Business as usual, says GM Premium Brands

HOLDEN says it is business as usual for its GM Premium Brands strategy after last week’s announcement that Cadillac’s Australian reintroduction has been shelved and confirmation that General Motors was well progressed on its plan to offload the division’s existing two brands in Saab and Hummer.

GM chief executive Rick Wagoner revealed at this month’s Detroit motor show that while Hummer was expected to be sold before the end of March, Saab’s departure from the GM stable was more complicated and could take longer.

The future of both brands is believed to be integral to the viability plan GM is due to submit to the US government on February 17, in order to receive the balance of the $US13.4 billion in emergency federal loans it was awarded by the Bush administration. GM so far has received $US9.4 billion.

“I think the logical conclusions are that for us it’s business as usual,” GM Premium Brands director Parveen Batish told GoAuto.

“We’re working with our dealers to grow sales of both brands. We’re out there in the market place, either with offers or promoting the brand. It makes no difference to our dealerships or our customers in terms of what’s happening in the background.

“We’ll continue to work on a day-to-day basis and do all the things that we have to do to really promote what are really two great brands that have great awareness. People know what Hummers are and have an idea of what Saab is they’re great global brands and we’ll continue to promote them.

“Those things are out of our control. We have to focus on the areas that are within our control and what’s within our control is taking a great package that we have with Saab and try to show that to as many people as possible.” The “strategic review” of both brands was announced by GM last year, but GM Holden chairman and managing director Mark Reuss last week admitted the prospect of losing the only two brands from its “premium brands” portfolio this year played a factor in Holden’s decision not to add a third marque in the form of Cadillac.

GM Premium Brands was due to reintroduce Cadillac to Australia from March after the national media launch of the mid-size CTS sedan on February 11.

“You have to look at this whole situation … what we don’t want to do is to (launch) our number one flagship brand through a channel where we have two brands that are under strategic review,” Mr Reuss said in a January 22 press conference to announce that Cadillac’s return had been “indefinitely postponed”.

“So obviously you’ve got to think about that when you think about whether you bring Cadillac into this or not.

“I think we’ve stated publicly that those are brands that have been listed as under study for strategic review in company with the US government’s short-term loan activities that are going on.

“That continues to be the effort around Saab and Hummer right now and packaging up those and looking at all sorts of different options for those, including sale.

“So that’s where we are right now. I haven’t got anything else to say that’s changed right now on that.” Mr Reuss said last week that Holden remained committed to both the Hummer and Saab brands in Australia.

“Right now we’ll obviously continue to support Saab and Hummer and the dealership channels that we’ve established in providing those to the public,” he said.

“We made commitments with our dealership body on that (Saab and Hummer). We are prepared to honour those commitments. That’s all I really have to say.” Mr Reuss blamed the global economic crisis, the weaker Australian automotive market and the downturn in value of the Australian dollar, which has made imports less profitable, for the decision not to launch Cadillac as planned.

“With the downturn of the Australian automotive market and the broader global financial situation, we have made a common-sense, commercially responsible decision to not introduce a new brand into the exceptionally challenging Australian market at this time.

“GM Holden was faced with making a significant investment to launch a new, niche brand into a tough market.

“There is only one chance to properly launch this brand in Australia and in these challenging times, we believe we couldn’t give it the best chance of success.

“This was a difficult decision but the only viable decision.” He said circumstances had changed since Holden staged the Cadillac brand relaunch with great fanfare at the Sydney motor show last October, when Holden gave the local-specification CTS sedan and CTS Coupe concept their Australian debuts.

“There is no doubt the Cadillac CTS is a magnificent vehicle and the response since it was revealed at the Australian International Motor Show in October 2008 has been very positive.

“But obviously since then the market for new cars has continued to deteriorate, the challenging broader economic environment remains largely unchanged and the exchange rate has worsened for imports.

“Our premium brands, Saab and Hummer, will continue to focus on sales and planning for future introductions of new models,” he said.

From top: Hummer H3, Saab 9-5, Chevrolet Camaro coupe, Chevrolet Camaro convertible.

Mr Reuss confirmed in December that the extended-range Volt hybrid would be badged as Holden when it went on sale in Australia in 2012 – the same year the Camaro coupe is now expected to become available for Australia via the Chevrolet brand, which had widely been tipped to join Saab, Hummer and Cadillac in the GM Premium Brands stable.

GM’s global product chief Bob Lutz revealed at Detroit this month that production of the Camaro convertible and right-hand drive Camaro coupe, which was engineered by Holden at Port Melbourne and goes on sale in the US late this year as a 2010 model, has been delayed by at least 12 months, making 2012 the earliest opportunity Holden will have to launch the Chevrolet brand here – if it chooses to do so.

“We looked at investments that we could defer, because they were not critical or vital to the short-term survival of the company,” said Mr Lutz.

“To be totally honest, one of the things we pushed out a little was the Camaro convertible.

“Initially, it was going to be a year after the coupe – now that’s two years. Another thing we deferred was the right-hand drive version.

“I’m confident it’s going to happen – it’s just going to be a little bit later,” he said.

