Season’s Rantings
By Bob Lutz
GM Vice Chairman
Hello, everyone. The original purpose of the post was to send the warmest of season’s greetings to all of you, and wish you a happy and healthy 2007. But, as usual, there’s more on my mind than that.
So while the holiday greetings from us to you are first and foremost and sincere, I also feel the need to comment on recent talk centering on possible revisions to the government’s Corporate Average Fuel Economy (CAFE) standards. There is now a team of “independent CEOs”, most of them in the transportation business, that has recommended a 4% per year increase in the standard.
My feelings on CAFE are well-known; I’m the guy on record who compared forcing automakers to sell smaller cars to improve fuel economy with fighting the nation’s obesity problem by forcing clothing manufacturers to sell garments in only small sizes.
So it’s no surprise to most that I fail to see the wisdom, or the fairness, in this particular recommendation. For one thing, it puts us, the domestic manufacturers, at odds with the desires of most of our customers, namely larger vehicles that we wouldn’t be able to supply in the numbers needed.
That effectively hands the truck and SUV market over to the imports, particularly the Japanese, who have earned years of accumulated credits from their fleets of formerly very small cars. They can afford to go bigger, which they’re doing now by the way, and they’d be able to move up and fill the segments we’d be forced to vacate.
There is no technological bag of tricks that enables much better fuel economy than we have today. We already have maximum aerodynamics, active fuel management, six-speed transmissions, electric power steering, direct injection, and hundreds of dollars (per vehicle) of other technology that saves a tenth of a mile per gallon here, two-tenths there. Despite what alarmists may think, we don’t have any magic 100-mpg carburetor that we’re holding back because we’re in bed with the oil companies.
We are working daily toward real alternative fuel solutions to reduce our dependence on petroleum, using the most advanced technologies available, and some that haven’t even been invented yet. Stay tuned for the North American International Auto Show in Detroit in January to hear more of what we’ve been up to in this area.
In the meantime, and I’ve said it before, the most effective way to drive market behavior is through the market mechanism; we saw the quick move to smaller vehicles when gas hit $3-plus recently. While I’m not advocating higher fuel prices, we have to face it: The reason Europeans drive very small cars is that gasoline costs so much more. That’s what the market demands there, and that’s what we provide.
Higher gas prices have done dramatically more to reshape consumer buying trends than any regulation. As long as it’s around $2/gallon here, people will exercise their freedom to buy the vehicle they want, V8 engine and all. Forcing us to alter the fleets to hit some theoretical average won’t change what consumers want, or what they’ll buy.
The real way to save fuel is the widespread adoption of bio-fuels, produced domestically, like E-85 ethanol (GM is the world’s largest producer of cars and trucks capable of running on domestically produced bio-fuels) and the pursuit of the electrification of the automobile, as announced by Rick Wagoner in L.A. recently, such as in plug-in hybrids, fuel cell electric cars and other electrical technologies. The Japanese government is spending huge amounts on advanced battery research. It would be nice if our government would do the same.
Chris C
Mr. Lutz,
You are absolutely correct about a gas tax being the most effective tool with which to reduce demand for petroleum. You need to give incentives for the people who use fuel to stop using quite as much. Was very excited to hear about GM jumping to plug in hybrids with both feet, hopefully a 100+ mpg plug in will justify the cost of putting expensive batteries on board, and we can all feel good about using less foreign oil as a result.
noel park
I heard a report on the radio this very morning saying that Toyota is geared up to produce over 9 million cars next year, and potentially pass General Motors as the world’s largest car maker.
It was reported, for about the 100th time that I have personally seen or heard, that this is because Toyota has concentrated on small fuel efficient cars and hybrids, while GM, Ford, and Chrysler have concentrated on SUVs and trucks.
Spare me the response about how Toyota’s SUVs and trucks get worse mileage than GM’s. I am just telling you what the media and public perception is.
Have you noticed that the price of gas is trending steadily up again?
I am a great GM supporter. Our family owns 6 GM vehicles, and no others. I devoutly hope that GM will survive as a viable business. Why else would I even look at this blog? Even so, I can’t help feeling that I am watching a sort of Harvard Business School case about the demise of a great industrial corporation.
Alan
Good article. It’s hard to get backing by our government because it operates differently than the Japanese government. It would be nice if they did take more of an interest of being more “energy efficient” for automobiles, but when you’re backed by oil companies… it becomes an untouched subject.
Alternative fuels is a good concept, but the problem with such fuels (E-85 ethanol and hydrogen primarily) is that you have to distribute it across the nation. E-85 wouldn’t take much modification for fuel stations to add, but hydrogen would require some major modifications - and costly too. Also if you travel outside the US and you drive a hydrogen vehicle, hopefully you can find a station that offers it. E-85 is a better alternative because regular fuel can be used.
The nice thing about plug-in hybrids is that you can use electric power - which is available about everywhere - and use fuel, which is also available everywhere. Electric vehicles are also a great alternative, but better technology is necessary, such as a fast charger (IE 10 minutes), and a longer range.
Keep up the good work… every day will provide progress.
Joe D. Cleveland, OH
Bob,
In Cleveland, we have a certain congressman who shall remain nameless (although, he just announced he is running for President in ‘08 and as such is alienating his constituants who voted for him to represent us) who is more concerned with forcing policy after policy of suffication on everyone, including the auto industry, than on actual legislation that will help our comunity and our country. I completely agree with you, Bob. If consumers want cars that consume mass quantities of dinosaur bones, the govt. shouldn’t be the ones telling us not to. The green peace cry babies have done enough to weaken our country and put us at risk in other areas where we would otherwise be strong in, and I’m tired of it. If our planet is going to self destruct because I drive a car that doesn’t get 278 miles per gallon, tough turkey. There are far more important things to worry about. I wish our govt. would stop medling in stupid stuff like that and get on with serious terrorist a** kicking.
In the mean time, I’ll still be waitng patiently for my 2009 Camaro Z28 6 speed. Although, I just might drive all day in 3rd gear just to spite our govt and consume much more fuel than I need to. I’d always have plenty of power on demand with just a tap on the gas, and I’d save on clutch wear from downshifting. The thing I think tree huggers hate the most is that I can afford it, I like it, and I want it. Call me pompous, arrogent, and all the other things people like to call that kind of thinking…… It’s AMERICAN! And I’m sure you have many more perspective customers with my sentiment.
Rene Curry
These are the same law makers that were asleep at the switch when they let all the big oil companies merge? The oil companies now have the same strategy of sitting on their hands. They have no incentive to capture market share through competitive pricing, increasing capacity, or product changes.
There is more than adequate competition in the auto industry, so I agree the free market should prevail instead of forced legislation.
Regarding existing petrol driven technology, I don’t see anyone doing anything with the wasted exhaust & coolant heat. That looks like a freebie that could add to steady crusing mileage as opposed to present hybrid technolgy that is just stored energy.
James
Mr Lutz,
I understand your frustration about these issues, but it seems to me that you are fighting a public relations battle you can’t win. Facts are difficult, myth is easy.
GM’s biggest mistake was to try to do the electric car in the first place. The regulators were going to kill you for not succeeding at the impossible whether you tried or not. Better to have saved your $1billion and not tried at all.
Fuel economy is still an important goal though, so you need to keep pursuing it. Electric hybrids might be a good idea for larger vehicles, but I bet they aren’t a long term solution.
My own guess is that the ultimate solution to your fuel economy woes will come from light weight frames. I realize you can’t get a tax credit for one, but how much time has GM spent on aluminum and carbon fiber frame technology in the last 10 years? How far would you be along on such a thing if all the electric car technology had been used for light weight frames instead?
I like the idea of changing frame technology because it boosts performance and economy at the same time. Something hybrid doesn’t do very well.
It seems to me that Toyota got all of its credit as a green company by pushing forward on something (electric hybrids) that no-one understood until they were released. The light weight frame may not be the ultimate solution, but if you are going to be ahead of the game, you have to out-inovate the thought processes of your average political leader. Give him something to jump on, and he will lead you in the direction you provide.
James
HotCarNut
I’ll never understand why people think that you can legislate behavior. It has never worked in any political system and certainly hasn’t worked in America. The job of a company like GM is to provide a product to the consumer. The consumer determines the type of product that the company will supply through certain demand signals. In the end, the consumer is the one driving the market and therefore consumer behavior will dictate fuel economy and mode of transportation.
That being said, there is certainly more GM can do to improve gas mileage across the board. Cars have gotten heavier and heavier since the early 80s. I’d like to see research funds at GM turned to alternative materials that could be used throughout the vehicle to save weight. How much of an improvement would you see in fuel economy if you could reduce the weight of the vehicle by 25%? If you’re spending extra for fuel savings, why not get the most bang for your buck? Plus, there is probably a big economy of scale savings that could be realized as most alternative material manufacturing is done on a relatively small scale.
ThriftyTechie
Couldn’t have said it better myself.
Edward Hayes
Merry Christmas and Happy New Year to you too Bob and GM, although I am sure by the time you get this Christmas will have past. So I would just say I hope you got everything you wanted.
Oh, I got I gift for you and I have been meaning to give it to you for a long time. Now you remember how you said leading product development is like conducting an orchestra. Well I want to give you an important gift, the gift of rhythm. How?
Now lets take the Camry. Now it has been on the market for 30 years, now watch this. In that 30 years it had 20 face lifts and 10 complete makeovers. In the next 30 years it will probably have 20 face lifts and 10 complete makeovers. Now watch the rhythm as to how it sounds over the years. BAA is complete redesign bomp is facelift aaa is no changes. Here is the rhythm of the Camry over 12 years.
bomp bomp BAA bomp bomp BAA bomp bomp BAA bomp bomp BAA
Now here is the sound from the Tacoma truck.
bomp bomp bomp BAA bomp bomp bomp BAA bomp bomp bomp BAA
Here is the sound of the LS 400
bomp aaa bomp aaa bomp BAA bomp aaa bomp aaa bomp BAA
Now ask yourself what kind of rhythm or lack of rhythm was GM’s portfolio making in the last decade say for example the Park Avenue. Seven years without a face lift. On again off again, on again off again product development, delays and cancellations dogging important vehicles like the H2. Hummer only has 2 vehicles. And vehicles canceled all together. Now a product cancellation is ooh. Here is what the Park Avenue sounded like.
BAA aaa aaa aaa aaa aaa aaa aaa ooh
Now I’m sounding like Homer Doh.
Don’t underestimate the power of rhythm, rhythm can take shake strong bridges down to their foundations and in fact, it’s Toyota’s rhythm that is shaking GM.
Bob, GM I am telling you, you need to get some rhythm and a constant pattern of consistent development for your portfolio that the bean counters cannot overrule and management will not interfere with.
In short.
While GM’s product portfolio was sounding like turmoil, middle school music class Toyota was shaking everybody down with a constant rhythm sounding like a Beethoven symphony.
(Now for Joe Blogger rhythms and patters may have been exaggerated for simplicity’s sake.)
