Food for Thought: Automotive Downsizing and How it Could Affect the Economy
You see a lot of discussion in the news – and even in the comments of this and other blogs – about the state of the domestic auto industry and what the current economy means for the industry’s future. Some of you have even expressed the belief that this is something GM and the US industry brought on ourselves, and that the domestic industry should be allowed to fail. “So what if Detroit goes down,” the thinking seems to go. “It doesn’t affect me.” However, the reality may very well be that it does affect you.
The Center for Automotive Research has just released a study that examines the potential ramifications of two scenarios involving significant downsizing of the Big Three, and what such a development could mean to the larger economy. We didn’t write or fund this report… but we thought that you should see it, because it might make you think of things you hadn’t before. - Christopher Barger, Director, Global Communications Technology
- Posted in Business
Gerard
I am glad the FastLane team displayed this study. I pointed out John McElroy’s defense argument and the Detroit Three’s integral part of US industr before. One variable is the social impact of having three large, historic enterprises (that played a role in making America a superpower) collapse and bringing down millions of jobs and billions of dollars. From an objective global view, this would fuel the adversarial perception that the United States is in decline. A central part of its business economy would be erased. What about a military emergency? Where would the facilities or experienced mechanical labor be if America was pushed into global conflict?
I’m not excusing GM, Chrysler, or Ford (or the increasingly hated UAW) for poor judgment and short-sightedness. For General Motors especially, I am upset by some foolish acts that defy logic. I believe by expressing these points, management can understand why there is such frustration from the buying public and from a growing number of enthusiasts. To simplify it, the General has alienated both sides. I would like to further the points behind this:
1) It’s clear GM bureaucracy is still bloated, with many of its products and brands overlapping. I do not understand why GM made the choice of adding another large rebadged crossover, the $29K Chevy Traverse, to compete with the Saturn Outlook and GMC Acadia. Not only that, the Traverse’s high price, large size, modest fuel economy, and sheer girth is not what Americans are looking for. Even if a buyer was considering a large vehicle, why buy a $30K crossover when you can find a heavily discounted SUV for $7,000 less? This is why the Flex, Journey, and Edge crossovers have gone nowhere.
2) I initially refused to buy into the “merger” hysteria, but it appears that a merger idea is being conceived. Has anyone looked into the history of business mergers? From AOL TimeWarner to DaimlerChrysler, they have been disastrous. To have two of America’s three major carmakers unite (with help from the state) sounds too much like British Leyland. The Fiat plan GM was embroiled in was beyond idiotic and wrecked the company’s business judgment in the minds of thinking Americans. This Chrysler plan is just another costly error–one that taxpayers should oppose. Do not request federal assistance on certain disaster.
3) The General is, sadly, a sluggish P.R. nightmare. When gas prices surged mid-decade, GM opted to terminate the EV1 support program (which was fair) and put its emphasis on its new line of full-size SUVs and pickups. This fell right into Toyota’s court with its updated Prius. The Prius became both a fashion statement and a culture icon for environmentalism, as opposed to the Explorers, Hummers, F-150s, Tahoes, and Rams we saw from Motown. Then we have the Chevy micro-car triplets. All of the gimmicks and hype GM put into promoting these to Americans…for what? An announcement they were scrapped because of NHTSA guidelines? It was a waste of GM marketing dollars and Americans’ attention. Don’t get people’s hopes up to let them down.
4) No one cares about some unknown association’s award or air-powered Saabs. FastLane was supposed to be execs’ way of communicating with the public. Don’t wait two weeks, ignore public questions about business activity, and then release some pointless topic about a concept that’s never going to be made.
5) Finally, what is GM trying to achieve? What is GM doing to appeal to frugal customers turning to Asian imports? What is GM doing to keep loyal enthusiasts? These questions can cover a broad range of company errors, but I’ll settle with Pontiac. Bob Lutz seemed fond of restoring Pontiac to a performance division. Then word hits the Web that it’ll abandon rear-drive in the next decade. The only interesting products, the G8 and Solstice, are said to be the last of their kind. Hate to tell you this: no one wants a front-drive Pontiac. That’s why the G5, G6, and Torrent never took off with buyers or critics. Now news reports state a future G6 will be delayed. Where is Pontiac going? I see Buick and Saturn in worse condition, but I think Pontiac’s dilemma in purpose and direction properly displays the General’s own deficiency. As a car lover, when I see entertaining vehicles being axed, I see GM losing the one link it has to its fans.
The more I think of these problems, the more I lose empathy for the General. I hate to say it, but GM did bring a lot of this on itself. These current and coming decisions show that. GM can save itself and prosper, but that would require drastic action that I don’t believe its executives, certainly not the UAW, are willing to commit to.
I am one potential customer wanting a small economy car. What do I think of as choices? Sadly, the sporty Honda Fit, well-equipped VW Rabbit, and the all-wheel-drive Suzuki SX4. I’ve repeated that I wanted to appreciate the Saturn Astra, but driving it with its primitive automatic transmission and underpowered engine makes me feel as though GM wanted it to fail. Where did those dollars saved from the Astra’s importation go? The Traverse? The G3?
James Whitehead
While nobody likes to witness the demise of GM, to think that you didn’t bring this on yourselves is plain rubbish. GM squandered the market share it once enjoyed in this country by allowing the beancounters to cost cut your products until the perfformance, reliability, and “gotta have it” factor was completely gone. You allowed the Japanese car makers to eat your lunch, and continued in your old ways, all the while burying your heads in the sand and whipping up the marketing spin instead of fixing your problems. You destroyed the almost blind trust that American’s placed in your brands. You turned a generation against you.
Twenty years later, and cost reductions continue to be your #1 focus, instead of great products, excellent reliability and uncompromised performance. And you wonder why your business continues to decline. I don’t have to read the story - I have lived it. And GM - you ARE at fault, whether you choose to believe it or not. I really hope it works out, but you do not deserve a bailout.
Some Guy
Fist of all, I’m Canadian.
It’s annoying how the “artificial” gas price hike caused a domino effect, leading to the the fall in car sales, real estate values, and the stock market… and not just in America… it’s now spread around the world.
GM was just getting its mojo back with great new products… and now this financial mess happens! Hopefully Obama will have the charisma to get the nation working together and back on track. Encourage manufacturing in your own country, rather than importing products with lead and melamine. Maybe if America would stop wasting time in “artificial” wars like some depressed schoolyard bully trying to hide his low self-esteem, but instead engage in making the world a more positive place, Americans could all finally stand proud about their country and start to again view American made products as symbols of success and desire.
Products built at home keeps money at home, rather than sending it overseas. If only the media would stop praising imported products simply because of the name. BMW? Pffft. My cousin who has had two simply buys them because they fit her “successful lawyer” image. And she’s not the only one. She comes from a family that always pays a premium for their consumer products. They never took advantage of all their features, but they helped fill some empty void in their lives. How ridiculous.
Chris R
I’d personally hate to see GM go the way of the dodo. However, GM in it’s current form cannot last in my opinion. The culture and structure is all wrong. GM needs to be like Chrysler in the early 90’s before that supposed merger with Daimler. Mr Lutz I’m sure remembers how it was. He was a big part of Chrysler at the time, and I’m sure was as upset as the rest of us when Chrysler was essentially sold to the German company. GM needs to get rid of a bunch of excess and get back to basics. A business formula and structure that is solidly about making truly great automobiles. Actual auto execs running the divisions rather than former or current marketing people. A culture that does not see Chevrolet as a brand, but as a company within GM and does not see Malibu as a brand but as great cars. Brand management failed a long time ago in the auto industry. The products are much to dynamic, they change much to quickly and need a much different management style. Please let go of brand management before you kill GM with it.
GM needs to be much more flexible, and faster to market with these wonderful new cars that i know your designers and engineers are just dying to make. That way, when you have an awesome new car to tell us about, it will only be two years out rather than three or four. Not enough lead time for the competition to be ready with a counter.
jg
GM could easily sell more cars.
1. Why is it OK to offer so many more Buicks in China than the U.S?
2. Why can’t the Regal be offered here?
3. The name Invicta is hot, why not use it?
Cad Johnson
GM needs cash, cash flow is the key for survival through 2009/2010 before big savings starts to kick in. But more importantly, GM needs to develop strategy on how to get cash in this period, here are some thoughts:
1) Borrow money from future. Delay product development on all platforms except those absolute critical ones - Volt, Cruze.
2) Expand use of plug-in electric vehicle technology to apply to other existing platforms, to qualify the maximum loan from $25B congress approved aid.
3) Don’t sale the Chrysler merge idea to congress who worry about job losses. Instead talk to them about providing GM with aid as stand alone package.
4) Search outside investor. The Chinese may be interested in partial ownership of GM, as long as don’t give up board seat (eg.Chinese investment in Morgan Stanley - 10% without a seat). If government doesn’t like that (due to foreign policy), then ask government for aid. They can’t have a cake and eat too. Invite deep pocket and ambitious SAIC & FAW to invest in GM.
Nelson
I’m not going to write about what GM did or didn’t do to get themselves into this mess. I will say what I would do if I were in charge at GM.
I would start selling the Two-Mode Plug-In VUE and stop production on all other VUE models.
This would make it easier for a buyer, who is looking to buy a fuel efficient small SUV, to make a decision.
Beaugrand®™©
I live in Indiana, an important automobile manufacturing state (I think we’re about #3). I’ve already been affected by the car industry’s problems. It’s been a major concern for nearly 40 years, as manufacturing jobs have vanished.
At the heart of the domestic automobile industry’s difficulties is inadequate product. Detroit abandoned segments of the car business long ago.
Because of the economic downturn, all car and light truck manufacturers are suffering, but recovery is going to depend hugely on offering product that people want and can afford to buy. I don’t believe GM can afford to ignore any part of the car industry, especially the high-volume, low-margin economy vehicle segment. These kinds of vehicles MUST be made here, if GM is to survive as a manufacturer, and not simply as an importer of Asian-made product.
Yes, GM has made some bone-headed decisions in the past. I think we should get past that and focus on the present, and on the future.
You need to make vehicles that people want and can afford. (I’ve made many suggestions here, as have may others).
Your present product line has to be made more efficient (I’ve also suggested this before), initially by using existing technologies (”taller” gearing; remapping electronics chips; smaller displacement engines; 7, 9, even 10 speed automatic transmissions; Miller-cycle engines; lowering aero CD to under 0.19 for all vehicles).
The bureaucracy has to be made leaner. I think a government (or other form of) bailout would insist on this.
The “design cycle” has to be made shorter (I’ve suggested how to do that), so that new product can be brought to market more quickly, in response to changing demand.
Overlapping brands and models need to be eliminated. Brands must be made distinctive (I’ve suggested how this could be done, with platforms unique to each brand, yet sharing common components).
Bring back the GM minivan…
Matthew
Let me tell you a story. I have a picture of me and my dad with his first car, a 1955 Chevy. Its here in my office. I was about a year old, and the car is 5 years old.
My dad had a new 1965 Buick LeSabre. A new 1969 Buick LeSabre. A new 1973 Buick LeSabre. My first car was a used 1970 Olds Cutlass. I loved GM.
I recommended to my dad that he looked into a 1980 Pontiac Phoenix (front wheel drive X-Car). It was the biggest piece of garbage ever foisted on the American public.
I loved the comparison of the 1950’s Cadillac vs the 1980’s Cadillac on the CNBC show “Saving GM”. GM lost their way with quality and value. Instead of building quality it tried to just say that it had quality. It did not build quality cars for many years and you know it. Bob admitted it on TV.
I might consider a new CTS Sedan (it looks gorgeous) but the Toyota Camry and Prius are the gold standards of family sedans, along with the Honda Accord. You have an uphill battle to convince America that the Malibu is a good as either.
My father, the loyal GM buyer for many years is still so mad about that 1980 Pontiac that he has only owned Honda’s since then. And you know what? I can’t blame him.
Finally, can you do me a favor? The Volt looks great. Get it done already. But don’t you dare release it isn’t ready. Don’t go the way of that 1980 Pontiac Phoenix. If its junk, and won’t last more than 3 years, and the headliner sags, and the paint has to be redone at the dealer, or the battery technology isn’t quite good enough - you will lose another generation of buyers.
PS. I agree with your thesis that GM is too big to be allowed to fail. But when you take our tax dollars in a bailout - please fix the union problems, and the management bloat, and build great cars. And I might even buy one.
Sheth
james whitehead:
Your assertions are totally off base and I suspect you have little clue about GM’s products. It’s amazing how those who know the least about GM’s portfolio are the same people who have the most to say. GM’s current products are the best they have ever made. Self annointed auto experts tout all the tired stereotypes about GM products but they are untrue. I have heard them all: no fuel efficient products (lie), no products people want to buy (lie), no investment in cars (lie), low quality (lie), etc. GM is currently paying the price for decisions made by past management teams and a severely contracted credit market. Contrary to popular (and ignorant) belief GM has invested money in competitive cars (see CTS, Malibu, Aura, Corvette, G8, etc.) and fuel savings technology. GM has put out more hybrids and cars equipped with direct injection engines in recent years than anyone else.
The other factor that no one wants to touch is the increase in competition. While everyone is quick to cite marketshare drops no one mentions how the North American market is one of the most open in the world. Only Europe’s market rivals this one in terms of the intense competition. The primary reason GM has lost share is that Toyota, Honda and Hyundai have become full line manufacturers. For decades that concentrated in small and medium sized cars but within the last 20 years they have expanded to pickups, SUVs and luxury vehicles. GM could not hold on to their share under any circumstances. While Gm should have done many things differently it is foolish to suggest that the increase in options for consumers wasn’t going to lead to more parity in the US auto market. As consumers it would be stupid for us to hope for GM’s demise. Who wants less options? In addition to the thousands of job losses we would be faced with fewer choices, fewer dealers to compete on price and higher prices cars. Does anyone really think that Toyota, Honda and Ford wouldnt be able to raise prices if their largest competitor goes under? Does anyone think that those brands would simply expand to replace all the shuttered GM dealership?
People here need to get real and recognize that no economic superpower totally relies on foreign countries to build it’s cars. In Japan the overwhelming majority of vehicles are sold by Japanese automakers. They do not have an open market like we do and US and European automakers have virtually no presence there. Conversely the US market has been wide open to the point where Japanese automakers sell more vehicles here than in their home market. It would be OK if US automakers were exporting vehicles to Japan but that does not happen. We have a one way relationship and the US is the only one losing as a result. Allowing US based auto manufacturers to fail while offering hundreds of millions in subsidies to foreign automakers whenever they offer to build a plant is ridiculous and it would never happen in another country.
Dale
What the domestics problem is as old men running the companies and missing major markets.
Trucks, Minivans, Suv’s, even large crossovers are dead. Huge gas guzzling dino’s just like an Olds 98 was in the 70’s. Whats hot 5 doors or mini wagons like Matix, Impreza, Mazda 3 cars that have utility and are the right size. I know you have the vibe but that is it and it’s truly a Toyota and yes the Astra is a home run but has the wrong badge to be successful. Heck I think that would have worked out better as an Opel you might as well convert all Saturn dealers to such a branding. Mini cars like Yaris, Fit and look at the popularity of your Korean Aveo. Small cute utes like Patriot, Rav 4, Forester or CRV. Sorry Equinox don’t count it looks huge compared to the others. It just seems it is 1975 all over again and you didn’t learn and you don’t know how to market the good small cars you do have heck it took 2 days to get a key for my Optra when I had it. Instead it is shoving Cobalts out the door and bringing out the Cruize. 1st dum name second where is the wagon or 5 door missed the boat again. Hire a few 25 to 40 year olds instead of 45 to 60 year olds.Thats the problem with GM.
john
I think that the problems are everyone’s problem.
Yes, American cars built twenty tears ago left alot to be desired for quality, but this is no longer true.
American cars are built as well or better than many foreign cars.
The UAW was greedy and lost it’s real purpose. Fight for good work conditions, fair salaries. Not overly paid, benefit rich, jobs that when laid off have a jobs bank. What industry can sustain this type of handout.
This does not include Rick Wagoner , but previous CEO’s of GM made horrible decisions on running the company.
National Security includes a stong manufacturing base.
WWII would have turned out differently without the BIG 3.
I believe all these problems are fixable but the companies and UAW must work together to make it happen because the past is the past and WE NEED OUR AMERICAN AUTO INDUSTRY.
IF YOU THINK AMERICA IS BETTER OFF WITHOUT THE BIG THREE. YOU ARE MISTAKEN.
Tomoe1
I have been digesting tons of articles/studies, including this blog, regarding what’s wrong with GM, the car industry as a whole and many Monday morning quarterbacks with what GM needs to do to right itself. For the record I do have a vested interest as my livelihood is linked to the auto industry.
I agree with Beaugrand that GM’s decisions and handling of certain events in the past is just that, in the past. Anyone with a bit of patriotism will take pride in something that was designed, manufactured, sold and consumed in their own country, and this coming from a Canadian. GM and the auto industry needs help right now. Will the execs at GM, the head and members of the UAW learn from their past mistakes? Well I would like to think so - - this is now a matter of survival and not blaming each other or lining one’s own pockets with cash.
GM and the union needs to make some tough choices ahead. For sure it won’t be palatable to the majority but that’s what is required if GM is to survive (although as a pale comparison of it’s former glory days).
1. no to unions (if bankruptcy is what it takes to do it…so be it)
2. GM is made up of multiple brands and that’s got to go. Pick the highest, most recognized brand (and GM is a brand), and manufacture cars under that one brand.
3. In addition to 2) above, pick the best vehicle in each vehicle segment and produce just that vehicle well (limited trim availability is acceptable).
4. Call upon Government to allow the new company (point 2 again) to sell and service vehicles direct to the consumers. This will provide much needed competition among the dealer ranks.
5. Thin the herd of dealers. Some will leave on their own accord, others will need to be prodded. If they cannot meet minimum acceptable levels then their dealership can be revoked.
6. Government, GM, UAW and the public have to believe in the plan to get the domestic auto industry working again.
My 2 cents.
Sheth
To all:
Lets stop beating the “eliminate brands” dead horse. Closing up Olds cost GM a lot of money and they cannot afford to pay off dealers if they close other brands. GM has already said Pontiac/Buick/GMC are basically one brand. Also, there is no evidence that eliminating Olds did not cost GM sales. People here assume that everyone who currently owns a car made by the cancelled brands will simply flock to other GM brands but there is no historical evidence supporting that notion. GM needs more sales, not fewer brands. Unfortunately consume confidence is low and credit isnt as readily available so people are not buying the competitive vehicles that GM offers today. If GM cant get the money it needs today they wont be able to bring us the vehicles we are anticipating like Volt and Cruze.
“At the heart of the domestic automobile industry’s difficulties is inadequate product. Detroit abandoned segments of the car business long ago.”
Can you support that statement? The Malibu, Aura, CTS, etc. aren’t cars? When people make these oft repeated statements about GM “abandoning the car market” I would like to know how they came to that conclusion. It’s true that GM spent a lot of capital on trucks in the 90s and 2000s but they never stopped investing in cars. GM’s recent round of new cars can stand toe to toe with anything from the import manufacturers.
Sheth
“PS. I agree with your thesis that GM is too big to be allowed to fail. But when you take our tax dollars in a bailout - please fix the union problems, and the management bloat, and build great cars. And I might even buy one.”
GM has already “fixed” the union “problem” and savings kick in by 2010. I don’t know enough about GM’s number of managers to verify “bloat” but I would assume that they have been making cuts and will continue to do so. You cannot completely eliminate management if you are trying to survive and thrive in this market. GM is building some great cars. Check out the reviews of the CTS and CTS-V as well as ZR-1. The Malibu has done pretty well with the auto media as well. While there was a time when we could accept that GM may not have been committed to great cars that time has passed. The G8, Cobalt SS, CTS, ZR-1 and Malibu are vehicles designed to compete with the best of the best. The G8 GXP, Camaro, Cruze and Lacrosse look VERY good and I hope to see them make it to production. Companies that arent committed to building great cars don’t produce vehicles like the CTS-V and ZR-1 and Camaro. If you are suggesting that there isnt ONE GM product that you would buy in 2008 you must not be willing to give them a chance.
