GM to Restructure Sales, Service and Marketing Units

General Motors Corp. announced plans Tuesday to reorganize its sales, service and marketing operations, a move expected to result in about 1,000 job cuts and up to $300 million in annual savings.

The streamlining is part of a broad effort to kick-start GM’s stalled restructuring and improve its competitiveness. On Monday, GM said it plans to divest its huge Delphi auto parts unit in a stock deal.

The latest initiative will shift power from GM’s traditional nameplate divisions to a single sales and service group organized into five U.S. regions. GM has been steadily reducing the autonomy of its car divisions since the 1970s.

GM will keep the Buick, Cadillac, Chevrolet, GMC, Oldsmobile and Pontiac marketing divisions intact, but limit their say in crucial product planning and development decisions. Saturn, which served as a partial model for the new structure, is not affected by the changes.

Ronald Zarrella, vice president of sales and marketing, said the changes will be transparent to consumers but will streamline operations, reduce costs and improve dealer relations.

“We will have a much leaner, faster organization,” he said. “This gives us a further competitive leg up to leverage our size and marketing power.”

The reorganization, which has been under study for 18 months, comes less than a week after GM and the United Auto Workers union settled a costly 54-day strike over the company’s push to become more efficient.

The restructuring is part of a long-running effort by GM to trim its dealer ranks and implement a brand management system that targets cars and trucks at specific demographic groups.

Critics complain that the giant auto maker has too many divisions selling too many similar vehicles. The powerful divisions, which compete fiercely with one another for product development and marketing dollars, often fight off efforts to kill poorly performing products.

The new centralized setup should provide a mechanism for making key product decisions in a more dispassionate forum, said Nicholas Lobaccaro, an analyst with Merrill Lynch.

“It’s definitely a move in the right direction,” he said. “It should streamline the process and better allocate the scarce resources for the right product developments.”

Nicholas Colas, an analyst with Credit Suisse First Boston, said the investment community still believes GM needs to kill a division or two, such as Oldsmobile and Buick. “This is a good interim step,” he said. “But it’s not where they need to be.”

GM plans to complete the restructuring by January. It hopes to reduce the marketing work force of 5,000 by 15% to 20%, mostly through retirement, offering enhanced benefits packages to some workers. Zarrella estimated yearly cost savings from the restructuring at $200 million to $300 million. Marketing costs, excluding incentives and advertising, now run about $1.8 billion.

Under the plan, GM will eliminate the powerful posts of general manager for each division. The division heads will be reassigned to new positions by early next year.

Zarrella said the reorganization will mean that GM dealers who sell more than one brand will no longer have to deal with separate sales and service managers from each division. Under the new system, dealers will deal directly with an area manager responsible for all six GM brands. About 65% of GM’s 8,100 dealers have dual franchises.

“This is a big step,” Zarrella said. “Is it the last step? Probably not.”