. The bad news? The author said I completely suck. What can you do? Anyway, on this day back in 1911, the first Monte Carlo Rally was run. Here’s the news:   

• Saudi Arabia seems poised to lift its ban on women driving. Bravo guys! Lookout 19th century, here comes Saudi Arabia! Telegraph
• The General is looking to raise its profile by launching urban megastores which would showcase all the brands in its stable. Will bigger mean better?  Automotive News
• Ford’s new "Drive it Like You Stole It" campaign didn’t go over so well in the Great White North. Hey, it seemed like a good idea at the time. Detroit News
• Jag’s new flagship has hit the ground running. UK buyer’s guide What Car? has named it Car of the Year, and says it’s the best Jag ever. Freep
• How far would you go to avoid paying traffic tickets? Would you pretend to be dead? Because Shafkat Munir did. BBC News

On this day in 1919, Walter Owen Bentley founded a car company in his native England. Cars bearing his name would go on to win four consecutive victories at Lemans, and be featured in countless rap videos. Brilliant governor! Here’s the news:   

• Looks like the feds are going start funding plug-in hybrids. Ten bucks says a no-bid contract goes to Halliburton: Automotive News
• Hey ladies! Want to see your name in the record books? Comfortable with the idea of driving a car at 800 MPH? The Steve Fossett World Land Speed Racing Team wants to talk: Top Gear
• The General is looking to get leaner and meaner. As many as 46,000 employees will be offered buy out packages. Where do I sign up?  Freep
• The other day, I mentioned how criminals are cloning fleet vehicles to elude police. Well, this dude took it to the next level: he pretended to be an armored guard, and walked with 850,000. Bravo! Washington Post

I’ve spent the better part of two days looking for a photo to go with this story, and I’ve officially given up. Some dude in Australia was waving at girls from a car when a passing truck ripped off his arm. The lesson?  Ogling women from cars isn’t just rude, it’s dangerous. Here’s the news:

• One thing which never changes? People love to complain. These dorks are actually whining about not getting free Hot Wheels cars at NAIAS. Cry me a river: Mlive
• Bike builder Jesse James is more concerned about being fined for violating California’s emissions laws than he is about the environment. Big surprise: Auto Week
• Enterprise, National and Alamo are going to start selling carbon credits to folks who rent their cars. It’s a neat idea, but will anyone pony up? Automotive News
• Stunt driver Terry Grant just set a Guinness Record for tightest j-turn. Yup, there’s a record for everything. Check out the video: Car Scoop
• Tata isn’t totally sold on the Jag/Land Rover deal yet. Apparently they want Ford to sweeten the pot with some engineering talent: Detroit News

Jason used to write this post. But honestly? I’ve had it with his lazy ass. Because when I went to bug him about it today, like always, he was curled up under his desk sleeping. Which is the first place everyone looks for him. It’s like he doesn’t even care anymore. Here’s the news:

• Chinese Engrish faux pas are legendary, but Guangming Li’s is so out there, we were all left speechless. You can practically hear the VW execs screaming. New York Times
• Aston Martin’s gorgeous DB9 won the GT1 class at LeMans last year, now some Brits are predicting an outright win in 2009. Top Gear
• Hyundai may not advertise during the Super Bowl after all. Do you think they’ll still have to pay Kevin Federline? Automotive News

Most of the time, a three-day week seems short, but this one has made me more miserable than a goth kid at Disney World. Time to up the lunch beers I guess. Anyway, here’s the news:

• Everyone has reported that oil just hit 100 dollars a barrel, but Ford is doing something about it. Their new nav systems will help drivers find cheap gas: Automotive News
• Terrorism has caused race organizers to cancel the Dakar Rally. Funny… as scary as this event is, I figured terrorists would be all for it: Top Gear
• Spy shots of BMW’s new 5-Series have leaked, and I couldn’t help but think that some of their recent models would have looked better had they left the cladding on: Auto Express
• Here’s a big surprise: Ford paid so KITT would be reincarnated as a Mustang. Is nothing sacred? Autoblog