General Motors: That’s why Saab, Pontiac & Co. had to die

The financial crisis of 2008/09 not only dragged the banking industry into the abyss. This also sent the car industry into a downward spiral, which had particularly bad consequences for US companies. While Ford survived – albeit temporarily badly hit – Chrysler and General Motors (GM) had to file for bankruptcy. The bankruptcy of GM went down in history as the largest bankruptcy in the US industry. As a result, the two car manufacturers were temporarily placed under creditor protection and nationalized, which is why the authorities were suddenly allowed to have a say in the management levels in and around the “Motor City” of Detroit.

During the restructuring, the state monitors had one thing in mind above all: the giant corporations should shrink down to health. This made it clear: that some tough decisions were ahead, especially in the multi-brand empire GM, which was fighting for global supremacy with Toyota and VW before the crisis. The government demanded that the company be split into a “good” and a “bad” part. The first category included those considered viable brands, which ultimately only applied to the core brand Chevrolet and the luxury manufacturer Cadillac. All other GM subsidiaries were up for grabs.

Today, about 15 years later, ex-GM manager Robert Anthony “Bob” Lutz reports how thumbs up or down were raised over individual brands at the time. At the time, Lutz, a Zurich-born son of Swiss-US immigrants, was responsible for global product development. He told the online car magazine “Motor1.com” why individual GM brands were saved – and others were not.

Saab

The Swedish cult brand brought its first cars onto the market in the late 1940s. After years of upswing, Saab went downhill in the 1980s and GM, together with its other European subsidiary Opel, took over half of the company’s shares. At the beginning of 2000, the Scandinavians were completely integrated into the group, but there was still no success. No wonder, if you believe Bob Lutz: “It was a silly brand that wasn’t mainstream, and every time it was mainstreamed, we stopped selling cars.” He allegedly advised GM decision-makers to get rid of Saab for many years, but he was always put off.

Now the opportunity to get rid of Saab arose, and GM wanted to seize it immediately. The manufacturer was initially supposed to be sold to Koenigsegg and the Chinese BAIC group, but this deal fell through. Ultimately, Saab was sold to the Dutch small-series manufacturer Spyker, but at the end of this short episode, there was bankruptcy in the 2011 Christmas season. There was later something like a successor company, National Electric Vehicle Sweden (NEVS), which was located at the former Saab headquarters in Trollhättan. The Saab brand name nevertheless disappeared from the automotive world and NEVS is now bankrupt.

Pontiac

“I dug my heels into the ground at Pontiac,” said Lutz about the brand, which had been part of the GM group since 1909. But he was unable to get them across the finish line, which is why Pontiac was liquidated at the end of 2010. “I still see it as a small tragedy,” said the ex-car executive, who viewed Pontiac as a vital brand because it was popular with young buyers. In fact, the manufacturer produced legendary models such as the Firebird, the GTO, and the eternally-built Bonneville. But Pontiac suffered the most from the common parts strategy, which is why the models could hardly be distinguished from their almost identical Chevrolet, Buick, or Oldsmobile siblings. The result was economic difficulties, which led government officials in GM management to let the brand die.

Hummer

“We couldn’t save Hummer,” says Bob Lutz, looking back on the former off-road vehicle specialist. Its independence was a mistake from the start. Because “we had to supply them with a whole range of vehicles”. Ultimately, Hummer never achieved the necessary quantities, and even that collapsed at the time of the financial crisis. In 2010, GM stopped production, which had been taken over ten years earlier by HMMWV (“Humvee”) producer AM General. Ten years later the name returned as an electric model from the GMC brand. Incidentally, Lutz now claims to have had a similar lobster concept in mind years before.

Saturn

When it comes to the GM brand, which is largely unknown in this country, Bob Lutz chooses drastic words: “Saturn was another mouth that we had to feed with limited capital.” He was happy to get rid of Saturn. Chevrolet was just as good and reliable, which is why the reason Saturn belonged to the group no longer existed. The brand’s history was short: it was only launched by General Motors in 1990 primarily to offer European GM models under its label in North America. This is how some Opel models such as the Vectra C or the Astra H started a second career as Saturn on the other side of the Atlantic. The concept failed: the sales figures for these cars fell far short of expectations, which is why Saturn stopped selling in the fall of 2009.

Buick

Against this background, it seems incomprehensible why Buick, of all companies, was allowed to live on. Ultimately, the brand strategy was temporarily the same as that of Saturn: the Opel models Astra J Notchback, Cascada, Insignia, and Mokka temporarily enriched the GM range in the USA as Buicks. The fact that real “badge engineering” was carried out here probably deeply affected not only the traditionalists among the manufacturer’s employees and fans. After all, it is older than GM: While today’s giant company was only founded in 1910, Buick has existed since 1903.

When things were bad for the parent company in the mid-1910s, it was primarily the success of the Buick models that saved the company, to which the brand had belonged since its founding, from going under. Almost 100 years later things went the other way around. According to Lutz, government officials also wanted to liquidate Buick. Ultimately, the manufacturer was saved by its success in China: “We argued that we had to keep Buick because if you drop Buick in the USA, the brand will also die in China.” So Buick survived and can now be a little more independent again. At least visually – under the metal, the cars hardly differ from their counterparts from Chevrolet and Co.

GMC

Another General Motors brand whose models differ and differ from their corporate siblings only in nuances is GMC. Consequently, it was also up for grabs 15 years ago. “We made it clear to them the profitability and the health of the GMC brand,” says Bob Lutz. The main argument in his opinion: Many buyers would only buy an SUV or pickup from the GM portfolio if the car bore the GMC logo. Knowing this, they will spend a few thousand dollars more to drive a GMC Sierra instead of a Chevrolet Silverado or a GMC Yukon instead of a Chevrolet Suburban. GMC has long since found a profitable niche in the sandwich between the volume manufacturer Chevrolet and the luxury brand Cadillac.

Opel

Bob Lutz has not commented on the Opel case. The drama surrounding the sale or non-sale of the most important GM Europe subsidiary was almost more interesting than that surrounding the brands already mentioned. It began in the fall of 2008 when the problems of the parent company brought the already financially strapped manufacturer from Rüsselsheim into even greater distress. Opel was the first German car manufacturer to ask politicians for help. In the spring of 2009, Opel managers presented a rescue concept to the then-federal government, but Chancellor Angela Merkel rejected direct state aid. Meanwhile, there were three purchase offers on the table: In addition to a financial investor, Fiat and the Austrian-Canadian supplier Magna were interested.

The latter quickly became the favorite for politicians, civil servants, and trade unions because Magna wanted to cut fewer jobs than the other bidders. So GM was pressured to sell to the supplier. But EU competition watchdogs raised concerns about loan commitments and guarantees from Germany. At the same time, General Motors, now bankrupt and majority nationalized, began to rethink: The US company now wanted to restructure Opel itself. This was accompanied by severe cuts: thousands of jobs were cut and the plants in Bochum and Antwerp had to close.

But Opel only managed to get out of the red in certain areas; the European GM subsidiary generally remained in the loss. Sales rumors were correspondingly persistent, and there was even talk of a takeover by VW. In the spring of 2017, things became concrete: PSA, the French parent company of Peugeot and Citroën, was exploring a sale of Opel with General Motors. Then everything happened very quickly: there was already an agreement in March and the transaction was completed in the summer. This ended an era that had already begun in 1929 when GM first became a majority and then a complete owner of Opel. Spicy: Through the later merger of the PSA Group with FCA (Fiat-Chrysler) to form the Stellantis Group, Fiat, which was once interested in taking over the Rüsselsheimer company, became the Opel sister brand.