Chris R
Mr Lutz,
While I agree with your stance on the CAFE issue. I can’t help but notice that the current Cobalt appears to get no better fuel mileage than the 1983 Cavalier I once owned. Perhaps the addition of a few new smaller cars wouldn’t hurt. Opel has a few cars such as the Corsa that would make fine additions to the US fleet and boost the CAFE ratings. Classing the HHR and perhaps if the Zafira could be classed as a truck, adding that to the saturn line would make some improvements in GM’s truck ratings.
Hybrid cars are currently all the rage, I believe that they are a rather short sighted solution. As future battery replacement and disposal issues may eventually make these vehicles undesirable.
Atul
Mr. Lutz,
I agree with you on the fact that people will not buy more efficient vehicles just because you offer more efficient vehicles. They will buy what they want when the price of fuel is low enough. But you also know that raising taxes on gas would never fly in our democracy. That would be akin to taking away a constitutional right. I believe the government should do more to incentivize more efficient vehicle purchase, not just with hybrids. But our current administration is slow to do anything of the sort. Additionally, they don’t seem to understand that the playing field is not level when it comes to government supported research, and healthcare.
I know that it’s not easy to make vehicles get 100 mpg as I used to work at GM and I know what’s involved. There is no hidden bag of tricks that you are holding back. However, you could do some price adjustments and allow people buying smaller engines to option up their vehicles more and not force them to buy the larger engine to get the other options they want. I know that it would hurt profitability and competitive pricing would have to be taken into account, but it would help with CAFE and prevent you from having to offer outrageously low lease prices on efficient vehicles as happened with the 4 cylinder S-10 pick-ups in the late 90’s.
Thanks,
Atul
Ed
Mr. Lutz,
GM shouldn’t have stopped making full electric cars, people loved those ev1’s they had leased. Almost all of the people who commute only travel from work to their home which is enough for an electric car to handle, plus having loads of torque at anytime is great when you need the extra power. I know GM will have something up its sleeve to handle the Tesla Roadster and when you do don’t leave out the Midwest I would like to see some vehicles here to buy or lease.
Beaugrand
I have to disagree again with the suggestion to raise fuel taxes, UNLESS those taxes are used solely for transportation spending- that is, road construction and maintenence, or mass transit improvements. I shouldn’t have to say that’s an unlikely scenario, given the Federal government’s appetite for taxing and spending.
Taxing fuel is akin to taxing fattening food- yes, it would probably be very effective, but it’s political suicide. Can you really see a Senator or Representative running on a platform of raising fuel taxes? Regardless of how much the entire auto industry could afford to contribute to such a campaign platform, it simply wouldn’t make up for the lost votes. (I’ll change my mind when I see Bob Lutz running for the Senate on such a platform.)
I propose an alternative approach: spend more advertising dollars on the highest-mileage GM products, and less on the lower-mileage models. I can’t help but notice that most of the GM advertising I see features SUVs prominently. If you need to sell 4 Aveos to equal the margin on a Tahoe, spend 4 times as much on advertising Aveos as on Tahoes. Some objective, side-by-side comparisons in operating costs (SUV vs “economy” car)might help consumers decide which model serves their needs best.
Finally- I think you missed a bet by not offering hybrid options on Cadillacs FIRST- as others have noted before, many hybrid vehicles share driveway or garage space with very upscale vehicles (including, to my personal knowledge, at least one H1 Hummer). Economy doesn’t only appeal to the “entry” market, in some upscale circles it’s considered “chic” to roll up in an efficient, “green” vehicle.
AD
What a messed up nation we live in, silly CAFE standards that really have no value except in the political arena and then states go off and subsidize manufacturing operations for Toyota and Nissan to build full size trucks. As if those tax breaks aren’t posible with out any federal revenue sharing.
We as a nation are competing against ouselves and helping to fund the other side.
IMO, the deal isn’t the price of fuel going up, it’s the value of the dollar going down. How does that happen? People here don’t bother to defend the value.
joe l
Mr Lutz
You US auto companies have fought fuel economy for years, it almost bankrupt GM. When are you going to face the fact fuel is not going to be cheap anymore. Have you not noticed that your gas guzzler trucks sales rise and fall on the price of fuel. Wake up and smell the roses, if not the auto companies will pay the price. As far as the gas tax goes, we all aren’t rich like you, it is obvious you only care about the rich. There are people that have a problem going to work and paying high gas prices, maybe even trouble putting food on the table. Happy Holidays.
Beaugrand
I had some additional thoughts after my first post:
What we need are STABLE fuel prices, not higher prices from excessive (and ultimately wasteful) taxes. Simply adding more taxes would raise prices, but would not stabilize them. If tax revenues were retained in a dedicated “National Fuel Revenue Escrow Fund,” the fund could give consumers a rebate at the pump (actually, the rebates would be paid to the fuel retailer, who would simply leave his pump price at he stabilized value) when prices spike, thus stabilizing prices.
Prices (at the pump) could be allowed to rise gradually in response to actual market demand (say, 4% a year?) rather than fluctuations in commodities prices or supply-line issues.
For example, with gas pump prices presently at about $2.50/gallon, the “stabilized” price could be $3.00/gallon, thus putting $0.50/gallon into the NFRE fund; when, a few months later, the “unstabilized” price spikes at $3.15/gallon, the fund would actually pay out $0.15/gallon to the retailer, who would still be selling at the “stabilized” price of $3.00/gallon.
Not a perfect plan and I’m sure many here will be poking holes in it, but the bottom line is, we need STABLE fuel prices, not simply higher taxes.
——————————
As far as raising CAFE standards- they have been unchanged for a dozen years. The 2006 models get the same mileage as the 1994 models- you’ve had 12 years to work on it, and nothing to show for it. Storage lots full of unsold, inefficient vehicles in the past months haven’t convinced you to act, the consumers have spoken with their money but you still push the gas-guzzlers, it’s time for some outside pressure. 4% a year is too much? Okay, how about 3%? 2%?
ANYTHING is better than the ZERO we’ve seen the last dozen years.
john
Bob,
I agree 100% and I don’t understand why everyone wants tiny cars. The Impala gets great gas mileage and is safe. The Cobalt gets only marginal gains over the full size Chevrolet.
Have a great and restful holiday. You deserve it.
P.S. Malibu is beautiful.
Ken
Hello Mr. Lutz -
Happy Holiday’s ! I just drove my ‘05 Impala LS from Detroit to North Carolina and back and got 30 m.p.g. on the highway while averaging 70 mph. I’m very pleased with that given I had 4 passenger’s and the trunk was loaded ! I also own an Envoy XL for the family that gets about 14 mpg in town, 19 on the highway. I don’t want to drive a tiny car like they have in Europe, smallest I’ll ever go is a Cobalt sedan or HHR sized vehicle. Your analysis is absolutely right on. As a consumer, my choices drive the market. I choose to buy larger vehicles becasue they meet my needs, and more importantly, my wants. That’s Economics 101. Keep up the good work in ‘07, I’m anxiously awaiting the new Malibu.
John
The price of gas is a major issue but it also is a red herring.
I have owned 25 GM cars in about 40 years. My 1st Corvette in 1974 if I recall new was about $5,000 where as a base model today is $50,000 !
Your allowing the non American nameplates to use American marketing to make the public believe it is a fuel cost issue when your not doing your own marketing to show where you were and were you are now.
That 1974 Corvette got less then 10 MPG.
My 1999 Corvette ( not stock) has 3 times more horsepower but gets 32 MPG and that is with fuel injectors twice as large as what came with a stock 1999 and even has lower overall gear ratio, yet this 1999 Corvette in race trim has done over 220 MPH when it has to.
GM has sold itself short, your not showing the then and now compares and your not showing that American cars are in a different world then lets say Japan where yes they now have V8 engines but try and buy a model with one in their country or the fact here in the USA as I have many times driven round trip from coast to coast changing greatly in weather, road conditions and elevation changes.
We do not live on a island and our requirements of our cars are greatly different then those who rarely drive a few miles a day in 30 MPH zones.
Saving money on gas with a small car looks good but GM failes to add the costs that smaller cars with smaller engines in this country do not last anywhere as long as American cars that last much longer and thus have to be replaced less often so the overall functional costs are lower.
GM’s problem is they do not show themselves as a customer’s friend. GM gives away all types of cars and trucks to pro sports people, big shot TV people, etc but ignore the common long term customer
I have bought 13 Corvettes, add up the sticker prices for them. When has GM even told me Thank-You much less gave me a car for over 40 years of handing over my hard earned money ?
In the end you really think I would in a choice buy a Japan nameplate to save a few cents on gas over driving in comfort with a 400 HP powertrain American car that has over 50 years of proud American history ?
Paul
Forcing us to alter the fleets to hit some theoretical average won’t change what consumers want, or what they’ll buy. - Bob
Like many people, you are ignoring the interplay of advertisements and psychology in the market. Nobody makes a decision in a vacuum, nor is every decision rational. If you tell people every twenty minutes that GM SUVs are tough and dependable, people are going to assume that they’re tough and dependable.
Second, I don’t think that cars and clothing are a good comparison. CAFE standards are broken, but fuel economy standards in general are a good idea.
Other good ideas for making sure people pay for the externalities of their purchases are things like feebates, where the cost of rebates on efficient cards is offset by fees on less fuel efficient cars.
And another good idea would be to offset the gas tax increase with a decrease in the payroll tax. And I also think that the best place to apply a tax is at the point where the petroleum enters the country, since burning petroleum of any kind is the problem, not the type of petroleum being burned.
However, I’m still waiting for a compact, four door hatchback from GM that can match the fuel economy of other vehicles in this segment.
Edward Hayes
Oh, somebody is working this weekend. Okay how about this.
What if McDonalds was run like GM. Guy walks in and orders a Big Mac fries and a shake.
“I’m sorry sir we no longer sell the Big Mac.”
“What do you mean?”
“Well sir everybody wants low carb food now, and thin is in fashion so you can have a veggie burger or turkey burger…
“Sir, sir where are you going, you still want your fries right?”
Next customer
“Yeah, let me get uh McNuggets 6 pack happy meal and a supersized Quarter pounder meal.”
“Sorry sir, we no longer serve super sized meals, they have too many calories and the happy meals have been discontinued, they have a stigma associated with soccer moms.”
“Sir I did not mean to call you a soccer mom, oh”
“Yes, ma’am may I help you.”
“Yes let me get a number 3, 6, and 7.”
“Okay ma’am we no longer offer the the 7 its been combined with 6 and I can get you a 2 and a half it’s similar to the 3.”
“Well let me just skip to dessert.”
“Okay, but we only have one type of dessert now to cut down our costs.”
“I’ll take it”
“What kind of package is this”
“Oh it’s a Pizza Hut cup we are out of ours. They are going to be moving in with us to help sales. You don’t mind.”
“Alright I am out of here.”
“Ahhh, Manager Tom, I think the customer is abandoning us and I am not sure why?”
“The customer responds, we did not abandon you, you abandoned us.”
Let me ask GM, you are not planning on abandoning your Trailblazer customers or your GMC Jimmy customers?
