And for anyone else who wants to stay in business.

I don't know what you have against profits. Without them, no company stays in business. Can't hang onto a brand because of its history or because of the romance. Those things don't keep the lights on.

I understand the difference between short-term versus long-term thinking, and one could argue that GM looked only at the short term in dumping Olds. But nonetheless, profits do matter, and there have to be some if a company, any company, is to stay in business. If GM thought that the money they would have needed to invest in Olds to return it to profitability could have been better spent elsewhere, then they would have been reckless if they DIDN'T dump Olds. Maybe hindsight will one day show them to have been wrong, but hindsight is always 20/20.

 

The REAL question that should be asked in all of this, and I'm sure it will be in business schools 50 years from now, is not why oh why did those mean GM bosses get rid of Oldsmobile and now Pontiac. Rather, it will be why didn't GM get rid of a brand or two several decades earlier, when the handwriting of the unsustainability of GM's business model began to be written on the wall.

Back in the glory days of the 1950s, when GM accounted for 6 or 7 of every 10 cars sold in the U.S., operating five separate divisions could be done. But it can't be done when your market share is half that. I'm sure that some of those "bean counters," when they saw the beginning of the seriousness of Japanese competition, realized this back in the '70s or '80s, and maybe the prescient ones could see it coming as early as the '60s. But GM was too large, to entrenched, too slow to change direction, and hobbled by powerful unions and state franchise laws that made it difficult to terminate dealership franchise agreements. It was easier to just go along with the status quo and hope for better times.

But those better times never came, and GM was finally forced by economic circumstances to face reality. Ford is down to two brands. Chrysler is down to two brands (although they've recently decided to call their trucks "Ram" trucks instead of Dodge Ram trucks). GM's whittling itself down from 9 brands as recently as 10 years ago to four brands now was inevitable.


There is a good article on the Popular Mechanics website right now about how the 40th anniversary of the Chevrolet Vega is at hand. The title of the article is "How the Chevy Vega Nearly Destroyed GM." As I said earlier, it's easy to see what went wrong in any situation when you look at it in hindsight. That's certainly seems to be true in this case, although there are many who could have told you what was wrong with the car and what it represented even then.

Chevy Vega Turns 40 - How the Chevy Vega Nearly Destroyed GM - Popular Mechanics

 

The hierarchy in the 1950's-1970's was:

Cadillac - luxury
Buick - low priced luxury, just under Cadillac
Oldsmobile - mid-priced
Pontiac - lower mid-priced
Chevrolet - entry level

There were exceptions, like a Corvette was not entry level (hardly), and a Buick GS could be cheaper than a Chevelle, but thats how GM marketed their 5 divisions. I read an article back when Olds went under that explained why they were being phased out, and there were lots of quotes from prior GM executives on how Olds was always the 'middle ground' between Buick and Pontiac, and since Pontiac was the performance division, and Buick attracted luxury buyers, those two divisions could fill the void left by Olds going away.

 

Considering Buick sold only about 120,000 units last year in a US market of 8 million or so, the question is why do people worry about such a niche player still being around? BOP didn't add up to a mouse fart in the automotive world's sales totals, so they should all be gone. The Toyota Corolla outsells the entire Buick lineup all by itself.

 

oh no,I think this is going to turn in to another Chevy motor in an Olds question.

How many Corvetts did they sell? Should they stop making them? How much mint chocolate mint ice cream do they sell (I never bought any)? Should they stop selling that? A mouse farts? Guess I'll take your word on that.Whats it sound like.......squeaky???? People buy BOP's for a lot different reason then (others) buy Corollas.You know what they say build a better mouse trap and.......some body will still buy the old one.

 

I have nothing against profits; that's the point of being in business. However, if you make long term decisions based only on today's profit margin, you're a fool and you're doomed. Certainly, you'll never build anything like a Corolla. Think Toyota is worried about profit margin on that poopy little thing? Nope, they're making mountains of money on it, and that's with very little profit margin. Sure GM made 8-10K on each Suburban that they sold, but when the price of gas went up and people stopped buying them, they were screwed. Short-term thinking left them with nothing to fall back on. And that's my whole point. If you put the blinders on and focus on one thing, you're in big trouble; if not now, then very soon...