Two GM Brands Need to Shrink to Grow

General Motors Corp. is ratcheting down the number of models offered by its Buick and Pontiac brands as it combines the bulk of those retail outlets with GMC and looks to cut the market overlap between the three marques.

But longer term, Pontiac and Buick once again could get broader lineups, the auto maker's top sales executive says.

In a presentation to securities analysts, Mark LaNeve, GM North America vice president-sales, service and marketing, says the auto maker's much-maligned brand strategy is on track.

Widely criticized for having too many brands in North America, LaNeve again defends GM's game plan, saying it ultimately will benefit from its broad portfolio once brand identities are sorted out.

He also says recent moves to bring in new ad agencies are designed to increase GM's presence in key coastal markets and take marques such as Cadillac to its next stage of development.

LaNeve says GM has organized its eight North American brands into two basic groups and four distinct sales channels.

“Anchor brands” are the higher volume marques Chevrolet, GMC, Cadillac and Saturn. “Focus brands” include the more niche-targeted Buick, Pontiac, Hummer and Saab.

Chevrolet and Saturn operate as independent sales channels, while Pontiac, Buick and GMC account for a third channel and Cadillac, Hummer and Saab make up the fourth.

Much of the focus has been on the Buick and Pontiac brands (once dubbed “damaged” by GM global product chief Bob Lutz) and their merger into a single distribution channel with GMC.

LaNeve says GM is ahead of schedule in combining U.S. dealers of the three brands. “Today, 65% of the (sales) volume is through dealerships that have all three brands,” he says. “We're targeted to get to 80% by the end of 2007.”

The consolidation, LaNeve says, will allow GM to boost sales per dealer for the three brands, “an area we have to improve on.”

As for Buick and Pontiac, LaNeve said more than a year ago GM would pare offerings down to about four models for each brand. He foresees a day when the lineups can be expanded once again.

“We got in trouble by crossing over products and brands in the middle of the market,” he says.

“Pontiac and Buick now need to be rebuilt. As we get the identity right, we can add product.”