Dave T.
There are a few important points:
1. Clearly the Detroit 3 all can’t be allowed to fail. The impact will be just too huge.
2. However, I don’t think Chrysler should be included in the loans/bailout if their ownership is just planning to shutter the company anyway.
3. GM is obviously too big to run efficiently. Heck, I can’t tell you how many people we have to deal with and often still don’t get good answers out of anyone. Although that’s better than the other two when you deal with just one person who doesn’t get you answers
4. If Chrysler disappears I can see GM keeping most of its brands. But obviously Hummer, Saab and perhaps Saturn will have to go.
John R
IMHO
GM it is your fault, you allowed quality to go out the window by the fact most parts in your cars are NOT from the USA or even built in the USA.
Take the Corvette, engine made in Mexico ?
Transmission, Mexico,
Transaxle, Germany
Tires, no longer American
Electronics, seats, etc, Japan, China
So now you have failures from non American workers and vendors and then allow your name to be dragged in the mud along with Americans seen as bad workers when you imported the bad quality.
Then when the Non American products fail you blame it on your own customers
Good example in 1994 I paid over $60,000 for a ZR-1 Corvette.
The first one brand new the dealer blew the engine up and I had no choice but to lemon law it.
Second ZR-1 which used a German transmission had a common problem with the syncros. Mine had a slight problem on this, GM voids warranty saying since the car only once was drag raced ( wow ZR-1 and sold to be used in carshows
which had nothing to do with the design flaw cost me $5,000 for a rebuilt transmission plus they kept the orginal one.
This is how GM treated a customer who had bought 12 Corvettes since 1974, plus the profit GM got from the GMAC loans, plus many other GM cars / trucks since 1968 to present.
GM is more then happy to kill off US jobs where the plants existed and then pay to build plants worldwide for non American workers and then wonder why we are saying you made your bed now sleep in it.
GM if you want Americans to buy your products start being loyal to long term customers, American vendors and workers and your quality issues will be greatly reduced.
Instead of marketing via a pro golf star, go back to doing 1 hour TV spots showing what the new models are and what the pro is to buying American product.
Got out of paying for actor award shows and more about we the Joe the plumbers who made you a success in the first place
Lastly it is about time GM takes a big stick and cleans up the dealer mess as most GM failures occur by the dealers picking up a screwdriver when they cannot chew gum and walk at the same time.
Joe
I to have read and heard enough bad news about the entire industry, and also am perplexed by the wisdom or lack of it spewed out from all corners. What I have not heard is how to rationally fix the problems. But first we must examine how the problems came about. And there are endless explanations, however, the foundation has to identified. In that be we live in a country with a free enterprise system and market economy. In my experience it has been civilizations fault for all of our dire circumstances.
First we were an agrarian economy, then the industrial revolution hit, finally the technical evolution emerged. As a civilization, we are always striving to make things better, faster and cheaper. I believe what has happened is that we are at the end our string of success with the information age in maturity. So it seems that there are natural tendancies which in the end bring about obsolescence. America’s finest hour has past and the torch has been handed to China and India, where people are now enjoying the same economy we had as a nation following the end of WWII and during the age of modernization.
Technology has made our lives easier, safer and longer. What the negative results from is the vast amounts of wealth created and sought for continuously. That leads to investing in ways to make more from less. A natural thought from economics. What the downside is, is that we have had to leave our borders to do so, finding ways to pay cheap labor to do the work once dominated by people here, but taken over by machine because frankly the work was dangerous, dirty or plain dumb. Blame technology! Same thing for every industry with exception of the services; Law, Health, Education and Infrastructure. Something had to give once we adopted the notion that modern is better. And that society benefits from leaps in technology. Think its all wet thinking? The US Airforce is in the middle of developing the F35 Fighter which basically does’nt need a pilot! Blame that on all those kids who were told that math and science was the foundation for a good education and future career pursuits!
Yes our auto industry is in dire straits, but it isn’t simply the fault of ‘Old Guys’ making decisions, it’s a whole lot of issues which affect our entire society, it’s also that the Auto industry happens to be one which affects many jobs in many industries accross the tapestry of these ole United States, therefore the pain is felt all around. We just need to figure out ways to create a new economy which utilizes the foot print of the ‘Domestic’ Auto industriy, which made this country hum with jobs and expansion not seen since the 1950’s that employ people at a good wage until that to becomes saturated and obsolete. By then we should be living on some kind of social pension or whatever is available if we lose what our parents had before! Remember without the Big Three, who knows how we would have won WW2?
In conclusion the auto industry domestically cannot simply go away, too many people depend on it, and we will always need transportation to continue living with the choice of travel.
d wagner
Bet you sure wish you would have kept the blueprints to the electric car. Who killed the electric car and don’t you wish you would have had it now?
SteveG
I believe the Feds need to infuse GM, Ford and Chrysler with cash immediately.
However I also think GM and Chrsyler need new CEO’s. Mullaley is the only one who ‘gets’ it.
Look at GM:
Instead of coming out with an improved Cobalt, a car that you spent 5 years building up, you change the name to Cruze (ugh). That move alone would prompt me to deny GM cash for a bailout on the basis of the sheer stupidity of the move.
Saturn needs to be killed off. Opels should come over here as Buicks-We should also be getting the Insignia-Regal. Not just China. The Astra can come over as the Buick Skylark. Buick has a reputation for quality here-they just need better cars. LaCrosse? Lucerne? Dump those names and go with Regal and Park Avenue or Invicta or Electra.
Pontiac? If it stays just go back to rebadged Chevy’s which it looks like you are doing anyway-just please ditch the ‘G’ names. If the G8 were the Grand Prix sales would double.
Bring over new cars at the same time as Europe, not a year later. For crying out loud the NA market is dying, why the hell are you not bringing new product here ASAP!?
Don’t wait for the 1.4 turbo before selling the Cruze (ugh) here-just drop in a direct injected 2.2 Ecotec. The turbo can come out later as an option.
And DO NOT call it Cruze!!
Get your act together, GM.
Alex
I am afraid that the news about the trouble of the domestic car companies has a cascading effect similar to the banking and real estate markets. In other words, when people hear about the financial state of GM, they may avoid buying a GM car fearing that if the company goes bankrupt, they will get stuck with a car that will have very low resale value. This in return causes more trouble for the car maker and accelerates its demise. It is a nasty situation that is very hard to deal with. Of course the company is ultimately responsible to get itself out of this mess. But government and consumers can help. The government can help with some of the R&D expenses of the company. Consumers can help even more by going against their instincts and seriously consider domestic cars when purchasing a car, and stop foolish nitpicking. This should not be very difficult because GM and Ford make really good cars these days. If the consumers don’t get involve, they will soon feel the pain when near 3m domestic jobs are lost!
gmo
To Sheth:
About the Japanese car market - The reason the American car makers have failed in Japan can also be because.
The Japanese car makers make special cars for the American and European markets, but the American car makers does not, example:
Japan has taxes and customs by the size of the car, Japan is crowded and big cars is something they want to avoid. Cars sold in Japan are hence a lot smaller than those sold in the US. Do GM and Ford develop small cars specifically targeted for the Japanese market, and produce them in Japanses factories?
No.
James Whitehead
Sheth,
It’s interesting to see your obvious passion for GM - no matter what. But you can’t ignore the countless stories time after time after time where people have had really bad experiences with GM cars and trucks. GM WAS a very large company and MANY people got to experience first hand the products that GM built back when they were a very large company. And MANY people got burned by GM and never looked back.
Can you dispute that GM’s #1 priority isn’t cutting costs? Spend some time in Michigan, and ask any GM employee and they will tell you that it’s all about survival, and they have been in this mode for a long time. Cost is the #1 priority and it has been for the past 5-10 years. Do you want to buy from a company that is constantly looking for ways to make the car cheaper instead of more reliable, or with better performance and features?
And I don’t buy your argument that GM’s market share suffered simply because there were more choices. People didn’t start buying Japanese cars just because they were there. Some folks like my Dad who swore he would NEVER buy a Japanese car were pushed there because of the very poor build quality of GM cars and trucks. Again - same tired GM mentality - build it for as cheap as you can and hope nobody notices. People moved away from GM after getting burned. Yes and to your point there were far more choices and I will add that were better built, far more reliable, had features that worked and didn’t fall apart, paint that was free of orange peel, higher quality switches and soft touch plastics. Great products at a good value - that was not GM.
Has GM gotten better - of course. But don’t think for a second that they are not responsible for the demise of their business. They continue to pay for the mismanagement and subpar quality from the 80’s and 90’s. Do you think for a second that they would be in this predicament if their focus had always been on delivering a high quality and reliable product at a fair price? Do you think maybe they should focus on that now instead of cost reductions?
You’re on a sinking ship called General Motors Sheth, and you can keep telling yourself that it’s not sinking, and shouting to others that it’s not sinking. When the bankruptcy is filed, and this blog gets shut down, and you have to find something else to do, remember those of us that did have a clue.
Noel GM FOREVER
I am a Chevy dealer employee.I have been at this for 22 years. I am deeply scared for my job now more than ever.I am also deeply dissapointed that GM didnt keep up with the imports. GM,you should have an answer to the Prius. I still dont understand why you let Toyota walk all over you. I know you were giving the public the SUV’s they demanded but you should have had a back up plan in cars as the other companies did. Now we are all suffering. My dealer,who is the largest seller in the area,went from selling 125 cars/trucks per month to 25 per month. A lot of dealers are going to close this year.We have been here since 1955. I only drive GM cars and will continue to do so for as long as I can. There is a lot of blame,GM fatcats,Unions, the public buying imports………I dont want GM to fail obviously, as this is my source of income. It seems to me that GM is headed for bankruptcy.I wish GM could get a bailout…..but what then?? Business as usual?? Burn through that cash?? You need to get the respect of the american people who foolishly support the Japanese economy by buying these imports. I want GM to succeed. I am nervous as hell though and am looking into another career if possible.But after 22 years,its all I know. How or why we ever let the imports get a foothold in our economy is beyond me. That was one nail in the coffin. Maybe a downsizing in the corporation area,I am sure there are plenty of GM uppers making millions who should not be. As said,a lot of GM dealers are going to close and its a shame. If GM closes up shop,it will be a huge and horrible impact on the economy.
I hate to point fingers but GM….you really should have seen this coming and you should have changed your ways. I watch tv,GM’s marketing sucks in plain english. I hardly ever see a commercial for the cars. Toyota,Honda,Lexus,…..see them all the time…..GM…nothing….
I really hope you can recover somehow……but it is looking dismal right now. At my dealer,its very depressing right now. Car sales are awful……people are getting laid off every week and there is NOTHING out there as far dealer jobs anymore.
Buy American…………..I do. No more buying imports people.Time to support our economy more and not the Japanese economy. GM cars are just as good if not better.
Beaugrand®™©
“Can you support that statement?”
I don’t have to. GM brass has better access to car sales figures than we do, and it was to GM brass that my comments were directed, not the cheerleading section.
“The Malibu, Aura, CTS, etc. aren’t cars?”
Some of those are well-made cars, and would have been very competitive 12 years ago.
“When people make these oft repeated statements about GM “abandoning the car market” I would like to know how they came to that conclusion.”
Look at a GM brand new car lot- overflowing with highly rebated SUVs they can’t sell, and nearly devoid of economy cars. Compare that to any import lot. Lots of big “American” SUVs in the used car “trade-in” section, lots of shiny new economy cars in the new car section.
Just about every time I set foot on a GM car lot, I’m steered toward the big SUVs and pickup trucks. When it comes down to the actual sale, GMAC financing is biased toward the SUVs with the hefty “rebates,” and nearly impossible to get with the “economy” models. Coincidence? I don’t think so.
Quick quiz question- where would I go to look for economy cars? The lot full of SUVs- or the lot full of economy cars?
Noel GM FOREVER
Oh….and in the fuel economy crunch and current economy crisis,just want to say thanks for sending us Chevy dealers a Traverse to sell…..nice truck……but $40,000??? Are you high?? Thanks for giving us something that consumers dont really want right now. A fully loaded LT is on our showroom floor for a whopping $46,000!!!! WHAT????
Get rid of Saab……dump Buick…..maybe Saturn…..stop building the same car for each line….ie: Equinox,Torrent,Vue………Enclave,Acadia,Outlook,Traverse.
It does not work. Get rid of GMC and just sell the Chevy truck….If people want a Denali package,offer it in the Chevy line as an option. Do we really need a $70,000 Escalade!!!!!???? Dump it.Most people driving them these days are people who cant even afford it anyway. Putting themselves in debt just show off is a part of how this country is in this finacial crisis…..overspending and not being able to afford what they buy.
Joe
Thanks for this…some food for thought, indeed.
I’ll be spreading it around.
Take Care
Sheth
GMO:
Gm and Ford make market specific products in Europe. This is common knowledge. if the Japanese market is open as you are suggesting why havent they been able to set up shop in Japan and sell product there? They do it in Europe, Latin America, China and Australia. Why don’t you explain to me they Japan is the only major industrialized country that has virtually no foreign automaker presence.
beaugrand:
Your statements show that you havent done much research on GM’s recent products. The CTS was MT Car of the Year and the Malibu was a finalist. The Malibu and Aura won North American Car of the Year as voted by industry journalists. These are not cars that are 12 years behind the Japanese competition as you suggest. The materials, design and finish of the Malibu are superior to that of the Camry. Trust me, my mother in law owns a Camry and I have checked out the hard plastics and flashing that are abundant inside the car. Trucks from all manufacturers are not selling these days and thus rebates are common. GM has drastically reduced production of large SUVs and pickups this year and some of their best selling models (Cobalt, Malbu, Impala, CTS) are cars, not trucks. Their bread and butter family sedan gets 22/33 (superior to Camry) and you are on here suggesting that GM isn’t selling any fuel efficient products. For those that still want trucks and SUVs GM actually has the most efficient models on the market, including hybrids. In case you havent been following the market recently sales of almost every type of car are down. The Accord, Camry, Civic, Altima and Prius are just a few of the models that have experienced drastic sales declines over the past few months. If you visit a GM dealer and cant find an efficient car you need to keep looking. The G5, Vibe, G6, Aura, Astra, Cobalt, Impala, Malibu, HHR and Aveo all get decent mileage and in today’s sales environment I would imagine anyone could pick up one relatively easily. Based on the misinformation you are spreading about Gm’s offerings I sincerely doubt you have been to a GM dealer recently.
Sheth
james:
You accuse me of ignoring facts while you incorrectly suggest that GM has not been addressing performance, features and quality. All that I ask is that you provide some context for your remarks. With vehicles like the CTS/CTS-V, Malibu and Corvette on the market I fail to see where you are coming from. The Enclave has class leading power, design and features. Have you done any research on the model? GM is offering more direct injection engines that anyone else and you state that they are not investing in performance. Please explain this to me. It seems to me that you are posting based on your personal experiences with GM products from the past with no regards for what is in the showroom today. I am merely stating undeniable facts in order to clear the air. While people like you claim to support GM and their survival it appears to me that you are here to lecture and oversimplify problems. We can all agree that some poor decisons were made in the past. We cannot all agree that GM has no competent product on sale. The crazy part is what I am saying has been verified by the automotive press. I don’t thin you will find one significant auto writer who would deny that GM is making its best products ever.
“And I don’t buy your argument that GM’s market share suffered simply because there were more choices. People didn’t start buying Japanese cars just because they were there. Some folks like my Dad who swore he would NEVER buy a Japanese car were pushed there because of the very poor build quality of GM cars and trucks. Again - same tired GM mentality - build it for as cheap as you can and hope nobody notices. ”
The reason Japanese cars took off was because they were small and efficient. They were NOT intially known for quality. When the oil crisis hit in the early 70s the Japanese were perfectly positioned because they had small cars designed for the Japanese market. In the early days people actually thought that imports were low quality and unrefined. Once they got a foothold here they started adding models and making bigger, more powerful cars. People who fail to acknowledge the significance of competition need to look at Europe. I am willing to bet that VW and MB had more share in 1960 than they have now. Why? Less competition. Now the European market is fragmented and no one controls 20% of the market. The American market is headed in the same direction. In the future GM, Ford and Toyota will probably have almost equal share of the market. Much of the marketshare loss has come within the last decade as Japanese brands aggressively expanded into pickups, crossovers, SUVs and minivans. Its a simple fact that new competitors will reduce the share of the established players. The ONLY segment where the Japanese have failed to gain customers is large pickups. Let me illustrate this in terms you may understand: Toyota’s marketshare of hybrids will be greater in 2008 than it will be in 2010. This has nothing to do with quality or design or poor decision making. It has everything to do with the fact that Honda, GM and Ford will be expanding their hybrid offerings considerably in the future. Toyota’s dominance of the hybrid market is based on the fact that they have virtually no competition at this time. That will change within the next 5 years.
“They continue to pay for the mismanagement and subpar quality from the 80’s and 90’s. Do you think for a second that they would be in this predicament if their focus had always been on delivering a high quality and reliable product at a fair price? ”
I dont recall praising management from the 80s and 90s. In fact, I was the one who said the current regime is paying a price for decisions made years ago. Everyone knows it took GM too long to adopt the quality control and production methods of the Japanese.
“You’re on a sinking ship called General Motors Sheth, and you can keep telling yourself that it’s not sinking, and shouting to others that it’s not sinking. ”
Not sure what you are referring to here. Anyone who reads the latest headlines knows about the predicament of the Big 3. My point is that they should be given a chance to allow their turn around plans to work. If you think less consumer choice is a good thing that is your business. I am not rooting for the demise of the American auto industry because I like choices and there are only a handful of Japanese products that interest me. I didnt claim GM wasnt sinking but I was saying that they deserve to be offered a life preserver to make it through this economic downturn. I see know reason why they should be allowed to fail because of a collapse of the credit market that was caused by others.
edvard
The thought of GM, Ford, Chrysler, or all three auto makers going under is a scary thought to me. The industry represents a cultural icon of American ingenuity. It also represents hundreds of thousands of jobs which we cannot afford to lose, hence the US government must do something to help.
I have a few ideas as to what might help to turn things around for the US auto industry.One being advertising and branding. In this case, it is useful to study the now complete presidential election. Mr. Obama ran the most successful campaign in US history. He won for a number of reasons, but one of the biggest was how he his campaign, image, and even speaking style was branded. It was completely different than Mr. Mccain’s. Obama’s campaign was modern and fresh. Mccain’s… not so much. Additionally, Mr. Obama proved that advertising is a powerful tool. He won the election in many ways by relying heavily on TV and radio ads. In this vein, perhaps one area of concentration for GM should be to ramp up advertising on a massive scale. Additionally, the kind of advertising and branding needs to be changed to me different from what GM has produced in the past, and furthermore, be so different from the competition that it stands out. Find new ways to present products that make them appealing. Perhaps take a nod to the current economic problems and create messaging that generates interest from consumers with financial concerns. The public can be swayed in directions to buy products even if the products aren’t groundbreaking. In other words- make every effort to stand out.
Secondly, the product lineup needs some changes. I’m not the only one who has mentioned this, but you need to let the crossovers go. I think many in the auto industry assumed that such vehicles were to be a sure-fire hit. They aren’t. I have yet to see a Traverse on the road, nor do I see many Enclaves, Acadias, or any of the other crossovers released recently. This is in California- the largest car driving state in the US. If they aren’t selling here, then that’s clearly a sign that they aren’t blockbuster hits. Secondly- the Volt program. As much as I like the Volt, there is no way people are going to pay $40,000 for a sedan even if it is semi-electric when they can get a plain-ole’ Prius for 20-25k. So in the spirit of drastic decisions, perhaps considerations should be made to keep the Volt, but perhaps consider a stepped-down model with a more conventional battery such as a Nickel metal hydride unit. Lastly, you need to get the Cruze and any other value economy car here soon as possible. The Aveo is garbage. Get rid of the thing because all it does is hurt your brand. Everyone knows its basically a Daewoo anyway.
I’m pulling for you guys. I hope we can get through this mess together. Please keep us posted.
