Saturday, April 25, 2009

How Low Can GM Go?: Goodbye Pontiac & So Long Opel

A Typical GM Executive
It seems that for every good decision General Motors makes in its fight for survival it makes an idiotic decision to completely wipe out the gains. This shouldn’t surprise anyone who has observed their strategic decisions for the past, oh say 50 years. The only logical reason is that GM is headquartered in Detroit and only very stupid people would want to live in Detroit. The latest series of wacky misadventures sees GM wisely killing off the Pontiac brand while negotiating the sale of their Opel division to Fiat.

Pontiac is supposed to be the performance division of GM. This is seen in iconic vehicles like the GTO and Firebird which were perfectly marketed to teenagers and jackasses going through a mid life crisis. The Trans Am was the official model for rockers and mullet wearers in the 1980’s. Unfortunately too often Pontiac was a home to slightly altered versions of Chevrolet's and Buick's and had become known and had lost that identity. Its only use was to offer Buick dealers lower priced vehicles to fill out their product lines. While many mourned the earlier loss of Oldsmobile it has quickly been forgotten and so will Pontiac.

While the death of Pontiac can be seen as a positive step, the sale of Opel is a ridiculously short sighted decision. With one stroke of a pen GM is writing off a market of 350 million people. The sale would mean that it is giving up on an entire continent. If it wanted to continue to sell cars in Europe it would have to build up an entirely new dealer network and a brand. Fiat is simply using this as a ploy to get a better deal out of Chrysler and the UAW. It offers Fiat market share, economies of scale and a workforce as highly paid and unionized as its own. Fiat shows ambitions to be a world player not seen in Italy since Mussolini. Hey Il Duce teamed up with the Germans too and he ended up hanged in a public square. That is a great omen.

The sale of Opel means little to North American drivers. Some Opel models end up here rebadged as a Saturn and that’s one of the many errors GM has made. For decades the term German engineering has stood for quality in car making. GM had cars that were actually German engineered and made in Germany. You would think they would maximize the value of that association but instead of bringing the cars over they set up plants in Tennessee. It is a state best known for Elvis, country music and marrying your cousin. While my cousin is cute I don’t want to buy a car associated and made by the inbred offspring of one of the poorest states in America. Take a look at Volkswagen if you doubt the iconic power of German engineering. They charge a premium for cars assembled in Mexico. The only thing worth a damn assembled in Mexico is tacos.

It is incredible to think there was a time when the term Made in America evoked the same sense of quality as German engineering.

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