The slimmed-down ‘New GM’ will have a clean balance sheet and a sensible brand portfolio. But there’s an elephant in the room – and it’s blue and square. It’s time to bid a final farewell to the General, believes Mark Bursa.

Five months after it was mooted as the only realistic option for the company, General Motors is in Chapter 11 bankruptcy protection. Those five months have seen at least US$20bn of US taxpayers’ money frittered away, largely on the wages of workers in idle factories, as unions, bondholders and politicians argued over what was going to happen.

Eventually, US President Barack Obama was left with no option – effective nationalisation of the world’s former number one automaker. The upshot, once the Chapter 11 process has trundled to a conclusion, will be the creation of a leaner, healthier car company. The United Auto Workers have swapped debts for equity, while the bondholders have effectively been railroaded out of the picture.

Chapter 11 will come into its own, clearing debts off the balance sheet of the so-called ‘New GM’ and setting up the company to cash in on any economic recovery. New GM could be profitable very quickly – providing its image hasn’t been irrevocably damaged by Old GM’s collapse.

It’s been impossible to avoid the newscasts from outside the Renaissance Centre, GM’s corporate HQ for the past few years. Sticking the blue GM square logo on top of the RenCen’s gleaming towers has given news cameramen something to focus on – here’s a stricken brand; will you trust it in the future?

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Catastrophic events can destroy a brand. The abiding image of the Lockerbie bombing 20 years ago was the crumpled nose of PanAm flight 103 lying in a Scottish field. The airline never recovered. The tragic loss of the Townsend Thoresen cross-channel car ferry Herald of Free Enterprise – through negligence of crew members – destroyed confidence in the long-established shipping brand so badly that the operation had to be rebranded P&O Ferries, using the respected brand of its parent company.

And when passengers died aboard a British Airtours Boeing 737 at Manchester Airport, the sight of the charred hulk of the plane on the front pages of newspapers prompted owner British Airways to rebrand its charter subsidiary Caledonian – it had acquired the much-respected brand in a takeover a couple of years earlier.

OK, nobody has been killed by the collapse of GM, but the damage to the company’s reputation has been much more widespread. The mass closure of Pontiac, Buick and Chevrolet dealerships has affected small-town American communities across the country. Even talk of ‘New GM’ is brought to you by the tainted letters G and M.

However, saving the situation may be relatively easy. Unlike PanAm, Townsend Thoresen or British Airtours, GM customers don’t come directly into contact with the GM brand. It’s only ever been used on one car – the EV-1 electric car of 1997. It’s not on any other cars, and you don’t go to a GM dealership.

This makes GM very different to, say, Ford, where the corporate identity is the same as the badge on the bumper. As an aside, Jac Nasser tried to change this a decade ago by using ‘Ford Motor Company’ as the corporate name – even taking the blue oval off the World Headquarters building in Dearborn. That went well.

So now, New GM needs to sort out its recovery brand strategy pretty quickly. A bit of Stalinist airbrushing is needed – and the Trotsky of the piece is that blue GM Square. Effectively, New GM will be structured just like Ford is today – built around one main, global brand with a couple of local specialist nameplates.

That brand is Chevrolet, which GM has been cultivating since 2001 as a world brand, competing head-on with Ford, Toyota and Volkswagen – also multi-brand groups whose group corporate name is the same as their principal brand.

New GM is maintaining three other brands – Cadillac as an upscale brand; GMC as a truck brand that effectively sells badge-engineered Chevys; and Buick, which plays well with two constituencies – rich Chinese and old Americans. These mirror Ford’s sub-brands, Lincoln and Mercury, for example.

As soon as the structure of New GM is finalised, it would make sense to get that GM logo off the top of the RenCen – and replace it with Chevrolet’s gold ‘bowtie’. It’d look good glinting in the cold Michigan winter sun when the US auto industry regroups up the road at the Cobo Center for next January’s Detroit show, don’t you think?

Meanwhile, the brand clear-out has been less rigorous than it might have been. Hummer may – or may not – be sold to Chinese heavy truck and earth-moving equipment maker Sichuan Tengzhong Heavy Industrial Machinery Co. The Chinese company says it will maintain US Hummer production, but there are doubts about the deal’s viability.

There’s still the distinct possibility that the Hummer brand will disappear – history will be harsh on it too – a brief fad at the end of the dinosaur SUV era, out of step with the tree-hugging 21st century. Hummer is small beer in the grand scheme of things, however, as is Saturn, though that other ‘90s phenomenon has a brighter future, as it is in the process of being acquired by retail entrepreneur Roger Penske.

Penske may be best known for his Indycar racing exploits, but he’s a formidable businessman. He has an impressive track record as a turnaround man with businesses such as Detroit Diesel (another former GM subsidiary) and the Hertz-Penske truck rental business. And he’s too experienced as a car dealer to let the excellent 350-strong Saturn dealer network slip away.

He’s looking to strike a deal with Renault Samsung, replacing the GM-sourced models (based on European and Korean designs) after a couple of years with the large sedans that Samsung builds for its local market, and will build for Renault to export to places such as Russia, as well as other Samsung models. The Koleos SUV would neatly replace the Chevrolet Captiva-based Saturn Vue, for example.

Quite how much damage this will do to Saturn is another question – though it’s unlikely to need rebranding, simply because the dealers are so customer-focused. The brand’s profile lends it to be something of an eco-brand too – maybe Carlos Ghosn sees a Penske-owned Saturn as a way of getting Renault’s own eco-technologies, such as electric cars and hybrids, into the US without having to go to the hideous expense of launching the Renault brand.

The only ‘Old GM’ brand to face the chop is Pontiac, whose sporty heritage has been diluted over time. Now it’s a slightly-more-aggressive Chevrolet, and although sentimental GM bosses wanted to hang on to it, it’s been pointed out to them that the likes of Corvette and the new Chevy Camaro provide enough sporty models, without having to support the infrastructure of another brand just to let the Detroit petrolheads launch a retro Firebird or GTO.

“Ultimately, I think that GM is going to be a strong company,” said Barack Obama. And he’s usually right. OK, various bondholders and terminated dealers may kick up a stink in the courts, but all that will delay is the Chapter 11 exit. No bad thing, perhaps. New GM’s relaunch – whatever name it chooses – needs to be timed to coincide with the fabled green shots of recovery.

Much of the infrastructure is there. Crucially, most of the various emerging markets ventures, like Shanghai-GM in China, the South American operations and in particular, GM-Daewoo in Korea, will come under the umbrella of New GM.

GM-Daewoo was vital to Old GM, and it’ll be even more vital to New GM. As well as global small car development, it will develop all the cars for another brand that appears to be included in the mix – Holden, GM’s Australian brand, that will effectively become part of GM-Daewoo.

And if we treat the ongoing relationship with a Magna-owned Opel-Vauxhall as a Renault–Nissan-style alliance, it might be possible to consider that GM is still a global group – let’s call it the Chevrolet-Opel Alliance – that meets the ‘Marchionne coefficient’ of around 5.5m units of production a year.

Sergio believes there’s room for one US-centred car maker – perhaps he’s got that wrong, and there’s room for two. After all, even business superstars occasionally veer off message.

Mark ‘Coolbear’ Bursa