$15B auto aid emergency loan agreed upon in principle

GM got infected with a mentality that marketing is more important than the underlying product. I miss the time when GM's "brands" were more than marketing organizations, but were instead divisions within the company with more autonomy. That produced more distinct products that appealed to a wider range of buyers. It is when they started blurring the lines between them in the late '70s and '80s, relying too much on badge engineering and minor styling differences, that their loss of market share also started. While not the only cause, it's a contributing factor.

However, few of these arguments for GM killing most of its "brands" mention the huge cost of doing so, which is why they've been reluctant. There are numerous state laws to protect dealerships that make it quite difficult. GM's cancellation of Oldsmobile cost them over 2 billion dollars, and has resulted in a further loss of market share. Most of those buyers didn't go to other GM names. Chrysler's discontinuation of Plymouth hasn't helped them much either.

So it's a tough decision to make, as it's not known for sure whether eliminating more names will cause a further erosion of their market, or if it will save them enough money in the long run to make them profitable again.

Whatever fraction of $15B GM receives will not be enough to shed brands. It costs billions of dollars to do so (as Cwc states). This also does not provide protection against lawsuits like Ch 11 would. If GM gets $5B of this, that might allow them to shed a single brand with zero money remaining for operations, a completely useless gesture.

For Ford, $5B is half of what they asked for, which is completely acceptable. Ford truly doesn't even need the money anyway. They're only there to provide a symbol of Detroit unity anyway.

Chrysler is dead. $5B will be enough to survive an additional month.

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My prime concern is that Congress will hear from these guys again in January (when Chrysler runs dry). $1 today will be worth $1M in January when all the credit has dried up and Moody's has downgraded each company's credit rating. I hope they have the wherewithal to stay the course and not provide additional cash later.

I mostly agree with your assessment. I disagree with you on Buick. Older generations tend to be more loyal and financially responsible (and richer) than that youth. What they lack in lifespan, they definitely make up for with these attributes. Given the economy today, loyalty and making payments on time is very, very, very attractive. You know what is also attractive? The new LaCrosse. The Enclave is doing quite well itself. Now the only problem is the Lucern. The way I see it the only thing Pontiac has going for it is the G8. If they give Buick the G8 sans the stupid hood scoops and called it the Invicta, it would be a brilliant family man's Camaro. Since the interior is pretty nice I think it would fit well. Then they can really kill of Pontiac like it needs to be. Give Buick one more smaller model, like a super premium Cruze, and they're solid. GMC can stay just because it costs next to nothing to rebadge a Chevy truck, the profit margins are high, and for some reason people still buy GMCs in decent numbers.

Chrysler needs to go from one brand to zero brands. Spin off Jeep to GM, merge it with Hummer, and sell to the highest bidder. There's real value there.

+1 @ Stove. I completely agree.

sorry, "stov," not "stove." Why is there no edit feature?

First, and foremost it is a pity GM couldn't follow their own BS about Saturn. If they had followed Saturn's model then they wouldn't be in this mess. Any how GM needs to fix there mess and that means Saturn must go. The problem is Saturn has the best business model and the least support. So, give all of Saturn's cars to Buick, since the Opel Insignia is already a rebadge Buick in China. Pontiac, can survive if Chevy drops the SS brand and give the super chargers to Pontiac. Also, Saab can survive if they make it the premium brand. Simply share Cadillac tech with Saab and you got a GM version of Volvo/Lincoln.

As noted, the problem with dropping brands is money and lots of it... but Chrysler dropped 1 of them without really paying a dime for it... Plymouth was never sold independently, so the dealerships themselves didn't close. When they dropped Eagle (nee AMC), they did some consolidation, moving Jeep franchises to Chrysler dealers and vice-versa. On the other hand, Oldsmobile was primarily sold independently and all those dealers had to be paid off under the franchise agreements of *each state* they were in. It was even noted during the GM/Chrysler merger talks that most of Chrysler's billions would be spent closing Chrysler down after GM grabbed the very few vehicles it wanted (essentially Jeep and the minivans).

But one underlying problem still remains, and a friend of mine in the financial industry even admitted I was right and she hadn't previously considered it... how many people do you know can buy a car without credit? Until the banks start lending again (and that should have been an immediately enforceable condition of TARP), it wouldn't matter if GM, Ford, and Chrysler made the best cars on the planet and they ran on one mouthful of spit for 10,000 miles. If no one can buy the cars at retail and dealers can't buy the cars at wholesale because they are unable to get financing, there's no revenue to be had for the manufacturers. This is why the foreign manufacturers are also seeing 30% sales drops.

Yeah, dropping brands is expensive, but it's less expensive than going out of business.

The fact of the matter is GM is still working with the playbook that Alfred E. Sloan developed back in the 1920s. While great for 50 or so years, it no longer works today.

http://www.britannica.com/EBchecked/topic/548879/Alfred-P-Sloan-Jr

Ah... Alfred P. (not E.) Sloan. Need that edit button back!

