Analytical Wealth

Let's look at the Brand Consolidation aspect of the GM Restructuring Plan:

Hummer is going to be phased out by the end of the year. Nothing much to say here: shoot this one, it's dead. 

Pontiac will be scaled back and refocused as a "niche automaker", no doubt with a focus on the company's high-performance automobiles. This makes perfect sense as it makes more sense for Pontiac to sell high-powered G8s than it does for it to compete against Chevy with run of the mill mid-sized family cars as well.

Saturn will be phased out by 2011 unless "no alternatives arise ", one of those alternatives is a proposal by a group of Saturn dealers to spin the brand off into an independent company. One of their ideas is that they would eventually sell "Saturns" that were produced by Chinese and Indian manufacturers. 

The situation with Saturn is truly a shame as it was a brand that was building up a solid following in the early 90s; after all can anyone name a domestic car brand that had people showing up for an annual festival? While I'm sure there are festivals around niche products like the Corvette or the Mustang, a festival for a domestic car brand is rare. Normally that's something you only see for brands like BMW or Porsche.

Even if the spin-off occurs I don't see how Saturn survives. Having to depend on no-name foreign OEMs to produce your product may work for DVD payers at Wal-Mart, but it's a different story in the auto industry. Because not only do you have to sell people on spending money on "Saturn", but you have to also sell them on trusting a manufacturer they've never heard of, and it's not like Saturn currently has any brand equity you could leverage in the proposed scenario. 

It's not the same as when VW bought the rights to the Bugatti name, and high-end enthusiasts that the same company behind such brands as Audi, Lamborghini and Bentley would be producing the cars.

Saab will be sold off and may even have to file for bankruptcy by the end of the month, either GM plans is for Saab to be an independent company by the end of the year. The support of the Swedish government would be needed to complete a sale, but initial reports seem to indicate that the Swedes aren't especially interested .

I concerned about Saab's survival as well because nearly all of the potential suitors are dealing with their own issues around declining sales, losing money, etc, not to mention the fact that it's a massive turnaround project. GM has to both find someone who is interested in buying Saab, in addition to finding someone who can afford to make the investment. Chances are if Saab is sold it won't be a real "sale", more like someone taking the company over in exchange for future considerations if the deal turns out to be profitable.

Here's hoping that my earlier fantasy of VW buying Saab comes true, if VW can resurrect Bugatti from the dead I'm sure they can save Saab.

While the above is definitely a good start I would've liked to have seen GM drop Buick as well, and either kill the cars in the brand's current line-up and/or rebadge a few of them as lower-end Cadillacs. Think: Cadillac's answer to the place the Audi A3 and the Acura TSX serve in the respective carmakers lineups.

It's probably not a bad idea to drop GMC as well, because all marketing speak aside they're just allegedly higher-end versions of Chevy trucks. Not to mention the fact that anyone buying a GMC knows that they're getting a GM product, and that their purchase isn't markedly different from its Chevy Cousin. Popular GMC vehicles should be able to be marketed as higher-end entrants in the Chevy line-up with any problems. 

You can read a PDF version of GM's restructuring plan here, and WSJ coverage of it here.

As for the plan itself I figure you can either go all in or make baby steps, and while the company has made some significant progress I'm still firmly in the bankruptcy camp. It seems to me that the company's management (and our politicians) are focused more on saving/propping up the old GM, then they are in remaking the company into something all together new and successful.

Sources:

The Wall St. Journal: "GM Seeks $16.6 Billion More in U.S. Aid" -- John D. Stoll, Sharon Terlep, Alex P. Kellogg, February 18, 2009.

General Motors Corporation: "2009 -- 2014 Restructuring Plan" -- February 17, 2009.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.