DSkippy

http://www.forbes.com/opinions/2008/...0226flint.html

Picard's predicting conglomertions of all Detroits brands into one dealership, more of the don't have 3 cars that are the same thing or serve the same purpose.

[quote]We all hope Detroit will survive, but the issue is still in doubt.

The key strategy of all three domestic carmakers, General Motors (nyse: GM - news - people ), Ford Motor (nyse: F - news - people ) and Chrysler, seems to be to get rid of as many workers as possible. The idea is simple enough: Unload the old high-seniority workers and replace them with new workers earning lower wages. I understand the need and the urgency, but this strategy is depressing and demoralizing.

I wonder how many workers will accept a buyout deal, take their "age out" money and then rejoin the company (or maybe another one--the Ford worker could go to GM, the GM worker to Chrysler, and so on) at lower pay. Those reduced wages still could be better than what workers may be able to get elsewhere, especially in economically depressed areas of the country. The companies would benefit too, as they would be hiring people who know something about building cars.

The second strategy of the Detroit companies is to force the dealers either out of business or together into triads. I am talking about Chrysler-Dodge-Jeep dealers and Buick-Pontiac-GMC dealers. Maybe one day GM will push together Cadillac, Saab and Hummer. I also sense the beginnings of a Ford-Mercury-Lincoln dealer group, although there are signs that Ford will abandon Mercury.

The logic behind this trend? The car companies believe they do not have enough money to supply a full lineup of vehicles to each dealer group. If they push the brands together, the companies think they will not have to make so many variations. For example, by selling all of Chrysler's brands in combined showrooms, the company would not need both the Jeep Liberty and the Dodge Nitro. The two vehicles are similar, so the company could justify killing the weaker-selling Nitro. By the same thinking, does the company need both Dodge Grand Caravan and Chrysler Town and Country minivans?

The viability of the one-roof-fits-all strategy is just a theory. The best way--proved in 100 years of selling autos--is the single-brand franchise. If you combine Dodge and Chrysler dealers, who last year sold a total of 314,000 minivans (138,000 Chrysler and 176,000 Dodge), and got rid of one variation, say, the Dodge minivan, you would not end up selling more, or even the same amount of, minivans. Were there just Chrysler minivans, I would estimate that the annual sales total would be more like 200,000 to 225,000 units. What is the advantage in that?

I predict that when Chrysler finishes combining all its dealer groups, it will end up with 8% of the U.S. market instead of the near 13% market share it won last year. Chrysler says that as it eliminates the similar models, it will create new models to conquer new markets. Well, I am skeptical.

How about those combined Buick-Pontiac-GMC dealers? Look at the sales in 2002, before the combined dealers took hold, compared with last year's results.

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Source: Automotive News

Of course, the market was not the same in 2002 as it was in 2007. Last year, for instance, overall industry sales were off 4% vs. 2002, but each of these GM divisions suffered much sharper declines. It is fair to believe that a good reason for the sagging sales of these divisions is that GM has whittled away at the model offerings of the divisions. Perhaps it is no coincidence that the GMC nameplate, the one that has not lost models in all this shuffling, shows the smallest decline.

Along similar lines, Ford Motor seems bent on getting rid of nameplates other than Ford. "One brand" might be the company motto. The company has already sold Aston Martin and seems close to selling Jaguar and Land Rover.

RLSH700

This does not fill me with confidence. I didn't know that Ford-Mercury-Lincoln was unusual as the dealership in my hometown has all three. Cutting down on dealerships is a stupid plan if you ask me. Ask Wal-Mart about the importance of volume for your bricks & mortars. Getting rid of the acquistions is a good idea for Ford, as they have been nothing but a lost cause. Killing Mercury and Lincoln is not the answer. Mercury and Lincoln just need to appeal to someone other than senior citizens is all.

Mercury needs the Cougar back and they need to do it right this time. The Cougar should once again be a more upscale version of the Mustang featuring higher end technology. They also need to offer a Saturn Sky competitor while being careful not to threaten the Miata (since that would threaten the relationship between Mazda and Ford). They need to offer a luxury compact out of the Focus and unlike the Focus make it something that does not make you beg to take your vision out of focus when you see it. They should also try to aim that car for the EVO class. They need to offer a performance line for Mercury (as Pontiac has GXPs, Chrysler products all have SRTs, Cadillac has the V-line, Ford has had SVO, SVT, and SHO, Chevrolet has the SS line, etc.). GTS would probably be a good one for them. They need to offer performance versions of the Milan and Sable that will capture the interest of the youth as well as a convertible version of the Milan against the Sebring and G6. The Grand Marquis should go through an update if they want to keep their current customers while trying to capture new customers. The 2 valve version of the 4.6L needs to go the way of the Cleveland engine line along with the 4-speed automatic. A new base engine should be the 3.7L Cyclone with a 5-speed automatic, the 3 valve 5.4L V8 for the next level, a supercharged GT500 spec 5.4L with a 6-speed automatic. They will need to completely redesign the styling of the model if not put the Panther platform to rest.

Lincoln should aim to compete again against Cadillac by using something other than part bins from the F-series from the 60-80s. They should try to be more innovative and look higher tech than Buick wannabe-ish interiors. The Town Car should go through the same process as the Grand Marquis except have 6-speeds, GDI all around, and have the Ford GT spec supercharged 5.4L engine. The MK naming idea needs to go the way of the F and M naming idea, into the dumb idea trash can. The MKS should be renamed the Continental and made an all-wheel drive car full time and offer a V8 that can compete against the CTS-V. The MKZ should be renamed the Zephyr again and given GDI at the base level. They should offer convertible versions of the Continental and Zephyr.

I still say that the Firebird should be the one reintroduced than the made up animal that was supposed to eat Mustangs but got beaten to death in the process. Pontiac should be the performance focused division aiming at offering the best performance possible in the industry, Chevrolet should be the practical car/volume division (like it or not the Impala in current form is doing extremely well just the way it is). Buick needs to go more upscale. Saturn needs to be more a market leader and feature something larger than the Aura to compete against the Avalon and Maxima.