Does anyone miss Oldsmobile? Not what Oldsmobile was in its heyday — but what it had become by the mid-late 1990s just before GM pulled the plug?
Same goes for Plymouth.
Like Olds, it had a great history. Once upon a time, Plymouth had been a great brand defined by an exciting lineup of standout cars. But Plymouth faded into badge-engineered irrelevance — re-selling the same basic cars sold under the Chrysler and Dodge nameplates. Just like Olds. And just as irrelevant.
The same could be said today for Ford’s Mercury division — to say nothing of several of GM’s divisions, whose continued existence makes ever less sense for an automaker whose share of the pie has dwindled from a high approaching nearly 60 percent of all vehicles sold in North America circa 1979 to around 24 percent today.
GM keeps Buick and Pontiac mainly because it has no choice — or faces choices as unappealing as ditching the brands themselves. It has the unions, of course — and they seem determined to kick themselves in the nether regions rather than do what’s in the long-term interests of anyone who hopes to work for GM in the future. As adamant as the president in his refusal to admit there might be trouble with the “mission” in Iraq, union leaders refuse to give GM any breathing room at all — which may just leave GM on the floor not breathing at all. But they don’t seem to care about that.
And then there are GM’s dealers. These are independent franchise owners — not directly under GM’s control. So the company can’t just close up unproductive dealerships (or limit the number of dealers in a given geographic area, as Toyota does). And it is legally bound to provide “product” (vehicles) even if those vehicles aren’t selling well. If that sounds odd, bear in mind that many dealers (perhaps most) don’t make the big bucks selling cars. They make them servicing cars. So there’s not much incentive for a dealer to close up shop — even if he is selling a brand that has become an also-ran.
This leaves GM in the position of having to dig deep and make generous buy-out offers (as it did with Olds). The money involved is enormous. GM can’t afford to do it — but it can’t afford to keep on pouring money into unproductive, duplicative brands, either. Toyota is almost as big as GM in terms of worldwide sales (and awash in cash while GM is awash in red ink) and it does this with half the brands GM has (Toyota, Lexus and the new Scion small car spin-off vs. GM’s six full-line divisions). Not one of the major Japanese nameplates has more than three divisions, in fact. Most have just two. A “standard” brand (Honda, Nissan, etc.) and a “prestige” line (Acura, Infiniti).
That’s all — and it’s probably just enough.
GM’s in a bind — trying to eke profitability out of a structure that’s too diffuse for the market it has — while Ford is dead in the water and seems to have no clue what to do about Mercury, let alone its struggling Lincoln luxury division. Bill Ford fled the scene, abjectly conceding he was in way over his head. The “Way Forward” appears to be a blind alley with a bricked-up wall at its terminus. The company is riding on the fumes of its retro-themed Mustang — one of the very few bright spots in an otherwise dismal product portfolio. GM, at least, has managed to resuscitate its Cadillac arm — but the union/over-capacity issues loom large, waiting to crash over GM’s Renaissance Center HQ like a mega-tsunami.
Of the “Big Three,” it is Chrysler — now an arm of German firm Daimler AG — that seems most seaworthy now.
Could it be that DaimlerChrysler has trimmed down to just Chrysler and Dodge? No one seems to miss Plymouth — and Chrysler doesn’t appear to have lost anything for having bid the brand adieu. There’s a “standard” line (Dodge) and a “prestige” line (Chrysler) and that seems to be just about right.
The fast food industry may be the best example of how this works — and why. Everyone knows the menu at McDonald’s. Taco Bell, too. These joints focus hard on their core product — and try to avoid being all things to all people. (Yes, there are now salads and so on at McDonald’s, but this is a sop to political correctness and the food police. People go to McDonald’s for burgers and fries and shakes. Providing these staples of the American diet with amazing efficiency and consistency is what McDonald’s and the fast food industry in general have honed into an art form). The most successful imports hew to the same philosophy — and that coherence (along with good value and pleasing the customer) has made them into the juggernauts they have become.
There are lots of very smart people at both GM and Ford who know all this stuff — but their hands are tied by institutional barriers, legal/contractual ukase and the same sort of lethal inertia that kept the Titanic speeding toward the iceberg even after the ship’s helm ordered hard to port. By then, of course, it was already too late.
Not many of us miss Olds. Or Plymouth. At least, not what they had become in their final decade. Ten years from now, another generation may be saying the same thing about Mercury, Buick and Pontiac.
Maybe even Ford and GM too.