The 2008-2009 period was difficult for Detroit’s Big 3 automakers. While Ford technically never filed for bankruptcy – even though it was get some of that sweet rescue money — GM And Chrysler did. GM appeared to have it the worst, as the automaker had to shed four of its divisions to stay afloat. But how did GM choose these four divisions? A recent interview with former GM executive Bob Lutz shed some light on the automakers’ thinking at the time.
Engine1 I recently chatted with Lutz on what inspired GM to do away with Saab, Saturn, Pontiac and Hummer instead of, say, Chevrolet, Buick, GMC or Cadillac. Lutz explained in detail all the arguments and logistics that led to the demise of each brand.
About Pontiac, Lutz says he fought for the brand, but the higher-ups just didn’t want it.
I resisted hard. But their hearing aids were off, they said, “That’s a lousy brand, it’s been unprofitable for years.” I pointed out all the signs of brand health; youth enthusiasm of buyers for the brand etc. I just couldn’t get it over the finish line. So unfortunately it died. I still think this is a borderline tragedy.
At Saab, Lutz said, he tried for years to convince his bosses to get rid of the brand, but things kept dragging on. He calls the brand “stupid.”
I tried for years to convince my boss at GM that we should get rid of Saab, and it was always, “Wait until next year, wait until next year, wait until next year” – and the next year never came. It was a silly brand that was out of the mainstream, and every time it was made more mainstream, we didn’t sell any. And when what the automotive press loved was silly, there were only 100,000 people in the whole damn world who wanted one.
His comments about Saturn are interesting in that he admits that Saturn had no reason to exist anymore, especially with Chevy around. That’s true, because the brands were constantly stepping on each other’s toes. The Chevy Malibu Hybrid and Green line of Saturn aura For example, they were essentially the same car with a $745 price difference.
Saturn, I was glad to be rid of him. There was no longer any reason for the Saturn brand. Chevrolet was just as good and just as reliable. And all dealer networks have now learned that you don’t rip off customers if you want to stay in business. The reason Saturn came into existence has somehow disappeared. Saturn was another mouth we had to feed with limited capital. All right, Saturn can go.
At Hummer, Lutz says they should have done with the brand what GM is doing now: make it part of GMC. Transforming Hummer into its own brand meant giving it a range of vehicles it didn’t really need.
We couldn’t save lobsters, which was a mistake. Hummer should never have been a brand, it should have been a vehicle in the GMC lineup. It should have been a GMC Hummer and that way you could have one attached to the GMC dealer’s body and when it wore out you could replace it. But once we made Hummer a separate franchise, we had to provide it with a full range of vehicles. We had the H1, which was never sold in significant numbers. The H3 did well. The H2, which was the size of a Wrangler and a Bronco, would have been a slam dunk. But I had to admit that the Hummer brand was a mistake.
Lutz even talked about both Buick and GMC being considered for the chopping block. For Buick, he says the Obama administration and bankruptcy lawyers all wanted GM reduced to just Chevy and Cadillac, with Buick getting the axe. The brand persisted due to its popularity in China.
Chapter 11 intervened and the Obama-appointed financiers from New York – who knew nothing about the automobile industry – said, “General Motors will be all Chevrolet and Cadillac.” We argued and said we have to keep Buick because if you keep Buick drops in the US, it will die in China, and it is one of the leading brands in China. So don’t do that. This is how we were able to save Buick.
GMC was almost canceled because it was considered too similar to Chevy. However, the profitability of the brand changed minds.
They wanted to abandon GMC because it was a version of Chevrolet. And we showed them the profitability of the GMC brand and the health of the GMC brand. Many people wouldn’t own another GM brand, they had a very high opinion and owned a GMC sport utility or truck.
It’s interesting to get some insight into the reasons why these brands were cut. If things had turned out a little differently, GM might be a completely different company than what it is today.