Thursday, October 8, 2009

GM: The Same, But Different, Sort Of

The Chevrolet Equinox, not to be confused with the GMC Terrain.


The GMC Terrain, not to be confused with the Chevrolet Equinox.


One of the myriad complaints about GM was their near pathological habit of selling the same car under different nameplates after "differentiating" them with a few cosmetic flourishes. Despite financial ruin, it seems old habits die hard. Christopher Jensen of The New York Times reports:
The new GMC Terrain is a mechanical twin of the Chevrolet Equinox — identical in size and driving manners, though different in appearance — that is aimed at larger game than its sibling...The Terrain’s styling is pointedly different, with exaggerated S.U.V. flourishes like squared-off wheel wells. But aside from the look, consumers are unlikely to see huge differences between the two vehicles.

15 comments:

  1. I had heard a rumor once, that there's some design concept firm in Seattle or somewhere on the West Coast, that determines the look and style of the cars today, and that every automaker uses them. Anyone ever heard about this?

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  2. I think you've been in San Francisco too long. Look again- these vehicles have completely different exterior skins AND different rooflines. That, my friend, is how a Toyota becomes a Lexus. In the Roger B days, they would have had a different grille and tail lights and that would be all.

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  3. Jeff, no doubt they all do it. In fact, isn't that one of the keys to Toyota's early success...they kept it simple and that helped cut down on quality issues? I could certainly be wrong, but didn't GM take this idea to the extreme, often with several cars that were basically the same, all competing against each other?

    And there's no doubt I've been in SF too long!

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  4. I can't believe you're actually complaining about this. Every automaker does this. Lexus cars are rebadged Toyotas... Acuras are rebadged Hondas (take a look at the Accord vs. Acura TSX, wow!)...

    Once upon a time, every brand of GM operated as a different division. Then, the foreign automakers came to town and sold everyone the same exact car under different brand names and operated on a much lower cost basis. GM simply had no choice but to follow suit in order to cut costs to keep up with the competition. Otherwise, they would've went bankrupt much sooner.

    Most importantly, these two brands that you're complaining about (Chevy and GMC) are two of the most profitable GM brands. Maybe they actually know what they're doing, eh?

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  5. Billy Durant invented this idea, and for at least forty years it was considered brilliant.

    Durant figured out that the earlier approach among mass-market auto makers of a single model on a take-it-or-leave-it basis, was doing a poor job of creating customer satisfaction. Instead, he would have several brands, each with its own vehicle-family personality. In the original conception, Chevrolet customers wanted practical, no-frills transportation at a good price. Oldsmobile customers wanted the same, but with a bit more luxury and performance and a little softer ride, and with a little more prestige associated with a somewhat higher pricepoint. Pontiac customers wanted even more power and performance. Buick customers wanted even more luxury, and an even softer ride. Cadillac customers of course wanted the Cadillac of cars, i.e. maximum luxury and ride comfort, and maximum prestige. GMC vehicles were utilitarian, practical and rugged. All of these could be accomplished with the same basic vehicle by changing trim, interior components, engine settings and maybe a few components, and suspension settings and components. Because the market's prestige expectations were correlated with pricing, more expensive components could be used in the higher-end vehicles. It all fit together efficiently.

    What GM got from this system was an ability to produce each of the basic undifferentiated models at much higher volume, while paying for about 1/5 as many separate vehicle development efforts and tooling projects. The development and tooling costs for a car model, amortized over its total lifecycle volume, are a huge percentage of its manufacturing cost and thus its minimum selling price.

    What customers got from the deal was an ability to choose exactly what kind of vehicle they wanted, and more competition among dealers to provide good service, high trade-in values, favorable pricing, etc.

    What both GM and customers got was lower pricing, while GM still made a profit. That's how GM drove its market share to above 50%. A lot of people liked being able to buy the car they wanted, at a good price.

    The ultimate compliment, of course, was that all of GM's serious competitors copied Durant's approach.

    Where GM lost their way was when brand management became a dialogue between fancy-new-MBA brand managers that found well-defined brand personalities to be constricting, and top management that came from Accounting and regarding vehicle differentiation costs as wasted profits. (Ditto, for a while, with quality costs.) So, the personalities became paper-thin. Every dealer offered models across a spectrum of luxury and performance levels. Differentiation was gone...only the older customers remembered what the brands once stood for.

    Once the brands' identity-value had been thrown away, GM was in a position of competing against itself on price. That's a stupid thing to do, and the only fix is to have fewer brands so that you can cut down on the number of GM dealers.

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  6. Okay, a few points and clarifications...

    Jon, I may be misinterpreting, but I'm not one of those GM haters. I was a strong proponent of the auto bailout, even though many readers kept pointing out I was an idiot for doing so. So it's not that I just hate everything GM does.

