Tuesday, August 29, 2006

Defenders of Buick and Pontiac

James Surowiecki, writing in The New Yorker, explains why General Motors won’t get rid of Buick and Pontiac. An excerpt:

When General Motors was the biggest and most profitable auto manufacturer in the world, its strategy was to provide “a car for every purse and purpose.” G.M. offered a panoply of distinctive brands, each targeted at a particular category of buyer—Buick for the successful but conservative driver, Cadillac for the wealthier and more flamboyant, and so on. This was a tremendously successful strategy in the days when G.M.’s domination was unchallenged. But now, with G.M. losing billions of dollars a year and struggling to restructure, it just looks like a waste of time and money. When analysts talk about how to turn G.M. around, most start with the need to slim down the company and get rid of less popular brands. (Buick and Pontiac are perennial nominees.) It’s an eminently sensible approach, but it’s unlikely to happen anytime soon, because it would challenge the interests of some of the most powerful players in today’s auto industry—car dealers.

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