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For GM, Ford, getting rid of brands no easy task

08/31/2006, 8:10 AM

By admin

As General Motors and Ford both undergo massive restructuring, there’s a great deal of pressure from observers for them to drop weak brands such as Buick and Mercury. But as James Surowiecki of The New Yorker points out, dealers could make getting rid of brands nearly impossible. “When, a few years ago, GM actually did eliminate one of its brands, Oldsmobile, it had to shell out around a billion dollars to pay dealers off—and it still ended up defending itself in court against myriad lawsuits,” he explains. “As a result, dropping a brand may very well cost more than it saves, since it’s the dealers who end up with a hefty chunk of the intended savings.” Surowiecki blames automakers for creating this adversarial situation. “They could have owned the dealerships themselves,” but instead created franchises, he explains.

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08/31, 8:18 AM

posted by:

Desu

Part of the reason the american auto industry is such a failure. All their products are diluted in bunch of brands each with a bunch of models all built off three chassis platforms.

08/31, 8:44 AM

posted by:

GarbageMotorsCorp

Well, GM shelled out 2 billion to cut ties with Fiat so what’s a few Billion more? Maybe the GM fanbois who so blindly support this miserable company could cough up a few bucks each to help them out?

08/31, 8:45 AM

posted by:

dave

Anti-trust laws prevented the manufactures from owning their own dealerships.

08/31, 9:02 AM

posted by:

1c3d0g

Well, if you can’t drop them, just sell them to a buyer. You make money out of if and get rid of trouble at the same time.

08/31, 9:04 AM

posted by:

sjd

Are you going to buy Mercury?

08/31, 9:20 AM

posted by:

Nick

Why don’t car companies start offering cars directly from the factory? I’ve went to several car websites and built my own model, just to have to search local inventories and find one that sort of kinda came close to what I wanted.

The car companies could let you build your own car online, then send you to a financing firm to finish the deal, and once it’s all done, send you the paperwork (unless they get some sort of online signature thing) and then send you the car once all is in order (or, for a fee paid to the dealer, let you pick it up at the local dealer).

If the car companies started selling direct, they could get rid of the troublesome dealers, maybe sell cars for less (dont’ have to pay the dealer commision), still get their money for the car, and then they could drop brands w/o the lawsuits.

I don’t know if this has been tried before on a large scale (I know the hyper lux brands do something like this) or if it could even have worked before the internet, etc. Just a thought. Of course, I’m bad and spend too much money when I get a couple drinks in me and go to eBay, the last thing I need is to get drunk and go out and buy cars!

08/31, 9:41 AM

posted by:

j i m

Everybody is right already! I especially like the like the trick of selling Mercury, Buick, Dodge, Jaguar, Saab, L.R., etc.
.
…but I’d tell the dealers; “You assh_les: you wanna sue?! Then we’ll sell these brands to the wonderful, Ahmed Chalabi for $1. Deal with slimy SOB.”

j i m

08/31, 10:02 AM

posted by:

JC2

First of all Ford SHOULD get rid of Mercury. All their cars are just rebadged Fords with tweaked performance and interior. Either that or they should sell Mercury, because Mercury is selling cars and is worth a decent amount. That would give Ford some much needed help.
I don’t think anyone should sell Dodge, currently they are not in the RED I believe.
Jaguar should simply be dropped for a few years and when they have a good plan and Ford is stronger than now resurrect Jaguar.

08/31, 10:03 AM

posted by:

1c3d0g

sjd: no. Are you?

08/31, 10:44 AM

posted by:

Veda

Nick, isnt’t that what Toyota did with their main showroom in Tokyo? You just build it on a special configurator screen and they’ll make it for you.

08/31, 10:46 AM

posted by:

Veda

Selling Mercury is a lot harder to do than to kill it entirely given the amount of Ford parts integration in the vehicles. Whoever bought the brand would need to make entirely new cars themselves to beg Ford for spareparts.