    I guess my post came out too strongly against the basic premise of a standard platform that several makes and models use. I'm all for that because it obviously works. My complaint is that GM hasn't done a great job in more recent years of actually differentiating among the models. I can tell the diff. between a Toyota and a Lexus. But these two models? Maybe the problem is I think they're both awful looking. But at this point, if they're selling, keep making them.

    And I realize that I don't have much credibility when it comes to critiquing the style of cars when I drive a 90 Camry. It's only style is having no style.

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  7. Just to tie together Jon's explanation and mine:

    "Once upon a time, every brand of GM operated as a different division."

    This was the era when the platforms were common, but the marketed vehicles were significantly differentiated and GM and the customers had a good understanding of what those differences were.

    "Then, the foreign automakers came to town and sold everyone the same exact car under different brand names and operated on a much lower cost basis. GM simply had no choice but to follow suit in order to cut costs to keep up with the competition."

    That's what I would call the "bad brand management" period, as it would have been alternately described by GM's brand managers and top-dog accountants.

    They did have a point...GM had allowed its internal design capabilities and quality expectations to become so stale that they weren't competitive. GM could either decrease their differentiation costs and make thin profits on thinning sales while gradually improving their sclerotic products and systems, or accept operating at massive losses for several years while they re-invented their product lines in a hurry. They chose the former approach. As it turned out, they chose wrong.

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  8. Stale and haughty attitude...unclebuck

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  9. I agree that they both look awful, but there is a definite difference between the Equinox and Terrain. They certainly aren't as identical as the Ascender/Bravada/Envoy/9-7X/Rainier/Trailblazer siblings. Those only had taillight/grille/steering wheel button differences.

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  10. Just to point out that GM can actually make the same platform look different, compare a Chevy Malibu Maxx, a Pontiac G6, a Saturn Aura and the current Chevy Malibu. All are on the same exact platform, but look quite different.
    I must agree with one thing, this GMC is one gawd awful ugly beaast.

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  11. Going back even to the days of the Roman chariot, the design of personal conveyances has had the capability to express to society the image of how its driver wished to be perceived behind the reins, including his status in life, his work ethic, his sense of family priority, his virility, his respect for the soul of the machine, or even his desire for anonymity.

    Over the last forty years, with few exceptions, GM has seemed to concentrate on designing for the hapless and fickle common denominator among the buying public - something real car guys like Alfred Sloan and Harley Earl knew would never foster brand loyalty, or lasting product appeal.

    I grew up in Flint in the 1960s with a Dad that only drove Chrysler products. It wasn't easy but I loved it. There was no better way back then, in a GM-centric town, to bravely express that you were a rebel - just because.

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  12. In today's mail I got a Buick promo on cardstock, sealed in three places. When I opened it, the covers had flaps, and the entire thing was in full color. I'm talking serious advertising dollars. Its return address read, "Buick Lacrosse, PO Box 909978, MILWAUKEE."

    I know it's not related. I just feel like it's a) a slap in the face to Buicktown, and b) a shocking waste of money from a company operating on the public's dime.

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  13. As to why not a return address in Buicktown...probably the mailing piece physically originated at a regional high-end mailing piece specialists that just happens to be located in Milwaukee...i.e. no significance.

    I reckon that right now, hardly anyone not from Flint or involved with the auto industry makes a positive association between Buick and what they know of Flint. Thank Michael Moore for that rather amazing negative-image accomplishment.

    As to "waste of money"...I'll bet GM's market plan shows that the sales and mindshare gain from this image-conscious, targeted-candidate mailing will more than pay for the mailing's direct costs.

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  14. Well, they certainly missed the mark in sending it to ME.

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  15. The Equinox reminds me of the Ford Taurus X, only a bit more stylish. Also similar to the Nissan Murano and other large crossovers. The only major difference is the Chevy style points, not necessarily good but enough to make it distinctive.

    The Terrain is more like a bulked up version of the Ford Flex, and the Nissan Armada. More mean attitude, more presence. Not well carried out (seems a bit puffy to my eyes), but definitely different from its Chevy (and Buick) cousin.

    It definitely is different from the bad old days of the early eighties, when GM felt they could pump out the same car not only across brand lines, but also across car sizes. Remember when the Le Sabre, Century, Regal and Skyhawk looked like the same car at different scales?

    And as for Buick and Flint...Last I checked, the only thing they made there were Chevy Vans and Trucks. I also checked out the Buick factory site, last thing I saw there was a slab of Cement and a chain-link fence. Anything linked with Buick and Flint is historical and in our minds, and rewinding Michael Moore's movie isn't going to change that (heck, I think Michael Moore should be thanked for keeping Buick in Flint for another fifteen years, but that personal opinion).

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