Working Hard on Tomorrow, Today
By Bob Lutz
GM Vice Chairman
As you’ve no doubt heard me say before, we’ve made a lot of progress in the past few years at General Motors. And we’ve delivered on what we said we would do. We’ve tackled the legacy costs. We’ve improved our quality. We went from having, at least in North America, some mediocre products to having acclaimed products that are selling extremely well, especially on the passenger car side. In June, for example, in a slow market, our retail car sales were up 8 percent.
We continue to reinvigorate our product portfolio. We’re pursuing advanced propulsion technologies that will greatly reduce dependence on petroleum. And, we’re reacting to the swiftly changing market conditions here in the U.S.
But even with all the changes we’ve made and the actions we’ve taken, our business results aren’t yet what we want them to be. Why not? What went wrong?
Well, we got hit with a triple whammy: we face a generalized economic weakness due to the mortgage meltdown, which is creating a borderline financial crisis in the United States and other parts of the world; we have seen a big decline in the dollar; and we have, of course, experienced an unpredictable and very rapid rise in fuel prices.
Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming, not this kind of rise.
And to say that we recklessly and stupidly kept producing trucks in the face of it is just wrong. In fact, if we hadn’t kept producing trucks before the fuel prices rose, we would’ve been in a lot worse shape, and a lot more quickly. And if everyone is so smart except us, how come most of our import competition was rapidly rushing into the full-size truck market, just as the party was almost over?
I’m not going to sit here and say we have done everything right and made nothing but good decisions. But I will say that in recent years, particularly since Rick Wagoner announced our North American turnaround plan in 2005, we’ve had a firm, sound plan and have delivered on it.
As economic conditions here in the U.S. continue to decline, further adjustments and actions are necessary, many of which we outlined at this morning’s press conference. If you didn’t get the chance to see it live, you can read the press release here.
These actions — the corresponding business decisions we announced this morning, including employment reductions and elimination of post-65 retiree health care, as well as some cuts in capital spending — were hard calls to make. They weren’t made lightly, they weren’t pleasant decisions to reach, and we’re fully aware of the challenging impact they’ll have on our employees.
I know a lot of people are going to look at the cuts in capital spending and say, “Here they go, cutting their bread and butter.” Well, they’d be wrong.
We did make some cuts — like those that we confirmed a few weeks ago regarding the next generation full-size pickups and SUVs, which by the way are still best-in-class in terms of ride, handling and fuel efficiency. But we are conserving our capital for those things that we know will move the mark… and no strategic programs are being impacted; it’s full speed ahead on E-Flex technology and the production program of the Chevrolet Volt. And we will continue to cut costs and adjust to changing market demands. In fact, 18 of the next 19 GM vehicle introductions are cars or crossovers. We will adjust our portfolio to meet the market where it is headed — and still keep the integrity of that portfolio intact, while maintaining and enhancing the improvements we’ve made in product design and technology.
Being a leader means doing what must be done. Let it not be said that we won’t make the calls and take the actions that are necessary to keep GM viable and ensure that we remain the best automaker in the world — which I fully believe we are and will remain.
We’re doing exactly what you need to do in these situations, you cut back on anything that isn’t necessary, you limit your cash outlays to only those things that are truly going to move the company forward, and most importantly you continue the ethic of producing the world’s best cars and trucks because that is the only thing that long-term is going to get you through it. We have a complete and total commitment to a massive onslaught of outstanding new global products over the next 24 months as our top corporate priority. No compromise there!
So while some may choose to see the glass half-empty, I couldn’t disagree more, or more loudly. As the saying goes, “Those who say something is impossible should refrain from interrupting those who are doing it.”
- Posted in Business
Jeff
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I happen to be cheering on GM, personally. I want nothing more than for U.S. automakers to be restored to glory. But these two statements in the same blog post make me very sad. To take something away from the people who worked so hard for so many years…..gosh. Just when they need it most, too.
sklunk
Mr. Lutz,
Good to hear that Mr. Wagoner and the Board have announced these cuts — they were long overdue. I’m sure they were not an easy decision but GM needed drastic financial measures years ago to stay competitive (they also needed great product but that is now being delivered). Now if product overlap between division could be eliminated you would make some real progress.
That being said, I have 2 major concerns about today’s announcements:
1) It was noted that Engineering spending will be held at 2006-2007 levels. GM will NOT be able to produce innovative vehicles that reduce energy consumption without significant R&D dollars. Not good. I don’t know if Design spending is being reduced but if so GM is moving in the wrong direction. Great products are not (usually) created on shoestring budgets.
2) While it makes sense to direct more effort to cars/crossovers, if you neglect the truck program I forsee large problems in the future. While I agree that less effort should be spent there, please make sure it doesn’t become a red-headed stepchild. There will ALWAYS be people who need trucks for work and need a Suburban/Tahoe for pulling a trailer and fitting the whole family in the tow vehicle at the same time. If you intend to keep Ford at bay in this segment PLEASE don’t neglect it. The downturn in the truck segment will eventually stop and begin an upward trend again. While it will never reach the levels that it did recently, by ignoring the segment GM will miss out on opportunities when the market rebounds (and it will, even if only slightly).
Once again, kudos for today’s announcements. I hope they deliver as promised.
Rum Doodle
~ “My answer to that is nobody saw it coming.”
With all respect that’s simply not true. The Peak Oil community has recognized for years that we were soon to hit an oil crunch where demand outstripped supply. (There is actually still a lot of oil in the ground, but as soon as demand outstrips supply, the balance shifts dramatically causing prices to spike.)
It’s true that the exact date when that would happen was unpredictable, but that it would happen was inevitable. Unfortunately, GM and the others remained in denial and chose to stick with the profitability of big pickup trucks and SUVs and uneducated customer demand far beyond what was reasonable or healthy.
~ “We went from having, at least in North America, some mediocre products…”
Since you brought that up, why does your GM-Europe division seem to make better products?
GM Shareholder
How much of a pay-cut are you and the rest of executive management taking as a result of the miscues of the past 3 years going to take?
No name
I was so disappointed during the employee broadcast when you showed all the new vehicles. They looked great but not one was a hybrid. Not one.
Doug Coventry
Thanks you all for taking the necessary actions. There are indeed a large number of us GM employees who believe in and support both the company and its leadership. In fact, among salaried employees there is a grass roots response to the current situation which suggests that GM take immediate out of the box action and not the usual headcount reductions. Especially in Engineering there is more than enough work to be done to avoid mortgaging our future. A lot of us would rather see us all give back any recent merit increases, even take a pay cut rather than see more headcount reductions. All the management effort focused on re-organization, redeploying work, etc. with these reductions only takes the focus away from the product and the real engineering / product related issues. However, the announcement today about the retiree health care elimination will undercut the employee loyalty! So now I’m not so sure so many would offer taking a pay cut to support our company’s future as the company walks away from our future.
In the end though, we still appreciate the tough decisions and will do our best to support the company. Thanks for the opportunity to provide feedback. While I have this opportunity I once again would like to suggest that GM re-use the phrase I remember seeing on GM keys and products “Mark of Excellence”. Why didn’t we include that with the new GM logos on the cars? I’ve suggested this in numerous ways.
Best wishes.
sheth
rum doodle,
I see you are providing more Monday morning quarterbacking. If we have learned anything in the last year or so its that few people or companies were ready for a $1/gallon jump in oil prices. GM is one of many companies who did not see this coming. Any commodity that increases in price so quickly is going to have an adverse affect on some people or companies. You are repeating GM bashing talking points with no regard for reality. You infer that GM was exclusively producing SUVS when fuel was cheaper to the detriment of cars. Last time I checked the CTS, Aura, Cobalt, Impala, G6, Solstice, Vette, STS, etc. are all cars that were introduced in the last 5 years or so. GM never stopped producing cars, they just sold more trucks because their trucks were regarded as the best in the business.
“Since you brought that up, why does your GM-Europe division seem to make better products? ”
Simple, its about costs and consumer tastes. Americans have different standards and this is why Toyota isnt nearly as successful in Europe as in the US. In the US resale and quality are what people care about most while in Europe design, interior materials and handling matter more. Toyota makes average cars by European standards and they havent been embraced across the pond the way they have here. Another fact that Euro car worshippers fail to mention is that premium small and midsize cars available in Europe are very expensive by US standards. PEople want the European Ford Focus for example but they dont mention that a loaded Focus would be close to $30k in Europe. Folks want GM to sell its European products here but they dont want to pay the prices GM charges for those vehicles.
GM worker
I stand behind GM as a 3rd generation GM’er. But rather than expect the ‘workers’ 7th level and below to give back merit raises, in an economic situation where we’ve really not gotten one given that gas has doubled. I think the 8th levels and above, the people making the poor decisions that got us here, need to step up and pay for their own gas. that accounts for more than any merit raise.
David
I think the question of hybrids has been answered by vehicles like the Malibu, Aura, Vue (both versions). As well as the full size truck hybrids that get the same fuel economy as a four-cylinder car. No one said that there wouldn’t be hybrid versions of vehicles like the Equinox or Cruze and until the Volt debuts that’s probably enough.
Justin Weber
I’m sure these cuts were very hard to make; and I hope for the best for G.M. workers, and for that matter, all workers in the U.S. auto industry. But this will all be for the best as the company is -hopefully- right-sized when it meets up with the economic turn-around coming in late 09.
The product G.M. has in the pipeline are wonderful. Not to mention, there is a lot of wonderful product on the streets today from G.M. I am glad Lutz was on the panel today. To me, that shows a commitment to new product. These cuts are needed, but even more importantly, new product programs are needed to move the company forward towards sustained profitability.
David
I’d like to make one other point… If GM was the only company to not see this coming why did Toyota blow 4 Billon on the Tundra and Sequoia only to have the plant shut down 12 months after SOP for nearly 6 months? Is it possible that Toyota also may have missed the rapid increase in oil prices?
Jared
Bob, if it is true that the Beat was not designed to meet US crash test standards, then one or more GM executives need to be fired.
If it is true that the Cruze isn’t coming here, then one or more GM executives need to be fired.
If you really believe that the Cobalt is “coming into its own” and doesn’t need to be replaced ASAP, then I’m sorry, Bob, but you need to go too.
We’ve all seen the sales data from May and June. The only cars selling in the US are subcompact and compact cars. While GMs compact cars have improved significantly, GMs subcompacts are very, very subpar. They need to be replaced yesterday.
Todd
Mr. Lutz, It is no longer the time to point fingers now that GM is heading in the right direction. Mistakes were made but too many people fail to realize that the other two big US automakers are in poor shape too. Chrysler lost everything years ago and Ford is taking the wait and see attitude, which is a mistake. GM is the only one that is moving forward. I buy GM stock and one day hope that it’ll reach that $50 ~ $65 a share price. I believe it will with all the inovation that GM is pouring into the E-Flex system. Thank you for all your efforts, and I will be purchasing a Volt once available.