Well I had the same argument with my co-worker but it ended like this when I said…
“You know the same person that thought customers could not distinguish the difference between truck platforms and car platforms is now saying the customer will abandon en masse, the truck platform for crossovers.”
Still Toyota has the answer as the 4 Runner does peacefully co-exist with the Highlander.
In short.
Product continuity. No don’t keep 6 versions of the Trailblazer, but don’t cancel the redesign of the #1 sport ute.
We have to get it into the mindset of Detroit that Trailblazer is a brand just like Big Mac, Taurus is a brand just like Tide. It is not so much about Chevy or Ford to these consumers.
You abandon them, they will abandon you.
Andy
I am a firm believer in capitalism; but much like democracy, people may have great liberty, but it doesn’t mean they exercise it with the best judgment. It makes no sense for so many US drivers, even with their families, to own full-size pickups and sport-utes. It is one thing if you live out in the rural country with a large family to own a Chevy Tahoe or a Silverado, but it is another for a twenty-something single guy living in an apartment in the middle of Los Angeles to be cruising around in an Avalanche sport-ute/pickup making 16 mpg overall. It is his right to purchase whatever automobile he wants, but it doesn’t mean it is a sensible one.
I am surprised by how many intelligent responses there have been to Mr. Lutz’s column. The whole CAFE system is flawed. I do enjoy this avenue, but if it means the more cars with better mileage and less fuel consumption on the roads, then very well. I don’t like the system, but it is evident that our country’s automakers are not doing enough to reduce energy demands. This is somewhat of a repeat of the 1950s, when safety was not on buyers’ minds, but glamour and luxury were dominant factors in consumer purchases. Safety came into light in the 1960s, and rushed in with a vengeance in the ’70s with hard government enforcement.
I have mixed feelings on an increased gas tax. That would assuredly reduce the purchases of gas guzzlers, but it would hurt many people. My uncle is a courier who uses his own vehicle for transporting supplies. A gas tax that would raise the per-gallon-average to $3.00 would run a considerable number of couriers and private transportation services into financial ruin. It’s also important to know that in our democratic republic, such a measure would not occur. Few lawmakers, state & national, would be willing to pass such a measure.
The difference between Honda, Nissan, and Toyota (Japan’s big three) and Ford, GM, and Chrysler is that the former are not dependent on full-size V-8 pickups and SUVs. That is the simple truth and the ultimate point. Chevrolet, Dodge, Ford, GMC, and Jeep have an overwhelming percentage of their vehicle production owed to medium- and large-size trucks. That is an inescapable fact. While GM’s new full-size pickups and SUVs are being lauded, its smaller trucks continue to leave a lot to be desired. I know: I owned an S10. It was a reliable vehicle, but the mileage was unimpressive, the power low, the handling weak, and the cabin poor. The Chevy Colorado (and GMC Canyon) rank far behind the Toyota Tacoma and Honda Ridgeline in magazine comparison tests. The same goes for the Chevy Equinox and the Saturn VUE in comparison to the Honda CR-V, Toyota RAV4, and Subaru Forester. GM should put the same amount of effort in refining its smaller trucks as it did with its larger ones.
One more note: GM has spent the past few years having to heavily discount these big vehicles to get people to buy them. GM management has to understand the principle of supply & demand. It is a cornerstone of capitalism. If you’re having to slash $4,000 off the price tag of vehicle to get someone to consider buying it, then you are not offering what consumers want–at least, not in the proper quantity.
André
As said before, the solution for the gasoline problem isn’t E85 or E100, but making a fuel able to be used by existing engines without modifications. And this fuel is butanol, which can be used in all cars that run with gasoline and can be obtained from the same fonts of ethanol. Look at http://www.butanol.com and see which car they used without altering the engine. What I can anticipate is that the lab on wheels isn’t anything with variable cams or manifolds or any kind of modern techs which could make any kind of very fine tuning.
Da Fonz
Mr. Lutz,
Maybe it would help quiet the critics if you were to put some technical data on this blog.
A table showing the trends over 20 years like average powertrain mass going down while horsepower goes up.
And a vehicle content increase listing would be helpful. I’m getting tired of people complaining that the cars today don’t get any better than the cars did 20 years ago. All the while they overlook all of those WEIGHTLESS content additions.
Power windows, 8-way power heated leather seats, full frontal & side air bags, anti-lock disk brakes, 3 more transmission gears, air-conditioning, 6-disc CD changers, 7/9/11 speaker sound systems, sound insulation, thicker glass, side impact protection, etc., etc., etc. I’m quite sure that the WEIGHT of all of this additional content has no impact what so ever on FUEL ECONOMY (yeah right).
Ted
Bob,
I am not sure what the answer is. But I think a few ideas worth considering:
Diesel-Electric: Electric car with diesel motor recharging batteries.
Electric Muscle Car: Why’d you let a small company beat you to it?
Plug-In Hybrid: I’d buy one of these if I could use no gas on my 50 miles a day.
kurtW
Bob, it is appreciated that GM as of late is trying to produce better engineered and assembled vehicles.
But would GM really try to build fuel efficient cars if there were no “government incentives” for fuel economy?
The tradition for USA makers have been to complain and fight the rules every step of the way, while the foreign carmakers simply build vehicles to meet those rules.
Bob, please accept once and for all the days of el- cheapo oil are over. It would be gratifying to see GM rise to the challange and offer us customers a wide range of choices!
Kelly O'Brien
I’m sorry, I don’t buy any of this claptrap. It’s not about CAFE standards or Gasoline taxes. It’s about long-term business strategies and decisions to realize the plans that come out of such strategies.
GM KNOWS how to do low emission, highly efficient and safe vehicles. The GM Unltralite concept vehicle was introduced in 1992. That’s 15 years ago.
Recently, you’ve tickled our fancy yet again with HyWire and AutoNomy… absolutely Japan-killer concepts.
Yet, these things remain as such. You have incredible engineers. But your suits made, and continue to make, the business decisions that got you in the fix you’re in now.
And if you don’t change, and change rapidly, then you deserve to be a victim of what Schumpeter called “creative destruction.”
That’s a economic principle arrived at by observing business. It’s not a government regulation favoring, tree-hugging, lefty tax-imposing, social-engineering, don’t tell me what I can or can’t do point of view.
It’s business, pure and simple.
So, lead, follow or get out of the way.
motorman
it was just in the press last week,smaller cars mean more highway deaths. i would rather pay more for fuel than have to cash in a life insurance policy on a family member. people buy imported cars because of perceived reliablity not fuel milage or they would not be buying the large cars these companies sell
Gerry
Corporate average fuel economy is a silly idea, but Mr. Lutz’s defense of gas-guzzlers is a lost cause. GM needs big truck sales: Honda and Toyota don’t. GM doesn’t made good small vehicles. Can you compare a Chevy Equinox to a CR-V? A Cobalt to a Civic? You can, but the outcome isn’t nice when you read magazine comparos. What’s with the Impala looking like a knock-off of the outgoing Accord? And Hummer? Lutz has charisma, I’ll give him that, but that’s not going to save General Motors. The big SUV boom is over, Bob. Sure, people will buy a V-8 truck when you slash 25% off the MSRP.
Andrew
Mr. Lutz;
You say “The real way to save fuel is the widespread adoption of bio-fuels, produced domestically, like E-85 ethanol (GM is the world’s largest producer of cars and trucks capable of running on domestically produced bio-fuels) ”
You seem to oppose government intervention where it hurts (CAFE) but favor it where it helps (taxpater subsidies of ethanol, mandates for E85).
Ethanol costs about twice as much per BTU and takes large amounts of fossil fuel to produce. As a taxpayer I don’t want to pay 51 cents per gallon so a few large-SUV owners can get 11 mpg “saving fuel”
absent.canadian
Bob, the problem - as several other people have alluded to - isn’t the government.
The problem is that the big three have staked their reputation on large vehicles (particularly SUV’s). It’s fine to offer the Big Mac, but you better have some more responsible alternatives. And I’m not talking about midsized rental cars like the Impala; I’m talking about a truly viable collection of smaller vehicles that will appeal to your youngest generation of car buyers.
Here’s an idea: scrap the Cobalt. Don’t even give it a farewell party; just drop it off the radar altogether. Design a small hatchback/sedan combo that will actually compete with the Honda Civic, the Volkswagen Golf/Jetta, and the like.
Remember GM’s old formula: get them with a Chevrolet, and let them move up through the nameplates. Pontiac, Buick, Cadillac, etc.
Listen to the buying public. Look at the numbers. The answers are staring you straight in the face; the only thing we’re wondering is if anyone is listening at GM?
krivka
Mr. Lutz, is GM selling snake oil again? You sound like a huckster from an old traveling medicine show.
Why don’t you stand up and tell us why Toyota can put up a car like the Corolla and the Camry, while your company wastes OUR money developing TRUCKS so people can carry STUFF. Yeah, so many of your trucks are bought by people in the trades, sure! You know the reality of the situation as well as anyone. The US consumer is loosing purchasing power by the day, yet your company continues to put out 30 grand trucks that get 13MPG. Smart move! Yet in a year or two you will be crying that you didn’t see the sucker punch from the US consumer coming when Toyota becomes the NUMBER 1 car maker on the planet. Do you see Toyota wasting billions desingning a line of trucks with the dazzling number of configurations that you or Ford do? No they don’t, and neither should you. You said that Toyota can put in a truck and still get under the CAFE numbers because of their SUCCESS in building and selling VERY RELIABLE AND INEXPENSIVE CARS. What a concept! Maybe your company should think about that. Why do we prefer Japanese brands? (made in America no less)
The answer is value. A smart car buyer realizes that you own the car for five to seven years and the costs of ownership of your vehicles are in ssome cases three times higher over that period. YYour company is pretending to be a car company, get real, quit blaming the government, what are you going to do when nobody buys you cars anymore? Blame the consumer? You sound like an owner of a baseball team that won’t get the players it needs until the fans come out. You relly surprised me with this post. But I see your loyal following posting up to support you, so this one won’t make the cut. Too bad. You company needs a good kick in the pants and you sir, should be making more cars that consumers want to own, not just buy.
Time for a change in attitude.
Barry
Bob,
It isn’t going to win any converts complaining that your bloated company can’t make any money selling small cars. Especially when Honda and Toyota do it. And do it while building them in the US as you move your factories and supplier base overseas. Yes, yes, I understand the healthcare issues. But, they wouldn’t be as severe if you didn’t lose 50% of your market share, thus making the per unit expenses significantly higher.
Now, Toyota sells a car in Japan about the size of the Aveo which gets a combined 65mpg while the Aveo gets less than the Chevette of thirty years ago.
The auto industry is so backward and open to change. Innovation is not a strong point. Even of Toyota or Honda. Your industry is very insular and forcing cafe standards on you is no different than what China or Japan or Europe is doing. Yet, are you complaining to their regulatory bodies and openly whining to their consumers? They’d dump your products if you did so. (Funny cafe standards in global markets are 2x what they are in the US yet you seem to be able to abide by them.)
