Makers are way off the marque

Now that Detroit has received a multibillion-dollar lifeline from the federal government and the threat of immediate bankruptcy has lifted, U.S. automakers’ next order of business may be to go on a nameplate diet.

General Motors Corp., Chrysler and Ford Motor Co. field a multitude of vehicle brands, and some analysts say that roster needs to be whittled down if the companies are going to cut overhead and production costs enough to survive.

A large portfolio of brands strains advertising budgets and dealer-support operations. More important, it consumes product development dollars that might be better spent creating vehicles and features for the most viable brands.

Blaming the domestic automakers’ current woes simply on an over-reliance on big pickup trucks and SUVs is wrong, said Eric Noble, president of Car Lab, an automotive consulting firm in Orange. “It’s because they had too many brands that they tried to support,” he said. “How do you make progress when you’re pulling all this weight?”

GM, the biggest player in the U.S. with a 22% share of the market, builds vehicles under seven separate brands: Buick, Cadillac, Chevrolet, GMC, Hummer, Pontiac and Saturn. It also has its Sweden-based Saab unit.

Compare that with Toyota Motor Corp., GM’s closest U.S. competitor. Besides its namesake brand, the Japanese automaker produces just its Lexus luxury marque and the youth-oriented Scion, which some analysts don’t even count as a separate brand.

Honda Motor Co. and Nissan Motor Co. are even leaner, each fielding only a flagship brand and a luxury nameplate (Acura and Infiniti, respectively).

In the restructuring plan it gave Congress this month when asking for a financial rescue, GM said it would continue efforts to sell Hummer, consider selling Saab and Saturn, and dramatically downsize Pontiac.

GM executives later said Pontiac, onetime home of such cars as the GTO and Bonneville, may be reduced to a single model -- perhaps the Australian-built G8 sedan.

Chevy, Cadillac and Buick present the best opportunities for success and will get most of the attention, GM indicated. For example, the Volt, the highly touted extended-range electric car GM plans to have on the market in 2010, will carry the Chevy badge. And the brand will be home for the fuel-efficient Cruze and probably most of the other gas-sippers that GM rolls out to meet new federal fuel economy standards.

Cadillac, whose exclusive image was damaged in the 1980s by the ill-advised Cimarron compact, has made an impressive comeback with the Escalade SUV and its well-received CTS sedan.

The brand is attracting buyers outside its traditional “rich-old folks” demographic, luring upwardly mobile baby boomers and even some Gen Xers intrigued by Cadillac’s bling factor.

“Cadillac shows that the domestics, when they get serious, are capable of making world-class products,” Noble said.

The problem is that developing vehicles like the CTS to revive a stalled brand is hugely expensive. Some analysts think GM needs to do even more pruning, jettisoning the GMC nameplate -- mostly known for high-end trucks and SUVs -- and perhaps ditching Buick, which sells well in China but has struggled in the U.S.

The problem with Buick is that it’s a classic “tweener” brand, filling a shrinking niche between Chevy and Cadillac. (The old joke was that doctors drove Buicks because showing up at house calls behind the wheel of a Caddy would be too ostentatious.)

That said, both Buick and GMC are likely to remain in the GM stable, at least for now, said Rebecca Lindland, an analyst with consulting firm IHS Global Insight.

Dealer showrooms featuring a triad of Buick, GMC and Pontiac nameplates will present car buyers with “a nice mixture of vehicles and brands,” she said.

In return for getting $4 billion in federal loans, Chrysler has been much less specific about what it plans to do regarding its Chrysler, Dodge and Jeep brands. However, analysts say the automaker is in a tougher spot than GM, with fewer standout vehicles and dwindling brand equity.

Chrysler has virtually no fuel-efficient models, and the bold plan it unveiled this year to produce a line of electric cars could get snagged by its financial woes.

Jeep remains a marquee brand, according to Lindland, but the rest of the automaker’s lineup has only two really distinctive products -- minivans (a segment Chrysler pioneered) and the redesigned Dodge Ram pickup, which has been getting favorable reviews.

Meanwhile, some analysts have suggested that Ford -- which has not sought nor received a government loan -- should jettison its Mercury division, which has suffered in recent years from a lack of distinctive models. And the Lincoln luxury marque needs a shot of adrenaline.

On a brighter note, the new hybrid version of Ford’s Fusion sedan is getting good reviews, as is the redesigned F-150 pickup. And Ford definitely got the memo about streamlining its roster, selling Jaguar, Aston Martin and Land Rover and putting Volvo on the block.

Although killing a nameplate may be beneficial in the long run, it can be very expensive in the short term, in part because dealers selling the brand have to be bought out. It cost GM more than $1 billion to lay its Oldsmobile brand to rest earlier in the decade.

Add in the cost of reviving faded badges to their former glory, and Detroit is looking at huge outlays at a time when new vehicle sales by both U.S. and foreign automakers are plummeting and the economy is in a deep recession.

“This is a storm that’s affecting everybody who’s got a boat on this ocean,” Noble said. “The problem is that the domestic automakers have some pretty leaky boats.”

--

[email protected]