Joe B
Thanks for this, Bob.
I may not be in “the know” regarding what you guys are doing…but given the press-release, and your sentiments here; it is painfully obvious that you’re not excited to make the decisions that have to be made. Frankly, not all CEOs, and executives can say that. I’m glad the automaker I’m rooting for has real, down-to-earth people leading it.
Keep up the good work. Your products are outstanding, and only stand to get better. And your innovation and foresight should serve to get the company through the alternative fuels shift fairly easily.
You haven’t given up on us Bob, Rick, etc; so I for one, won’t give up on you. My next vehicle WILL be a General Motors product without fail.
And on a somewhat related note, here’s an interesting read for anyone doubting the General’s ability to produce fuel efficient vehicles:
Most Fuel Efficient Automakers
Chevrolet virtually ties with Honda. But the kicker is that they do it with a full lineup of trucks!!!
Again, Thanks for the update, Bob. And I’m sure we’ll all make it through this.
Frank
Bob,
I think the announcements today are largely necesary and good for GM
However, I dont think GM can afford to slow its R&D spending - the competition (Toyota) is spending big to beat GM now
And I dont think GM should loose sight of what GM do best - Camaros, Corvettes and Cadillacs
GM is too short sighted and reactionary -
BMW isnt switching all their cars to Front Wheel Drive!
Toyota didn’t stop work on their Camry or Lexus when they developed the Prius!
Keep it real Bob - remember the PEOPLE who ACTUALLY LIKE CARS and you will continue to make CARS PEOPLE ACTUALLY LIKE!
emmanuel Coleman
I am to be a man who is going to purchase his 1st GM vehicle with pride . I am also an employee out in Fremont California where we make the Pontiac Vibe . These are cuts that have to be done . Just like in life when you eat well you find yourself after alot of hard work to get to a place where you can be a leader on your job or in your life you find yourself complacent . This is something that has happened and The General is getting back into combat shape . But like some of the people who have posted I have concerns. Like how we have many copies of vehicles like the Buick Enclave . Chevy Traverse GMC Acadia and Saturn Outlook are the same vehicle . But good looking small and gas conserving vehicles like the three concepts that we took a pool on the Beat, Trax, and Groove . All these cars are good looking trendy vehicles that meet different demands in what a person might want . I guess what I am saying is that GM is on the right TRAX for innovation in categories for design , fuel economy and quality but the must level up not watering down what they bring out that can help US you and me . USa . In competing with cars like Mazada 6 which looks like Robins version of the Bat-mobile . Verses the Sierra concept that hit a home run . That looks like a vehicle that I would buy at 26 someone at 40 even 60 + cause it brings this level of the style and flair that is US and at the same time can be that new lux. car with the E-Flex system . And I believe when it comes to vehicles that we produce that the E-Flex system needs to be push to all forms of development through out all of GM’s brands . This will not only allow us to have brands that can compete . Like the Provuq concept another vehicle that shows innovation in quality design and fuel economy . This is what will keep GM alive and will allow it too compete with all other car manufactures .
Eric
It is called the Law of Supply and Demand
“Unfortunately, GM and the others remained in denial and chose to stick with the profitability of big pickup trucks and SUVs and uneducated customer demand far beyond what was reasonable or healthy.”
In 1981 (the previous gasoline peak price) according to the DOE, trucks represented 20% of the market. By 2007, trucks represented 50% of the market. So, don’t blame GM for the SUPPLY, blame you neighbor for the DEMAND.
“I was so disappointed during the employee broadcast when you showed all the new vehicles. They looked great but not one was a hybrid. Not one.”
Hybrids, people are being so ecologically green that they are not being financially green. There was an article last month at Edmunds.com listing the top ten lowest cost to own and operate. And guess what at $4 gas, none of them were hybrids. And at $5 gas, none of them were hybrids. And at $6 gas, tenth place was a hybrid.
So wake up and do the math. And if you want the price of gas to come down - DRILL!!
N Riley
Mr. Lutz
I am a firm believer in GM and I wish it all the success possible in the future. I would like to see an accelerated Volt program to get more of them out sooner than what I have been reading. We need to see a better hybrid system for the other current and soon to be released vehicles to allow them to compete more fully with other vehicles in their class.
The Volt should introduce a BEV version soon. That would get the Volt out to the buying public sooner and get cash coming in. The BEV version should help GM to stave off some of your competitors that is coming to the market with competing versions of BEV, PHEV and E-Flex type vehicles.
Thank you.
Another GM Employee
…We’ve all seen the sales data from May and June. The only cars selling in the US are subcompact and compact cars. While GMs compact cars have improved significantly, GMs subcompacts are very, very subpar. They need to be replaced yesterday.
Posted by: Jared on July 15, 2008 12:14 PM
Jared,
Yes, we have seen the June sales.
Have you? Your conclusions are a bit off. From http://www.gm.com, investor information, sales and production numbers, some intersting highlights:
% chg in sales, JN07 to JN08
CTS +16%
STS +12%
Cobalt +21.6%
Malibu +73.4%
G6 +34.2%
Vibe +23%
Aura +25.6%
SKY +44.1%
SRX +12%
Equinox +45.9%
HHR +23.6%
Trailblazer +28.2% (not a typo)
VUE +24.8%
Definitely, not all of these are compacts or subcompacts. Try looking at the actual data, and not regurgitating uninformed soundbytes.
Yes, there is a shift in the model mix away from large trucks, but this does NOT mean that NO trucks are being sold, it just means that LESS trucks are being sold.
There are people, believe it or not, that actually require a large truck capable of towing significant load or a large number of passengers.
The Aveo, a subcompact, actually dropped by 19.7%.
The Prius dropped by 24% also, as well as the Scion tC (-28.2%).
Edwin
Mr. Lutz,
Great to hear the good news about retail car sales being up 8 percent.
Really like the photos of the new 2010 Cobalt / Cruze (cool name). Its just what is so needed for the youth appeal. The new Malibu is drawing people, even as a stand along car. The Malibu has a classic profile and that should show that GM’s special classic styling can lure them in, just as GM enthusiasts having been saying.
I believe expanding Cadillac’s offerings up, down, and sideways a bit would improve your car/crossover sales, profits, and market share dramatically. This move would help the other divisions too. Consider the refined and unrefined luxury buyer targeting the Mercedes buyer for reputation, and the more cosmetic Lexus/BMW for looks. Its evident by their current offerings these makes are trying to keep up with Cadillac. Cadillac should not fall for the slogan of we don’t want to compete with ourselves by having an alternative style offering. A sedan with a bit more room with alternative headlights and tail light designs to the CTS would round out Cadillac’s middle and literally take market share from the foreign competition. Round out the XLR too. Cadillac should keep the focus on what’s the best car with price no object (even if its a lower price than theirs) and not simply the best for the money. They already know Cadillac is the best car for the money, thats what irritates the foreign competition, and its how they get by with soaking their luxury customers.
Pontiac and Buick need a couple gorgeous designs for their flagships.
A small V-8 with even better fuel economy would help luxury and near-luxury sales.
GM should be mentioning in its fuel economy ads that GM cars use regular gas, many from the foreign competition do not.
Also, thanking customers in your ads for their support would wake them up a bit, and probably would bring even more in. With your sales increase in cars, it seems there are people looking for a great American car.
Steven
@Jeff: Seems you missed the part that said “Affected retirees and surviving spouses will receive a pension increase from GM’s over funded U.S. salaried plan to help offset costs of Medicare and supplemental coverage.”?
Eric
Focus on the VOLT. Stick with that vehicle GM.
It’s the future.
Don’t screw this up.
There is everything you need to know about the future market of autos.
You can now fire all of your market research people and save a few million.
Get to work.
Rum Doodle
~ “So, don’t blame GM for the SUPPLY, blame you neighbor for the DEMAND.”
OK, point taken, But we can blame GM, Ford, and Chrysler for their continued, irresponsible (and unfortunately successful) lobbying effort to exempt trucks and SUVs from having to meet more rigorous CAFE standards.
All they were doing was turning a blind eye to reality in order to bolster the short-term bottom line. Unfortunately, those chickens are now coming home to roost.
I wouldn’t be surprised now if they wished they hadn’t spent so much money on lobbyists and politicians fighting CAFE, and had instead invested that money in research and development for better cars and alternatives to fossil-fueled internal combustion engines.
Richard
Realizing that trucks consume more gas that our car counterparts, they are also a neccessity. If i could buy a BASE pickup with only PS/PB - no air / air bags / carpeting / headlining / radio etc - would buy that in a heart beat. The price of the vehicle would offset the cost of gas at $9.00 per gallon. (which it is in England right now)GM still could make money on a base pick-up and not degrade the entire line.
Gereon (Germany)
Hi Sheth,
Hi Rum Doodle,
saying, that European cars are generally better than GM- or other US-cars, doesn’t meet the facts. How would you explain, that some European manufacturers (especially Volkswagen) repeatedly fall behind the GM-Brands according to JD Power? I am driving a US-made GM-vehicle since more than 7 years (2001 Alero) and so I have the chance to do real-world comparison all the time. My resolution after 82.000 miles: I definitely would buy an American GM-vehicle again.
Nevertheless, considering the current oil-prices, it for sure was a right decision to bringing the Opel Astra to the US. In my opinion the Corsa should follow a.s.a.p. in order to gain some market-share for GM among the sub-compacts. I am wondering what you have been writing regarding the sticker prices. The Astra is vastly more inexpensive in the US than over here in Germany. I’d say the Astra is far from being a high-priced compact in your country.
HotCarNut
Another GM Employee:
The reason for the drop in sales for the Prius and Aveo is due to AVAILABILITY, not a lack of market. The current waiting list for a Prius is 6 months and there is roughly a 1 day supply in the US.
Also take into consideration that while the % change looks good, what matters more is market share in a growing market. The Honda Civic just became the best selling car in America. Do you really think that most Americans (or even half) believe that the Cobalt is the Civic’s equal? Not likely, and for good reason. The Malibu shows that when GM produces a world class product, the world sits up, pays attention, and puts it’s money where its mouth is. However, the Cobalt has not and will not enjoy the same level of success. The Aveo? GM’s polishing a turd. They’ve spent so much time cheapening the car to get a low price point they forgot to make it truly competitive and fun to drive. I can only imagine how bad sales will be when the new Ford Fiesta rolls out, along with a revised Fit, and the Beat isn’t here to meet it.