Get innovative and quit complaining. There are many solutions to better your cafe standards today and there will be even more in the future. I see Honda and Toyota working on them. And, I see Toyota’s CEO saying the perfect car should get great fuel economy. I agree. I don’t like whiners. Your industry and its resistance to change is, in large part, why we are in the Middle East in a bloody war.
Jon Baker
Give us a break Bob.
First General Motors goes after the supply base wringing as much as you can from them and then throwing them away like a disposable item. It doesn’t matter that costs are going up, you demand cost cuts or else the suppliers lose business. GM gets to raise retail prices several times every year, why don’t your suppliers get the same opportunity for fair treatment, based on market price conditions?
Now you want a hand-out from Uncle Sam (i.e taxpayers)? What will you give back to the taxpayers in return?
It is time for GM to take a leadership position and make some real investments in your future, using YOUR money - don’t you think?
No other company in the US expects handouts from others like you do. Sure there are tax incentives, but you guys take it to a whole new level.
Is GM still in the business to produce automobiles and trucks or have you all just become professional beggers?
Chris R
I have to agree with Barry. Quit whining.
Part of GM’s probem is the corporation has never been totally reorganised back into a car company after the brand management fiasco. It dearly needs it as I believe that there may still be to many people in the wrong positions, and to many positions in the offices that have been invented, but aren’t actually needed. Get the marketing people back to the marketing department. All of them. Then hire or promote executives that actually know how a car company should be run to fill out the proper management roll. I think that once GM has the proper people supporing you with the proper structure, perhaps similar to what you were able to do at Chrysler, then GM will be more flexible, and faster to market with products that people really want to buy.
Tracy
Mr. Lutz, I really wanted to buy a new vehicle in 2006. I did not because I could not find any at a reasonable cost whose gas mileage was as good as my 98 Saturn SL2 (38 mpg on a good day). I literally cannot afford to sell this car. The Aura comes close but creature comforts do not yet tip the scale in its favor for me as I have a low maintenance, low cost vehicle that gets better mileage.
smj
Your statement “forcing automakers to sell smaller cars to improve fuel economy is like fighting the nation’s obesity problem by forcing clothing manufacturers to sell garments in only small sizes.” is a strange one. Obese people do not directly threaten the environmental balance which sustains life on this planet. Taking measures to cause the US auto industry to face a reality which it apparently would choose not to if its hand was not forced is justifiable.
A Smarter American
Mr. Lutz,
Greetings, happy holiday wishes and I wish you all the best in the coming new year. Here’s my commentary for the American auto industry, take or leave it, I’m really not that concerned. I represent what is probably one of GM’s prime demographics - born and raised in America, 48 yrs old, well educated, married, 3 kids, and a combined income well over $100K. However, our family doesn’t drive any GM or other American-made cars. We won’t even consider buying another one. Want to know why? The first reason is marginal quality and reliability. Yes, we’ve heard all the marketing buzz about professional grade vehicles, quality is job one and that American car companies have improved quality. However, when it comes down to the reality of day-to-day vehicle ownership, American-made vehicles still proudly wear the badge of the highest TCO. Parts and systems that should last the life of the vehicle with regular maintenance, fail regardless. After 100k miles, American cars are just tired and worn out and the resale value is poor. Second, low gas mileage, an attribute you are evidently fighting to preserve? Although I could easily afford to feed one of GM’s beastly large trucks or SUVs, I choose a wiser path. I would prefer to spend that extra gas money on say our family vacations or save it towards my children’s educations so they may too be able to make smarter choices when we are no longer around to guide them. Just so you know, we all own and drive Honda products. They are safe, don’t break down, and I’m sure you are aware of the gas mileage comparison. Just thought you’d like to know we’ve owned GM products, Chrysler products, and Ford products and they have all fallen well short of our reasonable expectations. We just don’t believe it is prudent to commit another $20k to $30K in resources to give them another chance. Mr. Wagoner is right, GM needs to build vehicles people really want to buy. However, after years of experiencing American-made mediocrity and planned obsolescence, GM may find it extremely difficult, if not impossible, to win folks like us back.
Andy
Bob,
I like GM and really want to invest in your future. The problem is - I am so upset by your brand choice and investment options that I can’t bring myself to even consider your stock or your vehicles. Here are my thoughts:
1) dump the Hummer - I don’t care if it’s making you a lot of money. It essentially snubs your nose at the environment and invalidates anything you say about being pro-environment.
2) if you don’t like the CAFE standards, then innovate ahead of them. Somehow Toyota and Honda have been able to create a more fuel efficient car than anyone in the US. And this year, the Prius will be one of Toyota’s top 3-4 cars sold.
3) get a hybrid on the market, especially one that doesn’t just use the hybrid technology to offset a huge engine. offer me a car that actually gets good mileage.
CAFE standards are going to come whether you like it or not. Your options are either to pro-actively address the issues or be dragged into the future kicking and screaming. If you could find a way to inspire the american people with your vision for the future that takes into consideration the environment and improving fuel efficiency, I think you’d do wonders for your public relations (and stock price). But your original post is not the answer.
Until then, I just see you as a bit of a luddite. Sorry.
T. Taulbee
Mr. Lutz,
I have been a loyal GM customer for many years starting with a 1978 Camero and then a 1987 Firebird both with a big V8 engine. In 1996, I switched to your Blazer as the dual functionality (Car and Truck) of an SUV greatly appealed to me. In 2002, I found myself in the market for another SUV. I greatly wanted to purchase a new blazer of GMC Envoy, but the fuel economy was lower on the new SUV’s compared to my 1996. I just could not justify going back in time on fuel efficiency for more power that was not needed. As a result I purchased a good used 1999 Blazer that had the same published fuel economy as my 1996. I have been driving this car ever since. Last year started thinking about replacing my blazer with another SUV. I was incredibly disappointed to find that the only viable (good fuel economy) SUV for me to purchase was a TOYOTA! What happened to the American manufacturers? Where are our choices? The Ford escape is a joke with it 500 lbs max towing capacity.
I am currently negotiating with the Toyota dealer to purchase a Highlander Hybrid since GM does not make a Hybrid SUV. Note, your Saturn Vue is not an SUV in my opinion and is one of the ugliest vehicles I have ever seen. Why not put the hybrid engine in the Blazer? I like the body style of the Blazer, the Envoy, and love the Buick Rainier. What is the problem? Even if it would only get 25-27 mpg compared to Toyotas 31, the improvement over your traditional engines would enable you to maintain a greater market share.
I disagree with you analysis that as long as gas is around $2 a gallon people will continue to exercise their freedom and purchase large SUVs. In my experience the only reason people have continued to do so is that this has been the only choice the car manufacturers have given them. (note I wanted a new SUV but couldn’t get a GM one with reasonable fuel economy). Thus most consumers probably weigh the benefit of the dual functionality of the SUV versus the fuel economy and as long as gas remains around $2 a gallon the benefit outweighs the additional fuel cost. In my opinion this is a dangerous gamble you and GM is banking on. I strongly suggest you start putting more fuel efficient SUVs on the market.
I feel it is the American car manufacturers who have let the American public down. While I greatly despise Congress for intruding on our free markets, I actually think the increase will help your company and other American manufacturers do what you should have been doing the past several years. It is going to be painful in the short term because you are losing customers, but many of us will return to buying only American made cars if you put more fuel efficient vehicles on the road.
Fabrice De Clerck
Thanks for the comments Mr. Lutz, I actually learned a lot from your perspective - and realized that its not that GM does not support smaller more fuel efficient cars, but that you disagree with the mechanism by which you are being made to comply.
I do want to say however, that this should not be new news, we’ve know since the 70s that fossil fuels are limited, and the growing instability in the middle east probably means that this situation will only get worse rather than better. GM touts itself as innovative, we need this innovation now more than ever, and GM needs to become a leader again (the Japanese now seem to have snagged this title).
Its also increasingly evident that global warming is not a farce, but is quite real, so no matter what American consumers are willing to buy, it simply has become unethical to sell and produce vehicles that with such poor gas mileage. If GM wants to be a leader, I think that the direction and the path are quite clear.
Thanks again for making this blog available, I found it very informative.
Bort Simspon
Mr. Lutz,
Sorry you and your chronies are getting smacked with this news. But in all fairness, if you didn’t see this coming then you and your underlings are fools and GM deserves to take a big hit for poor planning.
Just because the Japanese saw this coming and worked toward it years ago and are reaping the rewards doesn’t give you the right to call foul.
All this tells me is that the american automakers are truely behind and incapable of thinking more than a year ahead.
I’ll agree there are no magic engine parts to reduce fuel consumption, but that statement obviously shows you are incapable of thinking outside the tiny box you exist within. Think beyond the engine Bob. Technologies DO exist that would allow consumers to drive far more efficient trucks and SUV’s without a rediculous increase in vehicle prices. Light weight structures that are made from advanced recycleable composites, deisel electric hybrids, and on and on. I for one know for a fact you have seen these technologies and are too concerned with your bottom line to pony up and buy in in order to reap rewards 5-10 years down the road. You’re losing money as it is, might as well be losing money investing in technologies that will save your bottom line in 10 years by providing a product that gets significantly better fuel economy. Sales of the Prius and other hybrids clearly indicate a market is there, too bad GM is so late to the game. Now you want to cry foul because you’re too timid to admit you put your eggs in the wrong basket, you chose to make a quick buck on a dying market rather than buy into something much more profitable 10 years away. Bad move Bob. Time to play catch up.
Suck it up, invent in lightweight and fuel efficient technologies, and save your whining for when you are crying to the board for your high six figure bonus.
Over and out,
B
Bob Nixon
I am sad to see the demise of the Big Three.
It seems I saw the first installment in the 70s.
Darwin had it right, survival of the fittest.
We should not expect the Three to evolve, we should be realistic and accept that they will go extinct.
Oh sure, for a time, government will seek to bail them out, reinforcing their lack of ability to evolve.
Too bad really.
Dustin
I think that the bigger point is being missed here. GM has fallen way behind their foreign counterparts. The Japanese are making far better automobiles and at a much cheaper price. Fuel efficiency has never been a point that GM has taken seriously and now they are paying the price for it. There are technologies out there that can completely replace oil powered engines but GM won’t go after them (HHO for example). I, for one, am sick of hearing GM complain about losing market share when all they have done for the past 10 years is put out the worst rated products on the market.
For once, the government has stepped up and taken the correct steps to effectively reduce emmisions and fuel consuption. The only thing that they need to change is eliminating any prior credits. Everyone should have to start at square one.
Kevin Milner
In reading the varied responses to the message, I feel that there may not be one correct answer but many different ones dependant on customer needs and uses.
There will always be the buyers that want top fuel economy. Give it to them as they want it. Small cars, diesel, gas or hybrid will answer their request. Electric will be a small player in the mix, but for a get dad to work or short shopping trips type of use, it can fill the bill nicely. I know that as long as i get there, safely with heat or ac comfort, I dont really care what the propulsion system is. As do many of my co-workers. We need a longer distance, larger vehicle for normal family duty, let me buy one. I have to pay the fuel bill, let me decide what I am comfortible with both expense and vehicle size-wise.