Noel GM FOREVER
While my comments above may have sounded negative,I am merely disgusted and upset with the notion that I may lose my job with Chevy. If any of you work for a dealer,you know what I mean.We are all scared. GM has sat on their butts in certain areas thinking they would always be on top. They waited too long to change with the times and the imports took the market.
SHETH:
I always agree with your posts. I drive an 07 HHR and get just about 30 mpg with it. Plus I absolutely love it and will buy another. GM is competitive with fuel efficient cars and trucks and it is sad how many people are uneducated about that. Malibu?? MUCH nicer than a Camry.
Most of our cars get 30 + mpg and our trucks lead all others in fuel efficiency. I really wish more people would realize that. And now gas is down to $2.52 a gallon here in NY and does it even matter that much anymore anyways??
Beaugrand®™©
Sheth:
Clearly, you’ve got it all figured out: it’s all a giant liberal, leftist, global conspiracy led by the liberal media and funded by the UAW and all the other car manufacturers in the world. GM products have no quality defects at all, the product mix is perfect, it’s just a matter of overcoming all the misconceptions, no need to improve product or quality or product mix…
Cheerleading is the last thing GM needs, if they stick with that delusion, they’ll be history within a couple years.
And yes, I’ve taken a close look at the new GM offerings. They don’t make minivans any more, and what economy cars they sell are made in Asia.
Nate
GM should not be bailed out, believe it or not these people will find jobs other places, probably not as the nice they have but there is no way my tax dollars should be used to subsidize an industry that has plenty of other companies that can perform properly. GM should downsize, or be allowed to fail. American auto makers arn’t the only ones making cars in America. Who is there to blame, just about everyone, GM, the overpaid workers (aka the Unions) which makes it to expensive for the automotive industries to operate. If you want your job so bad, take a reduction in pay & benefits. You are in an industry that is not providing what america people desire, no way I should have to pay for that.
st34
GM’s business model needs to change. Long overdue restructuring is needed to save the General
The case for rightsizing….
While I am sypathetic to the industry, and a domestic supporter. I have driven mostly GM products throughout my life. I have been an automotive enthusiast my entire life as well. So the following transcript pains me to say the least, but I feel it is paramount that the case for downsizing be made for GM’s survival. I have given much thought into this and repectfully am submitting my thoughts, along with a recent discussion with my answers to some tough decisions that need to be made. Please bear in mind that I am not an auto analyst, but rather a fan of GM, Chrysler and Ford for all of their influence and rivalries that have been embedded into the culture I grew up in. I have been a bowtie fan all of my life, and owned GMC trucks, several Pontiacs, and a few Buicks too. My first car was a 79 Chevette, and I loved it for what it was.
Here goes….
Argument; “GM does not have too many brands, it just needs to improve each brand’s image and place in the market.
Not true at all. With 8 brands GM needs to rid itself of 5 of them. They need to right size their operations! They no longer have nor will they ever have 80% of the marketshare to justify this many brands with redundant products.
Argument;
“Eliminating any brand is a disastrous plan. The cost of closing Olds was over $1.2 billion and another $1 billion in lawsuits are still pending; not to mention the loss of about a half a million customers who migrated to other non-GM brands. Oldsmobile was the smallest division at the time.”
With the shared platforms that many of these cars have in common, there truly is product redundancy across the board. This is nothing new to the General. I grew up in GM family with both parents being employed by G.M., and drove their products for years too. I know what I’m talking about. They are the same cars. There are subtle differences that goes into badge engineering, that help to distinguish them apart but they are the same animal. FWIW, this is not a news flash.
Argument;
“The cost of closing PONTIAC would likely be $2-4 billion with another 500,000 customers lost.
The cost of closing BUICK would likely be $2-3 billion with another 500,000 customers lost. Buick probably could not survive just on sales in China either.”
I am going to adress both of these brands together. Those figures of 500,00 customers are spread out over the many products under each brand, but all but a few products of each are suffering from poor sales, resulting in unsustainable losses. The cars that are selling of each already have sister cars within those platforms at either Chevy or Saturn. It is also no secret that they have too many dealerships. Pontiacs best sellers are the G-6, G-8, and the Vibe, a rebadged Toyota Matrix. The G-6 could just as easily become the new and improved, new Aura, and the G-8 could easily become a Chevy. The Lacrosse, who knows, but aside from that Buick’s crossover’s are already duplicated throughout GM. While the cost of doing this is going to be painful, sometimes it is necessary to severe a limb or two to save the body, specifically if they are infected with gangreen.
Argument;
“The cost of closing SATURN would likely be $ 1 billion with another 300,000 customers lost.”
I believe there is a case to keep Saturn as they do not have too many dealerships, and they are already right sized. They also fit right in between a premium brand and an entry level brand like Chevy. They also allow for integration of the Euro models, like Opel, and Vauxhall. I believe the most viable of Buick, Pontiac and GMC should live on through Chevy, Saturn and Cadillac.
Argument;
“The cost of closing SAAB would likely be $1-2 billion with another 300,000 customers lost.”
I believe Saab should be sold. It has lost money since it has been acquired.
Argument;
“The cost of closing HUMMER would likely be $500 million with another 20,000 customers lost.”
Hummer should also be sold. Only 20,000 customers spells big loser!
It takes between 75,000 and 100,000 in sales per product just to be able to break even on manufacturing costs and product development.
Additionally, you also are listing sales numbers by brands not products! Listing sales figures by each product is when things start to really look unsustainable!
Argument;
“closing any GM brand is cost prohibitive. ”
That’s where you are wrong. It’s the dismall sales of the worst performers that are tanking the company. We are not living in 1970’s anymore. GM no longer has the market share it needs to sustain all of these brands. I am sorry if the truth hurts, but the facts are in the sales numbers.
Also GM could not survive on its own with just Cadillac, Chevrolet and GMC to feed its enormous debt and financial obligations. They would be out of business within a month. “
You need to wake up to the reality of how bad things really are. Unfortunately that is what is needed to stop the current burn rate of cash.
At a cash flow burn rate of a billion dollars a month, G.M. needs to consolidate it’s’ 8 brands into 3 before it does anything else. The three that should live on are its’ best performing, Cadillac, Chevy, and Saturn. The five insignificant, if not redundant brands that should be cut before G.M. considers anything else should be; GMC, Buick, Pontiac, Saab and Hummer. Although there was a time when GMC was more upscale, it is now nothing more than a Chevy clone having the same amenities both inside and out. Aside from China, Buick is a loser in the sales arena and has lost it’s’ base. Pontiac, no longer an excitement brand, really only has the G-8 and Vibe going for it. Both could consolidate into Chevy and Saturn. The Malibu and Aura already replace the need for a redundant G-6, filling that segment. Hummer and Saab, barely even worth mentioning, should have been on the chopping block a long time ago. I believe they should be sold if at all possible. G.M. no longer has the market share it once did to justify either underachievers or under-performers for the sake of being bigger, regardless of their brands rich heritage, or the niche segments/markets once catered to. Additionally, all three of the Chrysler brands outperform each of the five brands G.M. needs to cut before it even considers such a move, as a merger. Even Chrysler’s premium brand “Chrysler”, which is their worst performer in sales, is still better than Buick, with the exception of cross-over vehicles that Chrysler doesn’t have! Dodge is a better sales performer than Pontiac as well. Oddly enough, I keep hearing and reading about Chrysler’s’ offerings being redundant in the media from self proclaimed auto analysts, yet no one seems to acknowledge that G.M. has more redundant, bad performing products out there than anyone.
Chrysler has reported a billion dollars in losses for the first half of the year. G.M. has lost six times that amount in the same time! G.M. needs to take a scalpel to the cancerous tumors in their own product line-up before acquiring and dismantling someone else’s just to prolong the inevitable by keeping it’s own even more redundant brands alive.
In closing…
Even if it costs 10 billion dollars to cut GMC, Buick and Pontiac it would be worth it in the end if you consider that is a one time cost. Absorb the most viable of those three brands into Chevy Saturn and Cadillac and the company will do just fine. For the most part Chevy Saturn and Cadillac already have those products though. There is a word for that, it’s called product redundancy! Hummer and Saab should be sold! Presently they are burning through more than a billion dollars a month! We are in a recession! Things do not look like they are going to get any better in the foreseeable future. The current economic storm that we are battling could drag out for two to seven years. Now I ask you, what would you do if the future of your company depended upon it and you couldn’t get a hold of enough money in more loans to ride out such a storm?
Charlie H
sheth writes, “Let me illustrate this in terms you may understand: Toyota’s marketshare of hybrids will be greater in 2008 than it will be in 2010. This has nothing to do with quality or design or poor decision making. It has everything to do with the fact that Honda, GM and Ford will be expanding their hybrid offerings considerably in the future. Toyota’s dominance of the hybrid market is based on the fact that they have virtually no competition at this time. That will change within the next 5 years.”
Let’s look at that differently… Thinking and acting very strategically, Toyota has had a decade to become the unquestioned market leader. GM has introduced a variety of low-effect and/or overly expensive hybrids, which sell in negligible quantity. GM’s next offerings will be high-effect but very expensive hybrids which are intended to sell in negligible quantities but, representing an absolute increase from near-zero production levels, do erode Toyota’s share in some miniscule way. In the interim, Toyota gains experience, reputation and knowledge. Toyota uses economies of scale to drive down the production cost of their hybrids, increasing their technical marketplace advantages. By the end of 2010, Toyota will have the capacity to build nearly 60K Priuses per month, plus some significant number of other hybrids, all based on the same fundamental powertrain. GM’s production may ramp to perhaps 5K per month and will still be struggling against large fixed costs and economies of scale are compromised because that 5K/month represents perhaps 10 different models and hybrids of 3 different types of powertrain.
Where in this prediction do we see GM doing what it must do in hybrids… make money?
Also, it’s an open question whether or not GM can actually gain any market share in hybrids at all, even if they go to 5K/month. Toyota is nearly tripling capacity and some of that capacity will be domestic US. Honda will build 200K Insights/year, 100K of which are due to come to the US. Other manufacturers will be adding models and capacity. Ford, for example, starts to sell the Fusion hybrid in early 2009. The overall hybrid market may actually expand faster than GM’s production and GM may see share remain constant at its current negligible portion or even decline. If capacity expands faster than the market, GM could still see negligible increases in share, or even declines, as they are forced to compete vigorously on features and price. If GM’s hybids are costly to build or not as high-content, they won’t sell (or GM will be forced to take a loss on each).
Mark C
With all that is happening, it is truly to see such a crushing blow to our once strong automotive industry.
However, serious thinking must go on for the sake of survival and that means that everyone, UAW included, needs to suck it up and deal with the new reality.
I agree that all this rebadging of cars is a silly exercise. Automakers suffer for such silly acts by eating their young and having to undermine a brand with like me copies of cars from other divisions.
I can’t see why GM just doesn’t pull the pin and finally eliminates brands to concentrate on what has clearly met sales goals ad elimante car platforms that don’t. Keeping Cheverolet, Pontiac, Saturn, GMC and Cadillac can do wonders by allowing each division to share car platforms while designing good cars. Let GMC make all your trucks and pick-ups and SUV’s, Pontiac be your performance brand, Saturn a good value brand with Chevy and Cadillac bringing to the forefront the best in style, performance and luxory.
With one or more factories, but certainly fewer than present, able to make mutliple brand platforms, you truly are able to respond to demand as it ebbs and flows in the lifecycle of a product.
As a Saturn owner x2, I can tell you I love the product and would hate to see the demise of our auto industry, but if you don’t start thinking light on your feet by designing what people want, not what you think they want, there may be a chance of survival.
As for the those losing their jobs, there can be no greater pain. But, perhaps a retinkering of benefit programs that will retrain and keep a laidoff worker in their home will ease the pain until they can reenter the workforce again.
RB
Noel GM forever:
you hit it right on the nose. why is GM introducing a pricey new crossover (Traverse) when they already have 3 nearly identical others scattered across the GM line (Enclave,Outlook, and Acadia), when they should be introducing a high quality small car. it amazes me to this day why GM still doesnt have a number of fun to drive small cars that get great gas milage. now they have to play catch up while the other foreign companies have had these cars for years. getting back to the crossovers, why does GM continue to issue the same vehicle to multiple lines? it not only dilutes the brands but it also creates a huge problem when vehicle sales slow down. GM you need to contract the company. Ax GMC, Buick, & Pontiac. these companies are just creating internal competition between your brands. You need a truck? go to Chevy not GMC. you need a luxury car? go to cadillac, not Buick. you need a sporty sedan? offer a sport package on a chevy. get the drift? i know its tough but you have to let go of the past and downsize. in the past all these brands made sense. there were no Honda, Toyota, Hyundai, Mazda, etc. but now GM has too many diluted brands to sustain itself. they cant just keep inserting a SUV or Truck into any of the brands to help keep them afloat. the government giving all this money doesnt make sense to a company that is just too big. Sure the money will help prevent people from losing jobs but the problem will not go away. telling people to by American wont work either.
RB
ST34- my thoughts exactly.
Jeff
st34,
While I agree with the notion that GM has to rightsize itself and discard quite a few brands in the US, there simply is not enough cash in the company to do anything like that right now. As reported in today’s earnings announcement, GM is getting very close to the minimum amount of cash necessary to run the company, and closing down brands is not something that can be done overnight - it takes quite a bit of planning and time to do so. One can get into all the specifics on dealer franchise laws and the buyouts that would have to happen, along with the rightsizing of the manufacturing capacity within the company (they have too much as it is right now), as well as the effects on the suppliers of such a move.
However, unless something drastically changes within the industry (i.e. more sales) in the next couple months, GM will have less cash than it needs on a monthly basis to meet its requirements. Right now, the focus in the company has to be cash conservation and short-term survival, and closing down brands is not a short-term solution, but one that would have to play itself out over a number of years.
Blue
Dear Sirs,
I have been driving Chevy trucks since 1970. Please give us a full sized pick up truck with an electric motor that will produce power that equals a 300 horse power V-8. We need these trucks to haul equipment etc. for our jobs. We will buy them if you make them.
Blue
Robert Farago
From TTAC:
Cerberus Capital, a highly secretive NYC-based vulture investment fund, wants the U.S. government and taxpayers to bailout its failed investment in Chrysler and its failing investment in GMAC. Its partner in this raid on the US Treasury is General Motors, a woefully insolvent automobile manufacturer whose CEO is paid $40k each day. Here’s why a bailout for GM and/or Chrysler is a bad idea.
Background
Cerberus Capital uses hedge funds as the vehicles in which to invest in various companies. Apparently, the hedge fund known as Cerberus Series 4 is the owner of an 80 percent interest in Chrysler and a related fund owns or controls a 51 percent interest in GMAC. Not surprisingly for a company known for its secrecy, Cerberus has not disclosed which entities actually own the interests in Chrysler and GMAC, has not disclosed what fees Cerberus has taken or accrued from its investments, and has not disclosed what severance payments would have to be made if GM actually acquired Chrysler. For example, would Chrysler CEO Bob Nardelli get another big payday if he’s cut loose in a merger? The interrelationships among GMAC, Chrysler Financial, Cerberus and other entities are also a well-kept secret.
Secrecy, Secrecy, Secrecy
Why is everything so secret? What happened to the idea of open government? A few questions come to mind:
1. Exactly what is the Cerberus/GM proposal to borrow $10b from the US Treasury in order to fund a merger, the terms of which are also secret? Is it in writing? Where is a copy? What were the proposed terms that were rejected by the current US Treasury? Is another proposal in the works? How is the $10b going to be repaid by two insolvent auto manufacturers?
2. Which lobbyists represented GM and Cerberus in getting their loan application before the US Treasury? How much were the lobbyists paid? With whom did GM/Cerberus meet? Where are the notes of any meeting or other communications about the loan proposal?
3. What do we know about the financial condition of the proposed borrowers? Where is Chrysler’s current balance sheet and income statement? Surely Chrysler is insolvent on an equitable basis, and probably insolvent on a balance sheet basis. Why is basic financial information not available for public inspection and comment?
4. Where are the financial statements for the Cerberus Series Four hedge fund? US taxpayers are being asked to bailout the failed auto related investments by Cerberus Series Four, while the profitable investments in the same fund are not being shared with taxpayers.
GM is woefully insolvent and should file Chapter 11
5. As of June 30, 2008, GM had total assets of $136b and total liabilities of $191b, a $55b deficiency. Thus, GM is insolvent. How can GM ever repay a $10b bailout, or any bailout for that matter? As of June 30, 2008, its current liabilities were $70b, dwarfing its current assets of $55b. Moreover, we do not know what deals GM has made to stretch/defer repayment of its account payables.
6. Is Chrysler in any better shape than GM? Probably not, but without a current balance sheet the definitive answer is a secret.
7. Assuming Chrysler is insolvent (liabilities exceed assets), then the equity interest of Cerberus and Daimler (the 20 percent equity owner) are worthless and these entities are not even entitled to a seat at the merger negotiating table. The real economic owners of Chrysler are its creditors and employees, who are also in the dark about the proposed US treasury bailout.
Who really benefits from a GM/Cerberus/Chrysler merger?
8. The US taxpayers can’t benefit since there is no repayment plan. Not surprisingly, Cerberus and its hedge fund are back door beneficiaries, because the 51 percent Cerberus ownership interest in GMAC will increase in value if GM and GMAC survive. Chrysler is a lost cause, but with the value of the Cerberus investment in GMAC also plummeting, Cerberus is trying to prop-up GMAC by helping GM survive. Is Cerberus pledging its equity interest in GMAC to the US Treasury as security for a government loan to GM? Why not? Is GM pledging its 49 percent equity interest in GMAC to secure repayment of any loan by the US Treasury? More secrets kept from the public.
9. The self-dealing by Cerberus extends to wanting to cherry-pick the Chrysler assets and keep the auto financing arm for itself. What is the value of the Chrysler auto financing business, and why should Cerberus benefit?
10. GMAC had negative net income of $3b for the first 6 months of 2008. GM’s ownership interest in GMAC was impaired by at least $2.7b during the same six month period, meaning that Cerberus Series Four hedge fund had suffered a similar loss in value in its investment in GMAC. Why should taxpayers bailout the millionaire investors in the Cerberus hedge funds?
More secrecy and lack of disclosure
11. Does GM plan to make any payments to GMAC, payments that directly benefit Cerberus? As vehicle residual values decrease, GM is obligated to make payments to GMAC under “residual support and risk sharing” agreements. On August 6, 2008, GM paid GMAC/Cerberus $646m, money which could have been used by GM to fund its ongoing operations and its obligations to employees.
12. Should any taxpayer money be used to fund payments to GMAC/Cerberus, whether that money is used directly or indirectly? How much, if anything is Cerberus investing in new money to prop up its investment in GMAC? If it is not investing in Chrysler or GMAC we can reasonably conclude that its analysis shows that the investment is a bad one. What’s bad for Cerberus is bad for the US Treasury.
Although it appears that the Cerberus Series Four has money available to make follow-on investments, it makes no sense to throw good money after bad if you can lobby the US Treasury to make the bad investment for you. A related question is whether the Cerberus equity interests in GMAC are going to be used as collateral for the loans that will be used (albeit indirectly) to bailout GMAC. Why should equity bear none of the risk but get all of the benefit?
More non-disclosure
13. What is Cerberus ResCap Financing LLC and who has seen its financial statements or the agreements relating to the $3.5b secured loan facility? How is this secured loan impacted by the bailout of Cerberus/GM/Chrysler?
Deepening insolvency is likely
14. GM’s current insolvency and continuing losses will trigger additional liabilities, and make it doubtful that GM will be able to make payments promised to employees and former employees or perform its labor agreements. GM’s worsening financial condition also deepens its losses from its derivative contracts. How would a GM/Cerberus Chrysler merger affect these liabilities? Will any government loans be used to reduce the $30b of GM accounts payable, or, in the event of a merger, to pay down Chrysler accounts payable in some still unknown amount? Sadly, we don’t even know what Cerberus proposed as the use of funds and we have no idea how Cerberus will benefit since we have no financial information on Chrysler or Cerberus.
15. As GM and Chrysler idle plants and facilities, more employees are laid off the employee related liabilities of GM/Chrysler will increase by hundreds of millions. Since GM and Chrysler are insolvent, who will pay these increased costs? Can any of these costs be avoided in a Chapter 11 case of Chrysler or GM?
