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GM lays out plan to trim models

Automaker tells dealers that Buick line will be cut back to four or five vehicles.


By Ed Garsten / The Detroit News
Friday, June 3, 2005​

Moving to accelerate the consolidation of its Buick, Pontiac and GMC brands into a single sales channel, General Motors Corp. is warning dealers that only sell the Buick line that they'll have fewer and fewer models to sell in coming years.

The message was delivered Thursday during a meeting in Troy of more than 1,000 dealers from the automaker's north-central sales region, including Michigan, Ohio and Illinois.

Dealers that sell only the Buick line could face financial challenges as GM pares its U.S. model line in response to falling demand. Buick sales are down 17 percent this year and GM told dealers that Buick's product portfolio will be trimmed down to four or five vehicles from eight. The vehicles most likely to be cut are the Rendezvous crossover vehicle and the Rainier, a midsize sport utility vehicle.

To reduce product overlap and save marketing costs, GM is realigning its North America brands and model lineup. Chevrolet and Cadillac will become "foundational" brands with the broadest car and truck portfolios. GM's other six brands will see their product lines pared to only models that meet specific, strategic brand images -- such as trucks and SUVs for GMC.

A big piece of that plan includes selling Buick, Pontiac and GMC cars and trucks at a single dealership, rather than at stand-alone stores. About 50 percent of Pontiac, GMC and Buick stores have already been consolidated.

"It's really getting the role right and the three work together," Mark LaNeve, vice president of sales, service and marketing for GM North America, said during a recent interview.

"I told the dealers straight up, I'd rather you've got three or four great Pontiacs that really deliver on that legendary athletic design or performance and three or four great Buicks that are a cut above," LaNeve said.

In recent months, GM has reached out to reassure and rally dealers as part of a broad initiative to revive flagging U.S. sales that contributed to a $1.1 billion first-quarter loss. In May, GM reported a 13 percent decline in sales, and its overall sales are down 6.7 percent this year. Its U.S. market share has dipped to 25.4 percent from 27 percent a year ago.

Livonia Buick dealer John Rogin said he felt no pressure to buy into the so-called "single channel" concept, but is open to converting at some point.

"We've been a single line dealer for 20 years," said Rogin, who also owns a single-line GMC dealership. "Would I and GM ultimately do better if I had all three brands under one roof? Absolutely. If GM has a plan, we'd welcome a discussion."

Jim Bunnell, North-Central regional manager, and Pete Gerosa, GM North America Vice President field sales, service and parts, said Chevrolet will likely market 23 to 26 models, while Cadillac's portfolio will consist of nine to 11 models. Chevrolet now offers 20 models, not counting medium duty trucks and certain derivative model such as Cobolt SS. Cadillac sells nine models, not including high-performance versions.

Hummer will market four to five different models, up from three choices. Saab's product line will have five to seven models, up from its current four, according to dealers attending the meeting.

Collectively, the Pontiac, GMC and Saturn brands will have 22-27 models, GM executives told dealers, without providing details. The three brands sell 18 distinct vehicles and plan to produce at least four additional models.

GM also told dealers it will cut production by 33,000 units in the last three months of the year. Hurt by lower sales and a stockpile of unsold cars and trucks, GM is reducing North American production by about 110,000 vehicles, or 9 percent, in the third quarter. For the year, GM plans to cut output by about 465,000 vehicles, officials told dealers.

GM spokesman Stefan Weinmann declined to comment on GM's future production plans, citing changing market conditions, which may alter production plans.

Dealers are concerned that the production cutbacks, together with a new promotion that offers employee-style discounts to all consumers through July 5, could leave them short of inventory, Rogin said. Dealershave largely dealt with bloated inventories in recent years.

While some dealers may not agree with GM's new strategies, Rogin said he felt optimistic after the meeting, calling it "the most direct, most truthful, most positive meeting anyone could remember."
 
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