GM (GM) Needs To Kill Some Brands

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GM (NYSE: GM) has eight car brands. There has been a debate for at least 20 years, from after the Saturn brand was launched by then-CEO Roger Smith, about whether it made sense to support marketing, production, and development costs for so many.

Two decades ago, GM had over 40% of the domestic car market. That is down to about 25% and may still be falling. There is growing evidence that GM may capture buyers from rivals like Toyota (NYSE: TM) and Ford (NYSE: F), but the GM brands may also be taking market share from one another.

According to The Wall Street Journal when GM launched crossovers for three of its brands the vehicles were nearly identical. That meant that customers may have been may not have moved from a Ford SUV to get into a more fuel-efficient car. People may have dropped off their big Chevy pick-up to get a Buick. A nice "zero sum" game.

GM’s weak brands are Saturn and Buick. They have almost no vehicles that do not have nearly exact equivalents being sold by Pontiac, Chevy, or Olds.

GM could save billions of dollars in marketing and design costs by dropping two brands. It would be forced to deal with consumers who are loyal to these nameplates. GM would probably have to offer incentives to keep those people under the GM tent.

But, GM already gives out incentives. They are masters at it. Paying to keep customers buying GM may be costly for a year or two. The long-term expenses of eight brands is greater.

Douglas A. McIntyre