Quote:
GM learns tough lessons in marketing strategies
General Motors learned important lessons about efficiency and marketing strategies from its global divisions.
BY WARREN BROWN
Washington Post Service
SAINT JEAN CAP FERRAT, France -- It was a good two days for Robert Lutz, General Motors vice president for product development.
The automotive media applauded the Geneva International Motor Show introduction of one of GM's divisional concept cars, the sleek, all-methanol-powered Saab Aero X. And at this Mediterranean resort, sumptuously sandwiched between Nice and Monaco, Lutz presided over the launching of the Cadillac BLS, a small, European-market, entry-level luxury car designed to take on the likes of the BMW 3 Series and Mercedes-Benz C-Class sedans.
The GM that Lutz and company presented here did not look at all like the troubled GM of North America, which got a bit more bad news recently when Consumer Reports magazine announced that it had chosen no 2006 domestic models among its top runners in the vehicle reliability category.
That report stung, casting a pall over GM's European celebration. But it wasn't what was really bothering Lutz, one of the global auto industry's most blunt top executives.
''I can't believe that we were so stupid,'' Lutz said of GM. ``People talk about Toyota overtaking General Motors [in global sales], as if GM were one company. But the truth is that we had not been one company for decades. We were different companies, each doing its own thing with little regard for the other. How can you run a global company like that? You can't. It was stupid. No wonder Toyota was cleaning our clock.''
The separate-but-equal approach to financing, developing, designing and manufacturing divisional cars and trucks yielded equally mediocre vehicles, higher production costs, lower vehicle quality and legions of dissatisfied customers, Lutz said. But GM waited much too long to fix what needed fixing, he said.
''The problem was right there before us all along. It was so easy to see, once we decided to look. It's not rocket science,'' said Lutz.
But GM was ''too comfortable,'' he said. ``We were too much in the habit of looking at how individual divisions performed, as opposed to looking at how all of GM was performing.''
That corporate blindness caused GM to cheat itself, Lutz said. ``We were not leveraging our strength as a global company.''
None of this really amounts to a revelation. Other GM executives and legions of automotive industry analysts have made the same, or similar, complaints about the company for years. What is new, as evidenced by the Cadillac BLS -- which won't be sold in the United States -- and other new GM products, is that the company is taking steps to correct its errors.
Cadillac, for example, now is treated as GM's global luxury brand. Chevrolet, at the other end, is the company's global entry-level vehicle.
That does not mean GM soon will be jettisoning another division in the manner of the defunct Oldsmobile. But it does mean an end to separate-but-redundant product-development, design and marketing operations and to all the costs and inefficiencies attached to those redundancies, Lutz said.
''We now have one, single global design and engineering budget. We've put an end to badge engineering,'' said Lutz, referring to GM's discredited practice of making cosmetic changes to, say, a Cadillac and calling it a Pontiac.
How did badge engineering hurt?
Take a look at the highly acclaimed Opel Signum sold here in Europe and the Chevrolet Malibu Maxx on sale in the United States. Both are solid family cars based on the same mid-size GM platform. But the Signum has substantially better styling and considerably more panache than its American cousin largely because GM cut some corners on materials and design to save money and get the Malibu Maxx to market.
It turned out to be a self-defeating strategy. The Signum sells well in Europe because buyers want it. The Malibu Maxx sells in the United States essentially because GM bribes customers with rebates and other costly incentives to buy it.
''Let's face it,'' Lutz said in an interview after GM's Geneva presentations. ``. . . The Signum and the Malibu Maxx should have been the same car.''
Even Toyota Motor Corp., which has much less product proliferation than GM, has learned a similar lesson. For example, what had been sold as the Toyota Echo subcompact in America was marketed as the Toyota Yaris in Europe and Asia.
Although both the Yaris and the Echo shared the same underpinnings, the Yaris had more appeal and was an instant hit among European and Asian buyers when it was introduced in 1999.
The rather dowdy Echo, which came to the United States a year later, was a commercial flop.
Toyota has reworked the Yaris/Echo for 2007. But the company will sell it in Europe and in North America as the same car using the same model name, thus eliminating the need for two separate budgets to sell the same car.
''That is the way we are going to do things from now on,'' Lutz said. ``It just makes more sense. Why we did not do that before? What can I say? We were stupid. We're much smarter, now.''