Bob:
18 of the next 19 may be cars or crossover, but are they the RIGHT cars or crossovers? The Camaro is a great car, but will you have the 4 cylinder model with the correct rear end gearing to help give it that fun-but-fuel-friendly image? It’s already been announced that the US won’t see a version of the Beat. BIG MISTAKE. How about using some of the $15B to rush the program and get it here in a year. Good Lord knows that there is enough spare capacity in the truck plants to turn a line to making the US version. Why is the Cruze not being made in the US until 2010 when the rest of the world has it next year? I understand about cycle times and model changeovers, but when you have a great product you put it on the market as soon as possible!!! Don’t let some theoretical calendar of refresh times dictate what you put on the market!
BTW: When does the board vote to kill GMC?
go broke
I hope GM goes broke just for the fact that their Home finance division is horrible ran and unwilling to work with it’s customers. I just had to come here today to remind myself what brands make up the GM family, that I will never buy again. GO Ford! GO Toyota!
Edwin
Rum Doodle,
Couldn’t disagree more.
CAFE is a farce by the far left to attack American business, unfortunately acquiesced to by a weakling Congress. It should be repealed entirely. So you don’t seem to like the revised CAFE with its more fair formula done by vehicle type? What’s the matter are you afraid that if the foreign competition has to put out by vehicle foot print they won’t be able to keep up with superior American technology.
Regulating C02 is also a joke.
What the left wing pessimists seem to hate most is success in America.
And on investment: American companies have done most of the reseach and development into alternatives and most of it with their own money.
Rum Doodle
~ Nevertheless, considering the current oil-prices, it for sure was a right decision to bringing the Opel Astra to the US.”
What are your observations of the Opel Agila and how it would do in the North America market as a city-car offering?
Bwright
Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming, not this kind of rise.
100% correct Bob. While GM gets virtually all of the press, quiet as it’s kept the ENTIRE auto industry is reeling.
Toyota has seen a sobering 35% drop from their December 2006 (down 22% from their high this year alone) high as a mix shift caught them broadside. Nissan is down 45% from their 2006 high. Porsche is down 53% from October 2007 to present. BMW is down 45% from their 2007 high. Daimler is down 47% from their 2007 high. Lead times for this industry are such that the vehicle mix on the road now was of course set five years ago. NOBODY in this industry can truly see five years into the future. They can make educated guesses and with 20/20 hindsight the peanut gallery can always anoint themselves geniuses even when the available evidence points out that nobody else in the industry got it right. They can spare me the points on Honda (down 20% from their 2006 high). Honda cut back on more profitable Ridgelines and Pilots to make less profitable but salable Civics. Let’s see what that does for their profit margins after the hype about how smart they are dies down. Also neatly not mentioned by the clueless media is that those flexible plants could not build the larger trucks and SUVs without which Honda’s current market cap is one third that of Toyota which does.
Sheth and David, great posts. Glad to see some here get it.
On my second Vette and looking forward to my ZR1 next year Bob. Thanks for always getting excellence from your team.
jamie
Bob
I applaud the tough decisions that both you and Rick had to make. I am fully confident that GM will win again in the not too distant future. If I had a couple of billion dollars to spare, I would plunk it down on your table for sure.
A couple of points I disagree with in your missive. As someone who is often mistaken for a dumb blonde, I foresaw gasoline prices rising substantially over two years ago. I also noted back then that Bill Gates and Warren Buffett were speculating with the declining dollar. I even predicted an equilibrium point of $6.87 a gallon which should be reached sometime next year. Of course, no one ever takes me seriously, until it’s too late that is.
Some things to consider:
Although I applaud GMs efforts in combining their distribution network into four channels, I believe you really must pare down to ONE channel. I had even thought GM would be able to survive with 2 channels, Cadillac-Chevrolet and BPG, but that seems to be a rather weak choice now.
Similarily acceleration of the global manufacturing system is essential to sustained growth and economies of scale.
It is fairly evident that GM cannot eliminate any of its brands, but it should be reducing the number of models it sells.
CADILLAC is AOK.
CHEVROLET is AOK.
PONTIAC should be reinvented as sporty rebadges of Chevrolet cars with sport suspension and turbocharged engines.
BUICK should be reinvented a near-luxury rebadges of Chevrolet cars with touring suspension, turbocharged engines and AWD.
SATURN should be the new moniker for greenline GM products like the Chevy Volt. Merge all Saturn dealerships with Chevrolet.
GMC would become a commercial division of Chevrolet and offer only MD and HD trucks.
SAAB/OPEL/VAUXHALL would provide Cadillac/Chevrolet products geared for European markets. No need to duplicate line-ups there. Saab would move upscale more to compete with BMW, Audi and Mercedes.
HOLDEN/DAEWOO would provide Cadillac/Chevrolet products for the Australasian region. GMDAT would continue engineering and manufacturing products for GM.
There you go. All the brands neatly positioned and uniquely different.
Motorsports fan
Heard the reference to cuts in motorsports budgets.
You can cut NA$CAR 100% and most would cheer.
You built that organization along with Ford. See how long they last with Toyota.
edvard
The oil situation in my opinion is largely a result of what many are starting to call ” The rolling bubble”. First there was the tech bubble, which of course burst fantastically. Afterwards, everyone jumped into “safe” investments-aka- real estate, and especially after the Fed lowered interest rates. It too went into the stratosphere and people who invested in it did so with great abandon.
So what happened to the get-rich-quick money after the housing bubble burst? Why- it all went into oil and commodities, hence the bubble just keeps right on rollin’ this time causing even more havoc on the American people.
The sad part about these bubbles is that they ultimately come back and bit everyone in the rear. As we see now, companies like GM- a company that ACTUALLY MAKES PRODUCTS versus inflating make-believe ones is being seriously affected by the rise in oil, which as I suspect is from investors buying oil futures.
Anyhow, thanks for being open and transparent as usual. Thanks Bob. I and many others thing GM is doing a great job.
Leonard Doorsmith
Bob & Others,
Wow, seems like there’s a whole lotta DENIAL going on… half the comments (and Lutz’s post) read somewhat like a Support Group for Poor Corporate Decision Making.
Kinda sad, because that’s what got GM in hot water in the first place, and it’s what will kill GM if GM does die in the end (which I hope they do not).
Bob, you can cry, “NO ONE SAW IT COMING”, and your sycophants can make cute comments about Monday morning quarterbacking, but really, SOME DID SEE IT COMING, and it wasn’t all that hard to figure out, really.
The rise of China and India + global oil output not keeping pace + no real improvement in auto gas mileage/efficiency (and GM, through its anti-CAFE lobbying, was a direct contributor to that) = an eventual crisis/breaking point.
It was obvious that it was going to happen sooner or later, the only unknown was the date. Now we know that, too. It’s now.
What I predict will happen is that same thing that always seems to happen… GM will REACT, but will still lack the VISION needed to see what’s coming or at least to have hedged its bets enough to be ready.
Toyota may not have seen it coming either, but they at least had a sufficiently diversified portfolio that they had a product out there that was ideal for what was a likely eventuality (the Prius).
GM, in contrast? Killed the EV-1 back in the ’90s, didn’t even want it EXISTING alongside its behemoth SUV lineup. Oh well, their bad and their loss.
Lutz, Wagoner, and Co., will likely survive the current situation (just barelly), but, lacking vision and the gumption to STAND FOR a certain set of values NO MATTER WHAT (the environment, reliability, whatever) but rather only up to the point where it stops being convenient, they will no doubt be caught flat-footed the next time something goes wrong or *gasp* CHANGES in their industry.
And they will, once again, REACT, while insisting that “It’s NOT OUR FAULT!”. With the support of the usual crowd of ‘me too’ sycophants.
Lather, rinse, repeat, ad infinitum. This is very mediocre and no way to run a railroad, but I guess we’ll all try to make ourselves feel good about riding this particular dinosaur, eh?
‘Dinosaur’ may actually be a bit mean… to dinosaurs, actually. As of February, Bob was still saying that global warming was a “crock of s***”, and that hybrids and diesels made no economic sense.
Rock on Bob, no one does denial and lack of vision better. You do get an ‘A’ in blame deflection, however. A pity that that is the least of GM’s needs right now.
Gary Dikkers
Mr Lutz,
OK, no one saw it coming. The question is, “How do you react?”
From what I’ve read, you already have a car that will get 50+ mpg, but one that you don’t plan to sell until 2010 because you’re still fiddling around with its Li-ion battery pack.
I’m talking of course about the Volt which you have said will get 50+ mpg running as a series-hybrid with a small ICE turning a generator to power electric motors at the wheels.
Doesn’t anyone at GM/HQ realize the Volt running as as series-hybrid — even w/o a satisfactory Li-ion battery pack — would by itself be a tremendous step forward?
Why not immediately push up release of the Volt — advertising it as a revolutionary series-hybrid — and then take your time perfecting the battery pack?
Who could resist a series-hybrid that would get 50+ mpg? You could be going toe-to-toe with the Prius in a matter of months.
Crank up some of that under-used assembly line capacity at Janesville or Moraine and start churning out those series-hybrid puppies now — then offer the batteries as an add-on option later.
V/R
Gary Dikkers
SierraGS
MR. Lutz, Thank you for your comments.
I would like to present a few ideas to you to help GM out of it’s current problems. Some you may not agree with and that is fine, so here is a couple thoughts.
The Refining and Recapitalization of GM
GM must REDEFINE itself and finally making major changes within the management structure.
Marketing should move to Southern California to see “first hand” how the competition operates here and the problems GM dealers have moving GM products in the California market and get “one on one” time with both the dealers and customers. This “insight” will enable GM marketing to better equip models with the correct “content” needed to improve sales to both import and domestic buyers in California.
GM has to get in touch with the loyal buyers it has and conduct some market research on what they consider important and what they are looking for in their next GM product.
Using this combined data GM must give each brand a distinct direction and create marketing both in line with the direction and complimentary to brand(s) that share its “sales channel”.
GM has to consolidate sales/marketing/logistics and production for each “architecture” under one management/engineering team and using market data and each brands “identity” to maximize shared parts between models in the architecture while maintaining each brands character within each model. This data can be shared between architectures identifying opportunities to share parts across architectures.
Each “Sales Channel” will have one management not the multiple ones of today to handle dealer relations, accessory sales and product distribution, streamlining decision making and lowering costs and will interface with each architectures development team to minimize redundancy and lower inventory levels in the distribution system.
GM must drive out all redundant efforts and bureaucratic roadblocks to agile marketing changes in order to “keep up” with day to day changes and be more aware of “major” swings in the marketplace.
CASH:
GM needs cash and positive cash flow today more than ever and must make adjustments to previous decisions such as fleet sale reduction.
Fleet sales must be increased on high inventory models, outgoing models and ones with name changes pending to generate as much cash in the shortest amount of time, not talking dumping here more inventory reduction coupled with production adjustments to get 2008 model vehicle inventory where it needs to be across the board.
ASSET MANAGEMENT:
GM has assets that are not creating the cash flow they are capable of and offer opportunities for GM to build both market share and cash.
