automotive: June 2009 Archives

General Motors agreed today to sell its Saab brand to Swedish sports car maker Koenigsegg. The move divests yet another brand from once-mighty GM, which sold Saturn to Penske and Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery Company in recent weeks. In addition to GM's dealer closings and plans to shutter the Pontiac brand, the revamped General Motors will be a vastly different firm when it emerges from bankruptcy.

Equally notable, though, is how the divested car lines might fare. Three significant car companies are now held by smaller firms with niche ambitions. This inadvertently trends the auto industry toward pre-1980s merger days, when more small firms had ambitions and opportunities to grow in a splintered market. Volvo, Jaguar, Land Rover, AMC/Jeep, Mazda, Nissan, Saab--all were once independent companies with unique identities. While Chrysler may turn into Fiat USA, many other car lines have a chance to creat unique, compelling products. Expect a more competitive and innovative car market over the next decade as these companies start to differentiate themselves.

General Motors, once the largest automaker in the world, is filing for bankruptcy Monday morning, the latest step in a long process to try and save some of the company. GM, which has taken billions of dollars in government assistance, is expected to need another $30 billion to complete its reorganization.

The bankruptcy process, which should be complete over the summer, will result in the General's closing or selling many of the brands in its stable. Pontiac is following Oldsmobile into automotive history; Hummer is rumored to be near a sale, and in Europe, Opel was recently sold, with Canada's Magna taking the largest stake.

GM's filing comes barely a month after Chrysler announced its own bankruptcy. Chrysler, like GM, received government bailout funds ahead of its bankruptcy filing.

Op-ed: This author, while generally supportive of domestic manufacturing, has publicly endorsed GM and Chrysler's bankruptcies, and hopes Detroit's once-big three will be able to continue a proud American tradition.