Making room in junkyard

By Published on .

Ever since Daimler-Chrysler eliminated the Plymouth brand last year and General Motors Corp. announced it would do away with Oldsmobile over the next few years, the game in automotive circles has been "guess who is next to go."

Auto analysts and some new-car dealers are absolutely convinced another vehicle marque will fall soon.

"Within the next five years, at least one more will go away, but I won't say which one," says Christopher Cedergren, an automotive consultant with Nextrend.

At the National Automobile Dealers Association convention in February, six mega-dealers, pressed during a panel discussion to name which brands would be next to go, were split: Two picked Daewoo, two named GM's Buick division and two selected Ford Motor Co.'s Mercury.

On the heels of a GM executive wondering out loud if American Isuzu Motors ought to be in the retail vehicle business, Isuzu also is mentioned as a possibility.

WHO'S NEXT?

Analysts and dealers suggest Daewoo Motor America, the U.S. marketing arm for Daewoo in South Korea, is a top-of-mind candidate because of the financial woes and labor turmoil of its parent company. The company is bankrupt, carrying about $18 billion in debt and reportedly is losing $120 million a month.

"Daewoo is so tentative right now," Mr. Cedergren says. "Its future globally is based on whether GM makes a move or not, and I think it will. That will give [Daewoo] a huge influx of capital to keep it in the market. On the plus side, [Daewoo's U.S.] sales are growing ... and they are attracting young buyers."

Daewoo Motor America executives insist the company is here to stay. And on the marketing front, Daewoo isn't behaving like a company going out of business. The auto marketer has more than doubled its ad budget to between $80 million and $100 million for 2001.

Among the U.S.' homegrown carmakers, if GM is willing to eliminate Oldsmobile, could Buick be far behind?

The difference between Buick and Olds, notes Buick General Manager Roger Adams, is profitability.

"Buick is a highly profitable and successful division, and remains a key brand in GM's portfolio," Mr. Adams says, adding it has one of the highest loyalty ratings in the industry, a good reputation for quality and strong dealer support.

OWNERS SKEW OLDER

Buick also has one of the oldest owner bases in the auto industry, with the average age of its buyer at 62 years old.

"We're still only selling four models-all of them are four-door sedans, and all are long in the tooth," says Carl Fisher, recently retired chairman of Buick's national dealer council.

Ford's Mercury long has been rumored to be on the chopping block because of its muddied image, lack of heritage, confused product line and sagging sales in a boom market. Ad spending was a mere $17 million last year. Still, company officials insist Mercury is here for the long haul.

"Mercury is an extremely profitable brand for Ford, a claim our counterparts at Oldsmobile and Plymouth couldn't make," says Jennifer Moneagle, Mercury group brand manager.

She admits Mercury has no clear image, but she says that's an advantage. "We can create an image, and we don't have the baggage of trying to overcome a reputation."

REMARK CHALLENGED

Isuzu makes the list of possible casualties because of a remark by an executive of General Motors, which owns 49% of the Japanese carmaker.

John Devine, who recently became GM's chief financial officer after serving in the same post at Ford, questioned publicly whether Isuzu should be in the retail business or should instead focus on producing engines and commercial vehicles.

Isuzu Exec VP Terry Maloney says Mr. Devine was new to GM when he made the remark and it was just his opinion. "Isuzu has no plans to go out of the sport-utility vehicle business since we are just launching a new product, Axiom," Mr. Maloney says.

In this article:
Most Popular