Indie Auto reader Captain My Captain recently weighed in on our story, “How might GM have better adapted its hierarchy of brands to changing times?” He offers an unusually in-depth and colorful assessment, so I thought it would be worth giving it front-page visibility.
A better question than how General Motors’ five-division empire might have survived is this: how on earth did it last as long as it did?
The answer isn’t brilliance. It’s timing. Pure, dumb luck wrapped in a booming postwar economy and a field of competitors busy stepping on their own rakes.
The independents? They didn’t just fade away, they conducted a long, slow, assisted suicide. Ford spent money like a man trying to impress a date who’d already left the restaurant, chasing GM with the Continental Division and the Edsel — two monumentally expensive lessons in how not to read the room. Chrysler, meanwhile, staggered from one crisis to the next, occasionally producing a genuinely good car almost by accident, like a blind hog finding an acorn.
Against that backdrop, GM didn’t have to be perfect. It just had to be less wrong.
In the 1950s and 60s, GM could afford its internal overlap, its brand confusion, and its quiet cannibalism. The tide was high enough to float all five boats, even if they were bumping into each other in the harbor.
Ford and Chrysler also couldn’t make brands work
Ford couldn’t make a five-division structure work. Lincoln and Mercury wandered through a barren identity desert, changing direction so often they wore grooves in the sand. Chrysler, not to be outdone, decided that if GM had five divisions, then five divisions must be the secret sauce. So they tried it.
DeSoto became redundant almost immediately. Dodge and Plymouth turned on each other like two dogs fighting over the same bone. Imperial was spun off, then pulled back in when the math stopped working. In the end, Plymouth took the bullet so Dodge could limp forward.
Neither Ford nor Chrysler could make the model work. And truth be told, GM couldn’t either. They just took longer to admit it.
The problem was baked in: too much overlap, too much redundancy, too many factories, too many layers of management all needing to be fed. It was a five-headed beast with an appetite that never stopped growing, even as the quality of what it produced became . . . negotiable.
And while Detroit was busy arguing with itself, the imports showed up — quiet, efficient, and built like someone actually cared. Within a couple of decades, they didn’t just take a bite out of the market. They took half the plate.
GM responds to import threat with more of the same
So what did GM do in response to the imports? Naturally, they added more brands. Hummer. Saturn. Saab. Because when a man is drowning, the obvious solution is to put on a heavier coat.
Hummer was pure ego on wheels. “Let’s take a Tahoe, square it off, make it look like it just came back from a desert war, and charge a king’s ransom.” The idea being that men with something to prove would line up. Turns out, the men with the most to prove were also the ones least able to afford it. They settled for lift kits and loud exhausts on used Silverados.
Saturn was, in theory, what Chevrolet should have been all along: simple, honest, well-built transportation. But instead of fixing Chevrolet, GM created an entirely new brand to do the job. It was like building a second kitchen because you burned toast in the first one.
Also see ‘1954 Chevrolet was beginning of the end for GM’s brand hierarchy’
And Saab? That was pure vanity. Ford bought Volvo, and GM couldn’t stand not having a Scandinavian conversation piece of their own. So they picked up Saab like a souvenir — less for what it was, more for what it said.
And then there’s GMC. A brand that, to this day, exists as a slightly nicer Chevrolet wearing a different tie, asking for a little more money and hoping nobody looks too closely. If common sense were lard, GM couldn’t have greased a skillet.
Eventually, the math caught up. Bankruptcy followed. The government stepped in. By then, GM had achieved a rare and unfortunate balance: too big to fail, and too clumsy to succeed without help.
The solution: Fewer brands, less overlap, greater scale
Meanwhile, the answer had been sitting in plain sight. Two divisions. One for the masses. One for aspiration. Ford and Lincoln. Toyota and Lexus. Honda and Acura. Nissan and Infiniti. Volkswagen and Audi.
A broad, bread-and-butter brand that sells everything from practical compacts to work trucks. And a halo brand that sells the dream—same bones underneath, but dressed up with softer leather, shinier trim, quieter cabins, and a badge that tells the neighbors you’ve arrived.
Because let’s be honest: folks spending six figures on a luxury car don’t want to step past a row of bargain sedans and work trucks to get there. They want a separate door. A different smell in the showroom. A sense that they’ve crossed into another tax bracket just by walking in.