Hybrid Technology: GM has built up expertise in Hybrid technologies like Two-Mode and E-Flex that can attract private equity if GM creates a separate business unit for it. This new unit can create powertrain, control modules and battery technology for future applications in GM’s own products and license them to others.
Alternative Fuels: GM has experience in Hydrogen Fuel Cells, Bio-Power Ethanol and E85 capable powertrains that again can be moved to a separate unit attracting private equity interest.
Next Generation Powertrain: GM’s powertrain group is one of the best in the industry and it soo can can “split out” into a separate unit, first just the HCCI portion since it has great promise and can be licensed to third parties. Later the remaining portion of Powertrain including production may be incorporated.
Dealer Network: The most underused and misunderstood asset GM has, most dealer profit lie in used vehicle sale, accessory sales, parts and service not new sales. GM has the most extensive network in the industry and treats it like a liability not the asset it represents. The retail portion of the network can have a business unit created with private equities help remaining completely separate from GM, relieving GM from the day to day retail cost burden. Ad and web site management costs can be consolidated throughout the country with data on latest market trends like color and interior preferences shared between dealers. This data can be fed back to GM’s marketing for national ad strategy and future product development.
Automotive Finance and Leasing: Separate from the Dealer network GM can create an Automotive Finance group (spin-off from GMAC?) with ties to the GM Card making loans easier and lowering handling costs of special offers. This group can provide Automotive finance for any manufacturer expanding it’s market and diluting potential risk to GM.
Product Enhancement and Inventory Control: The inventory, accessory, service parts, training and “dealer installed” factory options will be handled by this unit. Along with private equity this unit manages new vehicle inventory in centralized locations (next to rail lines where possible) cutting transportation and inventory holding costs of dealers yet enabling faster response to customer orders. This centralized location would perform service training and install upgrades such as AC on base model cars, leather seating and electronics upgrades on interiors and wheel, tire, brake and suspension upgrades on vehicles in inventory before or after sale. It could also perform factory warranted hybrid battery swap/upgrades as they are available.
Similar to the Inventory Control unit, GM can create a Performance Group to install performance parts on new and old GM products using crate engines from GM Performance Parts and other performance parts from established high performance companies that could partner with GM.
Medium-Duty Trucks: When the economy picks up and with the possibility of more companies using rail to ship from major metropolitan area to another the Medium Truck business will pickup in the next 18-24 months and GM has available facilities, powertrains, chassis and trained assembly workforce to offer a partner - this one can become sticky with UAW representation potentially being a problem.
Production Facilities: GM has excess facilities that can remain vehicle production centers for companies looking for a U.S. location in a JV with GM (or not) and with a private equity partner used for Alternative Energy production like Cellulosic Ethanol or Algae to Bio-Fuel providing GM with additional cash flow.
Real Estate Management: GM also has excess office facilities that with a private equity partner can be “managed” to maximize cash returns to GM - these properties can be sold, leased or used for JV projects depending on what best fits the property. This will maximize the value of the property, give GM some upfront capitol and allow a private equity partner to make a good profit from the properties.
These are some ideas that do not involve selling/dropping brands and can work, maybe not all but most and will build a stronger GM.
Keep up those great new models coming.
Christopher Popa
Mr. Lutz:
The Detroit Free Press has quoted you as saying GM needs “triples and home runs” from its upcoming products. The new Buick on Epsilon II is beautiful, but no one would ever know it from the photo that was shown behind Rick Wagoner today. Either the shot was too plain or from the wrong angle or something. And why the hesitation with what it’ll be called? I haven’t heard a single person ask for the LaCrosse (or Allure) name to be retained, but Invicta seems to be desired overwhelmingly. Are you listening? Also, whatever the NEXT Buick beyond that is (Delta II?), it needs to be not just beautiful but startlingly so. Please.
- Christopher Popa
Phil Racicot
What hurt GM so much isn’t only the economic situation or the price of oil.
It’s also the cars that GM currently produce which don’t meet customer’s exectations.
I really like cars but not all kind of cars. And my favourite brand, which happens to be a GM division, didn’t procuce a car like in the last 20 years.
Please change that and the sales will go up!
And I’m quite surprised to see that there is still not a a less expensive alternative to petrolium for internal combustion engines. At 10$ a barrel, it was easy to understand, but at the actual prices, I think that large corporations like GM should find something. Even your large network of dealers could be the distributor for this inexpensive fuel and that would increase their incomes!
SteveG
Lets see, we have to wait yet another 3 years and GM will be saved. Seems we hear the same thing every 3 years!
You had us vote on the Beat, Trax, etc, yet didnt design the car for the US market. If you had, it would be here next year when it is so desperately needed. You guys are so clueless its almost as if you are trying to fail!
How about designing all your ‘global’ cars so they will meet US specs? Is this so hard for you to grasp!?
You say the Cobalt is hitting its stride? Did you say this with a straight face? The Cobalt is falling behind its competition by the day. Do you even look at your competition? They all have telescoping steering wheels, more comfortable seats, better steering dynamics, etc. I know you can’t make the rear seat bigger but what about all the other things I mentioned that would at least make the Cobalt a little better? The Kia Forte will be another nail in the coffin while we wait for a new design.
Now, here you have the Astra with better steering, better seats, and a telescoping steering wheel. The Cobalt has the superior powertrain. Can’t you swap out the different pieces to make both cars more competitive? Is this rocket science to you guys?
The Aveo is garbage. I rented one when my Cobalt was in the shop for the umpteenth time (coming into its own and falling apart at 40,000 miles) and the interior smelled like a toxic dump, the engine was rough and buzzy and the handling was atrocious. It was a rental, you say, thats why it sucked…………..it had 600 miles on it!
You can make a small car fun to drive, see the Fit. See the Versa. Replace the Aveo with something far better than what you have now or the Ford Fiesta is going to kill any sale you can get. And change the name to Metro while you’re at it.
Rick Wagoner really needs to go, 3 years ago. I’m sorry to say that its time for you to retire also since you are primarily the one responsible for GM ignoring their small cars.
Lets watch the Cobalt whither on the vine just like the Cavalier, only to have GM say oh, this one is going to be really good thats why we renamed it…….again.
Bizarre logic, especially when you give it quite possibly the most pathetic name in the world.
Cruze………….what were you thinking!?
Better yet, you guys had better START thinking. Even better, let more competent people take over GM.
Rob Keller
I cannot believe that the Beat and the Cruze will not be sold in North America! What poor planning! I think people are going to be very disappointed by this announcement, and it is just one more example of how GM will miss the boat and be years behind the competition! Unbelievable! We need more fuel efficient smaller cars, not more crossovers and cute utes!
Chris R
edvard,
Nicely said. I’m glad someone else understands that when the price of something, oil in this case, rises out of proportion with actual supply and demand, that there is a bubble. A huge one by the looks of it. It’s not only got GM and other automakers scrambling, but is putting a bunch of companies that make up our global transport system on the ropes, particularly airlines. People who think GM and the others were short sighted and irresponsible need to seriously take a look at the oil speculators who completely fail to see the big picture. If they did, then they’d see that they are causing more damage to our economy than a few more mortgages than usual going into default (it’s hardly a meltdown).
Brady Turley
I agree there will always be a truck market. Its not going away, only reduced. Yet, why hasn’t GM put a v8 into the Colorado. Ya, the Colorado is a mid to low quality vehicle, but if the V8 Dakota can tow 7000 pounds, why can’t the colorado with a 5.3? Its in the H3, which of course is Colorado underneith. Why hasn’t GM explored the smaller truck market with big truck cababilities. Shed the extra 1000 pounds, and the 5.3 should be good for near 25 mpgs. Not to mention it would be a stop light sleeper. Or, you could always toss that 4.5 into the silverado a little sooner…
Bob Anon
What I am curious about is why during the entire live conference yesterday, did it seem that the name “Saturn” was purposely omitted or avoided during the entire GM conference?
soon to be former GM employee
I have to agree with a lot of the posters. If anything there has been a lack of leadership from GM. The “hard” decisions that GM announced is no more than the same path taken by most others when times get a little tough . . . .cut employment, cut spending, cut benefits. At least the leadership could have taken a pay cut (a bonus cut isn’t enough) to show that they are part of the team. It’s not like they need the money. We were late to the market with crossovers (now I would bet that we will have too many with all that are coming). We have never had a quality, competitive small car until the Astra. The Beat needs to be sold in this country, and it should be available now. We’ve been late to market with quality, high milage four cylinders. How much has market share declined since Wagoner has been head of North America or higher? He has had to operate in tough times, but I’m amazed that he still has the confidence of the board. GM is going to need real leadership and real changes to prosper in the future. It’s not going to get any easier. I’m glad that I got rid of my GM stock long ago.
Jared
Another GM Employee:
Prius sales are down because Toyota can’t get enough batteries. You either know that and you are deliberately using the Prius sales figures to mislead people, or you should know that.
GM subcompacts are simply subpar and that is why they selling poorly. If you drive the competition you’ll see that.
GM should have engineered the Beat for the US. The demand for it was plain to see.
The Cobalt needs to be replaced and the Cruze should be coming ASAP.
The top 4 best sellers in May were the Civic, Corolla, Camry, and Accord. The Cobalt was 9th with about 1/2 the sales of the Civic. The Ford Focus, which is horridly ugly and based on a 10-year-old platform outsold the Cobalt in May. That should tell you something about the Cobalt — it simply isn’t competitive. The Cobalt was at best an adequate car when it was introduced.
While the Malibu and Aura are greatly improved, neither of them are in the top 10.
You (and the rest at GM) need to stop being defensive, face reality, and accept that you have a problem. Your cars are not selling anywhere near as well as the competition. There is a reason for that — with a few exceptions they simply aren’t as good.
You can keep trying to tell us that the world is flat, but that isn’t going to move metal off the showroom floor.
Barry
Actually Bob, many people did see it coming. All of those you cite that didn’t see it coming but that surely isn’t everyone. And, many mainstream people saw it coming. It isn’t rocket science. The world was awash in capital to ignite never before seen global growth. That growth would spur an underlying demand for commodities and investment in oil discovery was at the lowest level in modern times.
And, I’m going to tell you what is going to happen in the future to prove that I not only saw it coming but that the future is predictable as well.
Just as you are quoted in the Detroit News that you aren’t even sure if GM should develop the next generation pickup in reference to high energy prices, oil is about to bust. I don’t mean drop. I mean bust. And, so is China and many emerging markets that GM believes is going to save them from the U.S. slowdown. And, that means all of the investments GM has made abroad are going to be subject to tremendous risks. Including risks you have no control over. That being potential political and social unrest.
No one saw it coming? Well, watch for the future because it’s coming
gtjeff
GM’s with high fuel prices is due to the fact your company doesnt have a balanced product portfolio, it was basically becoming General Trucks. All the analysts predicted that cheap gas was over and you could see demand shifting back to cars a full two years ago. How did GM react? Close the Spring Hill plant to retool for another crossover, 250,000 units of small fuel efficient vehicle production were lost.
