Car Guys vs. Bean Counters - Bob Lutz [85]
What emerged in the opinion of the task force was that GM was a company of basic operational excellence, hampered by a sales and marketing activity that lacked focus and supported too many brands with too many dealers. Finance, accounting, general management, and the apparently ritualized culture of the company’s basic way of operating came in for criticism as well.
GM, in the opinion of the task force, was deemed to be a company that knew how to design, engineer, and build great cars and trucks, including those of advanced alternative drive technology, but was sorely lacking in its ability to market them, the totality wrapped in a culture that did not exude urgency or recognize the right priorities.
Once the task force got to work, so-called Viability Plans were developed. Basically, these were largely arithmetic exercises to see at what total North American market size and what market share GM could survive and prosper, assuming fixed costs were cut sufficiently to permit survival as a smaller company. Viability Plans 1 through 3 were rejected by the task force and the U.S. Treasury as too optimistic, so in VP4, active to this day as the commitment against which GM’s performance is measured, total market size was cut pretty much to what it is today, and GM’s market share was assumed at below 20 percent. For VP4, with its drastically lower volumes, huge cuts in fixed cost were needed. Plans were drawn up on myriad plant closures and workforce reductions, as well as planning a much lower future debt load and pension/health care benefits.
It was during these first few months of 2009 that plans were drawn up to eliminate Saturn, Pontiac, Hummer, and Saab. (Buick and GMC were also on the list but survived when their profitability became better understood. Clearly, though, the future emphasis was to be on Chevrolet and Cadillac.) Personally, I shed nary a tear for Hummer, as the brand, justly or unjustly, had become a lightning rod for the enviro-left and was taxing GM’s credibility as a creator of fuel-efficient vehicles. Saab, a perennial money loser, was a failed son I was glad to see leave home. Again, not a tear from me!
Saturn and Pontiac were a different story. Both now had the best product lineups in their histories. Unfortunately, during the past few years of growing financial stress, both had seen their marketing and communications budgets slashed to the point where even sensational new products like the Saturn Aura and the Pontiac G8 V6 and V8 rear-wheel-drive sedan (a great, traditional Pontiac if ever there was one) were launched with so little advertising and sales promotion that they were what I call “confidential entries”—only the people at GM knew about them.
Still, the task force was right: GM needed to shed brands, with advertising and communication dollars devoted to the four critical ones—Chevrolet, Buick, GMC, and Cadillac—and not peanutbuttered over the original eight. As we reduced dealer count in line with the strong advice from the task force, GM’s salespeople did the best they could in applying objective criteria to the cuts, such as sales results, customer satisfaction, and dealer profitability. But it was a hasty job at best, and in many cases the dealers had to be reinstated.
Other mistakes were made as well: in an effort to reduce Cadillac dealer count, many rural dealers who lived off of their Chevrolet, Buick, or GM franchises but who also sold five or ten Cadillacs per year to the local mayor, banker, or physician, were terminated to get the number down. This was counterproductive: a lot of Cadillac’s strength lies not in massive urban “Taj Mahal” marble, chrome, and glass palaces like Mercedes, BMW, or Lexus, but rather in