The Mystery of GMC

I still don’t get why GM kept GMC as part of its core brands. I’m a bit baffled why they kept Buick as well, given that it hasn’t done well in North America (it is a hit in China though). But I can sort-of see a reason for Buick, since it could act as a bit of bridge between Chevrolet and Cadillac. GMC is a total mystery.

Why keep a brand that, except for the Denali trim level, has no models that are unique to the brand? Even the Denali isn’t completely unique: the only difference is the full-time AWD system that isn’t offered on the Chevy siblings. But everything that has the ruby logo on the front can be bought with a bowtie. As evidence:

  • Sierra = Silverado
  • Yukon = Tahoe
  • Yukon XL = Suburban
  • Terrain = Equinox
  • Acadia = Traverse
  • Canyon = Colorado
  • Savana = Express
  • (soon to be discontinued) Envoy = (discontinued) Trailblazer

Its not like the presence of GMC is necessarily adding customers that wouldn’t have bought a Chevrolet. In fact, by having to split some of their sales between the Sierra and Silverado, GM has allowed Ford to hold bragging rights on full-sized truck sales for a long time. There have been years that, had all the GM fullsized trucks been Silverados, they would have outsold Ford.

Instead, GM has to continue the extra costs associated with GMC: extra costs for parts (unique sheetmetal, badging and trim) that they could have saved if they had shut GMC down, the extra marketing costs associated with having TV, web and print ads for both the GMC and Chevrolet products, the slight increase in cost for R&D since they have continue to design 2 of each product, and the extra costs associated with signage and dealer marketing materials.

It all adds up to extra cost, but I don’t see extra sales volume (or the ability to command a price premium) resulting from this. What I do see is that it means GM is competing with themselves, not just Ford, Dodge, Toyota and Nissan. If the GMC versions were to somehow completely differentiate themselves from their Chevy counterparts, then I could see them drawing in extra sales. All I see now is customers playing one GM dealer off of another, and hurting their chances of selling for a potentially higher price, so that the customer can buy a GM product.

To survive, GM has to be able to make a profit off of everything they sell. Increased costs, reduced prices and incentives do not translate into profit. This is a road GM has been down for too long, and they seemed determined to stay on that path. I don’t see that as being a recipe for long-term success.

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