Your Wilmington plant could build another 200,000 small fuel efficient vehicles, yet 80% of it is sitting unused. You want to be the fuel mileage leader, yet overlook the spaceframe technology that could get you there quickly and at a low cost. Why stop building the old vue and replace it with a steel paneled model that weighs 800 pounds more?
Time to build more coupes, rwd and how about one competitive minivan instead of just handing these segments to your competition. Chevy isnt even selling a minivan in 2009, one could argue they didnt offer one in 2008 either.
You want to eliminate unnecessary spending. First step towards this, end the model renaming. The person calling the shots here doesnt understand GM’s customer base nor the value of many of the companies storied model names. Want proof, look at the declining sales at both Buick and Pontiac.
Next step, sell Saab and Hummer, both are just distractions. Buick and Pontiac have great potential with the right marketing and product infusion. A new fiero would be the ticket, along with a GTO. Bob, it will take your Solstice 20 years to sell how many Fiero’s Pontiac moved in just five years. You got the car you wanted, the customers didnt.
jg
GM needs smaller luxury cars. Why don’t you sell the Buick Excelle here (with a non Hyundai name)
You have nothing to compete with the 3-series, Volvo s-40 or small Lexus.
How about a hybrid called the Buick Electra?
Also, how about a car for Tiger? Buick Bengal? Velite?
Why is Buick still neglected?
Steven
I read alot of negativity about the current Cobalt. I grew up on a farm in mid Illinois and drove mostly trucks. In 1985 I moved to Detroit and got a job at GM Engineering working in the truck chassis dept.
I continued to buy trucks (I do home makeovers). My place of business is 30 mi one way and the high price of gas was taking coin out of my pocket. I dreaded the thought of moving over to a small compact car. I was use to my big roomy trucks. On May 23 2008 I purchased a Chevy Cobalt LT Special Edition. I have already racked up 4,800 mi.. I tell everyone this is a great fun to drive car. The interior is beautiful. The outside is eye catching. The ride and handling is smooth. The 4 cylinder is quite and has plenty of power and pickup. The latest trip to Chicago I got a solid 34.4 mpg. My feelings about the Cobalt is echoed by anyone who is an owner. For $15,550 out the door I didn’t expect a luxury car by no means. But I feel I have gotten alot more car then I expected for the money. Anyone who bashes the Cobalt most likely has never driven one but has the perception (there’s that word again) the Honda Civic must be better. And they probably have never driven a Civic either. One more thing, I didn’t trade in my 2003 truck since it’s paid for. It has 156,000 carefree mi. and many more to drive.
I AM GM
Steven Gilles
David
“The top 4 best sellers in May were the Civic, Corolla, Camry, and Accord. The Cobalt was 9th with about 1/2 the sales of the Civic. The Ford Focus, which is horridly ugly and based on a 10-year-old platform outsold the Cobalt in May. That should tell you something about the Cobalt — it simply isn’t competitive. The Cobalt was at best an adequate car when it was introduced.”
The Cobalt outsold the Focus in June. This is indicative of the production increases recently instituted at Lordstown. You criticize it for being on an ancient platform yet the Toyota Camry/Matrix is on a platform that is almost 20 years old and has very poor NVH performance and refinement.
GM Dealer Employee
Forget all these crossovers already.We at your selling dealers need cars that people want to buy.I work for Chevrolet and I really dont think the Traverse is going to be a great seller.Nice yes……but at 14mpg? The Beat and cars like that should be here right now.GM has been behind for so long,its time to get ahead or even at least.Other car lines can make fuel efficient vehicles,so can GM.I would really prefer not lose my job because the place closes due to poor sales.Forget the trucks,forget the crossovers,start being competitive and give us something to sell.Maibus are great,HHRS are as well.I drive a 2007 HHR…..speaking of why are there virtually no commercials or advertisements for this car??? The press and all media is killing you guys.They seem to favor everyone but GM.All you hear is Toyota and Honda but they never mention that they have gas guzzling suv’s also.The Impala gets better mileage than a Camry,yet thats not talked about.You need some heavy marketing and some new models a.s.a.p. as well letting alot of 6-7 figure salary people go.Start doing business like you mean it and get on the same boat as the other car lines. Fire Rick and get some new,young aggressive blood in there and change the way GM does business.I really dont want to be unemployed because the company we rely on to give us cars to sell cant give us cars that people are after now.
And yes,GM should have seen this coming when gas started going up in 2004! You should have at least had a back up plan.SUV’s couldnt last forever…….Get with the program now.
Rum Doodle
Edwin: ~ “CAFE is a farce by the far left to attack American business, unfortunately acquiesced to by a weakling Congress. What the left wing pessimists seem to hate most is success in America.”
I’m far from a left-winger, but exactly what success are you talking about?
GM, Ford, and Chrysler have all lost billions over the last few years. GM just announced major restructuring and has had to cut thousands of jobs for hard-working Americans. That’s success?
The fact is that all three majors fought CAFE tooth and nail, and shortsightedly rode the SUV horse into the ground with few long-range plans for an energy future that has been all too obvious since at least 1979.
As much as they didn’t like higher CAFE standards, the hard fact is that if 15 years ago CAFE had been upped to 40 or 45 mpg, and had included SUVs and trucks, all three majors would be in a far more competitive and better position today.
If the CAFE of US automakers and the US auto fleet was 45 mpg, we would have to import virtually no foreign oil. Instead, we have to import almost 70% of our oil while sending billions of dollars out of this country. How can you call that success?
Steven
David wrote:
That should tell you something about the Cobalt — it simply isn’t competitive.
I’m trying to be unbiased here even as a GM employee. So many times I read comments on this blog site relating to
some of our products being not competitive to foreign. Almost every time it is with out facts, figures and or statistics. It is usually written with emotions only derived by hearsay from media outlets or special interest groups. I feel in order for any comment to be taken seriously that blogger needs to have done their own fair comparison. Please explain in more detail David as to why the Cobalt simply isn’t competitve. I beg to differ as I did ride and drive a Honda to see what my competion is on the road. We can nit pick differences all day how the Cobalt has this over the Honda and the Honda has that over the Cobalt, but at the end of the day it’s not like the Civic has round wheels and the Chevy has square. Don’t take my word for it or any magazine that has their own hidden agenda but take a look yourself and be honest if there is a real reason not to buy an American vehicle anymore. As GM cuts back headcount so does hundreds of GM suppliers and their tiers layoff thousands that will and does effect yours and my economy. As our American car industry goes so goes our countries economy.
I AM GM
Steven Gilles
Hoboken Tim
I understand that you have to release information on future models to calm the nervous nellies on wall street, but releasing photos is not a good move. Two years from now when they hit the market,everyone will say,Oh! I’ve seen that before, that’s not new. You need to play yours cards closer to your chest to overcome GM’s image of a day late and a dollar short.
hugo Bidinot
I think that quality and service will be your biggest problem going forward. You have a superb “bench” in thye cars sold elsewhere in the world under your other brands.
Meanwhile; my new CTS4 has been waiting over three weeks for a wheel speed senson-without it the ABS, 4 wheel drive, traction, and stabilty control are nonfunctional. he longest I ever had to wait for a Toyota part was 4 days; and that was when my 4WD Celica was 14 years out of production!!(usually all parts were overnight delivery)
Quite apart from the failure of a critical part on a new Cadillac; the extremely delayed repairs won’t kindlydispose me to GM in future. I doubt I would wait so long for parts on a Lexus AWD sedan (If it failed at all!!)
Steven
David wrote:
That should tell you something about the Cobalt — it simply isn’t competitive.
I’m trying to be unbiased here even as a GM employee. So many times I read comments on this blog site relating to
some of our products being not competitive to foreign. Almost every time it is with out facts, figures and or statistics. It is usually written with emotions only derived by hearsay from media outlets or special interest groups. I feel in order for any comment to be taken seriously that blogger needs to have done their own fair comparison. Please explain in more detail David as to why the Cobalt simply isn’t competitve. I beg to differ as I did ride and drive a Honda to see what my competion is on the road. We can nit pick differences all day how the Cobalt has this over the Honda and the Honda has that over the Cobalt, but at the end of the day it’s not like the Civic has round wheels and the Chevy has square. Don’t take my word for it or any magazine that has their own hidden agenda but take a look yourself and be honest if there is a real reason not to buy an American vehicle anymore. As GM cuts back headcount so does hundreds of GM suppliers and their tiers layoff thousands that will and does effect yours and my economy. As our American car industry goes so goes our countries economy.
I AM GM
Steven Gilles
Heraldblog
You had me up until you wrote” Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming, not this kind of rise.
Is that last clause suppose to be some sort of qualifier? Are you saying that nobody predicted oil would rise X percent in Y months to $145+ per barrel? The fact is plenty of people have been talking about our vulnerability to foreign oil, and inflationary prices, for years. Oil was $11 a barrel with GM produced the EV1 - you must have had some suspicion this day would come.
Nobody
Really sad,
when I read my company’s vice-chairman publicly declaring - “nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming, not this kind of rise.” … I sadly feel like GM’s glass is half empty of talented and visionary leadership.
HotCarNut
GM Dealer Employee:
“I work for Chevrolet and I really dont think the Traverse is going to be a great seller.Nice yes……but at 14mpg?”
As usual, a dealership employee knows next to nothing about the product that they will be selling. Had you done about 30 seconds worth of homework, you’d know 2 things:
1. The Traverse is a platform mate of the Enclave, Acadia, and Outlook with a 3.6L V6 (see point 2) and a 6 speed transmission. Those vehicles get 16-24 and 16-22 city/hwy for the FWD and AWD variants respectively.
2. The 3.6L V6 going into the Traverse will feature Direct Injection which actually boosts fuel economy and horsepower. The current thought is that the numbers for the Traverse will probably be 17/25 FWD and 17/23 AWD. This would be a combined fuel economy of 20 mpg FWD and 19 mpg AWD.
To put that in perspective, the FWD version will get 42.86% better fuel economy than you predicted, and the AWD version will get 35.71% better. I pray that you in your infinite ignorance haven’t been telling potential customers that the Traverse will only get about 14 mpg. My Acadia SLT-1 FWD sees 17.5 mpg in mostly city driving, which is better than the 16 mpg on the sticker.
As for the Impala, it may get better mileage, but if you’ve ever driven the two back to back you wouldn’t even bother comparing them. I personally hate Toyotas because they aren’t any fun to drive, but the Camry SE is an infinitely better handling and better performing car than the Impala.
Gereon (Germany)
“It was noted that Engineering spending will be held at 2006-2007 levels. GM will NOT be able to produce innovative vehicles that reduce energy consumption without significant R&D dollars.”