Underneath, it’s often the same machinery. Same platforms, same engineering, same bones. But perception carries a premium, and that premium prints money.
It’s genius in its simplicity. Fewer brands. Less overlap. Greater scale. Higher margins where it counts.
So how did GM make five divisions work for as long as it did? A roaring economy. Weak competition. And just enough distance between perception and reality to keep the illusion alive. Until one day, it wasn’t.
And like every small-town parade float that looks fine from the bleachers but falls apart up close, the truth became impossible to ignore. The emperor didn’t just have no clothes. He’d been naked for years.
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This is an excellent analysis, both substantively and in terms of literary quality. I would only quibble with two things.
First, that the hierarchy of brands strategy did manage to work fairly well for decades. The problem was that management — both at GM and other American automakers — started to view the approach as sacrosanct even when there were indications that it was starting to lose relevance.
Second, I don’t see anything particularly magical about a two-brand lineup. My sense is that it would have depended on such variables as total volume as well as the degree of market segmentation during a given era. Perhaps the number of brands was less important over time than the company’s ability to pivot as market conditions changed.
Wow. This is some of the best writing here I’ve seen in a long while. I think part of GMs advantage was their brands had a real organic history, at least if you count Pontiac as an Oakland continuation. DeSoto, Plymouth, and Mercury were all invented brands. Imperial as a pre 1955 top line Chrysler was an also ran, Packard and Cadillac had nothing to fear from it. Also, until safety, emission, and mileage regulations caught up with it GM GM could afford to have each marque develop their own engines and powertrains. Also as these brands had a real nistory there were people with solid brand loyalty. You would have say, Oldsmobile people who would rather eat worms than buy a Buick. IIRC there was a big brouhaha with Olds owners in the 70s that may (?) have gone to the courts as their cars used Chevy 350s instead of proper Rocket V-8s.
It did go to the court. GM lost and paid an award to some people who were sold 1977 Oldsmobiles with Chevy V8s. We owned a new 1978 Delta 88 with an Olds 350, then a 1977 Delta 88 with a Chebby 350. GM added disclaimers to its marketing materials immediately after the public stink in 1977, so there was no further liability for new cars.
Interestingly, the car shown in your banner illustration is a 1966 Beaumont Sport Deluxe, a badge engineered Chevrolet Malibu S/S. This was a model created as a means of allowing Canadian Pontiac/Buick/GMC dealers to offer an A body intermediate seeing as the Tempest line was not sold in Canada. This was consistent with Canadian Pontiacs being comprised of full-sized Chevrolets wearing U.S. Pontiac sheet metal. This is yet another example of GM product proliferation in those times.
Wow – love it! Thank you, Captain!
Cheers to Captain My Captain for a lively reality check.
Five brands were fine for General Motors with 50% market share in fifty states. During the 1960s, Pontiac reached nearly one million sales per year thanks to distinctive styling and creative marketing (ref. John Z DeLorean’s GTO & GP).
Five brands still made sense during the late 1970s, when GM achieved its highest-ever production numbers. Pontiac had faltered, but Oldsmobile became GM’s hottest brand with one million sold each year thanks to elegant styling and sophisticated marketing (ref. Cutlass Supreme’s waterfall grille by Tom Matano).
GM’s market share and production volumes declined steadily in the 1980s due to poor build quality, disastrous reliability and unhelpful dealers, so Roger Smith created Saturn and purchased half of SAAB in 1990 because his customer research told him that none of GM’s brands were attractive to import buyers.
From 1994, Ron Zarella attempted to define seven separate sets of brand characteristics for GM’s product lines, and added an eighth with Hummer in 1998.
GM needed to get out of a hole, but it couldn’t stop digging.
Wasn’t GM also somehow imvolved with Subaru also?
Yes, but Subaru rebadging happened after Ron Zarella left.
Bob Lutz rejoined GM in 2001 and created Saab 9-2X from Subaru Impreza and the Saab 9-7X from Chevrolet TrailBlazer, but sales were
…inadequate to sustain the initiative
These were painful exercises in platform sharing!
Steve, I appreciate you letting another one of my ramblings slip past the gate and onto your pages. Around Fort Stockton, that’s about as close as a man gets to a second cup of coffee without asking.