Mr Wagoner said at Detroit this month that preparations for the imminent sale of Hummer were well advanced, but would not comment on speculation it was courting at least one Chinese company in its quest to divest itself of the iconic US off-road brand.

“There is interest ..." he said. “The people who had said ‘we're interested’ are looking at the financials and talking about their ability to support it, so hopefully we can bring this to a conclusion by the end of this quarter, at the latest.” Meantime, Swedish sources have told Automotive News that, as part of a strategic review that commenced in December, GM is preparing to transform Saab into an independent company with control over its finances and decisions, a move that is expected to make the struggling Scandinavian luxury marque more attractive to buyers.

Saab spokesman Eric Geers told Automotive News the company had “positive and constructive discussions with GM and the Swedish government about the future structure of the business”.

“You have to make sure there is a company that GM can sell,” Stefan Lofven, president of IF Metall union in Sweden, told AN. “That means a company that is a separate entity where people can look at the balance sheets and you know what you are buying.” The head of Saab’s union, Paul Akerlund, told AN: “Under this (plan), the Saab board will be more like a normal board and less dependent on what happens on GM's European strategy board. They will make their own decisions.” He added that GM would still be the owner, but Saab would have its own budget.

Under the new arrangement, it is understood Saab could move all of its operations back to Sweden, including research, development and design work that is now done by GM Opel at Russelsheim in Germany.

Mr Wagoner likened the process to that of Jaguar and Ford, which transferred ownership of the historic British brand to India’s Tata Motors last year, but continued to provide intellectual property such as the platforms on which Jaguar models remain based.

“We've been working on (Hummer) a bit longer (than Saab), so that process will come (to an end) sooner,” he told journalists at Detroit earlier this month.

“Saab, we really just started that work – more like over the past couple of weeks – so the track is not quite as far as we've gone with Hummer.

“There has been some interest expressed in Saab ... I can't rule out any options, but hopefully we'll come up with something that structures it in a viable way.

“We need to have a plan for transition, where it could be standalone.

“I understand, for example, in Tata's purchase of Jaguar, they have a lot of agreements where, for some period of time, Ford will continue to provide support in many areas until Jaguar makes the decision to either do something itself or work with Tata, or something like that.

“This has been done in other places. It’s do-able,” said the GM boss, who refused to expand on alternative options for Saab, including closing the profitless brand completely or transferring its assets to a GM affiliate such as Opel.

“You know, I understand the interest, but I'd rather not go beyond what I've said right now,” he said. “It does not help the Saab dealers or people making Saabs to speculate on downsize scenarios. On the other hand, it wouldn't be truthful to say ‘hey, don't worry, everything’s going to be great, no matter what’.” Saab came under full GM ownership in 2000 and was described by GM vice-president Lutz at Detroit as being “on GM life support” ever since.

The first spy pictures of Saab’s next-generation 9-5, production of which is expected to stay at Saab’s Trollhattan plant in Sweden rather than occur in Germany, prove the Swedish brand is on the verge of launching a replacement for its large sedan flagship after 12 years.

Of a total of 1158 Saab vehicles sold in Australia last year (down 37.8 per cent on 2007, when 1862 were sold), just 60 were 9-5s.

Mr Batish said: “Everyone likes new products but we’ve got to sell what we have. We don’t sell too many of them but the 9-5 is a great car. If we could get more people to actually experience them they’d actually see what a great car it is for its age. It still holds up very well.

“I think the whole premium market took a downturn last year and we were only 80 percentage points or so away from another manufacturer. If you look at who has done well last year, it’s those manufacturers with new products.

“Look at Audi. They’ve done a great job with the A4. I think everybody else has suffered and I guess the age of our product hasn’t helped us. Our sales have probably gone down more than others as a result but we’ve got a great brand to build on over the next few years.

“We still have one of the best if not the best ratio of value to performance. If you look at the performance of our vehicles and the value for money offered for the power and the spec we’ve got a great equation.

“We launched the 9-3 TTiD and it was kind of like a silent launch but there’s a fantastic vehicle there with a twin-stage turbo which falls below the tax threshold because it falls below 7.0L/100km and it’s an Aero.

“It’s an absolutely fantastic performance car for a diesel and those are the sort of things we’ve got to get across to our customers.

“You never like going down in sales but it wasn’t a complete surprise to us. We have to build on what we have.” GM Premium Brands sold almost as many Hummers as Saabs in 2008, with 1078 H3 SUV sales making Australia the world’s fourth biggest market for the US military-based truck brand – without the aid of the even larger H2 models.

Mr Batish said Hummer’s 2008 sales result in Australia was as expected, but admitted GM’s mid-year review announcement had affected Hummer sales.

“It’s pretty much where we wanted it to be, considering it was the first full year of sale. I think we’ve done a great job, having one product with one engine. I think it’s been really well accepted in the Australian market and we’re very pleased with the result.

“We announced the strategic review halfway through the year and I think it’s no big secret if you look at the sales result you’ll probably see a slight decline. But were in the other months extremely pleased and we are well above where we were anticipating where we wanted to be.

“To become the fourth largest market in the space of 12 months is fantastic and that’s with the other three markets selling both H2s and H3s.”

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