The veteran US autos analyst, Maryann Keller, posed a simple yet salient question of GM in a feature in the Washington Post last week: why has it been so hard for GM to figure out what car buyers want and then give it to them? The company has not been able to leap ahead of the competition since the early 1980s when it led the way into front-wheel drive. Her reflections were focused on the slow nature of the company's response to consumer trends over the last twenty years. Here, Rob Golding asks whether the muddle of brands that the cars are sold under has exacerbated the problem.

One possible answer to Keller's question is the difficulty in handling the muddle of brands. It is demonstrably true in the auto industry today that the more brands you have the more money you lose. There is a near-perfect correlation between lots of badges and lots of red ink. GM has more than anyone else and persists with increasing the number.

In times of trouble - and GM has trouble in plenty now - decision-making is much more focused at the top. Only commercial confidence at the top can radiate delegated power to the lower levels. And the essential task of brand-building is all about detailed work at the lower levels.

Inclusive of Subaru, Isuzu and Suzuki where GM has influential minority stakes, GM manages fifteen brands. Or rather it doesn't. It loses money and market share on a daily basis. Its stock market value is - or has been - less than Harley Davidson.

By contrast, the world's most profitable carmaker is Porsche. It makes margins of 17%. It has one brand.

Next best - measured by operating margin, is Toyota which has one world-wide brand. It has had a successful fifteen year trial in the US of a second - Lexus (now going global) and the experimental introduction of a third (Scion) in the US for the youth vote.

Third most profitable is BMW which similarly has one brand and two bits in the shape of Rolls and Mini. It's not hard to imagine the BMW board giving a free hand to the managers of its subordinate brands.

And so it goes on until at the bottom of the list of profitability comes the company with fifteen brands to care for.

Viewed from a distance, the GM brand portfolio is a nonsense that successive announcements do nothing to clarify. Only Chevrolet is now to be the full-range brand and Buick and Pontiac will get new models in selected niches. But Buick, Pontiac and GMC will have a common marketing department. So are they different or separate?

Then there is just Saturn to understand - the blue skies brand invented to escape the GM problem of having too many brands. The Saturn website is eloquent. The list of year-by-year corporate highlights since formation fifteen years ago stops in 2003. It appears there have been no highlights for the last two years.

More recently, the task of focusing on the necessity of brand reduction became so difficult that the problem was avoided by creating more. GMC was invented as a stable for vans and SUVs. The indefensible Hummer business was purchased and expanded, and Korea's Daewoo was acquired out of the rubble of the world's biggest-ever corporate bankruptcy.

Recognising Fiat as a kindred spirit, GM bought a share in that too in order to eventually acquire the bankrupt brands of Fiat and Lancia and the promising but low-volume brands of Alfa Romeo, Ferrari and Maserati. The adventure cost $4.7bn for the ticket to get in and for the ransom to get out.

The whole process of branding in Europe has been strange. GM has for years owned Vauxhall in the UK and Opel in the rest of Europe. The ranges have converged to the point where there is little difference between them other than the badge. GM could so easily have halved the cost of brand development thirty years ago by shelving the Vauxhall name and burnishing Opel. Instead it convinced itself that Vauxhall was too well established to risk change.

The simple truth - which could have been confirmed by any random group of UK dealers was that the British market is only too eager to buy cars that are visibly German in origin. Vauxhall cars are good. As Opel cars they would have done better. And GM Europe would have been within a breath of generating an Audi-type success before Audi did it themselves.

And so to the continuously loss-making Saab - which GM bought when it came second to Ford in the race to acquire Jaguar fifteen years ago. It always was a hard brand to position in Europe where it is halfway between the mid-sized saloons and the luxury cars. And the positioning gets harder once the aficionados read that Saabs are riding on Subaru or Chevrolet underpinnings. Chat rooms are full of the newly invented brands of Saabrolets and Saabaru that GM must now deal with.

Who is there to sort it all out? Well, all credit to his lifetime track record, but is Bob Lutz - a man of 73 - really the right leader to control product development when the fat piece of disposable wealth is controlled by people half that age?

Rob Golding

Operating margins (end 2004) of the
world's top car groups
Group
%
Porsche
17.2
Toyota
9.7
BMW
8.7
Renault-Nissan
8.0
Honda
7.4
Peugeot
4.0
DaimlerChrysler
4.0
VW
1.7
Ford
1.0
GM
0.2
Fiat
0.3

Sources: Consensus forecasts and company announcements
Data calendarised to a December 2004 year-end

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