Friday

GM announces intent to sell Hummer and Saturn

As you and the rest of the world is quite aware, GM filed for bankruptcy protection this past Monday. Like the Chrysler BK, it seems like GM is trying to short cut the process as much as possible and make this as quick as bureaucratically possible.

Yesterday, it was announced that GM had arrangements to sell Hummer to Chinese company Sichuan Tengzhong Heavy Industrial Machinery. Good riddance I say. They had turned into nothing more than rebadged GM trucks with little purpose other than a tool for poseurs. Problem though – the deal still has to clear Chinese regulatory hurdles. See, China wants to focus their industry on building smaller, more fuel efficient cars. Obviously that is a direct contradiction to the purpose of a Hummer. Nevermind too that currently there are over 100 car manufacturers in China and the government would like nothing more than to pare that number down. Again, bringing another automaker into the country that is polar opposite of their intended mission plan doesn’t make a lot of sense. In fact, China would rather focus on buying distressed parts makers. At least that helps them more than bringing more junk there to sell. Plus, it has to be proven to the Chinese government that they would be able to turn a profit with Hummer. Hmmmmm. Don’t check that box off it – it’s not quite a done deal.

Next up Saturn. Today, it was formally announced that Penske will purchase the Saturn brand that would preserve the dealers and the jobs of Saturn. Most of the current models would continue to be made under contract by GM for the time being. Why?? I mean, let’s review the current automotive landscape. US sales are down to between 9-10 million on an annual basis, when in recent years it has been as high as 17 million. It is also estimated that the world is capable of producing 90 million new cars a year when only about 55 million is the expected yearly demand.

Some of these brands have to go. As I have said before, this a very painful period that we all have to go through right now. Unfortunately there will be winners and losers through this process. Obviously there is too much capacity right now. How is reshuffling the deck going to help? Here we have two tarnished brands being thrown around and someone else hoping they can make them work. Are they really worth saving? What do they produce that can’t be gotten elsewhere at higher quality and sometimes even at a lower price?

In my opinion, GM hasn’t gone far enough if they’re serious about survival. Buick sells well in China – leave it there. Focus on Chevy for mainstream cars, Cadillac for the luxury line, and GMC for both consumer and commercial SUV’s/trucks. End of story. Keeping both Chevy trucks and GMC trucks is dumb – they’re just doubling their marketing and distribution efforts to sell similar vehicles. Trying to make a go of brands that consumers have shut their wallets to is not a smart idea either. Let ‘em go. They won’t be missed.

Note to GM – this is part of what got you in trouble in the first place. Those who do not learn from history……

UPDATE: Turns out the length of time that Penske will contract with GM to build Saturn cars will be two years. Aside from that, he says that he is in negotiations with other as yet unnamed manufacturers to produce cars for the Saturn brand. It's a new business model where the distributor will decide on the product. Interesting to be sure, but the real question can Penske survive selling the current long-in-the-tooth models while the products are being developed? Only time will tell. And while being a distributor only eliminates manufacturing headaches, will the future models just be rebadges of other makes and models? Come to think of it..... that's all Saturn is today. But perhaps Mr. Penske should think about how well that business model has worked out for Saturn up to now.

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