08/31, 11:30 AM

posted by:

sprinterman

Nick, First of all, it is illegal for car manufacturers or importers to sell cars directly to the public in some states in the US. Virtually all of the Northeast and Midwest States, as well as California have Franchise Laws that protect the dealership, and have laws that prohibit direct sales from Manufacturers. I represent a manufacturer, and have to deal with dealers as my job, as well as sign up new dealerhips, or terminate dealerships. In the Northeast, it is virtually impossible to terminate a dealer, and the only way to do this is if they are criminally neglegent, commit overt fraud, or can’t pay their bills. If they don;t reach a quota, or stock the required number of vehicles, or reach a certain level of satisfaction in Sales or Service…. oh well, they are still dealers..

08/31, 11:38 AM

posted by:

al

ford should get rid of mercury
Gm should get rid of saturn,
the solar system got rid of pluto (no longer a planet)

08/31, 12:07 PM

posted by:

Bush

If they don;t reach a quota….

Solution: Mediocre cars= Mediocre sales.
If they can’t sell’um they can terminate them.

08/31, 12:09 PM

posted by:

Richard

Neither General Motors nor Ford are adding brands. Chrysler has dropped one (Plymouth). Ford has taken existing brands (Volvo, Jaguar, Land Rover, Aston Martin) under its umbrella. GM added one (Saturn), dropped another (Oldsmobile), and took two other brands (Hummer and Saab) under its umbrella. OTOH, Toyota has added two–Lexus and Scion. Numerous other offshore manufacturers have come to American shores to compete with the domestics.

Certainly GM and Ford need to rationalize their product offerings. From where i sit, they appear to be trying to do this. For the most part, they are doing it correctly. (Well, GM is doing it correctly. Ford doesn’t yet have a clue.) By rationalizing, I mean that GM should establish target audiences for each of its brands.

Don’t allow one brand to cannibalize the others. For this to succeed, GM will have to get its dealers on board. GM must get healthy and stay that way. The dealers need product to sell. I am as big a critic as anyone of domestic auto dealers. However, we must remember that for many communities across the USA, the local car dealer is the biggest locally-owned business in town. To close them would be to throw the baby out with the bath water.

08/31, 12:57 PM

posted by:

huh?

i dont get it, how hard is it to stop making something? it dosn’t make any sence. please all you smart people put it all in idiot terms so i can understand!

08/31, 1:47 PM

posted by:

Ben

we have a solution. Make crappy cars that nobody wants, sooner or later all the dealerships will close down, finally they could drop the brand.

08/31, 2:24 PM

posted by:

JC2

Ok, first of all. Think about this. Mercury has NO independant models from Lincoln or Ford, ZIP ZERO NADA. If someone bought Mercury, they would:
A. Have to create a totally new lineup, costing BIG bucks
B. Just pitifully die
There you go. Do you people get the point about Mercury being sold now?

08/31, 2:29 PM

posted by:

2006300C

How about instead of spending money killing brands, you spend that money on research & development of good cars? Just a thought.

08/31, 2:33 PM

posted by:

2006300C

Buick has serious potential and mercury makes healthy performances as well. There is nothing wrong with any brand, just a lack of vision, laziness, stinginess and incompetence on the part of the mother companies. And there is nothing wrong with different bodies on the same platform; it’s a smaller, modern equivalent of coach building in the twenties and thirties.

08/31, 2:41 PM

posted by:

Jay

yes 2006300C, I agree with your point but we are also talking about selling a brand like Mercury. If it shares major components with Fords, then selling it will be much difficult, or very expensive.

08/31, 3:32 PM

posted by:

JC Whitless

I’m getting together an investment group to buy Plymouth, Desoto, and Maxwell-Chalmers from Daimler….

/Coming Fall of 2011
//Desoto Fireflite 2+2
///Who wants in on the deal?

08/31, 4:25 PM

posted by:

301k mile trep

what?

