Does GM Have An iPod Project Waiting?

Fritz Henderson, CEO of General Motors, talks at a news conference Monday, June 1, 2009, in New York. General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government. (AP Photo/Mark Lennihan) AP Photo/Mark Lennihan

Brian Cooley, is an Editor at large at CNET, where he has been covering technology since 1995 with an emphasis on automotive topics.

The easy part of GM's bankruptcy was filing for it, now the hard work begins: How does such a monolith unwind and then reshape a brand that has been around longer that any consumer alive to consider it? New cars take at least a handful of years of gestation to get to market, but new brand images can take much longer and typically with more fickle results.

The new GM that will emerge from this reorganization - the so-called good GM - will consist of Chevy, Cadillac, Buick and GMC. Those are GM's strongest brands if you take a measurement at the nexus of perception and transaction.

But with those four comes a company with a much smaller footprint, and the leaves an opportunity for GM's competitors and their much stronger brands to take market share. GM will be in the unenviable position of trying to take back that share in the years ahead. And companies like Toyota, Honda, Hyundai and Nissan will not give it back easily if at all.

In this bailout the U.S. government is gambling - heavily - that GM's DNA has great cars in it we just never saw. Otherwise, why bail it out? If those cars are there, where have they been? And almost more importantly, does anyone in the U.S. car team understand the brand challenge?

My biggest concern lies in the assumption that the agony of GM's failure will somehow be cathartic enough to cause hidden sensibilities to emerge and great cars for the times with it. Yes, any large company can put its mind to a task and accomplish it with some legitimacy, but consumers know that the best cars come from companies that have an authentic mission. For the most part, GM's healthy competitors have that.

Yes, everyone from KIA to Mercedes makes an SUV these days, but seldom to the exclusion of what else they do really well. Thus their Audi's brand still means athletic, highly engineered cars; Mercedes means luxury, BMW means luxury performance and Toyota means your car will always start(with the Prius thrown in for extra credit, but that's Toyota.)

What GM must do is reorient consumers' perceptions of what its remaining four brands mean. And they each must mean something. Cadillac comes the closest, but what about Chevy? What is a Chevy? It's a large or small car or truck that is either high performance of rather slow and good looking or ugly. That's not very focused.

Interestingly Pontiac, Hummer, SAAB and Saturn are all brands that have much rather iconic brand equity, yet not the commercial success of the four that will remain in GM's quiver. So does the loss of those brands help or hurt GM?

n the sense that investors will hopefully rally behind a strong "GM", it is important to burnish the corporate brand via its portfolio and you might rue the loss of the four that are being dumped. To a much lesser degree, consumers are aware they are buying a GM product when they drive off a Chevy or Cadillac showroom, but primarily they are buying a Chevy or Cadillac.

The easiest way to reset the GM brand is a couple of hits, right off the bat. We see this in the technology industry all the time. A company can go from obscurity to celebrity with a single product. If GM rolls out even one car that consumers and the media lavish praise on without reservation, the game will almost change overnight. This is a big part of the stories of Apple, Amazon, Google, and a host of other technology firms that play in the fastest-moving, most malleable space in American commerce. I don't honestly see where GM will get that breakout hit that redefines it or any of its four chosen divisions, but nobody really saw the iPod coming, either.

Let's hope they've been hiding the next iPod in some back room all these years.
  • CBSNews

Comments