Is Buick the next to be kicked by GM?

[sosuzguy]

Interesting article from the Dallas Morning News.

http://www.dallasnews.com/sharedcontent/....ba08cd.html?nl

GM may ditch brands, cut white-collar jobs as sales shrink

02:05 PM CDT on Monday, July 7, 2008

Associated Press

DETROIT — General Motors Corp. may get rid of some brands, speed the introduction of small cars from other markets and make further white-collar job cuts as it tries to deal with a shrinking U.S. auto market.

A person familiar with the company's discussions said Monday all the options are being considered as GM tries to cope with the dramatic shift in consumer buying habits from trucks to cars and crossover vehicles.

General Motors Corp 9.40

11:09 AM ET -0.29

Previous close: 9.69

The person asked not to be identified because no decisions have been made.

GM announced last month it would close four truck and sport utility vehicle plants and boost production of several existing car models.

Its sales are down 16.3 percent this year, and last week GM's stock price closed below $10 for the first time since September 1954.

The job cuts could be considered by GM's board of directors when it meets in early August, The Wall Street Journal reported Monday.

Company spokeswoman Renee Rashid-Merem would not comment on potential job or brand cuts, but said the company has made it clear that action would be taken if the U.S. auto market worsened.

“If conditions persist or deteriorate, then we'll continue to take aggressive actions,” she said Monday.

GM's stock price dropped to a 54-year low of $9.96 on Wednesday after Merrill Lynch analyst John Murphy wrote in a note to investors that a GM bankruptcy “is not impossible if the market continues to deteriorate and significant incremental capital is not raised.”

The next day, JPMorgan analyst Himanshu Patel called the bankruptcy fears overblown but predicted GM will burn through $18 billion in 2008 and 2009 as it struggles with depressed U.S. sales.

GM has $24 billion in cash and $4.6 billion in credit on hand, he said, so it doesn't need to raise more money immediately. But he predicted the automaker will try to raise another $10 billion in the third quarter of this year by mortgaging trademarks, international operations and other assets.

Critics have said GM still has too much fat in its middle management, despite cutting white-collar employment to 32,000 last year from 44,000 in 2000. They also say the engineering, manufacturing and marketing costs are too high for it to keep all eight of its brands.

Over the years, analysts have suggested cutting or selling the Buick, Saab or Saturn brands, perhaps jettisoning them like GM did with Oldsmobile in 2004. Chevrolet and Cadillac remain the company's strongest sellers.

Buick sales are down 21 percent so far this year, while Saab is down 29 percent and Saturn sales are off nearly 19 percent. Saab, the Swedish automaker, sold only 12,068 vehicles during the first half of 2008. Saturn sales have declined nearly 19 percent for the year even though its model lineup has been completely revamped.

GM already has decided to study the sale of its Hummer brand. The big trucks aren't the right product for consumers facing $4 per gallon gasoline.

[RivNut]

I would think that the Buick car division is safe as long as the Chinese consider Buick to be their car of choice.

[sosuzguy]

Yeah it will be safe in China....

[Guest musclecarfan65]

in the german online news magazine WAZ there have been even up-to-date "rumors" yesterday that general motors is not liquid anymore ... but as usual rumors like that are demeted with lighting speed. reminds me of delphi who also demented the rumors about bankrupcy ... and they are still struggling to move out of chapter 11. i really don't like the idea that world economy is "depending" on china.

[tjthorson]

IMO GM made a serious "brand-killing" decision back in 1988 with the choice to refocus the brand on the "senior" crowd.

While that initially boosted sales, the senior crowd, while very loved and appreciated, general don't buy cars as often, or rack up miles like us younger generations do. Therefore, instead of a 3-5 year repeat customer - its more like 10-15.... Not enough to sustain them. The mid-late 90s Regal GS was too-little, too-late for us Gran Sport, Grand National crowd from the 60s, 70s, and 80s.....

When Oldsmobile began to get away from their "experimental" reputation, it began to signal the beginning of the end for them. When Buick moved from the "luxury sports for the 25-40 crowd" to the 55 and over, it began their decent into history along the side of Olds....

Sad but true....

[jimtash]

Agree with Todd on this. Personally, I wouldn't purchase a new model Buick. I'm 37 and there's nothing in the line-up I find appealing.

Now if they came back with a GNX like was sold in 1987, well that might get me to take a closer look.

GM needs to allow the divisions be seperate entities again if they intend to keep them all operating. Otherwise sell the Buick name off to someone who can make it a profitable brand again.

[sosuzguy]

I agree with the last two post. I have loved Buicks and most of my family has owned Buicks for many years. But now there is not a single one that make that I'd buy. Seems like everytime GM get's something right, as in the 87 GN & GNX or a RIVIERA they quit producing it.

FYI Phil Cooley shared this article which contradicts the one that came from the associated press on the same day. I wonder who's not telling the truth? Could this be part of the problem with GM?

Another article from the Wall Street Jounal says they won't be

cutting any car lines.

http://online.wsj.com/article/SB121573308128544183.html?mod=AutosChannelMain_RelatedStories

[tim63riv]

Dirk,

Unfortunately for us all, this is really becoming a global market and the Chinese are playing a huge part in it. You would not believe the number of cars that are being crushed in our regions salvage yards. Once crushed, most of the metal is on its way to China! Their thirst for raw materials is a major impact on oil costs as well.

