Bob Lutz: Lessons from [Vice] Chairman Bob

“Today, we have a much healthier balance sheet, with significantly less debt.

“Today, we have a much healthier balance sheet, with significantly less debt. We’ve slashed our operating and labor costs. We’re creating a leaner, stronger dealer network. We’re positioned to be profitable in anything close to a normal automotive sales market. And we’ll begin to repay our government loans sooner than expected, starting this month.

“Equally important, we’re going to market in North America with just four brands – Chevrolet, Buick, GMC, and Cadillac – and next year, just 34 nameplates, down from 48 last year.

“One key to our success is developing those four brands. We must make people more aware of them and what they mean.”—Bob Lutz, vice chairman, General Motors, December 2, 2009, Motor Press Guild keynote, L.A. Auto Show

This is all good. But Lutz was among those in positions of authority promulgating the eight brands that GM once had. Eight was said to be vital. Necessary.

Turned out, in part, to be bankrupting. Literally. It costs a lot of money to make people aware of eight brands and what they mean. And I doubt that it is half as expensive to deal with four. B

During his presentation, Lutz told an anecdote. And he concluded it by saying, “if you don’t know how to handle your brands, you’re dead.”

Agreed.

But I’m still troubled.

They’re going to market in North America with “just” four brands?

Ford is going to market in North America with three brands—Ford, Mercury and Lincoln—and arguably Mercury is one that isn’t getting a whole lot of love and attention and it probably will go away when the Lincoln showroom gets a few more models.

Chrysler is going to market in North America with three brands—Dodge, Jeep, Chrysler.

Toyota is going to market in North America with three brands—Toyota, Scion and Lexus—and arguably Scion is more of a marketing experiment than a full-blown brand: there are no standalone Scion stores, just real estate within existing Toyota dealerships.

Honda is going to market in North America with two brands—Honda and Acura.

Nissan is going to market in North America with two brands—Nissan and Infiniti.

So GM has four. Why? Why not two: Chevrolet and Cadillac?

GMC, I’ve been told by GM people, is “highly profitable,” so it needs to stay. Wouldn’t it be more profitable if they put all the truck product in Chevy and offered the “professional grade” as a up-scale option?

Buick, I’ve been told by GM people, sells well in China, so it needs to stay. Yes, in China. But would some Chinese person not buy a LaCrosse because it isn’t sold in the U.S.? Wouldn’t the fine new Buick product be well situated as entry-lux vehicles in Cadillac showrooms?

Today Ed Whitacre announced some changes. Mark Reuss, whom I’ve talked about in this space, has been named president of GM North America. That is fantastic news.

Bob Lutz no longer has the “Marketing and Communications” responsibility, but will be advisor on Design and Product Development; he’d been instrumental in that space prior to the most recent re-org before this one.  But the focus on products—and on the brands and what they mean—are still certainly germane in that advisory spot.

Here’s hoping that Reuss and his staff take a hard look at the numbers. Especially 4, 3 and 2.