16. Should taxpayer money be used, directly or indirectly, to pay GM and Chrysler obligations that are coming due while these entities are unable to pay from their own assets. Surely not, but what is being proposed, and who will benefit if GM debt is redeemed at par by vulture investors that bought the debt at pennies on the dollar? A related question: will any Cerberus entities benefit from government funded redemptions of auto maker debt? Is it possible that Cerberus is trading in credit default swaps and actually benefiting from the difficulties of Chrysler, GM and GMAC? Yet more items of non-disclosure on a long list of secret items.
Conclusion
17. GM, GMAC and Chrysler are not credit worthy and are unable to borrow money on any basis, secured or unsecured.
What’s Good for GM/Chrysler is a Chapter 11 Filing
18. GM needs to be restructured, which means it must change the terms of its legal obligations to suppliers, bondholders and employees. The only vehicle to accomplish the needed changes is Chapter 11, which lets GM reject unfavorable contracts, renegotiate its debt obligations, defer interest and principal payments and gives it time to fix its business. Without a chapter 11 filing a government infusion of $10b cash will be gone in six months when GM uses the money in 2009 to pay bondholders and employees billions of dollars, payments which do nothing to help GM survive.
19. Chrysler, the stepchild of a distressed debt vulture fund, is also a prime candidate for Chapter 11. But Chrysler should be liquidated, not reorganized. A liquidating Chapter 11 case, expressly permitted by the Bankruptcy Code, can be used to keep Chrysler operating while its divisions are sold. With adequate Chapter 11 funding line workers can keep their jobs and benefits, and non-essential executives can be fired at minimal cost to the Chapter 11 debtor, known as the debtor-in-possession. Trade creditors will continue to ship to Chrysler because their post-petition claims will have a priority in payment. Chapter 11 also lets the Bankruptcy Judge appoint an examiner to conduct an investigation into the financial affairs of Chrysler and its equity owners, and to sue to recover any improper payments. Chapter 11 will also make it clear to Daimler and Cerberus that their investment is worthless and they will not be able to use their position of control to improperly benefit.
20. Cerberus should acknowledge the financial reality and either file a Chapter 11 case for Chrysler or have a federal receiver appointed so that the value of the Chrysler assets can be maximized in an orderly sale procedure. The US government should fund the Chapter 11 case and keep Chrysler operating by giving Chrysler a debtor-in-possession loan having seniority over all other liabilities of Chrysler, thereby assuring taxpayers that the money will be repaid out of the proceeds of asset sales. The US could also give a senior secured loan to GM to help GM acquire assets from Chrysler, but this would require the cooperation of bondholders, cooperation not likely to be forthcoming. On the other hand, if GM is in Chapter 11 then the government could refinance the GM operations without fear that taxpayer money would be diverted to pay existing creditors.
motorman
the cost of fuel to run your vehicle is below the cost of depreciation,interest on the loan and insurance so i can not see what the big deal is if you get 20 MPG or get 30 MPG. the difference between 20 MPG or 30 MPG with driving 15,000 miles a years is 250 gallons of gas and at $2,50 a gallon that equals $625.
Noel GM FOREVER
RB wrote : . “it amazes me to this day why GM still doesnt have a number of fun to drive small cars that get great gas milage”
Chevy does. I bought an HHR last year after owning an Equinox. I bought a fully loaded 2.4 liter model. It has 175 hp,not bad for a 4 cyl. First off,it has every option one could need from leather heated seats to an mp3 radio to power everything.It handles awesome,its peppy and is a joy to drive.Now we have an HHR SS Turbo with 260 hp for a manual tranny and 230 hp for an automatic.I drove on here at the dealer and this thing just kicks ass.The Cobalt SS Turbo has the same powerplant.The Impala SS with its 300 hp v8 is just sick.We do have these types of cars.
My HHR gets just about 30 mpg. Its a shame these cool cars dont get more recognition……..
Buddy Dean del Rio
“You need a truck? go to Chevy not GMC.”
My thoughts exactly RB. I have never been able to understand why GM makes and sells both Chevrolet trucks and GMC trucks that compete against each other. What was (and is) the point of making and selling re-badged brands of what are nearly identical trucks?
Does each appeal to a different demographic? In my mind it’s unlikely, but who knows? Someone in GM marketing must know (I would hope), and it would be nice to hear an explanation for something I’ve puzzled over for years.
Nate
I’d like to first off say that the study is quite one sided and really misses a lot of other points that are equally important. The fall of any or all of the Three automakers in this country won’t be as big a problem as people think. If anything good will come out of the facilities and people being released to better more efficient uses of American energy, resources and time. Quite simply what do you do when an entire industry collapses? Well you of course figure out why it collapsed and form a new one. Thats exactly what the US needs is the ability to actually keep pace with technology and the world. Something GM no doubt prevents its employees from properly doing just as most large companies do.
The fall of GM would open the doors for small automakers who can innovated and advance technology that GM was too afraid to put on the streets… Overall I don’t see THAT as a bad thing. No to mention the iconic small block chevy will live on somehow. Good designs USUALLY get lost in history, they just move from organization to organization.
Gerald,
I don’t feel a central part of its business economy would be erased. Its physically not going anywhere… all that would happen is the dieing of an inefficienct organization of those tallented people and the resources they manage.
As to military emergencies, the manufacturing facilities will be around for a while and as the Japanese and Germans have shown aren’t that hard to re-establish in the US when all the overhead is removed. The Japanese and Germans have put up quite a few new auto plants in the US with what would appear to be minimal difficulty. So I’m sure in a military emergency the US gov’t could reuse the old plants around, the closed down facilities from WWII that are still around and if need be build new buildings (putting people back to work).
The mechanical labor is still there the teaching of that labor to new generations though is a totally different question. The power industry in the US faces a similar problem. The US no longer has the manufacturing facilities to produce nuclear reactor pressure vessels (they are all outsourced to France now). Talk about
Gerard,
To respond to your first point… lets not forget the Buick Enclave is the same basic vehicle as the traverse.
Regarding your fifth point. As a Pontiac, and Buick owner, and someone who has driven Chevy trucks, and Oldsmobiles I understand your point but disagree. I think the idea of a loyal enthusiast is out of place and quickly becoming outdated. I too am/was an enthusiast of GM. As should be apparent from the simple fact that I comment on this blog site. However, I think getting rid of Pontiac is the best thing GM could do. I really could care less about what GM calls their brands and products. I’m sure I’m not alone when I say that above everything else I would LIKE to continue buying American products (and cars/trucks). But, when American automakers can’t keep pace with the competition and I go looking for my next car it may not be a GM or even American. And thats something I don’t like to say. But the reality is that GM isn’t doing what it needs to grab consumers attention.
I don’t agree that a car NEEDS to be rear wheel drive to be interesting (though I will say it helps). GM’s foreign competition has shown that people will buy Front drive and Reardrive alike if they get it right. I think the G5 and G6 have the potential to be great cars, if GM invests the money to refine them.
I think the real problem is just poor decisions on how to build the cars and a misjudgement of what consumers want and are willing to pay for.
But if GM refines them to the point they are needed to be there is little that differentiates the G5 from the Cobalt and the G6 from the Malibu, and Aura. I think GM needs to ax Pontiac and make their other cars more sporty.
Why don’t you consider the Malibu, Aura, Cobalt, and other GM cars entertaining? GM’s other cars are no more or less entertaining as a Pontiac. Why not have a Buick build on the G8 Architecture?
There simply is no real need for Pontiac anymore the cars can be carried in another brand.
If GM made the Astra into a sporty small car they’d do great. Put a small turbo in there and a nice modern looking interior.
James Whitehead,
I couldn’t agree with you more.
I think if GM axes Pontiac, Chevy, and GMC and brings Opel into the US and focuses on the remaining products they have, they will do well. As the movie field of dreams said “Build it and they will come”.
If GM built truly amazing cars people would buy them. Not cars that pretend to keep up with their competition and 15 to 20K miles later rattle and have problems.
Some Guy,
I like to think that if GM manufactured all its products in America things would be a lot better. Certainly they’d get a bit more sympathy from me. But since a large portion of their products are imported……
Chris R,
I’m not sure I agree with you. I haven’t figured out if Mr. Lutz did more good or harm to the companies he was at. Of them BMW is probably the only one still doing decently. GM and Chrysler both have issues. I’m not sure what to make of that fact.
As far as the Chevy Brand goes… I just see it as a cheap looking car (even though it costs quite a bit).
If GM focuses on great cars people will buy them. And if they put the best technology they can in them people will be willing to pay what it costs for a car that lasts. Perhaps they need to focus on the vehicle’s life rather then the ownership period of one owner.
I’d much prefer a car 6 months out. I can wait 6 months to buy a car… not 2-4 years.
JG,
I agree GM could be doing more with Buick. But they are affraid no doubt of alienating the loyal base of current Buick buyers. Truth be told I’d rather see the China Buicks here then some of the other models GM makes in their other brands (Chevy and Pontiac and Saturn specifically).
If GM put those names on the cars younger buyers would no doubt want them. If they can backup the mechanicals and interiors and interior mechanicals they would no doubt get a lot of young buyers.
Cad Johnson,
GM doesn’t need cash, it needs less poor uses of the cash they have. They need to be more efficient. They need LESS vehicles and they need to drop the current ones as soon as possible. No matter what it costs. They need new products that capture what the CURRENT market wants. And that most certainly isn’t their current fleet of vehicle offerings.
The best thing they could do is sell off as many of their current cars as possible, ax Chevy and Pontiac, Bring Opel over and reshuffle their vehicles to the left over brands. Then they will have more cash/vehicle to make each vehicle better.
I think the platforms to keep are: Caddy CTS, Chevy Trucks, Buick Enclave and Saturn version of it, Saturn Vue/GMC version of it, Corvette, G8 (Opel version of it), Saturn Aura, Cruze and Volt. They should bring the Buicks over from China. The rest of them can go as far as I’m concerned.
I do agree though that more vehicles need to be plug ins.
I think GM would be foolish to ask our Gov’t to assist them. GM should be able to manage on its own. And should do what it takes to make that happen.
Selling shares of GM to the Chineese is a very foolish move. Why would you want to do that?
I think GM would be better off reinventing itself rather then sell to SAIC or FAW. A government bailout wouldn’t be to much different then selling to the Chineese, or SAIC or FAW. And besides that companies like SAIC probably wouldn’t buy GM because the customer base isn’t right for the kind of business they do.
Nelson,
That would almost work except buyers like me who want trailer towing capacity don’t get it and there fore go elsewhere. Now if GM could make a Vue with towing capacity and hybrid… or a hybrid diesel Vue, I would be up for that.
Beaugrand,
Perhaps you have been affected by the car industry’s problems, but how would selling product that people can afford and want change that?
I don’t see how GM can sell more affordable cars then they do now. The reality is to make a car cheaper something has to give… the prices of materials, the cost of labor or the cost of energy. I don’t see any one of those changing immediately without some action on the behalf of the American people who work for GM (or want to).
I agree that GM does need to sell more economy cars but why don’t they? I suspect they can’t compete with other country’s offerings.
The only way for GM to get past that is to immediately remedy the way they do business and to have American workers and suppliers willing to work for less to help GM get back on their feet. I don’t see that happening.
If it were as simple as using taller gearing and remapping chips why wouldn’t GM have done that? And on the note of taller gearing, what does it cost to change the gear ratios on an assembly line?
7,9 and 10 speed transmissions mean more vehicle weight (that isn’t being used) or less torque handling capacity (ie less Horse Power capability). The Miller cycle seems interesting though I have my doubts as to whether it will really help with fuel economy. Lowering Aero CD to less then 0.19 wouldn’t be to hard if styling sacrifices were willing to be made by the consumer.
Ever hear of lean engineering? Hmmm interesting idea.
If the design cycle is shorter and if GM were better able to predict the market they would be doing much much better.
I like your idea of overlapping components but not brands, though from an engineering point of view I wonder how you do that.
Mathew,
I agree, my dad still has my grandfather’s 1950’s Chevy and it still runs well. GM sold out a long time ago to quality. Its time to emphasize quality. I almost wish GM would pick a car and try it on, don’t worry about the cost just make the thing as good as they can and see how the buying public reacts to it (in terms of how many they sell).
I agree, convincing America that Malibu is as good isn’t going to be easy… because its really not. I’ve driven one, I’ve driven in the back of one and I’ve driven in Hondas, Toyotas and even a 4 year old Acura and the Malibu just doesn’t cut it. GM is getting close though. They just miss the attention to detail and quality issues that other companies “get”.
That is the truth it only takes 1 bad GM product to sour GM’s image with a consumer. Couple that with all the consumers and you have what is going on with things at GM now!!
I think if they can put the Cruze interior into the Volt and a nice sound system/nav system GM will have a winner. But before they release it make sure the interior controls parts (AC controls, Heater controls, Power windows, mirrors etc..) will hold up for more then 10 years. And make sure that after 20K miles it doesn’t develop rattles or any other problems. If GM can do all of that and still release the Volt they will be headed in the right direction again.
Sheth,
I think people are still waiting for GM to hear them.
Increased competition only furthers the points that people make. GM isn’t getting it (just yet) because if they were their products would be competing. If GM’s competition is making full line autos then GM needs to be making their full line better. And if they can’t afford that they need to get rid of un needed product lines until they are competitive.
When I goto my local shopping mall and see a Saturn or GM rep there advertising their cars they should actually know something about them. In addition GM should be in every mall, every town with their cars getting feedback from customers and opinions of what customers like and don’t like. If GM did that and actually looked at what people say, it would only be a short time before their products were what people wanted. But I don’t see GM doing that, I see them hiring some advertising agency with people that really don’t know the product or understand it and who could care less what interested people have to say about the car.
Its not a matter of wanting less options, its that I don’t want to pay for a GM that can’t learn and fix its problems, but would rather complain to the government then make better products.
This is America home of free market. The free market voted for everyone but GM with their dollars and GM lost. Thats just how it is. The only way to fix that is the next time around do better or go out trying. I don’t see why people won’t let GM do that. Jobs won’t be lost forever only for a short while until someone else fills the void that GM left and then they can work for that company, or find a new line of work.
I think inter-dealer competition is what hurts GM. Everyone is in the rat race for the lowest price and GM gets hurt because their dealers scream for cheaper products and GM responds by lowering their quality and thus price.
I don’t think Toyota, Honda and Ford (and all the other car companies out there) would raise prices. I think they would sell more cars. I don’t think GM missing is going to effect the competition that Toyota, Honda and Ford have amongst themselves not to mention all the other brands out there.
No economic super power (how many are there really)? Maybe they don’t rely on other countries to build their cars but then again how many countries are getting by without cars or by buying our used ones?
In Japan you can only keep your vehicle so long before it is taxed heavily. So there is a lot of incentive to buy new cars. I don’t see that in the US.
Can US automakers even make vehicles that meet the market demands of Japan?
I agree our foreign policy is a bit off. I guess we’ll have to wait and see how that gets fixed.
Dale,
GM didn’t learn. They need younger people at the wheel of the company. End of story.
John,
Do you really think American cars are built as well as foreign cars?
I think they are getting close but not there yet.
We have a strong manufacturing base without GM. Do you think the people that work for GM, and other auto makers in the US just disappear when GM goes under?
Heck if GM goes under it frees those engineers and workers to go build new different things. Perhaps some of the ambitious ones will start a new auto company that addresses the markets better then GM was ever able to… you never know what the future brings.
What about the Big Two and the Little Four (or seven or ten or whatever)? Isn’t that an option?
Tomoe1,
If America took pride in America we wouldn’t be having this problem. And on top of that GM products aren’t produced in the US, a lot of their parts are made outside the country in Mexico and Canada. Its tough to have pride in american products when I pop the hood open on my car to change oil and I see in big prominent letters on an engine casting “Made in Mexico” … or was that “Hecho en Mexico”.
I think people today take pride in NOT owning American cars. But even so GM has people who care enough and take the time to read these blogs and can’t even really respond to us. Imagine if GM had an in person open blogging session where they invited the general public to GM headquarters… Maybe the feedback would get heard. As it is I feel like this blog is just a way to appease GM fans rather then anyone seriously listening to comments. Heck once I even sent GM an idea and they declined it saying their system was good as it is… I’ve never heard of a company turning down a money making idea.
I agree unions need to go.
GM needs to get rid of the GM brand name. They need to push Opel, Saturn, Buick, Caddy and GMC, and Corvette. And if thats to many… Caddy, Opel, Buick and Corvette. And if thats still to many then just Caddy Opel and Corvette.
I disagree on picking a vehicle. Trim availability is a tricky word to use. I think customers need different trim levels. I for instance like ultra modern sleek interiors with all the bells and whistles and a sleek exterior. Some customers like boxy interiors with only a radio and heater. I think GM needs to address these types of things. but I don’t see any reason to do it with different brand and model cars. I think one brand one model is what they need.
I don’t understand what you mean by allow the new company to sell and service vehicles direct to the consumers.
The public is a hard sell when they can go out and buy a foreign car today.
Sheth,
Eliminating brands is the smart way to fix GM. And one of many steps required.
Why would GM have to pay off their dealers?
If Pontiac/Buick/GMC are one brand why not name it that way.
There is no way to predict one way or another whether cutting olds cost GM sales or not. Thats not the point. Changing public image of GM and reducing costs and inter-company competition IS the point. How much money does GM waste supporting its brands?
If consumers aren’t buying then GM won’t get more sales. Its a very simple concept. If they can’t get more sales then they won’t be able to afford the R&D to make new cars in each brand. So why not preemptively eliminate the unneeded brands and replace them with something new and different that will make Americans stop, scratch their heads and say “Who makes that”. I think Opel is just the thing for that. Replace Pontiac and Chevy with Opel and all will be much better.
If people aren’t buying competitive GM vehicles them GM isn’t being competitive. Part of the competition is making dollars by selling cars. To not do that is to not be competitive.
If GM and its employees were that concerned about the Volt and Cruze and company at large they would put in the extra hours and voluntarily offer to give up their pay.
GM did abandon the car market when they refused to offer products that were competitive and refused to listen to consumer requests. Or for that matter didn’t even think of asking its consumers what they wanted.
GM may have invested in cars in the 1990s but they sure didn’t invest as much in them as they did their trucks. And certainly didn’t go above and beyond to make sure their cars were top notch.
The CTS and CTS-V and ZR-1 are extremely high end cars that demonstrate GM’s capabilities. But even the CTS has some things about it that make it not worth the price tag in my mind. GM needs to apply what they have learned from the CTS, Corvette, and G8 to their smaller cars. And then they need to buy one of everything their competition makes and pass them around their employees so they know what the competition is and isn’t.
If you want to see how nice GM can make cars take a look at Opel’s web site. The Opel insignia looks amazing but its only in europe. I’m not surprised.
NO, companies that aren’t commited to performance cars don’t build CTS-V and ZR-1. They are priced out of the reach of most of their buyers… AND had GM really been committed to showing how good the Corvette is they would have made an extremely limited edition, hand built $250K based on the Corvette to show the world that they could compete with Ferrari, Maserati, and Aston Martin. It would have been a car with better style then the Vette, not a dressed up ZR-1 (not that I’m downplaying the ZR-1s performance).
That is the GM problem they are performance focused at the wrong products.
How about a smaller CTS that could compete with Audi and VW? Or how about a car thats competitive with the Mazda 3 and Mazda 3 Speed?
Nudge
Hi all, sorry about being late to join the thread. Have not been by this blog in awhile.
Roughly two years ago I posted here for a few weeks in an effort to learn more, from the folks connected to Lutz, about why GM was doing what it was doing then. We all know the story: many plants were still working overtime making (wait for it) heavy, clunky SUVs with poor fuel efficiency. I asked this question rather openly, and pointed out that during the last auto purchase cycle I opted for a small high-efficiency hybrid not made in the USA. (if there are any domestic-made highway-capable cars that can get above 60mpg, please point me to them)
The responses here, to say the least, were not encouraging. Approximately 80% of it was openly hostile testosterone-infected garbage like, “Hahaha! You moron! My giant truck will crush your tin can! That’s why your car sucks!” The few less blatantly useless responses, presumably from folks in the know, were to the effect that GM wanted to focus on providing good product value to its customers, and that its customers were primarily seeking heavy SUVs with poor fuel efficiency.
