The period of 2008 to 2009 was rough for Detroit’s Big 3 automakers. While Ford technically never filed for bankruptcy — though it did receive some of those sweet bailout funds — GM and Chrysler did. GM seemed to have it the worst, as the automaker had to get rid of four of its divisions to get its head above water. But how did GM choose those four divisions? A recent interview with former GM executive Bob Lutz shed some light on the automakers’ thinking at the time.
Motor1 recently chatted with Lutz about what inspired GM to kill off Saab, Saturn, Pontiac, and Hummer instead of, say, Chevrolet, Buick, GMC, or Cadillac. Lutz detailed all the arguments and all the logistics that went into the death of each brand.
On Pontiac, Lutz says that he fought for the brand, but the higher ups just weren’t having it.
I dug my heels in. But their hearing aids were turned off, they said, ‘It’s a lousy brand, it’s been unprofitable for years.’ I pointed to all the signs of brand health; Youthful buyer enthusiasm for the brand, etc. I just wasn’t able to put it over the goal line. So unfortunately it died. I still consider that to be borderline a tragedy.
With Saab, Lutz said he had been trying to convince his bosses to do away with the brand for years, but things kept getting drawn out. He calls the brand “goofy.”
I had been trying to convince my boss at GM for years we should get rid of Saab, and it was always wait until next year, wait until the next year, wait until next year—and next year never came. It was a goofy brand that was off the mainstream, and every time it was made more mainstream, we didn’t sell any. And when it was goofy, which the automotive press loved, there were only 100,000 people in the whole freakin’ world that wanted one.
His comments on Saturn are interesting in that he admits that Saturn had no reason to exist anymore, especially with Chevy around. This is true, since the brands constantly stepped on each others’ toes. The Chevy Malibu Hybrid and Saturn Aura Green Line were essentially the same car with a $745 price difference between them, for instance.
Saturn I was glad to be rid of. There was no longer any reason for the Saturn brand. Chevrolet was just as good and just as reliable. And all of the dealer networks had learned in the meantime that you don’t screw the customer if you want to stay in business. The reason Saturn was formed kind of went away. Saturn was another mouth that we had to feed with limited capital. So okay, Saturn can go.
On Hummer, Lutz says they should have done with the brand what GM is doing now: Make it a part of GMC. Spinning Hummer into its own brand meant that they had to give it a lineup of vehicles it didn’t really need.
We could not save Hummer, which was a mistake going in. Hummer never should have been a brand, it should have been a vehicle in the GMC lineup. It should have been Hummer by GMC, and that way you could have added one to the GMC dealer body, and when that one was worn out, you could replace it. But the minute we made Hummer a separate franchise we had to feed it with a full lineup of vehicles. We had the H1, which never sold in any significant number. The H3 did well. The H2, which was Wrangler and Bronco-sized, it would have been a smash hit. But I had to admit Hummer the brand was a mistake going in.
Lutz even spoke about how both Buick and GMC were considered for the chopping block. For Buick, he says the Obama Administration and the bankruptcy attorneys all wanted GM to be cut down to just Chevy and Cadillac, with Buick getting the axe. The brand stuck around because of its popularity in China.
Chapter 11 intervened and the Obama-appointed, all-New York finance guys—who didn’t have a clue about the automobile industry—said, ‘General Motors is going to be Chevrolet and Cadillac only.’ We argued and said we’ve got to keep Buick because if you drop Buick in the US, it’s going to die in China, and it’s one of the leading brands in China. So don’t do that. So we were able to save Buick.
GMC was nearly cut because it was deemed too similar to Chevy. The brand’s profitability however changed minds.
GMC they wanted to drop because it was a version of Chevrolet. And we showed them the profitability of the GMC brand and the GMC brand health. Many people would not own any other GM brand, they had a very high opinion and owned a GMC sport utility or truck.
It’s interesting getting an inside perspective on why these brands were cut. Had things gone just a bit differently, GM might be a completely different company than what it is today.