The period 2008-2009 was a difficult time for Detroit’s three major auto manufacturers. While Ford technically never filed for bankruptcy – even though it did get some sweet relief funds — GM And Chrysler do. GM appears to be facing a worst-case scenario as the automaker has had to scrap four of its divisions to stay above water. But how did GM choose those four parts? A recent interview with former GM executive Bob Lutz sheds light on the automakers’ thinking at the time.
Engine1 recent chat with Lutz about what inspired GM to kill Saab, Saturn, Pontiac and Hummer instead of Chevrolet, Buick, GMC or Cadillac. Lutz details all the arguments and all the logistics that led to the death of each brand.
Regarding Pontiac, Lutz said he fought for the brand, but the higher-ups weren’t having it.
I plugged in. But their hearing aids were off, they said: ‘It’s a terrible brand, has been losing money for many years.’ I’ve pointed out all the signs of brand health; Young buyers’ enthusiasm for the brand, etc. I just couldn’t exceed the target. So unfortunately it died. I still consider it a borderline tragedy.
As for Saab, Lutz said he’s been trying to convince his bosses to get rid of the brand for years, but things keep happening. He called the brand “goofy.”
I tried for years to convince my boss at GM that we should get rid of Saab, and it always had to wait until next year, wait until next year, wait until next year—and the next year never came. It was a silly brand that wasn’t popular anymore, and every time it became more popular, we couldn’t sell anything. And while it’s the goof that the auto press loves, only 100,000 people worldwide want one.
His comments about Saturn are interesting in that he admits that Saturn has no reason to exist anymore, especially with Chevy on his side. This is true because brands are constantly stepping on each other’s toes. Chevy Malibu hybrid and Saturn’s halo green line essentially the same car with a $745 price difference between them, for example.
Saturn, I’m glad to be rid of. There’s no reason for the Saturn brand anymore. Chevrolet is just as good and reliable. And all dealer networks have learned that you can’t bother customers if you want to stay in business. The reason Saturn was formed is gone. Saturn is another mouth that we have to feed with limited capital. Okay, Saturn can go.
Regarding Hummer, Lutz says they should have done with the brand what GM is doing now: Make it part of GMC. Making Hummer its own brand meant they had to give it a line of vehicles it didn’t really need.
We couldn’t save Hummer, that was a mistake. Hummer should never have been a brand, it should have been a vehicle in the GMC lineup. It should have been a GMC Hummer, and that way you can add one to the GMC dealership and when that one wears out, you can replace it. But as soon as we turned Hummer into a separate franchise, we had to give it a full line of vehicles. We had the H1 but it never sold in significant numbers. H3 works fine. The H2, about the size of a Wrangler and Bronco, is going to be a huge hit. But I have to admit that the Hummer brand got it wrong.
Lutz even talked about both Buick and GMC being considered for the chopped block. As for Buick, he said the Obama Administration and bankruptcy lawyers both want GM to be cut down to just Chevy and Cadillac, and Buick to be left out. This brand still exists because of its popularity in China.
Chapter 11 stepped in and financial experts from all over New York appointed by Obama – people who knew nothing about the auto industry – said, ‘General Motors will only have Chevrolet and Cadillac.’ We argued and said we have to keep Buick because if you leave Buick in America, it will die in China and it is one of the leading brands in China. So don’t do it. So we saved Buick.
GMC was almost eliminated because it was considered too similar to Chevy. However, the brand’s profits have changed minds.
They want to abandon GMC because it is Chevrolet’s version. And we showed them the profitability of the GMC brand and the health of the GMC brand. Many people would not own any other GM brand, they have a very high opinion and own a GMC truck or sport utility vehicle.
It’s interesting to get more insight into why these brands are making the cut. If things had gone a little differently, GM might be a completely different company than it is today.