Time passes; the wheels turn.
As a taxpayer (and not one from that rich bracket paying reduced taxes – thanks Mr Bush) I am beyond horrified at the amount of government money being given to the domestic auto manufacturers for, of all things, to help them make vehicles that are more fuel-efficient. These are the very same automakers who have resisted a plethora of market signals, several times over, telling them to do exactly what they’re now requesting federal assistance to do. Only someone living under a rock in the Australian bush, for example, could have missed the hyperbolic rise of the common hybrid sedan (the Toyota Prius) this past decade, or the pricing volatility in the motor fuels market.
But let’s not dwell on the fact that this is essentially an act of rewarding failure; there’s more at stake here. No one wants to see even more former employees seeking welfare or helping to empty the food banks; no one wants to see more home foreclosures or more money being spent to support the homeless and unemployed. With the size of the combined operations of the Big Three, and their potential impact on the economy (both good and bad) it’s imperative that we find the right way out of this mess.
In that vein, here is a modest proposal for the requirements that GM & Ford should agree to follow if they are to accept government monies:
limit the maximum top-to-bottom compensation ratios to something like, say 20-to-1;
provide an extraordinarily complete accounting of how the money is being spent or has been spent, and the efficaciousness of these funds at achieving the desired goals;
if the desired goals are not met, provide an accounting of why & how and a plan for resolving the problem(s);
provide a detailed plan (obviously it will be an ongoing thing) as to how to return to profitability;
agree to produce the vehicle design(s) selected by an independent group for such criteria as fuel efficiency, ease of assembly, durability, limited environmental impact on the sourcing side, etc, if GM is unable to provide any designs of its own which cannot be proven to meet the criteria;
Nudge from CFN
Roy Lions
3 strikes and your out;
Take a good look at the 3 major hurdles GM has!
1) Ask a GM hourly employee what they want, and the reponse is a simple ” I want to get out of here, retire and get my pension!” Mundane work assignments with little pride in the job other than the fact the UAW has forced managment to pay ludicrous non competetive rates and benefits, a television and newspaper at every station.
Ask a GM middle management or salary employee what they want and the response is a simple
” I want to cover my butt so I don’t get canned, retire, and collect my pension” Forced to work in conditions of severe intimidation and management by fear.
Ask a GM supplier what they want and the answer is simple!
Give me work from Honda or Toyota ,as the supply base despises how purchasing squeezes every last penny from them until they go bankrupt. Engineering can’t design a product without making a ton of changes right into start of production and the expect the supplier to absorb ridiculous costs.
These 3 simple issues make GM non competetive and never able to compete against the JOEMs
A bailout at this point in time is a total waste of money. The spending spree in regards to big salaries, bonuses, stock options should have been over years ago. Buying the Renaissance centre when GM is already on a downward slide and now attempting to buy a defunct Chrysler corporation just proves there is little fiscal responsibility at GM.
Nate
John R,
Couldn’t have said it better myself!!!
I have never had a good experience at a GM dealer except when I walk out the door without buying OR when I walk out the door with the part I need at less then the price I expected to pay.
Joe,
What IS the problem. As an engineer the first thing you do is define the problem. What is GM’s problem?
In my opinion its declining sales and that is caused by non interested buyers and that is caused by GM’s products and the mentality that goes into them.
I think more correctly its a question of where the wealth has gone!! There is plenty of wealth in America today but what is being done with it?
I don’t see a pilotless F35 as a bad thing (and as a Pilot and engineer myself I don’t know how you could possibly think an F35 could effectively perform its “job” without a pilot).
The one thread you miss is that the work has merely shifted from physical to mental work. Our economy isn’t able to handle a society where people have to work less. Thats how people seem to be going, they want to work less, but someone has to do the work because it has to get done. All outsourcing does is cost us money in the long run.
How is math and science to blame for this? It is the foundation upon which our entire species is based.
If there is one mistake it is over emphasizing college degrees and not emphasizing hard work and physical labor enough in our society.
It can be said though that our whole society suffers from similar or even the same problem as GM… not being able to keep pace with things.
Perhaps what we need is an economy where less is better. And resources and energy are actually used wisely and valued.
Why do we need expansion? Why do we need an economy thats expanding as it was in the 1950’s isn’t there a point when big enough is big enough? Isn’t there a point when the market becomes saturated with goods and new ones aren’t needed as much.
WWII was won because we had no alternative. With or without the Big Three we would have been mostly at the same place. WWII merely stirred up the dormant labor force that this country has. It was a need to act. If you look at WWII the contribution of facilities owned by the Big Three were but a small portion of the overall labor and industry. Take a look at the overall production of the US back then it was incredible. At one point we turned whole ships out in less then a day!!!
If you want proof of this take a trip to your local old military base (Philadelphia comes to mind for me) and look at the differences in the industrial buildings made in 1930 vs 1940, the 1930 buildings are beautiful brick and ornate while the 1940 buildings are quick, and “dirty” and not very pretty. WWII buildings were built in a hurry.
The point is people were out there working toward a common cause because they had to. I doubt you’ll see that kind of labor until a major conflict that scares enough Americans into action.
Ok enough on that from me.
The industry will not go away anytime soon, only change and evolve under whatever name the people running it choose.
SteveG,
The Feds don’t need to bail GM out. GM needs to bail itself out so it manages itself better in the future.
There is nothing wrong with the Cruze, though I do think the Cobalt is a stronger name (it certainly is a stronger material). Either way if GM makes the product right the name won’t much matter.I much rather the G series names from pontiac, they are much more concise and don’t stir up such a conflict of viewpoints regarding what to call a car.
I think Saturn should be kept around. Opel needs to replace Pontiac and Chevy.
I whole heartedly disagree with you. GM needs to dump ALL of its classic names from the last 30 years. The G series is a great way to call a product. the G8 shouldn’t be associated with the Grand Prix at all. The G8 is a totally unique name. The G8 is a large, niche market car thats why it doesn’t sell. Other then that its not to bad, it could use a diet and some handling improvement but its not bad enough to call a Grand Prix.
Alex,
I agree with you. I have been seriously looking at a CTS but if GM goes under where will I buy parts for it? Inevitably something will break and then what? And a warranty means nothing if the company isn’t around to back it up. Its a good thing I’m looking into Acura I suppose.
Consumers aren’t going to buy current GMs.
James Whitehead,
I agree once again people did experience the bad products GM sold. I still drive a few of them. And they aren’t that great. I only drive them because its cheaper to fix them then drive a new GM.
You are 100% right people got burned by GM. A friend of mine purchased a G5 a few years ago and after 20K miles it had all kinds of rattles and things going wrong on the interior. Ironically this is the SAME experience I had and have with my current GMs (one is a 1990 the other is a 1987) as well as my parents GMs (they are both 2003s).
Noel GM FOREVER,
Well put, what will GM do with a bailout cash supply?
What about dumping Pontiac and Chevy and bringing Opel to the states?
Sheth,
I have been in both a 2008 Malibu and a 2008 Honda Accord. I have to say the Honda feels and seems nicer from any seat in the car. Perception is everything. Quality is everything else. How does the Malibu deliver both of these? I tapped around the interior of the Accord and couldn’t find anything that felt or sounded like hard plastic. And I found no hollow sounding plastic panels. The Malibu had them all over.
Decent mileage? What happened to good or great mileage?
Where are the small RWD performance cars? What does GM have to counter the Nissan Z and the Infiniti G37? Nothing I can think of not in that size class.
What about Subaru WRX does GM have anything small like that.. nope
How about something like the Mazda Speed 3… nope again…
Performance cars are about more then just numbers. The Cobalt might be close to a Mazda 3 but interior quality is extremely lacking according to many people who HAVE shopped for these types of cars.
GM may be making a few great products but I can ague that they aren’t price competitive yet.
I suggest anyone who can’t understand why the Japanese are so successful need to look at Japanese culture. The japanese place great pride in what they do and how they do it and even take their own lives over messing up at work. This is why they do so well. Because they are dedicated to doing the best they can. And this is why they are so competitive.
Why should they need a chance. They’ve had more then 10 years in the market and very easily could do it now. If GM focused its US efforts on say 5 to 8 models of cars and redirected all their personnel and cash they could and would be able to pull themselves out of this mess in less then 5 years. But instead they will get a bailout and continue operations as normal, not nearly as valuable a learning experience for them.
Edvard,
The country can’t afford to have a bailout unless some serious serious changes are made. Out with the OLD in with the NEW.
I think advertising is needed but a quality product will be enough to turn GM around.
Noel GM FOREVER and Sheth,
I don’t really consider 30 MPG that good when one of my Buicks gets 29 MPG and its 20 years old.
Any of GMs mid sized cars should be getting 33MPG.
st34,
Rightsizing is the best way to put it. I think though that axing Chevy and Pontiac would work. Make it Buick, Caddy, Opel and Corvette and then Chevy Trucks.
I agre GM has Gangreen. Though I don’t agree on which limbs have it. I really think Chevy and Pontiac are replaceable. And I think that GM needs a new brand to capture the attention of the import buying public. I think Opel could be just that. And personally I think the Aura is a much nicer car then the G6 interms of styling. Then again I like the Acura TL.
Saturn I think is a poor brand to close down. They have always done pretty well and always catered to the economy car segment. Though I suppose I have a thing for less then 5 letter brand names.
I think Buick can market the China designed Rivera to young people move the G8 to either the Opel or Buick name, Caddy the CTS and STS, Buick Can keep a few old people cars as I call them (they really are great for traveling) and Saturn can sell the inexpensive entry level and economy cars rather then GM. This leaves Opel, Buick and Caddy to compete with Infinit, Acura, Lexus, Audi, BMW, and Mercedes….
I Disagree that GM needs to keep the best performing brands. Performance isn’t everything. The problem is fighting the imports and what they have. I don’t think Chevy can make an import fighting car. Buick is Luxury, Caddy is Luxury Sport and Saturn is economy/entry level. I don’t think with Saturn around there is a need for Chevy. Just consolidation of models. I think though Buick and Caddy have a spot at some interesting products if they let Buick turn into a young people’s brand.
Because Buick has lost its base it needs to be kept. Buick doesn’t have that cheap reputation that Chevy has. Buick has a reputation for being a good luxury car. Even if people think of it as an old person’s car. That won’t take much to change just look at how Caddy turned itself around. the CTS was a great success in that regard. I personally think the Chevy bow tie logo is in heavy need of replacing. It just repulses me, its just so simple and lame. To me the Buick emblem has more impact then Chevy does. The Malibu is nice but the Aura nicer.
I think GM needs to reshuffle their products not eliminate the bad ones. I think Branding is a huge problem. For example a G8 with a Buick Emblem on it should be competitive with a more Luxury brand such as infiniti or Lexus or even BMW. I will never be able to look at Chevy, or Pontiac as a luxury brand. Caddy and Buick are the only two GM has, both of them have style and class (opposite but the both have it).
GM needs to absorb the most viable platforms into the Buick, Caddy, Opel, Saturn lineup and remake themselves as a quality car maker. That means… Keep the Caddy CTS, STS… then Keep the Buick Enclave and Riviara and move the G8 To Buick, Then They need Opel’s Insignia, Opel Roadster (Sky), and a few other products. Saturn can have the Cruze, and the Aura with an upscale interior. And a few other cars in there will make up the lineup. They could put the Trucks into any of the brands easily enough… Then there is Corvette which I think has enough of a name to dissociate it from the Chevy brand (since it also has its own emblem rather then the lame bow tie).
Charlie H,
I agree with you.
***************
As a last note I think anything GM makes should be hybrid or diesel or hydrogen from now on. It likely won’t happen for a variety of realistic reasons but one can be hopeful.
Miguel Gonzalez
Scare tactics at use again and no, not buying it. GM and Union brought it onto themselves. Fire the executive officers, hire someone willing and able to bring disrupting technologies out to the consumer at affordable price. Sounds too much? Throw in the towel. Take your golden parachute and move on to brag about your “golden times’ when money was abundant and you had no worries.
Lessons to learn, many, but only to the wise, which can be hardly found at GM, “white or blue” collar. Not among the arrogant executives and never among the spoiled union workers which are willing to lend their bodies but not their minds and are thinking on the next beer or the next benefit they can exert from the contract.
On the car buying experience, personally, I’m checking out the so called import cars that will not give me goosebumps after the warranty period expires, service people with the attitude of “i’m here to help you” instead of “what a drag this job is”. Not interested on GM’s low-quality, made on Wednesdays cars or SUVs.
Unfortunately, “you brought it on to yourselves” and need to face the consequences.
Now, some suggestions, maybe Rick Waggoner and Bob Lutz can come out on TV adds begging people forgiveness for their past botched products and workmanship and perhaps this tide will turn around. Some public humility and big discounts to give your products another try will probably help.
Life is tough, that’s what I was told many times.
Ben
Sorry GM no pity here. I got a call the other day from Saturn trying to drum up sales and I flat out told them they no longer sell anything I will buy. My next car will be a Honda Civic (in a few months) that is made in Ohio. I was a loyal Saturn owner until GM polluted then killed off the inexpensive American made Saturn’s. I have owned only American made Saturn’s (SL’s & Ion’s) since 1998. Here is a concept for you a Quality made American car that was inexpensive and good on gas. I don’t want a $20K+ Saturn/GM clone (Aura, nice car but too much money for me and a lot of other people right now), one made in Europe (Astra) or a GM SUV with a Saturn logo glued on. I want a car like a 1990’s S Series that comes in a bit over $13K and runs to 180,000 miles with little or no problems like my 1994 S Series. Didn’t the polymer panels save weight and were better for gas mileage? I want to turn the key and drive to work each day, that’s all! If you could stick a 6 speed manual in it so it will get over 35 mpg that would be even better. You abandoned that market completely to the Koreans and soon the Chinese. I was okay with the Ion’s (Quality slipped a bit from the S Series) but at least it was still made by American Workers in Spring Hill. Oh wait, you needed the Spring Hill plant to make SUV’s. Go make your SUV’s in Spring Hill and see who lines to buy them.
seguin
Do you have a backup plan in case the bailouts don’t come?
I will never buy a new car if the Big Three go under. Never.
Dennis
I am deeply saddened by the current state of General Motors. For years they produced cars that I truly wanted to own (and did, many of them in fact) but something happened and the company really lost focus and let their car business fade with cheapened products while chasing after the SUV/truck profits. In this transition GM managed to lose many former loyal customers such as myself without a care. Now that the tides have changed and the corporation’s lack of foresight is rearing it’s ugly head in the form of impending bankruptcy, GM finds itself needing to push car sales on a public they have not only alienated, but are now afraid to buy a GM product for fear the company is going under. Wow. What the heck happened? How could it happen?
As I read one of my various car magazines and see a glossy, multi-paged advertisement for the Hummer I realize it is hopeless. GM cannot exist as it is, nor should it . What will it emerge as? Only time will tell, but one can only hope that the quality goods (CTS, Malibu, Camaro) survive and the badge-engineered nonsense and assorted questionable ideas are given the merciful death they so richly deserve.
Hey GM… are you listening? CUT THE CRAP and save your company… save OUR company!!!
Chris R
st34,
Well said. I agree with you as well. however, I have one slight change and that is to rebrand Saturn as Opel. It’s essentially what they are anyway. The Saturn name is still associated with small cars like the SL which defined Saturn for most of it’s existence. That perception will keep many people from seeing Saturn as any sort of premium brand.
Edwin
Congress should provide the aid to clear the auto industry through the economic crisis period. The credit crunch/banking crisis is not the auto industy’s fault. The prolonged war has also contributed.
The auto industry kept the economy moving following 9/11/01 attacks, now Congress and the President should return the favor. The President has emergency powers and he ought to be using them to help. If not Congress should enhance the authority so the aid can be given. The President should already have the authority so grant a waiver or suspend of the credit rating agencies so companies can get access to credit. The President has used extraordinary powers throughout the war on terror, surely he can do it for the economy. We are severely disappointed in President Bush for his seeming lack of support for the auto industry given the war and the economy.
This issue needs to be priority one for both parties in Congress and the White House.
The auto industry is much more important to the US economy than the studies show. The short run effects presented in linked study do not take in to account the long run affects of a vibrant US auto industry on improved standards of living for Americans. If Congress had supported America’s manufacturers after 9/11/01 there probably would not have been a banking crisis in 2008. Let’s recall that the auto industry was making strong profits in the years leading up to 9/11/01. The American auto companies are among the best managed companies in the world.
We strongly oppose consolidation or mergers of any kind, it only confuses the consumer and allows the foreign competition to gain. It was wrong for Chrysler to merge in 1998 and we feel that GM should not be looking at any mergers whatsoever. Car sales and market depend more on how many great choices there are to inspire the trade. Luxury and near luxury buyers are motivated by factors like style, technology, and utility. They will change vehicles when they are inspired to change. For many, money is not an issue. The market potential for luxury and near luxury is much larger than projected. The market for a second car that is attractive is under estimated. Every new college student needs a car and ifs its the right one the parents/grand parents will buy it for them.
If I were a GM exec, I’d be looking at ways to sell Opel in Europe to you know who in order to shore up GM’s cash position and focus on North America if possible.
Bankruptcy may not bother the public under the current circumstances, people understand the economy right now. However, GM should be able to raise cash by selling foreign assets like Opel.
GM could sell its interest in GMAC to another financial company?
Given the circumstances, GM’s second quarter losses were far less than one might expect and show that GM is turning itself around. Its a great time to buy a new car and to invest in US auto stocks.
GM has a great product line going forward. There are exciting products and concepts from each of the American companies.
Consolidation is the wrong way to go and we hope the auto companies are listening too. The U.S auto companies should receive aid from Congress and remain separate and distinct. Consolidating will not help the industry. The only parties that would benefit from consolidation in the US auto industry are the foreign competition.
Chrysler/Dodge would not help GM’s bottom line. Dodge/Chrysler customers would probably look elsewhere if they thought it were a GM product. An indelpendent Chysler/Dodge help GM more by fending off Honda and Toyota. The Chrysler 300 took a chunk out of Honda/Toyota/Nissan sales. It didnt’ hurt GM or Ford at all. Chrysler 300 proved that style and technique are effective.
Auto execs should not view the sales of luxury vehicles as finite (are you listening?). There is plenty of money and pent up demand out there for new luxury and near luxury vehicles. Its all about style, design, and the inspiration to trade or change vehicles, not about the money necessarily.
One of my friends in his early 40s who can afford it, recently drove each Cadillac model car. He can now tell me the features of the CTS-V. He noted the CTS-V didn’t have all wheel drive option, but that may not be important after all, he knew the horse power of the CTS-V exactly and sounds very enthused. Among the vehicles in his garages are a new Aston Martin and a new Chevy Avalanche. He read every word in the Chevy brochure. He seemed to like the DTS more than he was supposed to for his age group which shows the car should be marketed as a choice for younger professionals in order to enhance its broad appeal.
GM should have more luxury and near luxury choices in order to reduce its exposure and improve its sales. Acquiring parts of other car companies is not the way to go. Mergers are wrong. American corporate execs need to see that more mergers have failed across the board and only let the foreign competition take more. Its time for American companies to learn to push back.
Cerberus is similarly wrong for wanting to sell Chrysler. With a refreshed update tthe Chrysler 300 would continue to sell strongly to its base customer and lure customers from Handa/Toyota/Nissan. The small Chrysler is causing many to rethink their choice of a Honda or Toyota.
One factor has driven the sales of the Camry more than any other, its the fear factor. The quality straw man has caused the worried to buy a Camry. Now with the quality perception of American cars back on track, the sales of cars like a nice looking America sedan like the Malibu are begininng to soar. Those with higher tastes want a Buick or a Pontiac version.
Americans are desperate for an attractive American luxury sedan and near luxury sedan. That’s why the CTS has done well. But there are even more potential sales out there.
There are some 120 SUVs and truck models for sale in the car guide. But there are precious few luxury car sedans and coupe choices. GM’s and Lincoln crossovers are certainly the best in class, but lets have some cars too. And they appeal to different customers often for different reasons and needs. Some of the crossover owners would also buy a sedan or two. Some families can handle four or five vehicles in the household.