Time to start a comment board boycott until we get that edit button back. You know its bad when even the Edmunds staff is complaining.

In addition to the edit button, I'd like the blogs to show when there are comments I haven't read yet. They used to do that and it was really handy.

"like what the major Japanese automakers offer: a mainstream brand and a premium brand."

Tell me about Scion and Hino then.

Once again demonstrating that perception rules over reality.

I fail to see how cutting brands within one manufactor will save any significant amount of money.

It doesn't cost that much more to make a few variations of the same car. It's the platform and the drivetrain that cost the big bucks and thats shared.

It's been a very long time since Pontiac or Buick were truly different divisions from Chevy.

It actually makes more sense to make one car in each size and then just throw different grills and trim on them for marketing purposes.

The brands you should get rid of are the ones that need unique platforms like Cadillac.

Not good for car guys but good for car companies.

Hino is a truck-only brand within Toyota.

I see Scion as a sub-brand within Toyota (there are no stand-alone Scion dealers that I'm aware of). I'm not sure if it has staying power either, as the brand has been struggling for some time.

"I fail to see how cutting brands within one manufactor will save any significant amount of money."

It costs less to market one brand than two brands. There are less parts to be made, meaning less manufacture and inventory of parts and fewer workers are needed. There are fewer dealers. The whole operation is more streamlined and efficient without extra brands.

I agree with Bob on both points above. Scion is proving that even niche brands within existing mainstream dealers can be troublesome. The Saturn Aura and Chevy Malibu are perfect examples for his second point. GM could only afford to really market one, the Malibu, and so even though both are almost the same the Malibu is selling well and the Aura is not.

Ultimately I think the best route for GM would be to go just Chevy and Cadillac, and maybe Jeep-Hummer (assuming they merge with Chrysler). Its nice to see Buick staying for the history, the promising products, and keeping a number of dealers in business, but ultimately it may be a business problem.

"It costs less to market one brand than two brands. There are less parts to be made...."

True but look at the lost opportunity. Different people want different things and if you can please both at minimal cost then you sell more cars. Since a lot of the different brands are really clones, there aren't a lot of different parts to stock. They often come down the same assembly lines so it doesn't require extra people and having too many dealerships is a different issue. Really you just need GM dealers selling all the cars.

It's not much different then going to look at a single model. I remember looking a a Sierra with a friend last year. They had 10 on the lot and no two were the same. They all at the same same but they were all different trucks with different prices and options. If some had Chevy grills and some had GMC grills, what would it matter?

If they decided all trucks would be Chevys, it would save almost nothing.

I agree it should be streamed lined but to try to put that forward as a way of saving the company is a smokescreen.

All three companies have major problems. If they waste time eliminating brands right now, they will just end up worse off then before. No matter waht brand you choose to eliminate, you will piss someone off and drive them to a competitor.

"Hino is a truck-only brand within Toyota."

Kind of like GMC? OK, not the same, but you get the idea.

"I see Scion as a sub-brand within Toyota"

Scion is more different from Toyota than Mercury is from Ford.

" (there are no stand-alone Scion dealers that I'm aware of)"

There's one about three miles from me. In fact, around here, I'm having a hard time thinking of any Scion dealer that's in the same building as a Toyota dealer. They're probably there, but I can't think of one.

Looking at the domestics; I don't know of a single stand-alone Lincoln, Mercury, Buick, Pontiac, or GMC dealer in my area. They've been intentionally merged by Ford and GM. Which is a sub-brand and which is a separate brand?

I think these are the 3 requirements I would put in for the bailout:
1) Have a uniform design philosophy, and pay attention to the top talent in design. Let's face it - Joe Sixpack judges cars on the way it looks. GM should put more effort into making cars that look sharp.
2) Although they've improved, they still lag in interiors.. after the exterior, the next step is really develop a sharp-looking interior.
3) Renegotiate the legacy costs - maybe this is only possible with a bankruptcy, but these costs hurt American car companies too much.

US car companies need to sell products that the public will want to buy - they've shown they can build at least reasonably reliable cars, so they need to start focusing on the things that will actually sell cars, and sell cars with less of a burden of the legacy costs.

All I can say is kepp GM & Ford running. Cerberus doesn't need or deserve any money. The goverment should get in an pull Chrysler from them. Read Business Week about Mervins.

"I think these are the 3 requirements I would put in for the bailout:"

And the first two are totally off. Design? GM's products have looked better than Japenese competition for years, and now in some cases, look better than German products. The MAlibu is usually called te best looking car in its class. Though there are several cases (i.e. lambda CUVs GM fullsize SUVs and Malibu and some lincoln products) where the American interiors are as good or better then the competition, you are right that in general American interiors are just a little behind Japenese competition (this really excludes Chryslers). But Congress isn't going to make this one of its requirements for the bailout. People aren't asking for better interiors from Ford and GM. They are asking for more feul efficiency, and higher resale value- which really depends on what consumers think the vehicle is worth. And there is still a large stigma involved with what consumers think about Hondas compared to what they think about GMs and Fords.