Detroit Is Between A Rock And A Hard Place

I haven’t said much about the whole Detroit automotive financial fiasco here, instead I posted most of my opinions about it over at Ridelust.com. Just the other day, I wrote a post called The 9 Detroit Auto Brands We’d Miss The Least that basically outlines which brands GM and Ford should sell to lighten up their load and get back on track financially.

Remember the story of Aron Ralston? He was the climber who was out in the wilderness when a boulder fell on his arm and pinned him there. He was stuck, unable to get free, so he did what needed to be done, he cut off his own arm. That kind of action takes massive testicular fortitude, but it saved his life in a case where, otherwise, he would have surely died. What does this have to do with Detroit? Well, right now, GM owns 12 different brands: Buick, Cadillac, Chevrolet, Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, and Vauxhall; Ford owns 5: Ford, Lincoln, Mercury, Mazda, and Volvo; and Chrysler owns 3: Chrysler, Dodge, and Jeep. All three companies are on the verge of certain death, and something needs to be done. The question is, do they have the testicular fortitude that Aron Ralston had? Here’s a quick run down of which brands I think should go the way of Aron Ralston’s arm:

First of all, GM should unload it’s Opel and Vauxhall brands. It’s a big move considering how important they are to GM, but selling the two brands off will give the company the huge influx of cash they need, that’s the main point. Secondly, Buick needs to go. It’s the perfect time to do it too, since they offer no real value to GM here in America, and they’re loved over in China. GM could unload Buick to Shanghai Automotive Industry Corp (SAIC) and everyone will be better for it. Suddenly, with those 3 brands gone, GM’s troubles aren’t nearly as bad.

Next up on the chopping block, Pontiac. It’s a shame, but Pontiac isn’t the exciting brand it used to be, and it hasn’t been for decades. They really don’t offer any value to GM, so let them go. The fifth brand to go is Hummer. Hummer sales are bleak, and the reputation probably isn’t coming back any time soon after the beating it took from the trend toward eco-mania. Sell them off to a company that can devote more energy to making the brand work again. Same goes for Saab; it’s a good brand that just doesn’t sell well. They have expensive parts, low margins, poor sales, and they aren’t on the good end of the competition with quality Japanese cars.

GMC is a bit of a weird case. Maybe they should sell it off, maybe they shouldn’t, but they definately need to rethink their brand strategy. Chevy and GMC both makes trucks, and the market for personal trucks just isn’t as big as it used to be. So either sell GMC off, or turn the brand’s energies toward making commercial trucks only, and selling to the business market.

That would take care of GM, after selling off those brands, they’d have the money they need and be an ultra-lean profit machine. They’d be able to focus a ton of energy on Chevy and the remaining brands. As for Ford, they need to drop Mercury post-haste. Mercury is completely pointless, they do nothing but mirror Ford models and add simple options to up the price. Ford needs to cut them off now. That might be sufficient to help Ford survive this crisis, but to be safe, they should also sell off Volvo. Recent reports say that Ford wants $6 billion dollars for Volvo, and I think they can get that. Do it to it, Ford, you can make it out alive.

And that’s it, that’s all nine brands. Chrysler can’t drop Dodge or Jeep, so they remain intact in my plan; maybe after GM is done lopping off it’s dead limbs, they could buy Chrysler, although I’m not so sure it’d be a good idea. So pass it along, maybe the head execs at the Big Three will read this and be inspired to summon up some testicular fortitude and do what needs to be done.