The car market is bigger than the projections show, especially the luxury and near luxury market. Some just aren’t inspired by certain styles enough to want a new car. So make them happy.
Buicks designs can be better. For example, take the tail lights from the Lucerne and the headlights from the LaCrosse and put them together and that would probably sell more. The Lucerne head lights are too big for the tail lights. The LaCrosse tail lights are not quite right for the head lights.
Chris R
Nudge, I’m reading a bit about the Chrysler bailout in the 70’s. Fascinating stuff, and something I’d like to see at GM. Pare down to just a few platforms, and make different models from those platforms. The average person probably didn’t even realize that the Chrysler New Yorker was in any way related to the lowly Plymouth Reliant. GM needs it’s own program like this. Pare down to the basics: One platform for compact and mid size cars, no full size cars for Pontiac or Chevy. GM can learn lean production methods, and start doing what Nissan and Toyota have been doing. The number of vehicles sharing the same platform at Nissan and Infiniti is staggering, and yet none look alike, or drive alike. This is what GM needs to learn, and it won’t be able to learn it under the current management structure.
Prepare yourselves GM. The Government probably won’t allow you to fail, but they’ll hardly allow you to continue as you are. Drastic changes are coming, and many of you on the corporate end of things may want to update your resume’s.
Soccergirl
Here is how I see it.
The big three automakers have been around for some 100+ years. GM being the biggest employer of the automakers. Basically, you are talking about an epic of greater proportions that anyone of you can even imagine. Millions of workers will be jobless if GM goes under. All over the world. We need the help right now. At least give the automakers the decency of saying “We will help you through this.” I realize that the car business is like any other venture, but the depth of these automakers and the implications they have on our economy are tremendous. People need to buy cars to get things going. Not foreign cars, but US made cars. GM states that they would not consider bankruptcy because its not in the best interests of their employees, their retirees, their union workers, and everyone else who is affiliated with GM. They care about what happens to their workers, and we should be proud of that.
they have some great products in the pipeline, the Chevy Volt, the fuel cell vehicle, all of which should propel GM to the top of the industry again, but they need help during this difficult time. Its not just about the products, but about what America stands for, where we came from, and where we need to go. Times change, but beyond that, its still right to help out a company that has given us so much over the years.
Beaugrand®™©
“If it were as simple as using taller gearing and remapping chips why wouldn’t GM have done that?”
Excellent question. I think it’s because it might affect acceleration and/or require redesigning the transmission to have (surprise) more gears, to maintain performance levels.
“And on the note of taller gearing, what does it cost to change the gear ratios on an assembly line?”
It requires replacing the ring gear and the pinion gear in the differential, or at least that’s how we did it on my brother’s old F-100. It also helps to replace the speed sensor to keep the speedometer accurate.
Or just go with 22″ rims and 305-75R/22 tires, same effect as “taller” gearing, it just (IMHO) looks stupid.
Yes they would have to design new wheels and tires, because I don’t think anyone makes that size at present, but you need the sidewall height of the 75 series tire for anything approaching acceptable ride quality.
“7,9 and 10 speed transmissions mean more vehicle weight (that isn’t being used) or less torque handling capacity (ie less Horse Power capability).”
Actually, transmissions are a “Torque Multiplier.” More gears means more torque available for less horsepower, and engines that are tuned to run in a narrower, more efficient RPM band- which is why I suggested it.
“The Miller cycle seems interesting though I have my doubts as to whether it will really help with fuel economy.”
Ask a Mazda Millenia owner who has the Miller cycle option. I’ve heard about performance gains with no mpg loss, but no actual mpg numbers. On paper, it delivers the same performance as a larger engine with the economy of a smaller engine (due to lowered internal “pumping losses”). Direct comparisons are hard to find, as the normally aspirated Millenia used a 2.5 liter V6, where the Miller cycle S model used a 2.3 liter V6 engine.
It’s always been cheap to stuff a bigger engine in a car or truck to enhance performance (the legendary ‘64 GTO was simply a compact (Tempest) with a full-size station-wagon 389); the Miller cycle requires a positive-displacement supercharger and valve timing modifications, among other changes, all of which adds up to higher costs than simply putting a bigger engine in. However, if properly executed (I realize we’re talking about GM but have a tiny bit of faith), it could improve fuel efficiency across the board by 15-25%.
“Lowering Aero CD to less then 0.19 wouldn’t be to hard if styling sacrifices were willing to be made by the consumer.”
Agreed, although for PR and advertising purposes I wouldn’t mention the word “sacrifice.” Advertising would have to stress enhanced fuel efficiency, better overall utility, and lower operating costs.
Edward Hayes
It’s the Brand Stupid!!!
In politics, “It’s the economy stupid!”
A strong US economy = a strong GM
A strong GM = strong brands
strong brands = strong leader + strong designs + strong heritage + strong vision
strong leader = One who is given authority. A CEO has authority, a brand head does not. So GM fails here.
strong designs = Defense is redesign every three years. Offense is tapping heritage, eyeing product trends like mini cars and green car designs a la the Prius. GM is playing catch up here so here GM fails.
strong heritage = Holden FJ Efigy, Pontiac Solstice, Corvette, Camaro, Mercedes-Benz, and Porsche. Unfortunately for GM it fails to make heritage mainstream for its high volume cars. In short put a little Solstice in the G6, put a little Efijy in the La Crosse. As we wait, you say you will but for now here GM fails.
strong vision = GM to have the strongest brands in the industry. Period.
A Strong vision for Pontiac to be the sports leader. For GMC to be the natural gas leader. T. Boone Pickens said “electric cannot move trucks but natural gas can” For Chevrolet to be the hybrid leader. For Cadillac to be the technological leader. For Buick to be the family car leader for Hummer to be the off road leader.
We had companies at the top that were neither the technology leaders, design leaders, quality leaders, profit leaders, but the one thing every carmaker has had that was on top is a strong brand and everything else will follow.
In politics “It’s the economy stupid!” well, in business “It’s the brand stupid!”
“Well Edward, what do you mean? We have been trying to shore up our bands for the last couple years?”
I respond,”No you have not.” You have been on defense with design, not offense. Brands are still herded together like cattle. They are not the free and independent spirit like the cowboy.
In short.
A strong US economy = a strong GM. A strong GM = strong brands. Strong brands = strong design. Strong design = strong leaders. Strong leaders = strong CEO.
Strong CEO of GM = strong CEO’s of each and every brand. Period! It cannot be done any other way.
But the bottom line is Pontiac’s head is not a CEO so they are a weak leader. Weak leader causes weak designs. Weak designs cause a weak brand. A weak brand causes a weak GM. A weak GM causes a weak US economy. And a weak US economy causes a weak America. And a weak America causes…
Oh you do not want to go there trust me.
Ziggy Molesworth
Nate said:“As a last note I think anything GM makes should be hybrid or diesel or hydrogen from now on. It likely won’t happen for a variety of realistic reasons but one can be hopeful.”
Nate,
There are certainly opportunities there for hybrids and diesels, but please let’s not fall for the hydrogen hype.
While hydrogen is the most abundant element in the Universe, it is also very energetic and hydrogen atoms are never never found on Earth unattached to other elements. There are no pools of free, unattached hydrogen atoms waiting to be tapped into. To make hydrogen as a fuel, we will ALWAYS have to spend energy separating that hydrogen from its bonds to other elements. For example, we can crack water molecules into hydrogen and oxygen using electrolysis, but only by spending lots and lots of energy. We can also make fuel hydrogen from the methane in natural gas. But, either method of making fuel hydrogen will always consume more energy than we can ever get back by burning the hydrogen as a fuel.
Making fuel hydrogen will always have a net energy deficit, and hydrogen will not be the solution until we have an unlimited supply of very inexpensive energy such as from clean fusion reactors. Until then, the idea of hydrogen powered cars are something from cloud-cuckoo land.
In short, making a hydrogen-powered car is not the problem. The problem is the negative energy balance of freeing hydrogen atoms from their chemical bonds in order to use hydrogen as a fuel.
Dtomaz
Unfortunately the business plans GM has been following are not working. If Rick and the present leadership are not willing to make the tough decisions it is time for the to pack up and go! You must deal with the problems of to many dealers, to many brands, to many re-badged models, to long a life cycle of models, mediocre small cars/trucks, legacy costs, underperforming/over compensated executives, etc. etc. Time is not on GM’s side! You created this mess so fix it! A $25 billion taxpayer loan will get you through next year and then what? Another failed plan and then another loan! No Thank-you! I’m afraid your only option may be is to declare chapter 11 and get a proper restructuring done! Short term pain for a long term future. Remember, your competition is not going to wait for you to restructure. They will take advantage of the situation and take more of your customers. If you customers see you making the tough choices they will return. If they see you whining and weak and begging for help because you cannot compete or offer product the consumer wants and needs you will lose them forever. At the end of the day the consumer decides if GM is relevent. And by the market share you have been losing they are talking loudly!! Time to LISTEN!!
Chris (Toronto)
Apparently, no one here realizes the economic fallout of a collapse of GM. As an economist, I can tell you that the costs of failure are far greater than the cost of low interest loans or an outright bailout.
GM has brought out some class leading products in the recent past (Malibu, Enclave, Corvette, CTS, others) and with the Cruze and the Volt, we KNOW they have their act together. Let’s lend them some cash to see them through this crisis, which, by the way, is hurting ALL automakers, including…wait for it…Toyota, who recently offered discounts on the Tundra and 0 % financing, as they cut their profit projections by about 70 %.
Again: the costs of failure are far greater than the costs of a bailout. If any of the Detroit 3 are allowed to fail, it will become a textbook example, that will be studied by future generations, as the turning point in America as a global economic power house.
The stakes are that high.
AJ
I have owned three Buicks, a Chevy, and now a Pontiac. I have loved all of those cars as if they were my children! I wish, beyond anything, that GM will do what they have to do in order to continue building good cars by American workers. I take a great deal of pride in that sticker in my side window that declares my Grand Am was built in Michigan on a union line. I’m willing to bet there are many others like me. I just find it hard to believe that GM can’t employ American’s and turn a profit at the same time.
Gunter Navarro
Things change. Things constantly evolve.
At one time Studebaker was the leading maker of horse-drawn wagons in the United States. Studebaker no longer exists, but does anyone miss them? For the last 100 years GM has played a major role in the United States, but like Studebaker, if GM no longer existed, would anyone miss it?
Sure, the people that work at GM and its suppliers would have to make a transition, but so did the people that made horse-drawn wagons at Studebaker. The United States and the economy will continue to evolve, and there will be a day when people remember GM as they do Studebaker — a company that had its time in the limelight, but that couldn’t adapt to events and let progress pass it by.
Jeff
Mr. Wagoner, Mr. Lutz and Mr. LaNeve,
It’s panic time gentleman. Slash and burn. Some points for this week.
Stop investing in high performance Cadillacs. This a not a turnaround project. Also dump the XLR and the EXT now. Cadillac is in fine shape. They don’t need to be race cars.
Saturn. Dump the re-badge SUV Outlook. Not in Saturn’s personality. Saturn should be LEXUS quality small and mid size cars only.
Chevy, GMC and Buick. Leave alone
Pontiac should be the MAZDA of the group. Copy MAZDA. Do not accept mediocre or poor handling. Style and performance can be produced. You only have one now.
Get GM off the Consumer Reports Hit list. You have a brand new Pontiac that is NOT recommended for purchase. This is costing you in sales, don’t deny it.
Invest heavily in commercial vehicles. Cargo vans and med. duties are a sleepers not taken seriously. Euro high roof bodies are necessary along with small displacement diesels.
Mid size pickups, the Canyon and Colorado are also not taken seriously. They fill a gap but have zero marketing or attraction.
Lastly do not let models become stale. The Rendezvous and Trailblazer should have been freshened after 2 years. Why buy a new vehicle when the looks and hardware are the same as 4 or 5 years ago? Impala is also ready for replacement now.
Do not give up on long term quality. It’s the number one seller which needs no advertising. The media will sell your cars. Toyota can sell out of a barn.
Dr. Turkey-Belly
Chris (Toronto) is spot on.
Nate
Ziggy Molesworth,
I am fairly well versed in thermodynamics and am familiar with the problems associated with hydrogen. Hydrogen is THE best chemical energy storage we have at our fingertips right now. Its better then electric (batteries) simply because of the energy density and refueling convenience. There is nothing wrong with hydrogen OR the energy it takes to make it. The problem is generating that energy. We have three options at present to do so… Chemically (fossil power plants and electrolysis or chemically reacting fossil fuels), nuclear (power), and wind/hydro/solar.
Today energy storage is a huge problem facing future technologies. Hydrogen is the universal storage medium right now. It can be converted to other fuels or used directly. That said there is enough nuclear fuel in this country to run 90% of our energy needs on nuclear for 200-300 years. And if we reprocess our wastes (which currently isn’t allowed by our government and international treaties) we can reuse most of that fuel for another hundred or so years. By then if we are smart we should have developed clean fusion or some other nuclear process.
I don’t see where hydrogen is a problem. Simply build more power plants and use them to store energy. OR use less energy. There aren’t many other alternatives. Nuclear is the cheapest energy out there… 4 tons of nuclear fuel (pellets) run a power plant for 6 to 9 months. Try that with coal you’ll be lucky to run a week. its also the safest and cleanest due to the way it is controlled and regulated in this country. Our whole economy is in need of such a solution. If that weren’t the case we would have cheaper, better alternatives.
In case you weren’t aware of it entropy is the problem here. But every day you wake up (and are alive) you use energy that will never be recovered…. does that mean you aren’t profitable or that you have a negative energy balance? And if it does is that a problem?
Looking for profit all the time and energy return isn’t always the best way to run a society. I think the present economic problems this country faces are pure evidence of that. A country such as the USA takes a certain amount of investment without gain to keep “alive”. Whether that investment be time, energy, money, resources, or labor. We certainly didn’t grow this country on pure profit. It was grown on abundancy of resources; and blood, sweat and tears.
Making fuel hydrogen always has a net energy loss but so does running your car or waking up in the morning. And you don’t see me or the rest of the world to worried about that.
The real problem is the negative work input in the US and the unbalanced energy usage we have. We use more then we can afford to supply/pay for. Nuclear is the best current answer without major investment in other technologies or a change in life style. Either of those other options are a loss according to the way you look at things. No matter what investment is required its that simple. Investment in new technology, or new products or the infrastructure to run them.
Also what about the energy balance from cracking and distilling gas and other fuels that require being refined. Who keeps track of what that costs?
At present nuclear power costs about half as much as other forms of power (slightly less then a gallon of gasoline as of 11-10-08). If the electricity to hydrogen process is 50% thermodynamically efficient we break even and get 300 years of energy at our current consumption rate. That means we have a neutral energy cash flow as a country. We no longer send our resources, money and labor outside the country to pay for energy, while at the same time losing value, wealth and money as a country.
Nate
Beaugrand,
The amount of money GM spends to develop and test a transmission probably would make the average car buyer cry. There are tons of design studies that no doubt go into it before they even design the first part.
Taller gears and changing final drive ratios isn’t always as simple as it seems. There a whole slew of problems that arise because of it. One of them is internal friction and engine operating characteristics. The engine-transmission needs to be matched to the rest of the car. Additionally sometimes a small change in gear ratios requires a whole other group of redesigns.
Bigger tires change air drag and component wear and durability. All things GM engineers have to look at. There is a huge difference from being a back yard mechanic and simply throwing parts together compared to being a GM engineer and having to certify components to company standards to make sure there aren’t a high number of warranty claims etc… Things at GM are no doubt not that easy other wise GM would have produced a much different product long ago.
That is true but transmissions won’t make a higher horse power engine. There are limits everywhere to power needed, power available and the other impacts they have on vehicle use. For instance. A weed whacker engine can easily pull 40,000 lbs. ith the right gearing. The problem is that it won’t move but a snail’s pace. To go faster requires horse power. The same goes with cars (but on a smaller scale).
A smaller engine can make more horse power but usually while sacrificing reliability. Also you have to compare HP engines. A small engine optimized for say 4500 RPM at 80 HP might have more internal friction and losses (due to RPM) then a large engine of say 80 HP at 2000 RPM. These are all things that GM must put in their studies before they make a product. If it were that simple the entire industry would have 300 HP cars with 2 Liter engines and turbos that still get 32 and 34 MPG. But I don’t see any that can do that right now. The closest I think is the CTS at 300 HP and 28 MPG.
Anytime you multiply torque you reduce RPM. AND you lose power through the gears.
On paper a carbon fiber car gets better fuel mileage but try to buy one at the local dealer and tell me how much it costs. In the real world unfortunately there are tradeoffs.
At what point are your pumping loses equal or less then your bearing loses and momentum loses on a smaller engine?
Also how efficient thermodynamically do you think today’s superchargers are?
The miller cycle could improve fuel economy if a supercharger is more efficient then piston. But how much is a supercharger like that going to cost and the rest of the technology (to develop, market and deploy for a cash strapped GM)?
Nate
Dennis,
Yes something did happen. GM became obsessed with cost cutting, sales numbers and stuffing cash into the pockets of their investors and management. GM lost sight of their bread and butter thing.. Selling quality cars.
Chris(Toronto),
Sure people realize there is an economic fallout… But for how long? Do you really think GM’s buildings and facilities are going to go to waste? Or that their good designs will die? I doubt it. Some other auto maker will buy these things. And put the people to work. And the ones who don’t will quickly realize they need to adapt or get lost in the dust.
The costs of a poorly run bailout are greater in the long run then letting GM crumble. GM refuses to change quick enough to keep step with their competition. New companies need to be started that are ahead of GM and ahead of GM’s competition. These new companies need to be small, quick reacting and efficient. Things GM can’t do without changing the economic landscape in this country (something it seems no one wants to see or allow to happen).
Dtomaz,
I don’t agree with the product life cycle being to long. I think GM doesn’t do enough with it. A good platform has a lot of potential if they use it. But they don’t. Additionally how do you sell your customers on quality cars if every year there is a new model to replace the old one. GM cars need to last but also need to keep with trends… How to do that is key.
GM needs a restructure badly… It sounds like an interesting job to take on.
GMisCARKING
I read all the interesting comments and i have learned a lot of stuff. But my central theme today is this: cut, cut and cut! You must reduce every salaried employee’s pay by 40%, from the Board of Directors, top executives, middle management right down to the call center representatives at OnStar. You must trim your bellies. You should also implement a 3 day work week, shutting down office operations (except OnStar, of course) from December until September 2009 and everyone should take an unpaid leave. Critical times call for drastic measures.
The Treasury should take an equity stake in GM. When GM gets the loans from Congress, please do this: Killing or selling all 8 brands except Cadillac, Chevrolet, Buick and Pontiac. That’s just like Ford which has 5 brands in the US. Yes, I am keeping Pontiac, but only if they make RWD cars. But most important of all, it will be an upscale brand. There’s no such thing as a budget BMW. If you want performance, you got to pay more. If you want BOTH performance and fuel efficiency., you got to pay even more! I like the G6 and it looks better than the Aura. Make it a RWD and it will be fantastic!
Most of my friends say GM make inferior products. My friend iin New Hampshire who can pay a 500k mortgage now owns a Toyota Tacoma pickup, and he says Tacoma=reliability. Another in Oklahoma says the garage has driven his friend’s pickup more than the friend has driven it. It doesnt matter if you make few great products, if the consumers don’t think so. The Consumer Reports concluded from 1.4 million consumers that GM cars are so par. It doesnt matter how many brands you have, if the consumers dont buy them. Win over Consumer Reports, and you will be in the game.
I read a great book yesterday in the local library about Toyota Product Developement System. It was printed in 2006 by Productivity Press. What a great book! You don’t punish your suppliers. You work with them every step of the way right from the Product Planning phase. You include them in your product development process. Toyota works with their suppliers to get 30% cost savings. That’s how they did it.
You don’t need to be the biggest carmaker in the world. You don’t have to be a superhero. All I need is for you to remain at my side.