Now, lets get onto the EPA milage estimate situation. EPA, the same people that test for emissions also uses the same information to come up with the “your milage may vary” fuel milage numbers that must be put on the window sticker. That test is to squeek one by the emissions. Of course it is going to use as little fuel as possible. Get the real world numbers out there so we can see them. Scare us now, but dont piss us off when there is no way, shape or form will I ever get this the EPA estimated milage put on the sticker. I know I get hit hard many times a month when people cant get 20 mpg out of a Denali with a 6 liter engine. But we keep selling them. Average is 11.5-12 mpg.
Lets force the oil companies hands to get us nationwide availibilty of E85. We can start to reduce dependance on foreign oil. Follow the lead of Venezuela and not import oil. The imports are not touting their E85 cars if they have any. I have not heard of one.
As for the product cycle, I agree. Why do we build the same vehicle for 8-9 years? Most import cars have a 4-5 year cycle. Make it look fresh and inviting. Change the front and rear ends so you know what year the car is. Then change the car once every 4-5 years. What fun is buying a new car that looks just like the old car but maybe a different color? Do the neighbors notice? What fun is keeping up with the Jones’ if we have nothing to show them? The neighbors and co-workers watch these things.
Oh, the fuel tax. Don’t we need to keep the roads in shape? The transportation trust fund that was set up in the 50’s ran out years ago. The highways were to be self supporting by that time. We need the tax money to fix and build new ones. When the gas prices went up, many states cut the tax amount down. What since did that make? Let’s use the money for what it is meant for. Not worry in 5 years why we cant fix the roads.
All in all, GM has come a long way. Keep going forward and the plans will work. Build what the people want & they will buy it.
Karl Hodgson
What a lot of bunk. electric cars could be built right now with new battery technology and go for 300 miles between charges. GM and the oil companies(Bush etc.) lobbyied against it and promoted hydrogen which is ridiculous and way off in the distant future. electric hybrids are possible right now. I worked in Brazil at GM in the late 1980’s and my GM made company car ran great on 100% ethanol as did every other vehicle in the country.
realist
More importantly, Lutz seems content and is almost admitting that GM is giving up the truck and SUV market, instead of actually working hard and improving fuel economy amongst trucks and SUVs. Such an attitude is very concerning, considering the amount of problems GM has right now. GM is in absolutely no position to be having a complacent attitude.
Dan C
Dear Bob
US automakers has already been steadily handing over market share to the Japanese and your just realizing this now?!?!
How many years has GM had to get their act together so that they can stay on top? Its 2007 and still piss poor results. Obviously the Japanese are doing something right. Oh well, I guess what Winston Churchill said was dead on “Americans will always do the right thing after every other option has been exhausted.” Do the right thing and you will succeed.
Anthony Keck
Mr. Lutz,
Although I understand your desire for self-preservation, your arguments are pretty weak:
1) Big doesn’t always mean low MPG. Diesel, hybrid, alternative fuel, and smaller engines in bigger vehicles can all increase MPG. As for the argument of what a hard sell to the American public this is - your marketing department has convinced us to buy some pretty boring vehicles over the years - couldn’t they redirect some of the magic ?
2) Although SUVs/large cars/full-size trucks may be profitable per unit, and maybe even providing most of GM’s profit, it doesn’t mean that the entire market is demanding the vehicles. In fact, your shrinking share confirms it.
3) I notice you suggest that government spend more money on battery development. Why is government OK when it spends money benefitting GM?, but it’s not OK when they expect something in return? Considering that they have waited so long so do something about mileage standards, I would expect that they are now responding to the pressure of the voting public - the same people who buy cars.
4) Toyota and others are now poised to eat into your SUV and full-size truck share. They have built large market share in high MPG vehicles and can now afford the hit their new full-size, low MPG vehicles will have to their fleet MPG. Unless GM starts to build smaller and/or higher MPG cars that people want to buy - they will never have the flexibility of Toyota.
5) Finally, and I’m just guessing here, but could it have been a strategic mistake that GM chose to survive on the smaller large vehicle sector which had a high profit per unit, while Toyota chose to increase share with lower profit per unit? This is B-School Strategy 101 and many a high-cost, low volume producer has been put out of business as a result.
Thinking on your competitor Ford, I have to think where they would be now if Bill Ford would have kept his promise to go a little more green. Maybe instead of relyinng on their friends in Congress to protect their share, they would have put more pressure on their engineers and desginers to come through for them.
Anthony
To Edward Hayes who used a McDonald’s analogy to argue that big, gas guzzling vehicles should be available:
His dialog (after an unnamed customer in need of arterial work orders a Supersized meal):
“Sorry sir, we no longer serve super sized meals, they have too many calories…”
Bad news dude: They ARE no longer served. 2004 came & went. Times have changed. Cars should too.
Here’s a more realistic example for you:
“We don’t want integrated schools…” - The majority’s opinion in the not too distant past.
Goverment officials made a change for the better. That’s what Lutz needs to realize.
My two hybrids aren’t going to be replaced by an American nameplate until I see one get 50+ mpg– but when that day comes I’ll be first in line. I support US manufacturing when it’s a responsible choice. I don’t feel the “less-Big-by-the-day”-Big Three have made responsible choices lately.
Richard Johnston
General Motors ought to be truly embarrassed at this irresponsible statement. General Motors has had 30 years to develop fuel-efficient technology and has chosen not to, rather to take the cheap and easy path of lobbying government and pandering to customers’ apparent preferences, chasing profit rather than acting responsibly. You are reaping what you have sown, and you deserve to lose market share to responsible, responsive foreign manufacturers.
Surely you do not believe it is a good idea for the United States’ trade deficit to be negative predominantly because our citizens na√Øvely continue to buy gigantic cars when you could have steered them in the direction of more reasonable and fuel-efficient ones. Grow up, get used to living in the 21st century.
Masospaghetti
While it may be unfair, there is always room to innovate and improve…you make it sound like there’s nothing left to improve fuel efficiency. “Maximum aerodynamics, 6-speed automatics, 2-mode hybrids, diesels, AFM, electric power steering, and direct injection” - Yes, these are all great things, but none of the above except AFM is present in a 2007 Tahoe or Silverado. You’re still using 4-speed autos, port fuel injection, hydraulic steering, no diesel choices, and no hybrid choices …and aerodynamics can always be better. Sure, you can get the 6-speed with the mammoth 6.0 liter engine, but then you forfeit AFM. And while the media bashes GM for electric power steering and how it feels wrong, they have no problem with electric steering from other manufacturers. I’ve driven a Malibu with EPS, and it doesn’t feel good. It has no communication to the road. And even with the stuff above, the GMT900’s remain the most fuel efficient in their class. It’d be amazing to see what is possible with these new breakthough technologies you mention.
What i’m saying is, while GM possesses these great techologies, they aren’t using them. And in any case, even if its not fair…you have to find a way to compete, regardless. The Japanese competition faced a HUGE uphill battle when they first entered the market, but they continued to innovate.
And GM’s smaller vehicles are still relatively uncompetitve, with non-VVT Ecotec’s and 4-speed automatics. The fuel economy on the Cobalt, for instance, is far lower than the Honda Civic or Corolla. You know there are much more efficient engines being sold in other regions - bring them here…think the 1.8 Ecotec, or the diesel motors, or re-engineer the current motor to make it better. Even the tiny Aveo can barely get 25 mpg in the city while Fits and Yaris’s (Yari?) easily break 30 mpg.
And is most of the advanced technology confined to SUVs? I’m talking things like in-dash nav systems, heads-up displays, and hybrid technology - pushing with SUVs first is only going to reinforce GM’s public image as only caring about trucks.
John Ghormley
Mr. Lutz,
Please wake up and smell the coffee!
First, go see Al Gore’s “An Inconvenient Truth.” Please note that, in the course of the film, Mr. Gore points out that the U.S. auto industry, when compared with auto makers throughout the world, comes out dead last (or nearly so) when it comes to fuel economy.
I have a long memory - and it always seems like U.S. auto industry “leaders” like yourself are best at foot-dragging when it comes to making significant improvements in their product.
Case in point, in addition to fuel economy - safety. I can remember in the mid-1950s when Henry Ford II objected to putting lap belts in cars, saying such a move would reduce sales because people weren’t interested in safety, only style. And for a long time after that, I also remember how the domestic automakers had to be dragged along, kicking and screaming, towards putting out a vehicle that made crashes more survivable for its occupants.
Baloney on him and baloney on you! Thinking like yours is one of the reasons the U.S. auto industry is on its way to becoming one of the great also-rans in the world economy. It’s also the reason I’ll never buy a GM product!
John
fred@dzlsabe.com
Bob Lutz writes-
“There is no technological bag of tricks that enables much better fuel economy than we have today.” Followed by ….”we dont have any magic 100 mpg carburator that were holding back”….Then “We are working daily toward real alternative fuel solutions to reduce our dependence on petroleum, using the most advanced technologies available, and SOME THAT HAVENT EVEN BEEN INVENTED YET.” Huh?
GM makes and sells plenty of them old-fashioned diesels and turbochargers…ya just refuse to give the US(or NA) the option to buy them. (Yeah I know its the EPA and DOT) And Duramax is not really an option. Nor is Aveo.
Im driving an obselete 03 Saab 93 with a 2.2L turboD. It aint a very small car. It gets 35-44 mpg. Today, everyday. The new ones are even better. That along with the unacknowledged Saab plug-in BioPower concept car brings 60mpg easily in range.
As you know, your euro and asian competitors are all headed this way.
How much longer are you going to baffle us with E85 and H2 bs?
John
Bob,
Do you realize how ridiculous you sound?
Just because you can’t make any decent cars that get 30mpg city, much less a line of them, doesn’t mean that CAFE standards aren’t worthwhile.
Sure, GM’s promised new alternative vehicles in the future, but those promises have always been for the future.
It’s time to focus on the now Bob, so how about a New Year’s Resolution to make at least 5 vehicles that get 30+mpg city, and at least 10 vehicles that are ranked in the top 2 or 3 by any major automotive publication.
Nobody ever made a great car by making complaints or excuses.
You don’t need any new technology to build cars that don’t suck and get decent fuel economy. You just need the will to do it.
And again, stop using the Vue to tout your environmental initiatives.
Joshua Kittel
GM has failed for years to be involved with increasing gas mileage the way other competitors have. Other companies are rightly beating you out and your answer is to tax the people who use gasoline and your vehicles. Your failed business plan and poor engineering for GM cars and larger vehicles are clearly to blame here. Don’t cry fowl when other competitors vehicles will clearly be able to keep up with laws defined to help the public have a cleaner environment. The public wants this and when you start making fairly lousy arguments about how its like making people lose weight by creating one size that fits all, it makes GM look even worse and not to mention that the analogy is a poor one at that. The American spirit for GM cars died when GM turned its back on the peoples desires as well as failing to examine the future of auto engineering like your Japanese friends who are coming out with their own larger vehicles. You have an opportunity here to change that view and really work to make vehicles that the public truly wants. I wish GM luck in dealing with this issue in a responsible way.