Jayson,

Hummer is a goner, but I think the others will be around for the near future. Saab is a question mark as a niche vehicle that never sold in large numbers and never will. Saturn is coming off of a 19% increase in sales for June, and will be fine because they are the fuel economy leader for GM. Buick will be safe because GM can't afford to loose any more market share! Hopefully the GM brass has learned that it is a brave new marketplace out there. The 14th floor smugness that killed Oldsmobile and thought that the Olds customers would just go buy a Buick or Pontiac cannot repeat itself.

As far as Buick products go, I could see myself in a Lacrosse Super with the 5.3 V8! Two fewer doors would help sell that car!

Enough ranting from me!

Tim

[Patrick91914]

As I see it, Buick has been putting potential buyers to sleep since 1974. I went to Buick.com and all I saw were three offerings: an SUV (which is actually pretty nice-but at these gas prices, they can keep it) and what appeared to me to be two almost identical, uninspiring sedans (boring).

Buick should take a page from dodge and reach back into the past and update a classic (hint: '65 Riv); otherwise, I say R.I.P.

[tjthorson]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Buick will be safe because GM can't afford to loose any more market share! Hopefully the GM brass has learned that it is a brave new marketplace out there. The 14th floor smugness that killed Oldsmobile and thought that the Olds customers would just go buy a Buick or Pontiac cannot repeat itself.</div></div>

Nothing is safe... GM Brass didnt learn anything from Olds - and that smugness is still alive.... Look at the lineup of any of the GM dealers today.... When was the last time people got excited about a sub-compact or crossover SUV?

The best "reaction" to Chryslers and Fords willingness to get with the times and give customers what they want (i.e. - RWD performance in a vehicle very close in design and power to the prototypes) - which is what seems to create "hype" around a brand is still lost. Their best shot - with all the R&D money they have, and the best "minds" in the business - is the G8??? They just take something from Australia and spend R&D money getting it emissions and crash friendly? Thats it????

Have you notcied the little "GM" badges going onto all the GM cars now on the fender? It would seem to me that GM is just paving their way into oblivion, with their last great "improvement" to just be a single GM brand, across all cars. Imagine going to your local GM dealer (not chevy, pontiac, or buick) - but GM. You could buy all the cars in one place! Think of all the marketing, salary, parts, branding money they would save! There would be some BIG EXEC bonuses for that kind of thinking for sure. (/sarcasm off)

While all your GM customers head down the street and climb into a charger, mustang, 300, etc....

[jimtash]

Speaking of G8.

I'm a Ford guy at heart and I own a 1989 Taurus SHO. The thing that turned me on to them is that for it's day, the '89 was a technical masterpiece that could back it up perfomance wise. Sure the Taurus body might not be the best looking or best platform to build on but it's surprised a lot of people that just think it's just another four door grocery getter.

If Buick was allowed to come out with something similar, maybe it could be the spark that puts it in peoples minds again. The division does great as far as quality is concerned but it's not enough to keep it afloat. They need to come out with a car/engine combo that isn't shared with the other brands. Go with something along the lines of the original Riviera but it has to be something that can't be identified with the others.

IMO, 20 years from now GM will be comprised of just Chevrolet and Cadillac with GMC being relegated to heavy duty trucks only.

[rocketraider]

I don't think it will take that long.

Someone commented on Olds moving away from its experimental reputation. Olds didn't make that move willingly. It was a result of some of GM's earliest short-sighted approach to "brand management"- which is as flawed a concept as ever came out of an MBA's brain when applied to automobiles.

The trouble with GM is they don't build interesting, exciting cars anymore, and if they do, they price it where no one can afford it.

I would hate to see Buick follow Olds and Plymouth into oblivion. GM took it on the chin when they had to buy out the Olds franchises. Can they realistically do that for another Division?

[tim63riv]

Glenn,

Good comments! You are dead on about the costs GM had to bear to kill Oldsmobile, and they already have spent another fortune on bringing together the Buick, Pontiac and GMC franchises.

What has happened to GM is simple, they failed to react to market changes rapidly enough. They are very conservative and it shows in the product. When they do make something sporty, like the GTO, they make it look like a melted jelly been and overprice it. The GTO was a helluva $23K car but not a great $33K car! Styling at GM seems to have eluded every division save Cadillac, most offerings are reliable and boring, aka Camry!

The playing field has changed, choices for customers are at an all time high (more car companies now than since the 1950's, think about that!)

Exciting designs, innovative technology and value for the dollar will save GM, they just have to DO IT!!!

Tim

[toomuchvinyl]

I agree with the observation that Buick has put itself at risk by offering so few models and most of them SUV's. My wife's daily driver is a '98 Regal GS that we bought new. She still says it's the best car we ever had and is certainly not looking forward to the day we have to replace it.

I'm afraid that the LaCrosse/Lucerne sedans are downright dowdy, even with the tempting V-8. If the division is to go forward I really hope to see a return to more conventional coupes and sedans and fewer SUV's.