Cory Tentries
GM, and for that matter Ford and Chrysler have all let the American people down because of, bottom line, greed. Now they want the tax payers to Bail Them Out. If we don’t, and they know this, our economy will almost certainly move quickly from its current recession into a major depression. So, do we let GM, Ford and Chrysler continue to greedily sell the American people crap cars, and pay their execs fortunes, or, do we let the inevitable happen (w/out a bail out) and wave good bye to the industry that built this nation?
So the government has taken over banking, why not auto manufacturing? But wait, aren’t our “leaders” on the greedy side too? Sure, but do they want to tell America that they sold us all? No, probably not, especially as this would reduce their perceived power…
So bail them out, compete with Japan and Germany for once (freakin’ hire some Japanese and German Auto Execs to run the American Car Companies), and then, when they are viable businesses, sell them back to the public.
Just like Chuck Prince, Stan O’Neal, and Jimmy Cayne who all failed their customer, employees and shareholders, dump Mulally and Wagoner (w/out the golden parachute so common for failed American business execs…) and recruit some of the successful competitor’s (Toyota, Volkswagen) talent and bring the glory back where it belongs! Cerberus will have to decide what’s best for its Chrysler brand on it’s own I suppose…I can’t possibly solve the entire industry’s problem…LOL.
Good Luck Mr. Mulally and Mr. Wagoner. You’ve done a bang up job to this point (?); can you pull a live rabbit out of your uncompetitive hat?
Alan Allen
As a former Creative Director for an advertising agency that serviced GM, I have first hand knowledge and experience with the brand and it’s products. While it is true that GM has made great strides in product quality the bottom line as a brand, GM fails. It is not well liked or respected by mainstream consumers. GM has no soul as a brand.
When great consumer brands come to mind names like Nike, Apple and Coke are at the top of the list for all of the right reasons. They have stayed true to their brand promise and except for a few occasions have never let anyone down with an inferior product.
GM can’t convince anyone that they are making better products because no one is listening and no one cares.
Jeff
Mr. Wagoner,
Holy cow, annalists report that my stock in GM is destined to evaporate soon? This is major. Please tighten your belt and hope that you can save this corporation.
Sincerely,
GM stockholder
PS: Mr. Lutz, don’t worry about shiny paint jobs and tight seems, you will not have a job soon.
Gunter Navarro
“You must reduce every salaried employee’s pay by 40%, from the Board of Directors, top executives, middle management right down to the call center representatives at OnStar. You must trim your bellies.”
Bob Lutz could sell a helicopter plus a jet or two and voluntarily become a $1/year executive for the duration of the loan like many did in World War II. That would set a good example for all GM employees. Once GM pays back the bailout loan, he could resume his present salary.
Ziggy Molesworth
Nate said: “I don’t see where hydrogen is a problem. “
The problem is that you have to divert energy to make hydrogen that could already be used a a primary fuel to propel a car.
* Why use energy to extract hydrogen from the methane in natural gas when you can just use the natural gas directly as a fuel?
* Why use electricity to crack water into hydrogen and oxygen when you could just use the electricity directly?
With either method you would have to undergo thermodynamic losses in the conversion process. Instead of suffering those losses, why not use the electricity or natural gas directly as a fuel?
Nate asked: “Also what about the energy balance from cracking and distilling gas and other fuels that require being refined. Who keeps track of what that costs?”
The energy return on petroleum based fuels is now about 5 to 1. In searching for, drilling, pumping it out, transporting it, and refining, we now get about a five times as much energy back as we spend.
In the early days of shallow, easy-to-find wells and when oil gushed out under its own pressure, the return could be as high as 100 to 1. That’s the reason why everyone started using oil to make transportation fuel. Making transportation fuel from oil allowed us to use sunlight (free energy) that had been banked over millions of years.
The energy return of corn to ethanol is about 1.2 to 1. That’s why corn ethanol has to be subsidized and can’t compete in the free market with fuel from petroleum.
The return on hydrogen fuel will ALWAYS be less than 1 to 1 because of thermodynamic losses and entropy. Hydrogen as a fuel would not even competitive with corn ethanol on the basis of energy return on energy invested.
—————————————–
Of course there is lots and lots of hydrogen waiting to be tapped into and collected from the Sun, Jupiter, and Saturn. Perhaps you’d like to get into the hydrogen hauling business and start sending space tankers to the Sun and back? Be sure to send them only during the day when the Sun is shining.
Fat_Is_Mine
Nate,
Yes the economy will adapt. But do you know how long this could conceivably take ? Decades of economic collapse, 100 % of autos in NA built by foreign firms, take their profilts home. A great deal of the wealth of our nation is based on the automotive sector.
Allowing the Detroit 3 to go down will mean reduced prosperity for us all. Whoever said it above, was right - the stakes are really that high.
- Tubby
Bill Brown
Well, per their SEC filing, GM already is bankrupt. Their liabilities exceed their assets by nearly $60 BILLION dollars. So, why should ANY funding source pour money into GM? Even if GM were to make a profit of, say $5 BILLION in 2010, it would take 10+ CONSECUTIVE YEARS of that level of profitability for GM just to get to a point where assets at least EQUAL liabilities. Think the UAW will stand still for 10+ CONSECUTIVE YEARS of billion-dollar profits? No way. So, that 10 years becomes forever.
Next, what level of a federal GRANT (’cause it ain’t a loan if you aren’t going to repay it) will be required to keep GM at least “afloat”? Oh, $50 billion? Remember, the 2009 model year sales are NOT going to be good, so they will need enough to make it thru to 2011.
Nope. They are already down. Their creditors just have been too afraid to push the button.
Joe
It’s been proven time and time again. It’s easy to kick someone when they’re down.
Should GM fail, alone, 1 to 2 million people, along with their families will be out of work, oh yeah and income! So many uneducated opinions run rampant here. A reflection of a callous and dis-enchanted society. If you think you are insulated because you don’t work in a industry not affected. Remember 1 in 6 jobs in this country are attributed to the Auto sector! Check out the facts before you get a false sense of security no matter what profession or industry you are in. You might not want to wish the demise of the domestic auto industry to quickly!
Keep piling on all the negatives, surely it’s easier than trying to solve the problems. Why, because it takes real brain and will power to tough it out when things are difficult, in other words- WORK! Whether mental or physical, work is a four letter word!
I’m outta here!
Nate
Alan Allen,
You are right half of GM’s problem is the stubbornness of keeping the GM name. If GM goes under and is reinvented as a new car company… and they produce high quality products at a good price (like Honda or Toyota do) no one will care that its the company that used to be GM.
If you look back to 1996 through 1998 Apple wasn’t the greatest name among consumers. Then Steve Jobs came in and gave Apple a soul again. As a leader Jobs did something no one else could. He gave Apple a direction and made it work. Thats what GM lacks… from the observer’s seat GM has no direction. They are like a shotgun trying to meet as many people’s needs as they can (just like Apple used to be before Jobs got rid of the duplicate branding etc..) but they fail to make a product thats truly a hit. BMW and Apple have a lot in common, both are dedicated to their prime markets. Apple is dedicated to great computers even if it costs a bit more, and BMW is dedicated to great cars.
GM needs a reboot!!! And a new leader.
If GM were taking nominations I’d volunteer…….. LOL
SteveG
Dump Saturn
Build Opel designs as Buicks. Astra=Skylark, Insignia=Regal.
Pontiac goes back to being rebadged Chevys but back to original names-Sunfire=Cobalt, Grand Am=G6, Grand Prix=G8, Firebird.
Dump Saab.
Cruze goes back to being named Cobalt.
Aveo next gen goes back to name Metro.
I just made better decisions in 2 minutes than GM has made in 2 years.
Time for new leadership.
Nate
Cory Tentries,
Thats exactly what GM must do…. Pull a rabbit out of their hat.
What GM needs to do is reinvent itself with one car. They need to take all their US engineering and production resources and put it on one car. Go from idea to production in less then 14 months and make it a top notch vehicle… Its a damn near impossible feat. But they’ve made the Solstice (show car) in less time. With this car they need address styling, interior quality, overall quality, fuel mileage and options etc… basically make a Cobalt replacement thats more like an Acura RSX or something…. just to prove to people that GM can make a top notch car that everyone can afford.
Build it and they will come!!
Alan Allen.
Another quick thought on your statement….both BMW and Apple produce a top quality product and stick with it. Their leadership knows where to take them, how to get there (most of the time) and knows when they get it right. Their leadership is allowed to do what is needed and delivers.
Nate
Jeff,
Are you serious?
The first thing GM needs to do is put everything on hold and invent the savior car (the equivalent of the iMac from Apple back in 1996/97).
Then after that they need to pickup a few other brands and bring them back up to par while not letting their savior product slip away.
What I think GM needs to do is continue marketing the CTS-V for the high end customers… refine it to be a super good car. Its so close now let them finish it.
The CTS needs to be kept since it is almost top notch.
I’m not sure when Saturn made a good car but I suppose they did at one time. I have always thought of them as cheaper then Chevy and lesser. They are no where near Lexus competition. For that GM needs Opel here yesterday.
Chevy, Pontiac and GMC need to go… So does the name GM…
You don’t get to be successful by copying someone else’s product unless you can do it cheaper like Kia. What GM needs is the right leadership to predict where the market is going. And get there before anyone else does. They need true vision of the future and a way to make it affordable and happen.
Consumer Reports’ is only half the problem. I don’t think all of the world buys based on Consumer Reports’. Many of them validate and justify their purchases with it though.
Stale and stagnant models need to go totally not be updated. Be chopped and re-evaluated.
Quality is #1. Build it and they will come….
Go find a new leader GM one with vision for the future.
Joe Gakenheimer
I think it was great for the Big 3 to give the working man and woman of the U.S. a nice middle class living for the past century. Unfortunately, this is no longer possible; with all of the imports and transplants foreign part filled, it is amazing that the 3 have held on for so long.
The Real Americans that built this country, the Real Americans that we will celebrate tomorrow on Veteran’s Day, don’t give up and I would expect the same from GM and Ford too. Those are the people I support and don’t plan on driving anything but domestic for the rest of my life.
mike
Me talking about crisis. So,
I noticed in the last quarter GM had like 10 bil$ less revenue than last year. That is 40 bil$ a year
lost revenue. Revenue pays legacy costs and every expense.
In short term there’s no way they can reorganize (mergers, cut dealers, cut brands which would take
years) to recover those 30-40 bil. $.
So, the gov should increase car sales. This is the most critical industry.
House building industry, home appliances, services and other are not critical. A construction company can be built up from scratches and be the most competitive in a year or two.
So, until customers recover from this credit panic, the gov could suport car sales. No sales generally but car sales.
Low interest rates, fleets, guarantee waranties(backrupcy rumours) , guarantee gas prices, anything.
Anyway supporting sales would be much cheaper than paying tens of bil to every automaker. Each car sold is revenue that doesn’t have be compensated by loans.
Guaranteeing waranties and gas prices for 3 years would mean zero cost actually considering the
slowing oil demand. If manufacturers don’t go down, there are no waranties to pay for also.
motorman
GM can’t just drop Hummer because it had the Hummer dealers spend tens of millions of $$$ on the special stores to sell from. The law suits from the Olds dealers will be peanuts compared to the Hummer dealers law suits. The GM dealers are going broke slowly on their own so if GM can hold out till this happens they can down size down to what they need to be.
edvard
Here’s the thing. If GM and Ford go under… They won’t be coming back, and neither will a new car company spring up to take their places. They will go the way of Zenith, RCA, and other formerly huge US electronics corporations. The amount of infrastructure needed to run a car company is immense. Secondly, even if a new company sprang up, how will they compete against the onslaught of cars surely coming from China, India, and who knows where else?
Folks- I know many of you despise the idea of a bailout. I do to. But this is it. Unless the big three get some help, you can say goodbye to the US car industry for good, and all the cars that you will be buying will be made or designed somewhere else. If we lose the big three, then we will have lost a part of our national identity.
edvard
By the way, I just saw this in the news:
“WASHINGTON – President-elect Obama suggested to President Bush that the administration immediately provide extra help to struggling U.S. automakers, aides to the Democrat say, in their first face-to-face meeting since Election Day.
Obama’s aides said the president-elect brought up the issue with Bush during their two-hour White House talks on Monday, expressing his view that action is needed now, not just to help the U.S. companies but also the broader economy, because of their enormous reach. Bush repeated his position, recently stated by staff, that he is open to helping the automakers.”
Andrew Bazalgette
“Here’s the thing. If GM and Ford go under… They won’t be coming back, and neither will a new car company spring up to take their places.”
Edvard,
There are already new auto plants in the U.S. in a chain extending across the middle and southern tiers of the country:
- BMW in South Carolina.
- Daimler in Alabama.
- Honda in Alabama.
- Toyota in Mississippi and Kentucky.
- Nissan in Tennessee.
- Mitsubishi in Illinois.
- VW has announced they will build a billion dollar plant near Knoxville.
There will not be an end to building cars in the United States. We are an attractive and essential market to the world’s car builders. But something is going on. Why does VW expect to make money from the new plant they will build in Tennessee, while at the same time GM and Chrysler are losing money hand over fist and closing plants across the country?
Someone needs to get at the root cause of why our Big Three can’t build quality, affordable cars people want to buy and be competitive, while foreign car makers have flocked here to have Americans build their cars.
delacruztaylor
GM should be allowed to fail, those workers will find other jobs, probably not as much as the overpaid union assisted jobs they have now, but obviously GM can’t afford to pay your salaries. Why bail out a company when there are others in the industry that are doing it correctly, what ever happened to free markets. GM got themselves in this mess with some bad decisions. Why not trying to sell something the american public wants, that is of respectable quality, there is a start.
Nate
mike,
An auto company can spring up just as well as a construction can. Both have contractors and tools that are needed. A car company need not own everything they use to produce a car. Nor do they initially need an assembly line. Thats what contractors and suppliers (hungry from work after a collapsed GM) are for.
Low interest rates and good financing will help GM… but only if someone will backup warranties on new cars regardless if GM goes under or not. Unless GM drops prices on cars who will want to pay full price for a car with no one to honor the warranty?
motorman,
Why can’t GM drop Hummer? If GM can’t pay the lawsuits it won’t much matter. You can’t get blood out of a rock.
Andrew Bazalgette,
Regardless of who is in the US building cars… a new industry will emerge. It is only a matter of time before future technologies hit the market (something GM seemed to have wanted nothing to do with). Tesla motors is a great example of a purely upstart company (though they do get some help from Lotus). There will be other new upstarts competing for the next technology to power cars no matter what happens to GM.
It would seem that VW is attracting new customers (perhaps previous GM customers). Or they have recognized the advantage of US labor in areas where there is not much (thus higher incentive by local areas to get new businesses there).
The Big three can’t build quality, affordable cars people want to buy because their culture (both corporate and management) don’t allow it to. GM needs to break its own rules, do things differently and innovate. In order to do that it needs the right leaders and the right employees. It needs can do people not can’t do people.
Also GM is more worried about keeping legacy customers who don’t want to change while losing more future younger buying customers. Its pretty obvious to me that GM just doesn’t get what people really want in a car. I’ve been shopping around and there isn’t much from GM I really like. For instance a subtle feature like power mirrors that look downward when you put a car in reverse are make or break it decisions…. GM needs to perfect nearly every detail of their car user’s experience (much the way Apple tries to do). In my example a 4 year old Acura has nicer features then a current CTS (minus the 30 gig in dash MP3 hard drive). GM just has missed the boat a lot on many of their products.
its a tough world to compete in. They need the right people yesterday.
edvard,
Are you serious? Zenith, RCA and other formerly huge US companies went away for the same reason as GM is… Bean counting and sacrificing quality.
Other car companies will spring up no matter what it costs. And if they make a quality product the likes and Toyota and Honda mean nothing.
Every business thats huge today started small. Just think about Google, Microsoft, Apple etc…. I use Apple as an example because I know their history quite well…. But back when Apple started they took on IBM head on. Their new thinking made them successful… @30 years later they are huge (possibly bigger then IBM and Intel??).
I think you underestimate the ability of new ideas to thrive and competition to “work”. GM isn’t competitive right now, thus they will do what they need to to survive or disappear.
The manufacturing facilities won’t just disappear in a cloud of smoke. There will be an auction and they will sell off all their assets. At that point anything worthwhile will be scavenged by upstarts and the likes of Toyota and Honda etc…
Be realistic GM may be involved in a lot of industry but a year after they close their doors it will be business as normal for most auto makers. New industry will be formed out of whatever need is presently there to fill.
edvard
Andrew Bazalgette,
You want to know why all of those import brand car companies are setting up shop in almost exclusively Southern US locations? I can answer easily because I am actually originally from Knoxville and also grew up going to Nashville a lot- not far from the Nissan Smyrna plant. The reasons are plentiful:
The Southern US is a relative late bloomer in the nation as far as developing a modern economy. It was economically depressed when I was a kid. I’m only 31 years old, so we’re not talking ancient history. But what that means is that there is a massive chunk of the country that has cheap labor, cheap land, hardly any unions or legacy costs, a overall young workforce thats happy to work for far less, and additionally- state and local governments that bend over backwards to encourage companies to move there- even companies from other expensive states like California. In other words, the Southern US represents opportunities that can’t be had where the cost of doing business is higher.
Meanwhile other states are covered in decades of red tape and bureaucratic complexity that leads to higher corporate taxation, legacy issues such as unions, an older workforce, and in the case of GM and Ford, older and sometimes outdated factories and plants. I can’t tell you how many people I’ve met from Ohio, Michigan, Indiana, and other rust belt states who can’t wait to leave the area or already have.
Getting back to the topic, if all we have are foreign car companies building cars here… then all we’re doing is building someone else’s cars and not designing and building our own. That would be sad and ironic.
F. Baker
Wagoner: GM needs federal help before Obama takes office
Jamie LaReau
Automotive News
November 10, 2008 - 4:40 pm ET
DETROIT — General Motors CEO Rick Wagoner says GM’s financial distress is so dire that it must line up financial assistance from Washington before President-elect Barack Obama takes office in January.
“This is an issue that needs to be addressed urgently,” Wagoner said during an exclusive interview today with Automotive News. Now is the time to “overshoot, not undershoot” when it comes to assistance for the auto industry, he added.
In return for financial aid, General Motors is willing to offer the government preferred stock, set limits on executive compensation and speed the introduction of fuel-efficient vehicles.
But Wagoner said he is not prepared to resign in return for government aid. “I don’t think it’d be a very smart move,” he said. “I think our job is to make sure we have the best management team to run GM. It’s not clear to me what purpose would be served. …”
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I love that last line - “it’s not clear to me what purpose would be served”. The purpose Rick is to get GM right side up. And you and the management team have had too many years running with the same old tired playbook - and you’re not getting it done. GM had major problems BEFORE the credit crisis. Step down Rick - it’s time. And take Bo with you.
motorman
andrew,most all the new factories are in right to work states. in these states the workers work for the company but in the other factories the workers work for the union
Dr. Turkey-Belly
Nate said, “What GM needs to do is reinvent itself with one car”
Hey Nate, how about
(1) Malibu
(2) CTS / CTS-V
(3) Corvette
(4) GMT-900s
(5) Volt
These are all class leading vehicles, an incredible bargain, or exciting and innovative products.
- the Doctor of Turkey-Bellies
Phil
If GM had done everything right for the last 25 years, they still would only have 27% of the market, down significantly from the 35% they started the 90’s with, because they CUT FLEET SALES BY HUGE PERCENTAGES!!!!
WHY DOES NOBODY ON THIS BLOG RECOGNIZE THAT FACT???
Secondly, as one other guy mentioned, the introduction of successful brands such as Hyundai, Kia, Lexus, Infiniti, Acura, MINI, etc, took more and more chunks out of that market share! What did we give up? Puegot, Renault, Sterling, and Fiat??? No comparison. Constant refinement and expansion of Toyota, Honda, BMW, Mercedes, and the 90’s explosion of Ford and Chrysler success took an even greater toll. Then Nissan and VW/Audi had a resurgence after their near-collapses.
So, the fact that GM even still exists through that onslaught is amazing.