Mike F
Stop crying and complaining about government regulation and start building more fuel efficient, safe, and reliable vehicles. We need to lessen our oil imports, and stop polluting so much. Most Americans dont need a huge hulking truck or SUV to drive to the mall or to work.
Arthur Owens
Mr. Lutz,
Your comments are pathetic, and your vehicles do not hold up. Your thinking demonstrates that you are old line GM: fighting improvements, better environmental technologies, safety innovations, or higher mileage standards. Your vehicles get worse mileage now than in previous years. There is no excuse for GM’s poor performance. The reason is weak leadership, retrograde thinking. This company can only lose with you at the helm. Face the music.
Bill L
Mr. Lutz:
It is with great dissapointment that I read your comments. Your postings smack of lack of vision and fatalism that your company’s destiny is outside of your control.
You “fail to see the wisdom or fairness” in adressing increased dependence on imported oil products by mandating increased efficiancy? Ray Charles could see this.
Here’s a freebie…Look at your average vehicle weight vs imports. Your cars are too heavy and as a result require bigger engines that still result in weak performance and poor efficiancy. You still have an engeneering department?
Also, the imports play by the same rules you do, they just figured it out how to suceed much sooner. Your comments imply that easing of efficiancy standards will help your sales. You are already selling cars at 0% interest with 30% off MSRP and still lose market share to cars selling at full MSRP. It’s not the standards that are your problems. The fault, dear Brutus, is not in our stars,
But in ourselves…
As far as your thoughts on market mechanisms being the most efficient method towards conservation, the recent move towards $3/gallon gas undercuts your thoughts. Gasoline demand proved highly inelastic in the face of increased prices, even if the move in new car sales was away from Hummers. We used the same amount of gas at $3 than we did at $2. And, BTW, europeans do drive smaller cars, not entirely due to the much higher prices (my last trip was euro 1.35/l or roughly $7/gallon), but because their infrastructure can’t handle large vehicles. Have you ever driven in europe or does your chauffeur handle it for you? Roads in european towns are extremely narrow and parking there makes NYC look tame. Also, cars are expensive as well as the gas because of those “taxes” that you would favor here, but europeans also have a much higher per capita savings rate than Americans. So by your solutions, we should impose punitive taxes on gasoline, hurting the average consumer, while your company should not be held to any sort of standards for conservation that would allow you to avoid innovation and keep producing also-ran vehicles (not my opinion, look at consumer reports)in the sub-compact markets that you are the least competitive in. That sounds like a recipe for chapter 11. By this logic, if we just stopped driving cars altogether…
One last item, your comments on bio-fuels being a savior. Biofuels are a noble persuit, but 2 big problems. One, the energy content per gallon is much less, requiring burning MORE fuel per mile than regular gasoline, and two: in case you didn’t do the math, if the US converted all current production of corn and related crops to the production of ethanol, this would account for only @15% of gasoline demand, leaving no crops left for food consumption. Please tell me you have a better solution for the fate of a great American company and it’s workers…
oggie
Mr. Lutz:
Maybe CAFE is feeding GM to the asian automakers, because we live in the past. This is the problem and its not specifically you. The fact that GM has made great advances in technology that asian manufacturers can only copy doesn’t meant that GM cannot revolutionize the industry again. We both know something needs to be done about the company, but not embracing change that potentially could mean more foreign consumers is like closing the doors. I’ve said shutting down Oldsmobile was not a wise idea and I stand by that, because it was a test platform for testing new technology and concepts like with the Aurora or with airbags in the 70’s or EV1. We can build big cars with good fuel economy and it is technologically possible. Don’t let a challenge to improve slip away. Buck the status quo. That’s the way a leaders change things. Let the other car makers follow.
oggie
hi again Mr. Lutz. I just thought of something. I suppose I should talk about the technology that is available to improve fuel economy. Plastic intake plenums, turbos, nothing wrong with a 7 speed automatic on a GMC even if the gears only get used when not towing a load, but it would probably qualify for 4% improvement. DOD is another. Pulse Fuel Aeration is yet another. Elimination of Leaf springs for coils with integrated airbags is a weight reducer. plastic valve covers. LED brake/taillights reduce electrical consumption. All electrical accessories contribute to a reduction in fuel economy as much as weight. Wish I had a good job though.
njpaguy
Looking back on the original fuel crisis in America, you may recall it was the Japanese auto manufacturers who met our government regulations for fuel savings head on. Detroit said it couldn’t be done.
Over the next three decades more and more government regulations were passed in the interest of consumer safety and fuel savings. At every hurdle the Japanese manufacturers not only met the requirements but in many cases exceeded the standards. They were doing it better and for less than Detroit could ever imagine.
If Congress passes legislation requiring 30 MPG/city for all vehicles over 5000 lbs GVW while dragging a 10,000 lb trailer, the Japanese will find a way to do it. Period.
Having grown up in the shadow of Bethlehem Steel, it’s clear Detroit doesn’t care much for corporate history lessons. Whether US policy on steel tariffs were correct or not, Bethlehem Steel focused on politics rather than product and innovation to continue to grow and flourish. Meanwhile small efficient steel mills were doing more with less not only in Japan but also in the US.
Bethlehem Steel is now a rusting hulk on the south side of Bethlehem, a tribute to years of failed imagination and stubborn refusal by management to adjust to what was clearly written on the wall: things change.
Based on your logic of further taxing fuel to cut consumption and dependence on foreign oil, you then would also agree to additional fuel guzzler taxes on vehicles not meeting recommended government minimums for fuel savings. For example, a Suburban not capable of 25 MPG average/combined should be taxed sufficiently to discourage anyone from buying such a vehicle except those that absolutely need it. What’s that? You cry “foul!” And why is that? Oh, that’s right. It’s impossible to build a fuel efficient engine for a large SUV or pickup truck.
I can’t wait to see what developments in V8 engine technology Toyota in particular has planned for the US over the next few years.
Just imagine what will happen if GM fails to imagine what needs to be done.
MK005
Mr. Lutz,
I must say I find your argument against CAFE disingenuous. As a leader at the largest automaker in the world, I am sure you are acutely aware that the 2011 model year CAFE standards finalized now are based on vehicle “footprint.” “Light Trucks” with larger footprints (track width x wheelbase) such as larger SUVs and pickups don’t have to achieve quite as high a mileage figure. 4% annual increases to standards based on vehicle size will in no way force GM or any other carmaker to make smaller vehicles.
You know this.
I love the direction you’ve been taking GM and am looking forward to purchasing my first new car from your company someday soon. But please don’t try to scare readers into opposing CAFE standards based on lies. Your obesity analogy, while cute, is irrelevant, as CAFE will not force anyone to make smaller vehicles.
Mike
John C
Do you see Toyota wasting billions desingning a line of trucks with the dazzling number of configurations that you or Ford do?
Hmmm…. Let’s see…. Sequoia, Highlander, 4 Runner, FJ cruiser, RAV-4, Tacoma, Tundra, Tundra heavy duty. Oh and let’s not forget ALL OF THESE, save the RAV-4 and pickups HAVE LEXUS COUNTERPARTS!!!
tim s
Will somebody please tell me or find out how much GM s hybrid system in buses save? I know this system cuts the harmful pollutants by more than half, and some of it by 90%. Lets give GM some credit, these buses are in the ideal situation, IN THE CITY. Some are in national parks as well! I am sick of everyone thinking Toyota is without fault! GM did miss out on the growing compact car and hybrid segment, so they made a mistake. Toyota and Honda missed out on the lucrative suv market in the late 90’s early 2000’s. I feel that GM is doing all it can to fix their mistakes, no company is without faults!!! Lets keep an open mind!! Once ethanol takes off GM will be doing as much as anybody for our oil dependecy!
Mike
Bob,
Let’s talk about EPA ratings; specifically what I’m not seeing with the wife’s 06 G6 GT. So far, with 7500 miles on the vehicle, we’ve only seen 23 MPG on highway, not the 32 MPG posted on the window sticker (no matter how soft peddle we drive the car). Setting aside any further break-in time on the engine, it still should be doing better. The service department couldn’t find anything wrong that would attribute the poor mileage. Defeated the purpose why we traded in the wife’s 22 MPG Grand Cherokee.
We really like the performance of the car; handling, braking, acceleration are excellent. However, overall, the car is a disappointment–not what I expected from GM. Excessive body flex occurs at any movement of the car (acceleration/deceleration, slow turns, or through dips). You can hear all 4 doors shifting in their jambs (audibly–door seals chaffing). Once again, the service department tells me this is normal, stating they drove 6 new G6′ on their lot and all had the same issue. This tells me it wasn’t a quality escape, but rather a substandard design. Either way it’s an unacceptable condition.
The latter issue is so annoying and cause for concern (structural integrity) that we attempted to trade the vehicle in for a different Pontiac, but the dealer felt it necessary to offer us $3k less than NADA trade-in value. Speaks volumes for the product!
We’re a GM card carrying family and aside from a couple of Jeeps, we’ve bought GMs exclusively since 1978 (totaling 14 new GMs). I guess we’ve been lucky in the past or GM’s quality has declined considerably; just don’t recall ever having significant problems with previous products.
Mike
Don Jones
I think GM has let’s it workers and investors down with it’s ham fisted gas guzzling fleet of non competitive vehicles. Maybe you should stop whining about Honda and Toyota and build a better vehicle and clean up your mediocre dealer network. If it wasn’t for employee discounts your sales numbers would be even worse than they are.
Dan
I mean come on already.
Every time congress lets on they may do something concerning fuel economy, the Detroit boys start whining about Japan. Detroit has had decade upon decade to remedy their problems and it’s always excuses and whining.
Yet, Honda just sucks it up and meets every challenge.
Stop bitching and start competing. People will respect you more. You’re American for crying out loud. Just get the job done.
Donald Paczkowski
Mr. Lutz,
Please add one more voice to those who believe that the American Auto Industry should die the slow death it deserves. Cars and trucks are not discretionary, “fashion items” and should not be cast as a frredom of choice issue. Size and fuel ecomomy directly impact climate, not to mention the implications of being held hostage by the oil producing countries, few of whom seem to wish us well. I am sickened every time I see a Hummer or one of your beastly large vehicles favored by the rich and super-rich. Your day is done.
Ron
Mr. Lutz:
I would like to propose a topic for a future post: why GM will not be building the Cadillac 16. The masses cannot figure it out. Thanks.
Bwright
Bob,
Brilliant post. I especially love the clothes analogy because it so perfectly addresses what the CAFÉ standards are about. Well done.
Some of the last few posts on this thread remind me just how much ignorance there is out there in the general public when it comes to GM’s fuel economy relative to the Asian automakers and Toyota in particular. Herewith some facts:
As Car and Driver recently reported, Toyota’s growth over the last decade has come NOT from the production of small cars but from a simply staggering increase in the number of trucks and SUVs that they produce.
