GM shifts auto design gears

After 50-odd years of Pontiac, Chevrolet, Cadillac, Buick, and Oldsmobile, General Motors is ready for a change. Early this week, GM's board of directors voted to divide auto operations into two groups, one to concentrate on large cars and one to focus on small cars. The giant automaker will still sell vehicles under the five traditional nameplates, but engineering, manufacturing, and design will be handled by the two groups. Buick, Oldsmobile, and Cadillac will make up the large-car division; Chevrolet and Pontiac the small-car division.

Analysts don't see eye to eye on the impact of the strategy, which GM has been studying for the past 15 months. Some see it as a way for the company to get rid of model overlap among divisions, reduce costs, and put more distinction into its car lines. Others say it will simply result in one more layer of bureaucracy. At a press conference, Roger Smith, GM chairman, said the change would mean ''faster response to the market, higher quality'' and more distinct cars.

''Go back to why this (decision) had to happen,'' says Maryann Keller, an auto analyst at Vilas Fischer, an investment counseling firm in New York. ''The two sick divisions at GM are Pontiac and Chevrolet. The nature of the problem: Their cars look like the cars of other divisions. In reality, these divisions are supposed to serve the middle-income buyer, which now translates into the small-car buyer. But today larger cars are just out of the reach of an increasing number of middle-income households.''

The GM strategy, should it work, will make smaller-car production more efficient. It will also make these cars more distinct in looks and function, and thus more marketable. ''Since the Chevy is the car that serves the mainstream buyer, presumably it will stress functionality and simultaneously carry the lower price,'' Ms. Keller says.

Thomas O'Grady, who recently left General Motors to head up automotive services at Chase Econometrics, a forecasting firm, notes that the ''overriding motivation (for the new structure) is the cost factor. There is a tremendous amount of redundancy to get rid of. There is the cost gap between Japan and the US. Also, the organizational structure will make (people) more accountable.''

''It will be a tricky marketing process to carry out,'' says O'Grady. But Smith says the change will make GM more consumer-oriented.

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