Hi Sklunk,
maybe you have got some incomplete information. GM obviously will not cut spendings on key R&D-areas, but there where it makes sense (SUV-, Truck-development). That’s interesting: http://www.autoobserver.com/2008/07/gm-spreading-the-pain-to-raise-cash-get-lean.html
GM Dealer Employee
Also…..get rid of GMC.Phase the Denali models into Chevy if needed and offer as upper scale package than the Tahoe. One thing I always didnt like from GM was making one model,then making the same car with another name….Acadio,Outlook,Traverse,Enclave…..The Equinox came out then all of a sudden we get the Torrent.Why??You take from pocket to put in the other! Please dont continue this ridiculous pattern.This was a trend in the late 80’s-90’s…remember the Celebrity,6000,Century,Ciera??
Rum Doodle
~“Now, it’s easy for everyone to say about oil prices, “They should have seen it coming.” My answer to that is nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming, not this kind of rise.”
Hmmmm…No one saw it coming, eh? No one, as in this major article published in Scientific America in 1998: The End of Cheap Oil
Or, no one as in petroleum engineer King Hubbert who as early as 1956 predicted the world would reach Peak Oil by around the year 2000.
Tim
I cannot foresee anything changing for the better until corporations like GM realizes what they have done to the US economy by exploiting communist and third world countries for lower wages.Greed for profit has destroyed the fabric America was built on.
GM Dealer Employee
Also…..get rid of GMC.Phase the Denali models into Chevy if needed and offer as upper scale package than the Tahoe. One thing I always didnt like from GM was making one model,then making the same car with another name….Acadio,Outlook,Traverse,Enclave…..The Equinox came out then all of a sudden we get the Torrent.Why??You take from pocket to put in the other! Please dont continue this ridiculous pattern.This was a trend in the late 80’s-90’s…remember the Celebrity,6000,Century,Ciera??
sheth
“All they were doing was turning a blind eye to reality in order to bolster the short-term bottom line. Unfortunately, those chickens are now coming home to roost.”
actually they were selling SUVs that people wanted. In the 90s and early 2000s SUvs were very popular. Suvs can attribute some of their success to CAFE standards which encouraged automakers to develop more truck like vehicles to benefit from the lower CAFE requirements. If there was no CAFE in the first place SUVs may not have been such an attractive proposition for automakers. Its amazing how simple facts easily refute poor arguments.
“saying, that European cars are generally better than GM- or other US-cars, doesn’t meet the facts. ”
I will say that GM’s european cars are more upscale and have more premium content. I dont know that they are actually better in terms of American’s taste. The Astra is popular in Europe but lacks proper cupholders or a front armrest and has odd ergonomics. I think that GM’s vehicles are tailored to specific markets but many in the press believe that GM should simply sell everything they sell in Europe. It hasnt worked that way for the Astra.
sheth
“Not likely, and for good reason. The Malibu shows that when GM produces a world class product, the world sits up, pays attention, and puts it’s money where its mouth is. However, the Cobalt has not and will not enjoy the same level of success. The Aveo? GM’s polishing a turd. They’ve spent so much time cheapening the car to get a low price point they forgot to make it truly competitive and fun to drive.”
You have no clue what you are talking about. The Cobalt’s capacity isnt anywhere near that of the civic. Sales of the Cobalt cannot touch the civic at this point in time. GM is adding another shift so GM should be able to move more cobalts later this year. My employer just got a Cobalt LT and its not a bad car at all. The engine is quiet, the tranny is smooth and the ride quality is decent. Ergonomics are superior to the civic if you ask me.
As for the Aveo, the interior of the 2009 model is actually one of the best in the segment. It looks far better than the interior of the Yaris or Versa. GM has already said a NEW Aveo will be introduced in 2010 with better fuel economy.
YOu seem to have trouble undertanding that GM is trying to advance the art of vehicle design and execution over time. To say the Cobalt is worse than the Malibu is silly because it should be due to its age. The Cobalt came out 3 years before the Malibu and it shows. I would imagine the 2011 Cobalt/Cruze will be a step up vs the Malibu. This is the way things are supposed to work. Gm’s latest products should ALWAYS be their best.
sheth
” That should tell you something about the Cobalt — it simply isn’t competitive. The Cobalt was at best an adequate car when it was introduced.”
For 2009 the Cobalt gets more power AND better fuel economy. The 2009 model gets 2mpg lower city economy than the Corolla and 1mpg less in the city than the Civic and has far more power and torque than either of those cars. Furthermore, the Cobalt with the 2.4L engine and 171hp gets better mileage than the Corolla S with 158hp. When the Cobalt came out C&D said it was a very refined small car and GM sweated the details. They said it compared favorably to the Jetta which was seen as the most refined compact of that era. The Cobalt is plain to look at but it offers nice features and THREE engines. None of its competitors offers two body styles and three engines. In addition, only the Mazdaspeed3 offers performance comparable to the Cobalt SS but even the Mazda cant match the mileage of the SS.
You say GM’s cars arent selling well and yet the CTS is outselling the G35 and TL. The Malibu is outselling the 6, Passat and Sonata and the Cobalt is outselling the 3, Sentra and Rabbit. In 2006 or 2007 the Impala was the 3rd best selling family sized car. Before the Altima coupe was available there were months when the Impala outsold the Altima.
James N.
According to the Internation Energy Agency, production of oil is still ahead of demand. In fact oil demand has grow ~4.5% in the last 4 yeast, where price has grown 298% in the same amount of time.
The two largest contributers to the oil prices is the weakening dollar and the oil commidities market being open to everyone. Up until 2003 only oil companies and very large users of oil could by it directly off the market. Now anyone with very deep pockets and looking to make a qwick buck can buy crude oil. So we have a percieved shortage, until the buyers put it back on the market for a higher price. And the fact that oil futures don’t ship for a month makes it even worse.
sheth
“We have never had a quality, competitive small car until the Astra. The Beat needs to be sold in this country, and it should be available now. We’ve been late to market with quality, high milage four cylinders.”
In spite of all the Cobalt bashing the car has sold well. There are only two compacts that routinely outsell the Cobalt- Civic and corolla. How those kinds of sales decribe a failure in the compact market is beyond my grasp. What the Cobalt bashers here fail to acknowledge is that GM has been updating the Cobalt ever since it was introduced. The SS/Sport model with 171hp was added. A new head unit was added. For 2008 the SS model with 260hp was added as well as the XFE model. For 2009 the Cobalt gets VVT on the 2.2L to make a class leading 155hp and fuel economy also increases. Once GM increases capacity I am willing to bet Cobalt sales will take off. The Cobalt lacks class leading mileage but it offers class leading hp and a great price.
The Astra is a nice car in many ways but it has not sold well here because of its price and hatchback configuration. While its the dream compact for many a GM basher it hasnt gotten traction in the marketplace. MEanwhile the mediocre Ion which was bashed by the press and GM critics was actually a successful vehicle. Sometimes when GM listens to the critics they may a price. Posting uninformed commments here is much easier than running a car company.
Instead of saying “many people” knew about the pending jump in oil prices I suggest folks start naming names and offering specifics. Tell us which individuals or corporations predicted that fuel prices would double in 2 years. The Airline industry certianly didnt know. The trucking and shipping industries certainly didnt know. Government entities certianly didnt know either. So the question is who actually predicted this rise in prices and make drastic changes to prepare for the increase?
Rules
Another GM employee.
I have to say that in many ways the competition products are ahead of ours. Their designs are modern or futuristic while ours have that 90’s look. Their engines are more efficient because they have more technology.
I always try to convince my friend to get a GM car, I tell them all the advantages they have but no matter how hard I try they always go with the competition and when I see their new cars I think inside my head that they got a better vehicle than what we offer.
GM is working real hard in making global platforms but there are some good vehicles around the world that they could sell in the US but they just don’t.
In Europe the price of the gas has always been higher than the prices in the US and we have very good vehicles there, the Corsa is a great example a good looking, fun to drive and fuel efficient car. Also in Europe people prefer diesel over gas because is more efficent. Why don’t we offer diesel vehicles in the US? There aren’t any, even as an option!
I think GM is doing a good job with the hybrid aproach but once again, we’re focusing on the Tahoe, the Vue, I think is good that the Mailbu will get soon an Hybrid option, but what about the sub-compact and compact vehicles?
The Toyota Corolla is in my opinion a very ugly car, yet is the high seller.
The Honda Civic on the other hand I think is great looking.
But the Cobalt, is not ugly but it isn’t exciting, looks like a very old car compared with the Civic. The engine I think is good, but both the Toyota’s and the Honda’s have better technology.
I’ve been talking only about the sub-compact and compact vehicles because I think that’s where GM should focus rigth now.
Develop new vehicles not to compete with what the competition has rigth now, the will renew their line in 2-3 years, develop vehicles that will be better than the competition’s after they renew their line.
Have more engines available as options, diesel, hybrid, turbo, etc.
I’d love it if my Silverado 5.3 V8 had a 4.8 V8 with Active Fuel Management or even the 4.3 V6 with the equipment and trim you get with the 5.3 package. I’d also love if there was a 6-speed transmision along.
If we have the variety of engines and transmisions, why not offer all those combinations?
I’m sure a lot of customers will be grateful of getting a high level vehicle with a 4 or 6 cilynder engine if there’s the option.
I’m definitely not a marketing expert, but I’m just telling you all what I’d like or consider in a vehicle if I’m planing to buy one.
Jared
David:
Huh? The Camry/Matrix are on two different platforms and no, neither is 20 years old. The Matrix is built on the Corolla platform. The Camry is built on a different, larger platform.
As for the Ford Focus, Ford is already selling the third generation Focus in Europe. The US Focus is a mildly revised version of the first generation. The third generation Focus is much better car than the first generation.
If the Camry, Corolla, and Matrix are so poor in NVH, why are they selling so much better than GM’s cars?
Steven:
Sorry, but I’ve driven both the Cobalt and the Civic. The Civic is a far better car and the general public recognizes it — that is why the Civic is the number 1 selling car and the Cobalt is number 9.
The responses from the GM employees here demonstrate exactly why GM is in such deep trouble today: you are in denial. You keep saying that GM cars are the best, when the marketplace keeps telling you otherwise.
I want GM and Ford to regain their former greatness. I really do. But you can not do that until you accept the fact that, outside of a few exceptions (CTS, Malibu, Corvette, etc.), your products are not world class. If they were world class, they would be topping the sales charts. They aren’t.
Chris (Toronto)
SteveG said, “How about designing all your ‘global’ cars so they will meet US specs? Is this so hard for you to grasp!?”
Exactly. We should be seeing the Beat et al in the US (and Canada) now. Instead, GM gives us (not even a “in a few years”) but a “never”. If GM shares weren’t at about 30 percent of what I bought them for, I’d probably sell them now.