08/31, 4:30 PM

posted by:

ss

if GM/Ford dropped the stupid AUW they could build car sto meet demand of the market. not demand of he union. Did anyone ask for a buick minivan or a Sabb SUV? if Buick had two cars to sell then there wouldnt be a problem. Dont renew the union contracts. let the, strike, hire non union workers and build the cars you NEED

08/31, 4:37 PM

posted by:

1c3d0g

Look, sometimes you have to spend money to make money. I agree that it can be difficult for a company in financial trouble, but damn, if it’s gotta be done, so be it. It might make things uneasy in the short term, but they’re better off in long-term.

08/31, 5:55 PM

posted by:

301k mile trep

JC whitless, wtf are u talkin about?

08/31, 7:09 PM

posted by:

Richard

ss, It is “UAW,” not “AUW.” In order to escape the UAW, the auto companies would have to abandon Michigan, Ohio, and Indiana. Such a move would cost $100 billions. It would also doom Republican chances of ever electing another President.

Who asked for a Buick minivan or Saab SUV? Simple–Buick dealers want the minivan. Saab dealers want the SUV. These dealers want these vehicles because they think their customers will buy them.

08/31, 7:21 PM

posted by:

American

Mercurys need to look a lot more different from Fords.
The current differeces are is a step in the right direction but needs to be greater.
Mercury is suppost to be the “middle” brand between Ford and Lincoln.
The problem is that they make low end Mercurys and expensive Fords.
Where is the logic?
The price of an Escape 20-26k vs a Mariner 22-27k
The price of a Fusion 18-22k vs Milan 19-23k

too much overlap

08/31, 10:49 PM

posted by:

Anonymous

Buick is not going anywhere. Nor is Pontiac. The existence of these two is part-and-parcel of the (rather expensive) Buick-Pontiac-GMC dealership reorganization. By 2008, 80% of dealerships that sell one of these brands will sell the other two.

People who talk about getting rid of Mercury generally have no clue. Mercury is packaged with Lincoln, *not* with Ford. The idea is to avoid sticker-shocking Lincoln intenders; i.e: to provide Lincoln-Mercury dealers with a lower price-point.

I’d be more worried about Lincoln. The Zephyr/ MKZ, better than the LS? No way.

08/31, 11:12 PM

posted by:

BR

Whatever happened to the ‘Price and Prestige’ ladder GM championed in the 70’s-80’s???

Chevy: Budget minded, dependable transportation
Pontiac: True driving EXCITEMENT (true FAST and FURIOUS machines……SD-455 anyone?)
Buick: Upper Middle Class Luxury/’Doctor’s Cars’
Oldsmobile: Affordable Cadillacs
Cadillac: The STANDARD OF THE WORLD (’You’ll buy your first one for what you THINK it is…..you’ll buy your second one for what you KNOW it is……)

Saturn: GM’s Import Fighter (At least it’s beginning to look like one now…….)

09/01, 1:34 AM

posted by:

mblommel

Mercury and Lincoln are lame ducks. Show me anyone under 30 years old that those brands have any recognition with. Nobody aspires to own either because they are crappy cars and have been for years. Just like Cadillac, Lincoln has been content to churn out land yachts year after year that shuttle geezers around to bingo halls. At least Caddy caught a clue and started on a program to make their cars desirable and competitive with other comparable brands.

Mercs are just dull rebadged Fords with an ugly grill. Ford has had some interesting concept mercurys over the years but never had the guts or vision to build them. The last Cougar was a great step in the right direction with risk taking, too bad the quality and driving dynamics were crap.

Mercury so needs to be history it hurts.

09/01, 2:05 PM

posted by:

BrokenCadillac...again

Cadillac is the Standard of GM fanboi world. The rest of the world could give two ****s about some geriatric, Bedpan, mafioso mobile…

“You’ll buy the first one because of what you think it is and then figure you paid too much for s Chevrolet”

09/01, 3:38 PM

posted by:

JC Whitless

301Mile….

I’m just starting buzz for Desoto, thats all…

09/01, 8:45 PM

posted by:

302k mile trep

oooooooo, ok.

07/10, 12:24 AM

posted by:

iluvamcars

wow none of the people who have posted are on here as of 2009. geuss what gm filed for bankruptcy

 
 
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