Trucks were only 26.7 percent of the 1,083,709 vehicles Toyota sold in 1995. By 2005, Toyota had more than doubled its U.S. sales to 2,260,296 vehicles, and of this much larger total, trucks had increased to 43 percent. Put another way, Toyota sold more than three times as many trucks in 2005 as it did in 1995.
Conversely, in the ’90s, GM failed to anticipate the shift of American buyers toward trucks. As a result, the company didn’t allocate enough factories to the manufacture of its big pickups. In addition, as was recently observed on this very forum, GM has also never brought a competitive minivan to market. And while Ford was going to town with its Explorer, GM didn’t produce a solid mid-size SUV until 2001, when the TrailBlazer and its relatives arrived.
There is an irrational belief that Americans are driving so many gas-guzzling trucks because companies like GM have brainwashed them into doing so. But common sense, which is apparently not common, should tell these people that if GM’s marketing department had such a hypnotic hold on Americans, the company would have used that power to stem the 25-year-long market-share loss that has led to its current problems.
I bet NOBODY, not a single person here outside of Bob knows that for the first time in their history Toyota is on the verge of building more trucks and SUVs than cars next year. Believe it. With the construction of their new San Antonio TRUCK plant Toyota is about to spew forth the largest (non-hybrid, natch) vehicles it has ever produced and one of the largest and most fuel-thirsty vehicles produced today. It is a vehicle one Toyota official called, “the biggest, boldest, badass truck in Toyota history.”
But the best part about this if you are Toyota is that the state of Texas subsidized the cost of producing these trucks by giving Toyota approximately HALF A BILLION DOLLARS IN GRANTS TO BUILD THE PLANT. If the state of Texas has ever given GM that kind of money to build a truck plant to spew the biggest gas guzzlers in company history the media would have crucified GM and Bob Lutz would have to hire someone to start his car every morning. In contrast, Toyota could burn down a nursery full of kids every year and the media and some of the clueless on this thread would sing their praises.
According to Automotive News, through November 2006 Toyota built 1,334,527 cars and 979,676 trucks. If you stopped sales there and Toyota hits their modest goal of selling 200,000 units a year of their redesigned Tundra pickup they will come within a sneeze of selling more trucks than cars by this time next year. For those of you who have not been paying attention to Toyota’s practices, Toyota always underreports expected sales, especially of trucks, because they do not want people to notice just how much they are growing especially since trucks are the last bastion of Detroit’s profits.
Then there are hybrids. The only reasons these things sell at all is because they are heavily subsidized and their supposed fuel economy benefits are wholly misunderstood. In the latter instance, even Toyota cannot defend the additional cost of their Prius relative to what lower priced comparably sized pure gasoline cars would use in fuel costs over a 10 year period even WITHOUT the relative cost of the non-warranty required battery replacement on the Prius. This battery replacement cost is expected to run in the thousands of dollars for unsuspecting customers. Add to that the laughable EPA ratings which every single auto magazine which has tested the vehicle reports is simply a matter of complete fiction. Consumer Reports pointed out that in city driving it found the Prius to be off its EPA rating by an astounding 40%. Even Prius websites talk about the failure of the vehicle to meet the advertised mileage.
With the EPA about to change their 2008 vehicle model mileage tests to be more realistic Toyota is howling in protest because the new rules will affect their Prius and other hybrids the most and basically unmask it and them for the fraud they all are.
Finally, if hybrids are so much in demand by the market why on earth do you have to subsidize them to the tune of about $3,400 in taxpayer funded handouts per car? Without those subsidies hybrid sales would have tanked a long time ago. Case in point, in October 2006 hybrid subsidies for the Prius were cut in half and sales promptly slid 12%. Wait till they cut that in half again in six months.
Just never fails to astound me how easily Toyota’s snake oil sells.
D Price
The planet needs tougher CAFE standards. I do no sympathize with the complainning that it would hand the SUV market over to foreign companies. If that is the case then they must be making better cars. Don’t get me wrong, I am Detroit born and raised and have family connections to the Big 3. However, you need to start facing reality. If someone is going to choose one product over the other it is generally not based on a single factor. Moreover, while it might seem unfair to US automakers to have higher standards, how fair is it to leave it to the future generations to deal with the problems caused by not implementing them?
kurtw
While the government causes enough trouble with inconsistant rules, I still find it amazing how inconsistant GM products are wrt fuel mileage, and how truly bad some of them are.
Case in point: A Malibu SS is 17 mpg around town .vs. the larger Impala V8 with 18 mpg. So just why does the Malibu SS guzzle so much fuel, Bob? Could it be to the ‘Bu SS’s ridiculous rear axle ratio somebody (marketing??) suggested so the car could easilly burn its tires at a stoplight? It makes that ‘bu a bad choice as a daily driver
Why not put that alpha male stuff in products that will really appeal to those folks, such as the Camaro, the Corvette, the Escalade, and any others you can dream up.
GM does these well.
Meanwhile, a little less ranting, and a little more engineering (direct injection technology into more GM engines, please), will help keep GM in the thick of world class auto manufacturers.
Durandal
Bob claims that raising CAFE standards would place an unfair burden upon GM and other domestic carmakers that make a disproportionate amount of profit from SUVs and trucks. I might mention the fact that GM trumpets that GM offers more cars that get more than 30mpg than any other car maker in the world.
Wait, let me repeat that, “GM offers more cars that get more than 30mpg than any other car maker in the world.” So, Bob says that this is going to hurt GM. Here’s the real reason why. Instead of spending R&D on vehicles that can get good gas milage, the money goes who knows where. The Japanese don’t have any problem extracting 197hp from a 2 liter engine (read the Honda Civic Si) because they understand that higher displacement isn’t always the best. You can squeeze the same amount of power out of a smaller engine by using higher compression ratios and variable valve timing.
So why doesn’t GM do this? Well, that would increase the cost of the parts and require increased engineering. Instead of using cast piston rods, they would be forced to use forged piston rods like the Japanese use, for instance. This translates to higher cost parts all around the board, cutting into profit margins. It would also involve a paradigm shift in GM, which is not efficiency centric.
I know there just has to be engineers in GM who want to break the mold, who want to produce something lean, efficient, and a model of excellence in engineering, but are forced to produce generally mediocre products due to the marketing geniuses under control of the executive committee. Whether or not CAFE standards are put into effect, GM will be forced to produce more fuel efficient cars or GM will suffer. Market dynamics will dictate it in the upcoming years as fuel prices continue to rise as the giant sucking sound coming from China drives up the price of petroleum.
E85 is greenwashing at its finest. It is impossible for ethanol produced from corn to produce enough fuel to successfully replace even 25% of the nation’s fleet with ethanol power without starving everyone in the process. There simply isn’t enough land suitable to be farmed to make the switch. The dirty secret, however, is E85 vehicles gain carmakers a credit in which raises the CAFE MPG credit for the carmaker. Domestic carmakers are abusing this on their current trucks and SUVs, and the Japanese haven’t had to do that yet. Just imagine the fun when the Japanese start making use of this loophole.
Lastly, Bob mentions taxing gasoline instead of mandating fuel economy standards because he knows that there isn’t enough politcal willpower to make such a thing happen. It will not happen anytime soon here in the US, as it would be political suicide for any Representative or Senator to push such an issue. Bob, stop whining, and make progressive choices if you care for GM to not take a serious wounding. Otherwise, make sure you have your golden parachute at the ready so you can bail when all those people in China cause the price of gasoline to hit $4 and $5 a gallon.
Lawrence Hands
Mr. Lutz:
I agree that CAFE standards have limited use without properly pricing fuels and providing transportation options. A Hummer driven 5,000 miles per year is more environmentally friendly than a prius driven 50,000 miles per yr.
You should be able to work with your friends in Congress to provide for an even playing field for CAFE with the other manufacturers by quickly sunsetting any past allowances that the others may have in the bank.
Why not address security issues and global warming by taxing energy rather than labor? Labor is good for the country; New jobs should be encouraged. Using foreign produced energy or even US produced energy is bad for the country, it reduces our security and causes Global Warming.
At the same time, we need to invest in vibrant cities and transportation choices by building quality transit, rather than encouraging sprawl with new roads and lanes.
Can you and GM be leaders in this fight for a more secure USA?
joe l
I just read that Mr Lutz states with higher fuel economy standards the Japanese will own the truck and SUV market. Well if the USA auto companies can’t compete then shut them down and go home, obvious the US companies lack leadership.
fiftyfourfortysix
My God, this is where the mighty American automobile industry has ended up? Crying about how life isn’t fair because supposedly everything is stacked against you?
You may want to review history, and how many imported cars have been stacked against.
Six months ago, I bought a new car. I looked at American brands, and decided that I had no interest in what you were offering. Why? Because I, like many others, wanted a small car. And I bought a small European car based on nice looks, excellent handling, a terriffic interior and a fun power train all crammed into a subcompact body. I didn’t have these options from a US brand, unless I opted for a foreign subsidary.
Someone ran into me, and I was forced to go carshopping again just last month.
Guess what, I bought another subcompact just like the last, because no matter how much of a rebate you offer me, GM doesn’t sell anything I care about. Further more, for all this talk of caring about fuel economy, why is it that no American small car offers me the choice of a diesel engine? The boat is pulling away from the pier, Bob, and you’d better be practicing your long jump if you hope to land on it and ride it to profitability.
Stop crying about an unlevel playing field, and try to actually compete. Its not becoming. I lived in a small town, home to the mighty Bethlehem Steel Corporation. BethSteel helped build most of this country, and now its entire plant lays in a rusting heap along the river, overgrown and collapsing. WHy? Because they spent time crying about unfair advantages and bloated managment and labour forces.
Detroit isn’t far behind, at this rate.
Good luck, maybe I’ll see you in five years when I consider replacing my current car, although at this rate… probably not. I won’t be interested in a Chinese owned GM marque.
MrChris
As a person who drives a 44+mpg VW diesel wagon, I have very little sympathy for a company with resources like GM that has so completely failed to see a very predictable future and to respond to it. The Japanese automakers did. The German automakers did. Meanwhile, US automakers can engineer a car that knows when to turn on the windshield wipers by detecting rainfall but can’t give me a 4% increase in fuel efficiency? I don’t believe that. It’s all a matter of priorities and, because you weren’t FORCED to by CAFE standards, you DIDN’T!
What makes me the most upset is that, while the rest of the country is enjoying a fairly robust economy, Michigan is at the bottom mainly due to the poor performance of our top industry: auto manufacturing. In other words, it’s not just your company’s bottom line that is impacted. It’s the financial well-being of a very large number of our state’s residents.
For shame.
tim s
good post bwright
Karl Hodgson
GM operates worldwide(I worked down in Brazil in the late 1980’s) and must meet the market and government conditions in each environment. Technical issues are no problem, whatever a government does, business will adapt, or just exit. Here in the USA, business faces different conditions than Brazil,Canada, China, etc. Regulations are different, taxes, labor costs, etc. You are booming in China, Brazil, and so is Ford. What’s really going on is you are breaking the unions and high labor costs here, and dealing with a government that pushes healthcare on employers etc.