Having said that, no one can deny the quality and beauty of the CTS and the Malibu, among others. GM does have potential. But unrealized potential = waste.
Chri (Toronto)
Gary Dikkers
Mr Lutz,
This is getting really interesting. On the same day your CEO announced major restructuring, and lamented the “triple whammy” of the declining economy in the US, Volkswagen announced they plan to invest $1 billion in the US and build a new plant in Tennessee, and that by 2018 they expect to be selling 800,000 cars per year in North America. VW to build billion dollar plant in Tennessee
What does Volkswagen see in the US and our economy that you and Mr Wagoner don’t see?
An idea for you
You are about to shutter several assembly plants including those at Janesville, Moraine, and Oshawa.
You have idle assembly capacity and skilled workers at the ready. VW wants to build a new plant, but one that can’t be ready until at least 2011.
Have you and Mr Wagoner thought of offering your excess assembly capacity and workers to Volkswagen and signing an agreement to build cars for them under license until their new Chattanooga plant is ready?
It seems like that would be a way to keep your workers and assembly capacity at work while at the same time providing a revenue stream into GM from VW.
The only downside I can see to such a plan would be GM’s pride and foot dragging by the UAW.
V/R
Gary Dikkers
Alan
There is a great business opportunity to re-engine, re-car America. The Cruze should launch ASAP, not two years from now. If that is not possible, at least get a more sophisticated and attractive front end on the Cobalt. Capital expense to construct a Traverse line in the old Saturn plant is a mistake and should be stopped. Build the Traverse with the other sister cross-overs; their sales volumes are sliding. GM is on the right path to re-think “legacy” marketing expenses. NASCAR funding is an embarassment to any ecologically-minded person, and never did sell Monte Carlos. Best wishes.
SierraGS
Posted by Jared
The top 4 best sellers in May were the Civic, Corolla, Camry, and Accord. The Cobalt was 9th with about 1/2 the sales of the Civic.
The Corolla numbers include the Matrix which is bogus, since the name Corolla does not appear on a Matrix, it would be like GM putting Cobalt and HHR sales numbers together. If you remove Matrix sales (GM sold nearly 5K Vibes, the Matrix sell more so let’s est. 7K) from the Corolla it leaves the Corolla below the F-150 and probably Silverado dropping it to 5th or lower.
Cobalt, Impala and Malibu sales were off at least 5,000 units due to a shortage of cars.
The Cobalt has made it’s 4-year run and is in need of updating at least and the rumors are the Cruze will replace the Cobalt in the U.S. market, Mr. Lutz can you clarify the timelines for the Cobalt and Cruze as they apply to the U.S. market?
thriftyTechie
Mr. Lutz,
You’ve got plenty of people here (and there) giving you tactical and strategic advice. I’m NOT going to do that. I can’t presume to have anywhere close to the amount of automotive expertise that you and your colleagues at GM have.
I can, however, ask you to reconsider GM’s attitude concerning product development and marketing.
You say: “most importantly you continue the the ethic of producing the world’s best cars and trucks because that is the only thing that long-term is going to get you through it.”
I can’t disagree more and here’s why:
The auto industry has many players and is highly competitive. As can be expected in such a highly competitive environment, everyone (including GM) are indeed building great vehicles. It is therefore simply not effective to aim for being “the best” because there is no such thing. Or to be more precise, “the best” car for each consumer/car buyer out there varies from individual to individual.
The question that your designers, engineers, marketers, and dealers need to consider at ALL times is this: Why would anyone buy this [Chevy, Buick, Pontiac, Saab, Saturn, Cadillac] over any other make?
If they consider that question at all times, then they have at least a chance of delivering on answers to that question.
For example, Ford/Microsoft answered that question in the form of the Sync system. There are tens of thousands of buyers that are buying that system and getting a Focus along with it.
If GM keeps telling me that they have “the best” cars, that doesn’t make me or any other car buyer consider a GM car.
If, however, you tell me that you’re gonna have a built-in fridge in your Enclave, I may consider it. If you tell me that your Saabs will all have standard iPhone integration standard, my neighbor would consider it. If you tell me that all Chevy’s will come standard with touch-screen GPS, that would make my uncle consider your cars. If you unleash a 40 mpg compact that sells for $4000 less than a Prius, the local Sierra Club members will be all for it. etc., etc.
The point is that if you think that all it takes to succeed and survive is to make “the best” cars, then you are very, very, very mistaken.
Beaugrand®™©
“…nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming…”
Actually, I’ve advised you repeatedly to make more efficient vehicles, and I’ve explained why you should. Read my comments over the past two years.
Beaugrand®™©
“…nobody saw it coming. Not the economists, not the governments, not the oil companies, not the smartest pundits in the world – no one saw it coming…”
Actually, I’ve advised you repeatedly to make more efficient vehicles, and I’ve explained why you should. Read my comments over the past two years.
Joe Gakenheimer
It will be very interesting to see what pans out in the next 2 years, with all that is going on. Some aspects of your business case I agree with and a few I don’t. As for HUMMER and Saturn, we’ll just have to see. It appears Saturn is gaining a little momentum and a 2.8 1-4 turbo 28k H3T could work for the mainstream; just hope you guys don’t give up on them. I am also excited to see some new cars in the next two years and not too enthused about any crossovers - but that’s just me.
William R. Walling
Mr. Lutz,
Last week, during a ‘day trip’ to nearby retail facilities, I witnessed a new for 2009, foreign, mass produced, advancement of critical importance within future ICE assisted electric ware.
Novelty -
A multiple cylinder, lightweight, ICE with inherit balance.
(Not a V-8 design)
Described ICE employs no associated balancing (i.e. gear, mount or shaft) methods.
Embarrassed technical engineers globally are hastily reviewing this specific commercially available product as we communicate.
Suggests future investigation by GM, $9,000 (U.S.D.) retail makes this so.
Enough ‘gloom and doom’, Back to Serious Work!
Something about reported ‘unavailable solutions’ to observed maladies existing within retailer facilities today …
GM
Lets bring back the EV1. Its funny how the day GM closed the EV1 plant down. GM goes out an buys Hummer? Who would’ve predicted that one?
Lorenzo Patlan
Hey JG!
The a version of the Buick Excelle was sold here in the states… It was the Suzuki Forenza… Americans won’t accept a vehicle like that, which is to say, “mediocre at best” as a BUICK! It wasn’t even mediocre, more like daewoo-esque…
GM should invest in a compact vehicle with the ecotec 4 cylinder using either the Kappa or new Alpha platform. If they go Kappa it could make strides as a great Civic fighter… If they went Alpha then the overalll wheelbase of the vehicle could be played with and possibilities extreme.
Frank
Bob,
When this blog started you told us that GM had finally got in touch with the real world and was going to deliver us the Camaro…
Now as Camaro launches - 5 long years after the new Mustang, GM will be percieved to be as seriously late and out-of-touch as ever.
The Volt will be 12 years too late in comparison with the Prius…
The Beat and Cruze will also be hopelessly late..
Getting rid of experienced GM workers and saving a few bucks isn’t gonna fix GM’s Problem…It’s gonna make it worse!!
You need to pay more attention and spend more money on diverse global advanced research & design.
You need a deverse range of cars that will cater to a diverse and rapidly changing market - not 4 similar lambdas and 7? similar epsilons!
Diversify the portfolio! You need 1 big RWD sedan, you need 1 small RWD sedan, you need 1 european premium mini, you need 1 class leading compact, you need 1 Corvette and 1 big pick-up.. BUT you dont need to waste money developing a whole lot of derivatives built on the same platform.
You need to be more open minded and you need to consider options that are not always the most conservative solutions.
Take some inspiration from Apple:
1. Adveturous forward thinking and smart leadership
2. Great Design
Wake up GM! You can do it - but you have not even started to fix your One Big Problem yet.
Beaugrand®™©
A local Ford dealer is advertising new F150s for $11,900. I couldn’t buy a Focus that cheap. It’s tempting. I could buy a lot of gas with the thousands they’ve slashed off the price.
With car sales actually increasing, it’s a pity you don’t have a nice minivan, and maybe a minivan-based or HHR-based pickup truck to offer those who need the hauling capacity but want fuel efficiency- too bad nobody advised you about that.
Oh, wait- I did…
Beaugrand®™©
A local Ford dealer is advertising new F150s for $11,900. I couldn’t buy a Focus that cheap. It’s tempting. I could buy a lot of gas with the thousands they’ve slashed off the price.
With car sales actually increasing, it’s a pity you don’t have a nice minivan, and maybe a minivan-based or HHR-based pickup truck to offer those who need the hauling capacity but want fuel efficiency- too bad nobody advised you about that.
Oh, wait- I did…
Soon to be former GM employee
Sheth:
“MEanwhile the mediocre Ion which was bashed by the press and GM critics was actually a successful vehicle. Sometimes when GM listens to the critics they may a price. Posting uninformed commments here is much easier than running a car company.”
If selling 105,000 Ions while Honda sells 686,000 Civics (2005) is “successful”, then GM might as well close the doors now. GM cars aren’t selling well. Yes, you can pick and choose segments where GM has some great product and is doing well, but overall sales/market share has continuously declined which is why GM is in the shape they are. I did not say that it is easiy running a car company, but Wagoner and his execs are paid very well, and they have not demonstrated that they can deliver in a tough market.
One of the major airlines (I don’t remember which one) set up some long term fuel contracts a couple of years ago. They are still paying low prices, so someone did see the rise in oil prices coming. GM has done this with steal and other materials many times. GM should have been prepared for a rise in oil prices. Not desinging the Beat to meet U.S. standards is inexcuseable. Maybe you need to be better informed.
Matt
Mr. Lutz:
I appreciate what GM is trying to do today and for up coming models but I think it is a mistake to not consider more diesel engines and making the 2-mode hybrid system available in all new CUV’s. Putting the 2-mode in the Enclave, Arcadia, and Traverse would be a big PR move. Combine even better MPG and great new styled vehicles would move GM into a new world. Keep up the good work, I’m waiting with anticipation for the Volt.
chiefpontiac
While the Volt seems to be the hingepin of teh future direction and possibly ultimate salvation of GM there are still families who eschew crossovers, minivans and mini-suvs for their daily driver. Those of us desirous or needful of traditional full-size family sedans such as the departed Bonneville and Grand Prix cannot comfortable survive in a Malibu/Aura/G6. My needs will be best met by a G8, but again, you are missing the big picture with the recent comments by Mark Reuss that the Commodore (basis of G8) Hybrid may never see the light of day and that all efforts instead will be thrown to LPG. Come on, you can talk people into $50,000 hybrid Denalis, but we can’t talk you into $35,000 hybrid sedans?
edvard
I’ll add more to the oil debate. I’ve been paying attention to energy stocks lately, and one thing that I find extremely interesting is that oil refiners, oil drilling companies, oil shipping companies, and so on are actually losing significant value.Why? Because the higher cost of crude means they make less profit. The result? There is an enormous supply of unprocessed crude that’s not being refined simply because the price even for the refiners is too high. So at least for now, the issue is not a supply problem. Notice that I didn’t say that eventually oil will not become scarce. But I’ll repeat what I mentioned above, which is that this is more of a oil future manipulation via investors more than anything. As soon as those who invest in futures panic and sell, I wouldn’t be surprised if oil actually comes down by a significant amount.
