GM Execs Need More Hummers

That really was the headline of a recent CNN article… I’m not talented enough to make that stuff up.  (Update: CNN apparently didn’t find it appropriate, and has since made a minor adjustment to the wording)

But that’s not the point.  Apparently Bob Lutz wants to take the usual GM approach and milk a successful brand, thereby diluting its value.  Hummer sales are up 50 percent just in the first eight months of this year while GM’s overall sales were down 12 percent.  So why not create a Hummer truck, Hummer sedan, maybe even a Hummer convertible?  That strategy has worked in the past hasn’t it?

Reminder: GM’s year-to-date overall sales are down 12 percent.  By comparison Toyota’s are up about 10%.  GM and Toyota sell roughly the same number of cars… 156,000 in August for GM versus 145,000 for Toyota.  GM sells considerably more trucks at 206,000, but Toyota is closing the gap fast with a 12% increase to 96,000.

Let’s take a moment to examine brand dilution, keeping in mind that the number of cars is roughly the same and the only real differentiator is truck sales. 

First let’s look at GM’s brands and models:

Buick	Cadillac	Saab
LaCrosse	CTS	9-2
Lucerne	DTS	9-3
Rendezvous	STS	9-5
Rainier	Escalade	9-7
Terraza	SRX
	XLR	Chevrolet
GMC		Cobalt
Canyon	Hummer	Monte Carlo
Sierra	H2	Corvette
Envoy	H2 SUT	Aveo
Yukon	H3	Malibu
Savana		Impala
	Saturn	Colorado
Pontiac	Ion	Silverado
G5	Aura	Avalanche
G6	Vue	SSR
GTO	Relay	Equinox
Vibe	Sky	Trailblazer
Grand Prix		Tahoe
Torrent		Suburban
		Uplander
		Express

Now let’s look at Toyota:

Cars	Truck/SUV	Lexus
Avalon	Tacoma	IS
Camry	Tundra	ES
Corolla	4Runner	GS
Matrix	FJ Cruiser	LS
Prius	Highlander	SC
Yaris	Land Cruiser	RX
	Rav4	GX
	Sequoia
	Sienna

And that’s not counting the large number of GM’s model variations, which far exceeds Toyota’s.  Now helping out GM by including its much larger truck sales, dividing the total number of vehicles sold by the number of models:

• GM with 52 models: 6,961 vehicles per model in August
• Toyota with 22 models: 10,917 vehicles per model in August

57% more cars per model with Toyota.  Is it any wonder that GM has a problem differentiating between major brands and models?  What, really, is the difference between Chevy and GMC trucks?  Both companies have a wide range of vehicles… from low end to very niche high end models. 

Now think about it from a waste perspective, as Toyota obviously does.  With so many different models, what is the incremental cost of different subassemblies and components, production lines, changeovers, design effort, marketing and sales efforts, brand management organizations, management infrastructure including accounting and reporting, and general complexity?  Especially when you’re a company used to beating up on suppliers, beating up on workers, and shedding knowledge workers because their true value doesn’t exist on the balance sheet?

And of course there’s the customer experience.  With Toyota you figure out if you want the basic high quality car or truck, or if you’re willing spend a few extra bucks for more luxury, and then you’re off to either a Toyota or Lexus dealership.  Once there you have a simple choice in clear categories of cost, size, and capability.  The experience is low pressure as the reputation for quality sells the cars.

If you’re a GM-buyer  you first have to figure out what brand you identify with.  Buick?  Pontiac?  Chevy?  What’s really the differentiator?  Off you go to one of the several local Chevy dealers, only to be met with sixteen more choices before you even get a chance to think about model variations.  And I won’t go into high pressure sales guys in polyester leisure suits trying to explain why body panels don’t match, hoping you’ll buy from him instead of the guy at one of the other Chevy dealers in town.

Before making high value Hummer yet another bland GM brand, how about figuring out how Pontiac, Buick, GMC, and Chevy are different.