There will always be arguments about how the mighty fall. Folks will gather their evidence like dominoes and knock them over in whatever order suits their version of the truth. But no matter how you stack it, it’s a shame to watch it happen.
I remember the day clear as a windshield with fresh Rain-X. I walked straight out of the interview where I’d accepted my first job out of college and drove myself to the local Chevrolet dealership. Didn’t even stop to think twice. I bought a brand-new 1981 Monte Carlo. The car of my dreams… or at least the one my checking account and optimism could agree on.
I had waited years for that moment. Five years of work, late nights, and cafeteria coffee that could have stripped paint. That car wasn’t just transportation, it was a declaration. I had arrived. Or at least I had pulled into the parking lot and left the engine running.
Less than two months later, that big plastic woodgrain insert on the dash decided it had seen enough of this world and dropped itself onto the passenger-side floor like a man quitting mid-shift. No warning. No ceremony. Just gave up. In hindsight, that little tumble might’ve been the most honest thing about the car.
After that, every time I slid into that navy blue interior, I found myself crossing more fingers than a Baptist at a poker table, hoping it would start and not leave me explaining myself to another boss who already suspected I was a step behind.
My father, operating a rung or two higher on the ladder, went and bought himself a Buick Riviera with the Turbo V6. A beautiful car, on paper and at a distance. But the problems he had made mine look like minor inconveniences. Within six months, it needed a full repaint. Pieces came loose like they were trying to escape a bad situation. The price was higher, but so was the disappointment.
That was the strange part of it all. Across all five divisions, the cars looked good. Sometimes even great. But underneath, they were built to standards that felt more like suggestions than commitments. Meanwhile, the executives in charge were collecting paychecks big enough to make a rancher blush, all while the company bled market share and argued internally about who got to steer as the whole operation drifted closer to the edge.
And the truth is, General Motors wasn’t alone in that slow march toward the cliff. You can line up the names like old cars at a Sunday meet: Pan Am, Sears, Kodak, Toys “R” Us, Lehman Brothers, Blockbuster. Once mighty, once trusted, all brought low by some combination of mismanagement, short-sightedness, or a stubborn refusal to notice the world had changed lanes without signaling.
Was it inevitable evolution, or self-inflicted tragedy?
That’s the kind of question that doesn’t get settled in boardrooms. It gets worked over at a corner table in the Lucky Lady Lounge, somewhere between the second and third Lone Star, with a little more conviction than evidence and just enough truth to keep the argument alive.
I was glad to have a seat at that table for this one.
Captain My Captain
captainmycaptain.blog
As consumers, we are so easily swayed by new, shiny, pretty things, only to discover that underneath lay cheap or poorly engineered parts, whether it be a toaster or a car. I nearly bought a 1980 Chevy Citation as soon as they were on the dealer lots, lured by the design and early reviews. Dodged a bullet on that one. I was pleased to see you bring up other corporations in your comment as the American car industry has not been the only one to succumb to the idea that cheapening products and services benefits the consumer. Ultimately, even shareholders have paid the price for corporate greed and mismanagement.
It wasn’t all cheapening, some time it was a failire to grasp the opportunity of changing times. Kodak’s business model was to sell inexpensive cameras and make the money on film and accessories. They had prototype digital cameras and a proto-Facebook in EasyShare (which I loved) but it didn’t fit in with their plans. Sears could have been Amason. Hell, they WERE the Amazon of a century ago. Even if Buick and Olds were peas in a pod they could still survive as separate brands as long as stand alone dealerships were around. You may prefer the grill on the Olds 88 or the interior on the LeSabre.
>> Meanwhile, the executives in charge were collecting paychecks big enough to make a rancher blush
The executives weren’t the ones to blame for poor workmanship. The blame goes to the slackers who assembled the cars, all the while the union complained that the workers weren’t being paid enough for their fine work. You could probably include the bean counters for less than adequate components but in a race against the Japanese dumping cars at below cost, they had few choices.
It wasn’t just General Motors. Everyone stopped having skin in the game and demanded too much for too little. A job is not about me, it’s about us. And that certainly needs to include those with window offices. That’s why they’re fretting now about AI and robots taking their jobs. Theoretically, robots will work at a consistent level and for a consistent cost. Then we only have to worry about the diligence in programming them. Which is where AI comes in. We have met the enemy and he is us.