But if it does… I think GM, Ford, and all the other automakers hopefully learned something from it, which is that just like stocks, it helps to be diversified in order to deal with unforeseen future events.
sheth
“Two years from now when they hit the market,everyone will say,Oh! I’ve seen that before, that’s not new. You need to play yours cards closer to your chest to overcome GM’s image of a day late and a dollar short.”
The models GM showed are coming out next year. Does anyone here every do any research before starting to lecture Bob Lutz? There is so much misinformation here that its embarrassing.
soon to be former GM,
You might want to learn how to accurately state sales figures before challenging me. The civic has NEVER sold 686k units in the US market in one year. I said the Ion was successful in that it did better than the Astra is doing. I never said it was a candidate for best selling small car.
Also, the fact that SW airlines got their fuel prices locked in just means that they thought they could get the fuel at a good rate that would benefit their bottom line. It does NOT mean that they predicted fuel prices would spike within a year. The point is that none of GM’s competitors have shown any more ability to predict fuel prices than GM has. All of this lecturing is pointless and based on the view that certain import manufacturers have exclusively focued on fuel efficient vehicles. Last year the same folks who are lecturing GM would have been talking about Toyota as the poster child for an automaker that was ready for high fuel prices. FAst forward to July 2008 and Toyota is posting the worst declines of any of the major import brands. Why? because their product mix doesn’t reflect that they anticipated $4.25/gallon gas.
Jared,
You are definitely not shy about revealing your ignorance and bias. You claim that except for a “few” vehicles GM isnt competitive. People like you dont want to talk about the auto industry sales outside of camry, accord, corolla and civic. The CTS is outselling the G35 and TL and even the ES350 at times. The Enclave is outselling the MDX. The Malibu is outselling the Sonata. The Silverado is outselling the Tundra and the Impala is outselling the Avalon by a long shot. While the Cobalt cant match civic sales, it is beating the 3 and Sentra each and every month. BTW, the civic was the #1 vehicle for ONE MONTH. It is NOT the best selling vehicle in America. At the end of this year the Camry will be the best selling car and overall vehicle in the country.
sheth
“The fact is that all three majors fought CAFE tooth and nail, and shortsightedly rode the SUV horse into the ground with few long-range plans for an energy future that has been all too obvious since at least 1979.”
You keep leaving out that Toyota joined the Big 3 in resisting the latest CAFE change. LEts tell the whole truth or be quiet. Not ONE major automaker came out in favor of the latest CAFE hike, not even Honda.
“I have to say that in many ways the competition products are ahead of ours. Their designs are modern or futuristic while ours have that 90’s look. Their engines are more efficient because they have more technology.”
This is totally inaccurate. GM is farther ahead on 6 speed trannies than Honda or Toyota. Honda doesnt even offer a 6 speed. As for engines, GM is right near the top in terms of mainstream manufacturers. Not ONE Honda or Toyota branded product has a direct injected engine. For 2009 you can get a Di engine on any lambda crossover, Sky/Solstice, Cobalt SS and Vue two mode hybrid. Then of course you have the CTS and STS. GM is the only manufacturer to have two powerful naturally aspirated four cylinders on its compact car. Toyota and Honda dont even have a model that directly competes with the Cobalt Sport with 171hp. GM is also using AFM more than any other auto maker. Honda has this feature on three vehicles and Toyota has it on ZERO. Same goes for Nissan and Ford.
As for design, anyone with eyes can tell that GM’s recent designs are far better than what’s coming out of Honda and Toyota. Have you seen the 2008 Accord?How about the 2009 Acura RL, TSX or Pilot? The Avalon (any year)? Give me a break. Only luxury brands like Audi and BMW are turning out designs as good or better than GM’s most recent efforts. If the cruze looks like the renderings it will be one stylish small car.
Steven,
You arent going to find any substantive reasons why the Cobalt is worse than the Civic. The Cobalt trails in ONE significant area- mileage. Of course that is largely due to the fact that it has a 2.2L engine while the Civic has a 1.8L engine with far less torque. For 2009 the gap gets smaller because the Cobalt auto gets 24/33. The Cobalt XFE with manual actually gets better mileage than the Civic. The Cobalt has numerous available features that cant be had on the civic such as trip computer, 17″ wheels (only Si has them), heated seats, remote start, Onstar, etc. For 2009 the Cobalt gets bluetooth and a USB port. I dont think the civic has either. Also, you have to get navigation just to get XM radio on the civic. The cobalt is dull but so is the corolla. In terms of refinement and feature content its right there with the corolla and civic in spite of being older than both.
Steven
Jared you wrote:
“Sorry, but I’ve driven both the Cobalt and the Civic. The Civic is a far better car” “You keep saying that GM cars are the best, when the marketplace keeps telling you otherwise.”
Jared
I haven’t read one blog from any GM employee who has said all our vehicles are World Class. As a GM employee I’m not saying the Cobalt is superior over the Civic. Is what I was trying to point out is some folks make it sound like the Civic is so much better of a vehicle. In my personal comparisons I could see were the Civic was better in some areas but the Cobalt was better in others. Neither is a high end luxury car. When you say the Honda is “far better” please follow up with your statement what you found in your vehicle to vehicle comparison that brought you to this conclusion. Those are the things GM would like to hear from the bloggers. Too many times there are very broad undescriptive comments made when talking about a GM vehicle to another competitve vehicle. No hard facts (plenty of personal opinions) are listed.
As for the “market place” comment, I would like them to start comparing vehicles themselves instead of basing their purchase on certain magazines and other media outlets that have their own agendas. The gentleman from Germany ,Gereon, made a comment awhile back saying Toyota penetrated 3% while Honda had only 1% in Germany. I see Gereon as someone who is independent and isolated from the American media. He is unbiased in his comments about American vehicles. GM products do very very well outside North America when the playing field is all equal. Why do you think that is Jared? Can anyone say GM hasn’t made forward improvements with their latest released products. I am sure if new consumers can have an open eye and do fair comparisons they will see and feel GM is equal to any competitive vehicle available.
I AM GM
Steven Gilles
David
Sorry Jared but the Camry and the Matrix/Corolla are both on platforms that are by GM’s standards “ancient”. The Camry platform has been in production since 1993 (15 years) and the Corolla/Matrix since 1993 as well. The Cobalt blows away the Matrix and Corolla in refinement, quietness, and overall NVH performance.
The Civic might be slightly better in powertrain NVH but but the Cobalt is far from uncompetitive -especially considering that it’s the fuel economy leader in the segment. By the way; it’s #8 not #9. I guess by your measurement of quality the Ford F-Series must be the best vehicle made because it outsells even the Camry.
Scott Ryan
Hi Mr. Lutz. After being a GM “short” years ago, I am now among the “longs” for the first time in my life. Bought some at $10.59 last week. I believe your company will make it through these challenging times.
I have a suggestion. GM could move the inventory quickly if you discount the largeer vehicles substantially and make up for the loss by teaming up with a company like Exxon-Mobile by selling multi-year “gasoline contracts” with the SUV’s and trucks, much the way wireless service providers discount wireless PHONES in return for service contracts.
More at TableofWisdom.com
MrArbitrage
Nate
Bob,
Well put I suppose… however…:
Despite the market problems and fuel price increase what I fail to understand is why it has taken something like this for GM to realize they need to do something about fuel prices. Car companies should always be striving to find new technologies, and better their product energy efficiency. During the 1970s GM and every other car company should have known that oil prices are a problem. Whether or not they fluctuate or go up significantly should be irrelevant.
I still drive a 1990 Buick because I get 29 actual MPG on the highway (and the car is paid for). I look at GM’s offerings and I scratch my head… why would I pay so much for a new car that gets less mileage then my old one? Sure they have more HP and safety options etc.. but the point I”m making is that in the past 20 years GM really hasn’t done anything I would consider significant besides crank out car after car.
The whole problem is that GM should be looking far enough in the future to have products in the pipeline just in case. Where are the leaders in GM saying “What if fuel hits $8 or $10 a gallon what do we do then?” Sure it may never hit it buy since when is having marketable technology for that kind of market a bad thing? As it is it takes GM several years to react and bring a product to market.
A great example are the GM diesels. GM has a lot of diesels around the world but why are they just now starting to talk about bringing them to market. I’m sure someone at GM will say customers didn’t want them.. but I am forced to ask how is GM to know if they don’t offer them. GM soiled the reputation of diesels in the 70s with some ill fated products. Only recently did GM figure out it needs more diesels with the creation of the 4.5L Duramax. Again I ask why so long… why didn’t GM develop a 4 and 6 cylinder diesel alongside the current 6.6L Duramax? Offer a cobalt with a diesel or even a Buick.
GM if you want to do better you have to look further ahead past the current market and start being proactive rather then reactive. Stop saying “well the market wasn’t predictable” and higher someone who says “what if this happens” and plan on it. If for some weird reason fuel went up to $15/gallon what would GM be able to do to sell vehicles to its customers? Sure it may never hit that but isn’t someone asking these questions and planning contingencies?
It all boils down to leadership Bob. Sure you’ve turned GM around now take the next step and get today’s technology like the 4.5L diesel and the new electric vehicles out the door. And in the mean time figure out what GM can do when gas hits $6.00 because by the time GM can figure something out that will most likely be reality.
Be prepared it sure helps.
In the mean time there aren’t many GM vehicles I’d want to buy new, however there are plenty I wouldn’t mind buying used.
Chevonly
Mr. Lutz:
IF ONLY YOU COULD GET THE U.S. GOV. to tighten there belts maybe the dollar would stop crashing. Also Honda was the only manufacturer that had a small sales increase when everyone else was in the dumpster. I saw an article that they can reconfigure production lines in 10 days to switch from trucks to cars?? sounds like a good idea in these tough times. I WISH GM THE BEST MY VOLT DEPOSIT IS GETTING BIGGER EVER MONTH DONT LET ME DOWN.
Scott Winneguth
Hello Mr. Lutz,
I’d like to share with you a few comments from a consumer’s perspective. I want my next new car purchase to be the Chevy Volt. I currently own a Ford Escape Hybrid and a Toyota Prius, both suit my lifestyle very well. I feel we need to shift our transportation energy source away from petroleum and toward electricity. I live in the Pacific Northwest where we have an abundance of Hydro and Wind power…electricity as a transportation fuel is a no-brainer.
I feel strongly about suppo