Kind of good because it will cost less to bring the vehicles to the market faster. Kind of bad if they basically do what Chrysler did in the 1980's with the K cars and what Ford has done with the Crown Vic/Grand Marquis. Different brands need different looks to appeal to a different buyer in the same market. What would be the point of buying say for instance if Pontiac sold the Pursuit here in the states with just a different grill and mark up the price more than the Cobalt?
They should sell that Cadillac in America!!
I like the last line. we were stupid...... were much smarter now.
so does this mean that I have a pre stupid GM car.
"
boobs now with Riboflabin"
I think part of the point of what Lutz was saying is that GM will not be rebadging like the K cars and Ford's Mercury line. That's what they HAVE been doing (see: j-body) two cars with redundantly engineered styling, everything else is the same. The point is to have ONE car.
yenkosuprcar wrote:They should sell that Cadillac in America!!
I spoke with Cadillac manager on the BLS when the Escalade was introduced. As of now, they will study on how well it was accepted in Europe first, if it is any good, they will bring them over here.
I told him, just bring it here so it can compete with the near luxury front-drivers like Acura TSX, Audi A4, Lexus ES 330 (or soon to be called 350). He said it may interfere with the Saab 9-3 sales. Well... we had a argument for like 20 mins on this.
But it is being considered for us.
--
But this sounds to hypocritical, as future Saturns will be re-badged Opels (not bad in my book). But one thing is for sure GM trucks especially GMC is one of the worst badge engineering GM's lineup.
My prediction is badge engineering will not be leaving any time soon at GM.
>>>For Sale? Clicky!<<<
-----The orginal Mr.Goodwrench on the JBO since 11/99-----
badge engineering is not always necesarilly a bad thing. it gives people options.
our j-bodies for example. i cant stand the interior of a sunfire. i can learn to live with it, but i prefer the cavalier interior. if GM only sold the j-body as the sunfire, then i probably would be driving a toyota or something else.
now toyota and honda have both been doing it as well, just slightly smarter.
Honda Civic = Acura EL/CSX(canada only for both of these)
Honda Accord = just about every Acura ever sold minus the EL and the MDX
Honda Ridgeline, Pilot = Acura MDX
Toyota Camry = Lexus RX300, ES300, etc.
VW Beattle, Golf,GTI = Audi TT, Audi A4(older ones only i believe)
there is nothing wrong with badge engineering, but it has to be done smartly. you cant always cut corners, though some times it is needed. cutting corners leads to a product of lesser quality. but some times a product of lesser quality is whats needed. who the hell would buy the Audi TT if the VW GTI was a convertable 2 seater roadster?
Badge engineering is a wonderful thing. look at the buick century. ya its the same as the Grand prix and the Regal and all those other, but its cheaper price tag and 3100 instead of the 3400 and 3800 v6 make it more appealing to older people who are looking for a comfortable way to get from a to b.
the cobalt and the pursuit. the cobalt is available with the Super Charger, where the pursuit as far as i know isnt. having the pursuit available with the supercharger would take away from the sales of the supercharged cobalt.
as soon as you start competeing with yours own product, that is when badge engineering turns ugly and "stupid" as lutz put it. but badge engineering to gain a segment of people that you would have lost if not for the pontiac rebadged as a chevrolet is fantastic.
if it wasnt for rebadging, we would get board of car models to quickly.
however, i do agree with you that the badging that goes on inbetween GMC and Chevy is getting a little out of hand.
i have another stupid thing for lutz to add to his list though. WHOS BRIGHT IDEA WAS IT TO PUT HONDAS 3.5 V6 IN THE DAMN SATURN VUE!!! that thing is engineer bass ackwards because honda didnt give a @!#$!
Injection is nice but id rather be BLOWN!
http://www.cardomain.com/ride/2290307
that is the one thing that I hated about some of the GM vehicles, The malibu, the cutlass, same car inside and out, just a rebadge, and I think that is soo stupid and just plain ignorant. Same thing goes with the venture, the montana, the terazza, and the saturn mini vans. They all look teh same exept for the grill and the badge. It's rediculous. Ford does it the worst with thier models though, they literally just change the badge. With the j-bodies though at least they look different, same platform but look totally different on the outside.
http://www.j-body.org/forums/read.php?f=1&i=333805&t=333704#333805