The object is to make vehicles that locals want to pay for, and make a profit. If you can’t do that, you close and operate where you can.
If your fighting CAFE you only do that by lobbying but right now Akin and Gump and the oil boys are in charge. So if you think you can hold the government off, you better re-learn the lobbying game and deal with the boys in charge-Akin&Gump, and the boys from Dallas. Otherwise you make the technical changes, and adapt. You get the bean counters and put out a sexy product, and the technical boys will figure how to do it and make a profit.
If GM is loosing money, it’s because you are not good businessmen. This communication is just feel-good PR for the masses.
Personally GM is a management tradgedy. It’s not a technical problem, it’s failure to give the consumer here what they want,because you didn’t play ball with the real government powers, and think people will endlessly buy whatever junk you make. Toyota and Honda are going to kill you if you don’t sharpen up.
Personally except for the Corvette, the new Saturn sportscar, and maybe the Silverado, you don’t compete.
If I had the bucks I’d make the sexiest damn sportscar, electric or electric hybrid, and market the Hell out of it and begin a whole new company. Sex sells, and it always will! Boring products are boring.
John
Looking at the comments, it’s clear the GM fans have spoken.
Whining - BAD.
Stepping up to the plate and making decent fuel-efficient cars (e.g. 30mpg CITY, not a super low top gear for 30mpg highway) - GOOD.
Will anyone at GM listen, or is it too hard to hear with their heads in the sand?
Time will tell.
Barry
John,
It appears Bob was feeling his oats with his ornery post about regulation. I suppose he thought he’d get quite a few responders to support him.
It’s part of the systemic problem with GM, Ford and DCX management. I respect Bob greatly but isn’t it ironic the wrath of posts he received?
Bob, I seriously doubt anyone on this board is here salivating at the thought of a GM bankruptcy. We are all here to add critical thought and feedback from the country club setting in the corner offices. We are hoping, almost praying for an American turnaround in the auto industry. No one wants to see jobs and markets move overseas.
You may already be addressing these issues but where is your segmentation? I don’t mean by brand. I mean by market segment.
Isn’t the time right to experiment? Who cares if you lose a few hundred million on a few brash projects? What about a city car? What about some type of radical hybrid or mini? How about a 150mpg diesel city car weighing 1000lbs? The germans are building one. With short production runs and minimal engineering comparatively, it is possible. If the engineering costs at GM are too expensive, outsource the design. You guys have so much talent and so much resource. Do the unimaginable. Just once. See the market response. Even if the cars are small sellers.
CM
Oh, Puleeze! Lutz is pretending that the only way to improve milage is to downsize to small cars. Fuel economy can also be improved by reducing weight, hybrid technology, improved transmissions, even (if necessary) reducing performance. Though car aerodynamics is better than in the tailfin era, reducing drag is still possible.
Toyota gets outstanding economy in their midsize and full size hybrid cars, and large SUV hybrids - better milage than in GM small cars.
GM should have put hybrid tech into a midsize car (Malibu?) to rival the Prius. GM has hardly anything to take advantage of the US government “high milage (hybrid) tax rebate program”. GM could go hat in hand to Toyota and offer to sell a re-badged Prius or Camry hybrid, as Toyotas “tax rebates” are expiring due to sales limits.
I second the poster with the “hybrid Cadillac” idea. The quiet power and smooth-as-silk acceleration makes electric hybrids a natural choice for luxury cars. Toyota’s Hybrid Synergy Drive will soon be sold in the top-of-the-line Lexus models.
heatmizr
I dont understand why GM needs the government to pump money into solutions. If the big 3 would have put money into flex fuels like E-85 20 years ago aned had taken the lead on the issue there would not be a problem of having to need to raise CAFE standards. I know there isn’t a magic 100mph solution, but if the auto makers start now, maybe there will be in the next 20 years.
Swede
Dear Mr. Lutz,
It seems as if every other country (or equivalents) except the United States seems to protect its domestic auto industry by imposing regulations that suits domestic producers. One example: For the model year 1976 Sweden imposed new emission control regulations for which foreign auto producers did not have sufficient economies of scale for a good (expensive) technical solution. The result was that foreign contenders to Volvo and Saab had to reduce the number of versions certified for the Swedish market and reduce the horsepower/torque (a better technical solution would have been more expensive).
Moreover, your country even seems to have regulations that favour foreign producers (CAFE).
That´s crazy!
American politicians seem to act as if the only person who owned auto related stock and received a pay-cheque from a domestic auto company was Henry Ford (who died in 1947) who by current standards would have been regarded almost as evil as Usama bin Ladin.
It does not make sense not to encourage production of bio-fuels by requiring a gradually increased percentage of bio-fuel in gasoline and diesel sold at ordinary gas stations. Another clever move would be a requirement that all new gasoline vehicles should able to run on E85.
Swede
Bluebabby
Huge fan Mr.Lutz I’m a GM family member and only buy GM but we have to realize that while Lexus and Honda are building these brand new dealerships in SoCal and it brings in lots of buyers because it like shopping for a new car at Salvation Army when it come to names like Cadillac or Chevrolet, come on lets get with the times this isn’t the 70’s anymore.
Also how about adding E-85 to our dealerships it would attract new customers and solve this Flexfuel issue in Cailifornia and possibly offset some of the costs of building new dealerships maybe the Goverment can help.
Thanks Bluebabby
Bluebabby
Keep up the good work Bob.
Roger B
Has GM honestly attempted to create the coolest most efficient vehicles possible.
No, because there was no incentive to do so. Maybe it is time for Mr. Lutz to try or get out of the way.
edvard
Hi Bob,
First of all, I’m glad to see a little transparency from both Ford and GM these days. It lets use consumers know what’s going on from an inner corporate standpoint.At the same time, it might also give you some insight into what we as consumers think.
In your above statement, you mentioned that:” For one thing, it puts us, the domestic manufacturers, at odds with the desires of most of our customers, namely larger vehicles that we wouldn’t be able to supply in the numbers needed.”
There is something in that statement that tells me that either GM is still focusing too heavily on selling the vehicles that are desirable in specific regional markets or doesn’t fully comprehend what consumers in other regions actually like.
I grew up in the rural Southeast and it goes without saying that every single mom drives a Mustang, Chevy Cavalier, or Chrysler minivan. There still exists a degree of patriotism in that region. People also buy domestic because frankly- “grandpa always bought a Ford… so I’m going to buy a Ford…” In other words, domestics still rein supreme in the South, Midwest, and most other rural areas.
I have been living in California for over 5 years now. The equation is totally in the opposite direction. Instead of domestic cars being the predominant vehicle of choice, foreign cars- mainly European and Japanese cars are in the majority. I’d say that almost 65% of all cars in the major metropolitan areas I’ve lived in are foreign.
People seem to have an inherent mistrust of anything made in America here. When you look at why, look at what people in places like California drive: smaller, fuel efficient cars. What options do they have from GM? The Cobalt? I’m sorry but a Cobalt has nothing in common with a Honda Civic- one being a cheap looking econo car with a lawn mower muffler sticking out the back while the later looks almost like a middle entry luxury car.
Hands down- GM makes the best trucks and SUVs I’ve seen. They also make good mid to full sized cars. But GM’s lower end falls off the cliff in terms of providing a comparable vehicle when the competition offers a more sophisticated product.
If you look at what the competition makes, in reality they ( Toyota) makes a really mediocre Camry that gets average fuel economy, a mid sized truck that actually gets horrible fuel economy, and a smattering of hybrids that only serve as a fashion statement to those who like the image of being environmentally friendly.
You don’t need to reinvent the wheel here. All you need to do is make cars that appeal to all target regions and consumer groups. I feel that you’re almost there.Just keep listening.
Chazz
Bob, I agree with most of your points but challenge GM’s assumption that small cars must always be low margin products. I think the BMW 3 and 5 series cars have pretty good gross margin percentages. Why not just copy them and then turn the results over to your badge engineering department?
Jerseydevil
Dad had a 98 Buick - engine blew up at 55000 - they said tuff luck its out of warranty. he now has an acura.
I have a VW golf - gm does not make a car like this - it has 199,700 miles on it - still purrs.
I do not like suv’s or cars like that. i have no need of a truck, they are too big and thirsty. the small gm cars all look like crap, no hatchbacks except the korean one - and it looks and drives cheap.
ya gotta do better than this or u are gonna go out of business, but i cant say that i would notice much if u did - sorry -
i’m lookin at Cooper Mini. VW GTI, Mazda Miata. Sorry about the solstace, WTF - NO LUGGAGE SPACE AT ALL???
you are delusional if u beleive that u will survive with the attitudes in your article. Gas is already 2.50 a gallon here in PA.
Marshall Chambers
Yes, Japan has done very well. However, China is hot on their heels. China has higher fuel economy standards than the U.S. This whole discussion is obsurd. It seems as though GM is a paid lobyist for OPEC !
dharder
I am at a loss for words. For every report or claim there’s an equal and opposite claim, blah blah blah.
Someone in the 1960s suggested that we put a man on the moon and we did. Impossible? At the time yes, but apparently it wasn’t so crazy.
Set a goal, reach it, set a new goal, etc.
Why can’t GM go to the moon on this? Why can’t GM make a blinged-out SUV that gets 50 miles to the gallon or a spacious smaller car? Can’t or won’t?
GM is failing for lack of imagination. Just look at your stocks.
Bwright
Tim S,
Thanks and to answer your earlier question, at the end of 2004, there were 335 GM-hybrid-equipped buses operating in about a dozen North American cities - saving about one million gallons of fuel a year. And, as GM points out, if America’s nine largest cities were to replace its existing fleet of 13,000 transit buses with its hybrid buses, the nation would save approximately 40 million gallons of fuel a year.
However, city and state budgets being what they are and combined with typical city/state bureacratic inertia have made GM’s fight to expand their hybrid bus fleet a stiff uphill battle that the company fights tirelessly every day.
You can rest assured that precious few of the talk first, fact check later crowd on this thread knew any of the above.
robert farago
So Bob, proposals to raise Corporate Average Fuel Economy (CAFE) standards by four percent per year would “effectively hand the truck and SUV market over to the imports, particularly the Japanese, who have earned years of accumulated credits from their fleets of formerly very small cars.”
Wrong.
First, CAFE credits were never transferable between cars and light trucks.
Second, as of ‘07, light truck CAFE standards are gone; replaced by target mileage figures based on a vehicle’s footprint.
Third, even when there WERE such things as CAFE credits for light trucks, Toyota, Honda and Nissan never used them.
If GM’s Vice Chairman of Global Product Development doesn’t understand the federal regulations that apply to his company’s products, what hope does GM have of building the right vehicles for the market?
Jason W
Been reading for a while but thought I’d respond here as fuel economy is a top priority in new car purchases.
I agree with you that the CAFE standards will not have much impact on fuel