Tuesday, February 17, 2009

GM, Chrysler Present Their Plans

As GM and Chrysler prepare to present their restructuring plans to the federal government, news reports discuss the possibility of a bankruptcy filing by one or perhaps even both automakers. At the same time, journalists are speculating about the scale and scope of the cost reductions and union concessions that the automakers will announce. While massive cost cuts are undoubtedly necessary, no revival of GM and Chrysler can occur unless they also retool their product strategies. The firms must also have a plan for streamlining their brand portfolios, and repositioning their remaining product lines so that each has a clear, distinctive brand identity. Moreover, the firms cannot completely gut R&D, as they will need to bring out new cars that are more appealing than those of the past. People need a reason other than price to buy a GM or Chrysler vehicle. While the government has pressed the automakers to make more "green" vehicles, that alone will not save these firms. Making a few more green cars, or even rolling out an electric car, does not constitute a distinctive, appealing, and comprehensive product and branding strategy.