A country is only as good as it’s manufacturing ability and god help us if we need to step up to WWII capacity again.
You’re literally fighting the last war. Modern manufacturing produces much more volume with many fewer people. This is a worldwide trend including the PRC.
Modern US manufacturing has gone from mostly HS grad employees to majority college grads. Operations like feeding sheet steel into presses and laying bead welds are automated, not manual. This has been a 75 year evolution. Traditional manual skills are useful for repairs of physically damaged equipment, but that’s a fraction of the work (either automated or manual) that is performed in building the products. A plan that depends on manual labor to build products in wartime volume is doomed.
Approximately sixty years ago, the traditional divisional structure within the automotive industry began to face significant challenges. The introduction of the Ford LTD was a pivotal event. This vehicle, although a Ford, was compared to luxury brands like Rolls Royce, and it began to compete directly with Lincoln, Ford’s own premium division. This event can be seen as the starting point for the gradual erosion of the clear-cut divisional lines that had previously defined the industry.
The changing regulatory landscape, primarily new safety and emissions regulations and a rather strong not-invented-here attitude only added to the issues that the domestics were facing. The domestics did have decades to right the ship but chose not to. As a result, over the past fifty years—and particularly in the last twenty-five—domestic brands have been significantly reduced, with manufacturers dropping brands at a rate reminiscent of the 1920s.
But I’m not sure that the two-division model is the answer going forward. I think that the future will see the re-emergence of mid-level brands once again. Using the two-division model, if your bottom tier brand is all about practicality and utility how far can you reach up to the upper tier? On the other hand, if a luxury brand tries to move downmarket, it risks diluting its prestige, as has happened to many before.
Japanese companies have found success with the two-division strategy, but, like their European counterparts, they offer only a fraction of their global product range in the United States. For example, the Volkswagen-Audi Group operates ten brands, Stellantis has fourteen, Honda three, and Toyota four. It is also important to note the significant presence of Chinese automakers in the global market: there are roughly 97 domestic Chinese brands and 43 joint venture brands, collectively holding 65% of a market that sells approximately 31 million vehicles annually. However, I realize these brands are unlikely to enter the U.S. market in the near future.
I would have to believe any of these manufacturers mentioned here could start a mid-level brand if there’s a market for it. But like with Volkswagen-Audi Group, it will be a fine balancing act to pull this off, fraught with steep consequences if it’s not managed correctly. Nevertheless, I believe the reintroduction of mid-tier brands remains a distinct possibility.
Manufacturers could also federalize some of their foreign models that could fill that mid tier gap rather than starting a mid tier brand.
Also… I wish we could up vote comments… I would upvote just about all of them on this interesting article and comment thread.
Alas, Indie Auto has an “economy model” hosting service that doesn’t have lots of bells and whistles when it comes to comment technology. I could move up to better equipment if the website generated ad revenue or if it had even a partial pay wall. Perhaps I’m showing my lack of business sense, but I have thus far not taken either step. Such are the trade offs in the small-scale publishing realm.
Very interesting observations, George. There is such a paucity of entry level vehicles in North America and the lines are very blurred between Ford and Lincoln, Toyota and Lexus, among others. Any mid-tier offerings have to be part of very distinct separation of styling, features and power trains. It makes me wonder if, for example, when shopping for a Chevrolet, the dealer will do everything to entice the customer into a Buick on the same showroom floor. Will dealers support mid-tier brands sufficiently and which companies might have the most success with this.
In the 1950s going into 1960, was the only adult in the room of U.S. automakers Robert McNamara ? (Now McNamara was not resolute in this as he did fail to curtail the over- proliferation of models within divisions and brands.) The real problem was that in the showroom, if an Oldsmobile has an interior design feature or options that a was missing in a Buick or Pontiac, the customer or salesperson would push to obtain that feature in the Oldsmobile, etc. (I know because my father obtained several Chevrolets with other G.M. car features allegedly unavailable…anything for a (BIG) sale !!!!!) Chrysler had little of this dilemma as many of its sales were from the “sales bank” where cars were always “built”. In the car sales business, where the goal was to move as many cars and trucks as possible, seldom was heard a discouraging word like “NO”! In 1955, it didn’t matter as much. By 1967, it was TOO late.