WSJ: "Eight-Brand Pileup Dents GM's Turnaround Efforts"
Michael Maguire has mixed feelings about General Motors Corp.'s coming launch of the Chevrolet Traverse, a seven-passenger crossover wagon that promises to boost sales at his family's Chevy dealership along Route 206 in Bordentown, N.J.
The trouble is, the Maguire Automotive Group also owns a Saturn store a mile up the road, and the Traverse will crimp demand for the Outlook, a nearly identical crossover GM's Saturn brand began selling about a year ago. The arrival of the Traverse will mean "the window has completely shut for Saturn," Mr. Maguire said. For dealers like him, GM's move to populate many of its divisions with vehicles that look alike largely for the sake of maintaining each brand's market share amounts to "robbing Peter to pay Paul," he said.
After three years of restructuring, GM is still racking up billion-dollar losses and isn't ready to say when it will return to profitability. The slumping U.S. economy is certainly a big factor, and one reason GM reported a drop in February vehicles sales yesterday.
But Mr. Maguire's predicament is an age-old one that continues to undermine the Detroit auto maker's efforts: The eight brands in its portfolio often compete with each other -- both for customers and a slice of GM's marketing budget.
For example, GM has four mass-market midsize sedans. The Chevy Malibu is backed by a ubiquitous ad campaign and is a top-seller. Meanwhile, the Buick LaCrosse, Pontiac G6 and Saturn Aura have struggled to build the awareness and recognition needed to compete. Toyota Motor Corp. has one model to compete with those offerings -- the Camry -- and last year it alone outsold GM's four models, 473,308 to 386,024.
A year ago the Aura was named "Car of the Year" at the North American International Auto Show in Detroit, but now, with Malibu marketing in full swing, Saturn dealers are struggling to move the Aura. In some parts of the country dealers are offering rebates and 0% financing on the car. Mr. Maguire said he had to line up an Aura financing package on his own because GM's marketing support for the car wasn't boosting sales enough.
Pontiac could run into a similar problem this year when it introduces a new rear-wheel-drive sedan, the G8. Although it is Pontiac's most important launch since 2004, GM marketing barely mentions the car.
Even when GM does spend on its smaller brands, it often sees little return. In past years, television ads have promoted Saab's sports cars as "born from jets," but in 2007 Saab dealers sold just 32,711 vehicles -- not much more than a single month of sales for the Camry or Honda Motor Co.'s Accord.
Mark LaNeve, GM's head of marketing and sales in North America, acknowledged the company puts substantial effort into promoting its two core nameplates, Chevy and Cadillac. The others, he said, can get more marketing dollars if they show they're gaining momentum in the market. It's an uphill climb. Of the six, only Pontiac and GMC have more than 2% market share in the U.S.
But to make money again, the company has to rev up sales in all eight brands. Mr. LaNeve said GM will slim down the product lines in the future, taking out underperforming models, or models that unnecessarily duplicate others.
GM is also working to reduce overhead and overlap among its brands. Buick, Pontiac and GMC vehicles are sold mostly through dealers that carry all three makes. To keep them from competing with each other, GM has trimmed their product lines so that Buick offers premium cars and wagons, Pontiac offers sporty models and GMC concentrates on trucks.
Still, internal competition continues, and nowhere is that more evident than in GM's push into crossovers, which look like sport-utility vehicles but are lighter and more fuel-efficient.
Last year GM introduced three -- the Saturn Outlook and GMC Acadia, which are all but identical, and the more luxurious Buick Enclave. The Acadia and Enclave were hits but Outlook sales have been less than GM had hoped.
Mr. Maguire said the Outlook was hurt by Saturn's brand image, which isn't as strong as GMC's. Customers often chose the Acadia over the Outlook, even though the GMC model sold for about $2,000 more.
Now Chevy will get its version, the Traverse around October, and dealers are already seeing an impact. In January, dealers held enough Outlooks to last 138 days, up from 98 in December.
GM had hoped the Outlook and Aura would help Saturn lift 2007 sales to about 350,000 vehicles and turn a profit, people familiar with the company's targets said. Saturn sales were up, but reached only 240,000 vehicles.
"I'm not telling you it's not a challenge," Mr. LaNeve said, referring to finding the right balance in the brand portfolio. "I'm telling you we can manage it."
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orrrr the Lincoln LS and the Jaguar S-Type 
sold 
