Understanding Gereral Motors

General Motors is an odd duck of a corporation. It has always been a bit unwieldy and too big for itself. And while it can be argued that there are bigger companies and groups that work well enough “despite their size,” I’m arguing from the angle that a marriage can be too big if the two people (assuming childlessness) cannot handle each other or the responsibility OR that the people married can best handle their lives when alone (Yes, there are some people like that. If they’re lucky, they get married to people who understand; historically they ended up becoming monks or drunks.).

First, the guy who got the ball rolling: Billy Durant. Started with the Coldwater Road Cart Company, which eventually became the Durant-Dort Carriage Company and the largest producer of cart for the nation. Was invited to run the Buick company in 1904, eventually built it up to the classic General Motors (minus Chevrolet) by 1910, when he was forced out. Went in with Louis Chevrolet, built the Chevrolet brand up enough to buy out General motors, went into another buying spree, was forced out in 1920. Set up another company in an attempt to create yet another General-Motors type corporation, but the Automobile business was beginning to mature, and the Durant companies were unable to gain traction. By 1934, the Durant Companies were bankrupt and the properties bought up for use by General Motors. His last years were spent holding together a bowling alley empire (around the Factories in Flint. Makes sense.).

Next we have Alfred P. Sloan. He organized things at General Motors, and made them into what they were for the longest time – the largest car company in the world. He took Billy Durant’s idea of car divisions segmenting the market and allowed the car companies some independence. He also liked the segmentation so much that he tried to crate Companion Makes – brands created to fill in perceived price/status gaps between the established brands. For the most part the Companion Make program failed, although Pontiac ended up replacing its parent brand (Oakland).

For much of the early 1900s, the idea was this:

  • Entry Level: Chevrolet
  • Getting Established: Oakland/Pontiac
  • Middle Class: Oldsmobile
  • Doctor/Lawyer: Buick
  • Old Money: Cadillac
  • Heavy Duty Trucks: GMC

In short, a set of class distinctions that also worked as a barometer of establishment in the community.

And as long as things worked out that way, there was nothing GM could do wrong. They could show a utopia of Automobility (which we now know as the dystopia we’re suffering from) in New York City and people would pine for it. They could (and did) turn the tramway systems into bus systems and suffer minuscule fines for side-charges.

Then, in the sixties things began to blur. Everyone wanted their own small car, everyone wanted their own pocket rocket, everyone wanted their own full-sized car, and they wanted their own identity separate from their neighbors. Eventually it shook down to this:

  • Entry Level: Chevrolet
  • Sporty, fun: Pontiac
  • Family Car: Oldsmobile
  • Upscale: Buick
  • Luxury: Cadillac
  • Heavy Duty Trucks: GMC

This was actually a bit tight for the market. Chevrolet and Cadillac were safe owing to their positions at the endpoints of the continuum, but sports cars were a smallish part of the market (despite their cache) and Buick was being squeezed between the Luxury Cadillacs and Family-marketed Oldsmobiles. And when Buick and Pontiac recovered, it was Oldsmobile that suffered to the point of being eventually destroyed (although one would have to note that it was family brands that died out; Chrysler’s Plymouth brand, aimed at the same general market as Oldsmobile, was quietly folded during this time).

GM also suffered what was discovered to be quality problems when Japanese automobiles started making inroads into the American market. Cars that were engineered to last 80,000 miles since the end of WW2 (I saw a Shell booklet that talked about how to make your car last 100,000 miles, as if that was an amazing goal) suddenly fell short in people’s eyes when it was seen that 150,000 was doable. GM (and Ford and Chrysler/AMC) never recovered, even with the better cars made today they’re still seen as (and are indeed measurably) inferior to Japanese and European brands (using different measuring sticks).

General Motors also tried to go after other markets, the results of which would drain energies GM would have better used fixing their situation in the eighties and nineties. Saturn was a nice concept, but it ended up being a cul-de-sac of intriguing inventions and a factory that would be refitted towards another division’s model before its assets could be written off. The Hummer Purchase, while temporarily profitable, was stupid on all fronts (and, sadly easily seen as fitting for a company that seemed unable to build a halfway decent small car).

So now the GM lineup is a mess:

  • Chevrolet still covers the entry-level cars and pretty much works as a car-for-all-seasons for GM
  • Pontiac covers the small mid-range cars, Buick the big mid-range and GMC mid-range trucks.
  • Cadillac is for luxury cars and trucks. Needless to say, it’s secure in its place (as is Chevy)
  • Hummer is the Heavy-Duty Truck segment (which has its uses, but not Saturday Night on Broadway)
  • Saturn, once the fun person in the group, is now the pretty shell of itself awaiting its fate.

Pontiac, Buick and GMC have pretty much become three brand names for a single brand. Definitely a drop-down from the past, when they served their own market without problems.

So in the end, we have a company which at some level was unable and/or unwilling to change for the marketplace. Various weaknesses include hierarchical rigidity (including a white collar force that desperately needs to be stripped down), a sales force that benefited from a past that no longer works and can’t be fixed (franchises that couldn’t be changed for the company’s benefit), actions that should have been taken a decade or two ago, actions that should have been held off on and workers who had things that they held on a bit longer than they should have.

The sad thing is that the worldwide company makes enough money, it’s the US market that’s dragging the corporation down. I could easily see a splitting of the two companies, followed by an immediate chapter 7 bankruptcy of the US GM while the worldwide corporation steams on, unburdened of its dead weight.

Belated Update, 4th of February 2017: Pontiac, Hummer, Saturn and Saab (a once-intriguing foreign brand known for safe, stodgy, long-lasting cars eventually turned into another Saturn-like brand) were quietly folded, leaving Chevrolet as the workhorse, Buick as the soft-luxury brand (and the workhorse for the China Market – otherwise it too would have been folded up), GMC as the mid-level truck brand and Cadillac as the hard/European luxury brand (with VERY sharp stylings, I must add). No real mid-level entry in the bunch (GMC always seems a bit odd as a truck/SUV seller, as those vehicles don’t necessarily translate well in the Suburban/Urban market).

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