Thirdly,
The Japanese Market is a CLOSED MARKET. PERIOD. THE SUM TOTAL OF ALL THE WORLD’S BRANDS IMPORTED INTO JAPAN TOPS OUT AT 4% 4% 4% 4%
4% 4% 4% 4% 4% did you hear me
FOUR measly percent….
Ensuring their BIG 3 a continuous stream of massive economies of scale that no one else in the world enjoys, especially not the Europeans. Imagine that those high-quality well-engineered Germans can’t get a foothold. ?????? Volvo??? PSA???
In Korea, it’s an even worse situation, so GM bought it’s way in with Daewoo.
So when you now add in the ridiculous 100s of BILLIONS owed to the UAW, you see why COST was such a big factor in the minds of the number-nerds running GM.
They started to fix that five years too late to regain the power and glory, couldn’t make money even in the SUV glory days, and then the price of gas spiked, banks collapsed, credit vanished, and the economy went into recession. Since YOU THE PUBLIC ACTUALLY BOUGHT ALL THOSE PICKUPS and HUGE SUVS, you cannot solely blame GM management for this situation, but must also blame yourselves. Only the Escalade and Hummers didn’t exist in 1990. GM always had a Tahoe/Suburban & Yukon/Yukon XL equivalent. They did cancel the original Hummer in favor of the smaller H2 and H3, though they should have hybridized them to make a point of adapting to today’s reality.
BUT FORD SOLD a MILLION F150s and GM SOLD MORE THAN a MILLION Silverado/Sierras
in ONE YEAR!!!! Plus ridiclous hundreds of thousands of Expeditions/Navigators and Tahoes/Yukons etc etc etc. YOU BOUGHT THEM FOR SOME STRANGE REASON. YOU. AMERICA.
So with Hummer and SAAB sold, they can get back to fully concentrating on great new breakthrough
products. The 35 MPG standard is already a mandate for massive mileage improvement.
We already know higher MPG cars are in the pipeline. All their asking for is the cash to make it through the PERFECT STORM, one that has even caused Toyota to predict cash losses ahead!!!
Don’t DARE FORGET that this company is the one that JUMP-STARTED THE ENTIRE US ECONOMY after 9-11 froze your feeble brains. All they’re asking for is a loan.
Go figure.
If they go down, we go into a DEPRESSION. The steel, rubber, glass, tech, and other supplier industries would fall into a hell-hole vortex because they would be bankrupt at the same time while trying to support other Tier 1s who can’t sell enough to offset the losses because of all the plant closing and retooling costs at all levels multiplied by the TOTAL WALL STREET COLLAPSE and second BANKING COLLAPSE THAT WOULD FOLLOW THE INSTANT VANISHING OF 3 MILLION JOBS. Leading to a couple million MORE JOBS LOSSES by panicked corporations.
Plus, because GM and Ford are multinationals, the same would surely happen to European and Chinese markets faced with the same reality. It would take at least 7 years to fix this mess!!
So if you want to KEEP YOUR JOB, you get on the phone and demand Congress bless American car companies with a $50billion LOAN.
jan Bayus
I haven’t written lately. I am a strong critic of GM’s leadership. But before I say another word, let me make it clear that the Malibu IS as good as GM and the critics claim. I purchased one in April (4 cyl and 4speed) and although I do not like the tranny, everything else is as good as advertised. I have owned over 40 vehicle sn my 55 years. I have owned almost every kind of automobilem and if GM would have put another $150.00 in materials it would have been the best deal in the world. I like the car. I don’t like the company’s attitude.
The Camaro? The crossovers? The money spent on TRUCKS? No Astra with a 6 speed and a 2.0 turbo? No Malibu with a DI V-6? No Malibu with a 2.0 L Turbo? But trucks that are flooding every lot. I have warned GM for years about their need to remember that they are a CAR COMPANY! Now it may be too late. The products that could have saved them here they build elsewhere. I am now convinced they committed suicide.
I think it is simple.
People are making less money, and because of health care costs constantly rising they have less money for cars, Food prices climbing, the economy slowly tanking and yet GM and Ford spent millions on a pick-up truck’s interior and smooth ride. Then go out and build the BEST pony car of the era (Camaro) and will sell less than 50,000 units. Even doubling that makes the Camaro a suicide machine. And you want MY tax dollars to continue to act stupidly? I do’t think so.
Build cars and I won’t mind, keep on doing what you are doing, and I hope the rest of the country buys Korean. I didn’t spell check because I am really not in the mood to waste another second on the plight of GM. BUILD CARS!!!!
Gary
Its a sad day in America. I for one gave up on American automobiles. I am american born always drove american products but finally gave up on the big 3. One of my vehicles is a saab and its a great automobile but its nothing like any other GM Product. The problem with American autos is more than just making a quality vehicle its a product of another time. Gm Ford and Chrysler cant get their minds out of the past. The glory days of the 50s and 60s are over. All the big three keep trying to do is reinvent vehicles that where popular 40 yrs ago. Yes i love muscle cars and the new camaros chalengers and mustangs are neat but all you are appealing to is people in their mid 60s and collectors. Those vehicles dont have a snowballs chance in hell in this day and age. I live in California and no one is driving ameican vehicles at all and if you see one its a rental car. The quality sucks beyond beliief and no wonder the asians and europeans are slapping the big 3 around in my company alone i think there is 2 believe it or not american vehicles the rest all german japanese or korean. I love nostalgia but the nameplates of the past are old and worn out. How come the big 3 cant see it open your eyes how many 30 yr olds want a caddy or buick a lincoln or whatever chysler is making these days. But they all want a bmw audi mercedes lexus acura ect.The american autos are nothing but poorly made worn out nameplates of the past. In my opinion even the chevy die hards its time to through the towel in. Tell me how many of you die hards have driven a foreign vehicle just do it and than drive your gm product then tell me after you did it what 95% of america is saying.Its to late in my opinion even with the government bailout people of my generation and younger generations dont want to drive american vehicles its a fact no one i know is saying wow i want a pontiac or a chevy it more like i want a subaru a acura or a bmw audi. If and i mean if the big three get a bailout its time to start over build quality get rid of the old monicker and position yourself for people who are buying cars not people who are in their 70s who may buy one last car or a few people who are collectors. God no wonder the big three are in a mess whos running these companies 90 yr old men its time for change.My persoan daily driver is an audi and there is no american vehicle that can compare with the quality style and handling even my sons 1992 lexus sc400 with 150000 miles drives better than a new american car. He kept it for a spare but purchased a new nissan. Just like obama said its time for change open your eyes big three i thinks it way to late in my opinion even if the government bails you guys out. Really its just prolonging the death of american autos. Its a sad day in America
nonotford
So we should all suffer because you made some stupid decisions in the mid-nineties? The move toward SUVs was as short-sighted and irresponsible as can be stated.
And your whole branding is built around this idiotic idea of American machismo. One day, when you are actually filing for bankruptcy, you’ll realize that innovation and cutting edge technology is what sells cars rather than celebrities, tough guys, and baby-boomer nostalgia.
The only hope left for GM is the Volt and the E-flex platform. As an American, I hope to hell they can pull is off right, and fast.
Andreas Stutz
I’m from Switzerland where we have no car industry. US cars never made it in Switzerland because quality, style and image are lousy. Japanese and Korean cars succeeded in the last years in taking market shares from the German brands which are still dominant in Switzerland. German cars are excellent in innovation and branding, Asian cars in quality and value-for-money. Let GM, Ford and Chrysler go bankrupt. This is less costly than to support them with billions of dollars. They don’t know how to build cars and they will never learn it. Employees will find new and better jobs in the plants of the Asian and European carmakers and also the suppliers will have a future if they succeed in meeting the quality standards of Audi, BMW, Mercedes, Toyota, etc..
David
“Someone needs to get at the root cause of why our Big Three can’t build quality, affordable cars people want to buy and be competitive, while foreign car makers have flocked here to have Americans build their cars.”
The root cause is this in GM’s example. Because they have a history; they start out every year about 20 billion dollars in the hole compared to Toyota and Honda and to make any money first they have to pay $20 Billion in obligations for health care and retirements.
Best estimates; Toyota is going to lose $10 billion in North America in 2008 and if they had started off 20 Billion in the hole like GM does every year; they would end the year $15 billion in the hole*. Does that sound familiar?
*Based on the approximately $15 Billion Toyota made in 2007.
GM has an agreement to resolve these obligations starting in 2010 but it just so happens that the timing of that agreement and the unfortunate collapse of our credit markets combined with forced spending for additional CAFE regulations have conspired to destroy GM’s ability to compete in the current situation.
You can only go swimming in the ocean with a $20 Billion anchor around your neck for so long before a storm comes along and drowns you.
Michael Dunphy
I am in my late 20’s and let me tell you, when I buy another car, it won’t be from GM. Simply put, you don’t make a product that I want. This is the 21st Century, and you still seem to think it’s the 1960’s. Why don’t you have fuel efficient vehicles?! The world is at peak oil, and buying an SUV is a terrible - absolutely TERRIBLE - economic decision. A Toyota Prius will pay for itself through fuel savings, and the higher the price of oil goes, more it will save. Guaranteeing gas at $2.99 for a year or two when you buy a new SUV is a stupid, backward-thinking idea. Whoever thought of it should be fired on the spot. Innovate, for Christ’s sake! That’s supposed to be what America does.
David
“The world is at peak oil, and buying an SUV is a terrible - absolutely TERRIBLE - economic decision.”
Another point… Who’s decision is it? GM does not force anyone to buy SUV’s and neither does Toyota but Toyota still sells them. And to a model; GM’s SUVs/trucks get better mileage than the counterparts from Toyota.
In the case of full size pickups; almost 15% less fuel economy than their GM counterparts on the highway. Don’t act like Toyota does not pander to people who buy full-size trucks and that they are super innovators. If they were great innovators and had everyone’s best interests at heart; they would refuse to sell some of the most gas-hogging trucks on the market and they woudn’t have invested 5 billion in the biggest failure in automotive history since the Edsel. (Toyota Tundra).
Nate
Edvard,
That is exactly what GM needs. To move its operations south. The problem however is that modern production requires fewer people due to lean manufacturing processes. Even if GM moved to the south there would still be a net job loss. But at least GM would be solvent and hopefully able to make vehicles at a profitable price.
I do agree though that there is a lot of benefit to moving south. It would force GM to build NEW plants and they could throw away much of the old tooling and problems of legacy industry left over from the 1950s.
Building someone else’s car here may be sad and ironic except it works. Foreign cars are decent cars in the minds of people and their production here makes people feel a lot better then a GM that has parts from Mexico and Canada etc…
On a side note I must point out that Japanese cars have a design advantage. In Japan (I have been told) there are heavy taxes on higher mileage cars. This means an incentive to buy new and thus support Japan’s auto industry. So in the case of Japanese cars Japan has government funding for engineering and design. In some regard this is a great thing because it means major infrastructure change only takes a few years to implement since there are far fewer legacy vehicles. In the US this means that there is more engineering dollars/time put into a product that is sold cheaper (I think).
So in the US they can produce better cars cheaper then we can. The only way to compete with that is to lower costs… but as can now be seen there is a limit to that. So does that make the US not globally competitive in the auto industry?
We won’t ONLY have foreign car companies. There will always be car companies in the US as long as there are motivated, enterprising people willing to start small companies to serve niche product needs.
Dr, Turkey-Belly,
I don’t think the Malibu makes that cut. Its just not quite there in my opinion. I’ve driven one, I’ve driven in the back of one. Its worlds better then the older GMs I currently drive but I dont’ think its really where it needs to be yet… just my opinion.
The CTS/CTS-V are pretty much there in my opinion though they could use a bit more interior work. Specifically getting rid of hollow sounding panels and an option for a backseat similar to the CTS Coupe concept. I just don’t think a car sold in the 50K range (on the high end) should have much exposed plastic in it, not to mention hollow sounding plastic.
The Corvette is pretty close to spot on too. There are a few improvements I could see, mainly in the interior and styling department.
I’m not yet totally sold on the GMT-900s
And the Volt is still 2 years away so its not even an option today when they need a savior product. Additionally the Volt’s price tag is prohibitive in my opinion. A car like the Volt should be marketed to the $20-25K price tag crowd.
Phil,
In all honesty I don’t quite see how quantity of vehicles sold matters at all. Who cares if GM has 25% of the market or 35% of the market when they are about to go under. If they go under they have 0% of the market.
GM should have figured out how to directly compete with its new competition. Now people seem to be making excuses.
Well “I the public” didn’t buy the SUVs I bought used cars.
We won’t go into a depression. If GM goes down people aren’t going to stop buying foreign cars (or are they)? Other car companies will pick up the GM sales slack (of course adjusting for auto market
saturation conditions) and the same suppliers will farm their work to other auto companies.
The major issue I really don’t hear is saturation of the market. I think there are just to many cars at to high of a price. I drive by large dealers every day their lots are full. I think people just aren’t buying and the auto manufacturers haven’t figured that out yet. The sales volume will get adjusted to a normal level and other companies will pickup whatever remaining slack GM has.
jan Bayus,
You don’t like the tranny on your Malibu?
What a shocking surprise. Its a shame GM didn’t get that right. At the price point you payed the Malibu isn’t bad I’m sure customers expect more for their money…..
You seem to be hearing what everyone else is saying.
GM just misses the little things that make customers dislike their cars. Its usually not anytthing major just small things that other companies do or do better. A nicer quality interior, the right engine and transmission selection etc…
You are right people are making less, working less, and prices are going up. It only fits that less new vehicles are needed and more used support products are needed. I guess someone missed that.
Gary,
I agree with most of what you say. GM needs to drop the old names and maybe even the old brands. the G series from pontiac worked well but many old stubborn people can’t get over the name changes.
As for 30 year olds… I almost amy one and actually like the CTS. But why would I buy one when a 4 year old Acura can be had for half the price with almost the same features. People want the styling, quality and name of an Acura, Infiniti and Lexus its that simple. GM needs to build their own brand that is that and drop the old ones.
I think GM could build a nice car… but why spend all that money when they have the kind of track record they do. Even the new CTS makes me worried. Will it have the typical GM interior issues?
nonotford,
I hope GM pulls the Volt out of their hat and makes it an incredible car. But I don’t think they’ll get the price down to the point I’d actually consider buying one.
David,
It sounds to me like the market is slow and saturated. Old cars die slowly there is no need to replace them and certainly no need to incur the expense of doing so.
Dan
I think it is nothing BUT essential that the gov’t comes in a helps GM out. I think it will be horrible to see what happens if not help is given. So lets hope the gov’t will do this right and help the country out!
http://www.ChevroletVolt.org for Chevy Volt and GM news!
edvard
There is a lot to be learned here from reading the comments, many from people who are simply speaking their minds and saying what they truly believe. GM could learn a lot reading these comments. Overall, despite the Malibu, CTS, and Upcoming Volt and Cruze, a LOT of people still have this image locked in their heads that GM only builds shoddy, inefficient, gas-guzzling vehicles.
I’ve been following GM for years now. I have to admit that I don’t even own GM products and own two Toyotas. But the comments about GM making gas guzzlers isn’t totally accurate. For one, I’ve driven numerous GM cars that get well over 30MPG, and we’re not talking about brand-new cars either. Secondly, Toyota, Nissan, and Honda also build large SUVs and of those, most don’t get as ‘good’ a fuel economy as the GM variants.
But what is reality and whats perceived is drastically important here. Despite all the hard work GM has done- and I commend them for their efforts, their transparency( this blog for example) and improvements of late, the public still thinks that GM builds garbage and makes gas guzzlers. This alone is much worse than the effects of the Unions, state taxes, and retirees combined. The fact that Americans still don’t believe that their own car companies can build decent products is a huge problem, and frankly, I don’t know what the answer to that problem is.
So lets talk about the worst and best case scenario. Let’s get the bad out of the way first. Assume that GM goes bankrupt. The impact would be immediate and potentially devastating, with MILLIONS of workers affected. Bankruptcy is complicated. It could mean anything from a full-out collapse of the corporation with all hands laid off, or it could also mean re-birth with a clean slate. Certain obligations that in the past and present act as albatrosses could be eliminated. I won’t name these since they’re obvious. But to say the least, if GM declared bankruptcy and acted with careful consideration, perhaps many of the internal legacy problems it has could be alleviated, bringing them closer in comparison to younger Asian companies.
The best case scenario is that GM finds a way to take advantage of the current financial situation. This is a two-fold. First, they do get federal aid. But if that occurs, then its merely buying time. At this point, it pays to make drastic decisions, and even though much effort was put into the Malibu, CTS, and upcoming Volt, these are not enough. Even the Volt, which I am a big fan of, is still way too expensive in an environment like this. The focus will need to be placed on products that not only address current financial limits of the avg consumer, but also for cars and trucks that stand out. It isn’t good enough to make a car that’s simply better than previous GM products. The name of the game will be beating the other companies. This doesn’t mean making a sedan comparable to the Camry that has a higher fit and finish. It means going outside the box and coming up with a totally new product. That doesn’t mean trying to shoehorn success via past fads- aka: Crossovers. It means really sitting down and coming up with an unexpected, clever, useful, and desireable product. I’m not sure what such a product is. But this goes with what I mentioned in the start of this post, which is that in order to improve your position, you must succeed in breaking down old perceptions.
David
“We won’t go into a depression. If GM goes down people aren’t going to stop buying foreign cars (or are they)? Other car companies will pick up the GM sales slack (of course adjusting for auto market
saturation conditions) and the same suppliers will farm their work to other auto companies.
The major issue I really don’t hear is saturation of the market. I think there are just to many cars at to high of a price. I drive by large dealers every day their lots are full. I think people just aren’t buying and the auto manufacturers haven’t figured that out yet. The sales volume will get adjusted to a normal level and other companies will pickup whatever remaining slack GM has.”
Toyota is very concerned that GM will go into chapter 7 liquidation (the only option they have) and will cause several suppliers (who also supply parts to Toyota) to fail - thereby making your dream-world scenario of no depression impossible.
Andrew Bazalgette
Nate asked: “So does that make the US not globally competitive in the auto industry?”
Of course not. GM is doing very well outside the U.S. Opel is doing well in Europe; Buick is doing fine in China; GM is making quality small cars and selling them in South America.
So what’s the problem in North America? Why can BMW, Mercedes, Toyota, Honda, and VW be successful here, while GM no longer can?
Part of the problem is that there are now two distinct auto industries in North America.
We’ve got the “old auto industry” of the Big Three who are being dragged down by a legacy of a hundred years of being set in their ways, old infrastructure, and the terrible burden of pensions and health care costs the UAW has forced upon them.
Then we’ve got the “new auto industry” whose companies are flexible and dynamic and who have built new infrastructure in the Mid and Deep South where the UAW has so far little toehold, and the auto makers can take advantage of lower labor costs and lower taxes.
Whatever happens in this bailout it has to do more than just keep GM afloat. It will have to get the Big Three across the bridge from being an “old auto companies” to being part of the new auto industry paradigm. If the bailout can’t do that, we taxpayers might as well pound those billions of dollars down a rat hole.
The UAW must also come to grips with the fact that they have played a role in the downfall of the Big Three and that they will have to offer concessions in any bailout and reinvention of the auto industry.
Krista Robertson
Go back to your roots, great products, excellent reliability and performance…
GM and American cars in general have lost respect and are no longer solid, reliable cars. I refuse to even consider purchasing an American car just on the reliability factor alone. I have turned to German engineering because of it impeccable style, quality, performance and reliability. It would take years and some serious revamping to change consumers’ minds and bring integrity back to the American car industry.
B Knotts
I don’t want GM to fail. I want you to *demand* that the government suspend the new CAFE rules, and other regulations that are causing you problems, at least until you can get back on your feet.
edvard
This just in:
“WASHINGTON – Treasury Secretary Henry Paulson called autos a “critical industry in this country” on Wednesday but said the government’s $700 billion financial rescue program wasn’t designed to help automakers.
Asked about Democratic congressional leaders’ plan to rush financial aid to the industry, Paulson cautioned that “any solution has got to be leading to long-term viability” for auto companies.”
Listen- I hate to be a negative person, but in times like these, whether it be government or corporate, we need to hear from the leaders and CEOs. Often times, its their job to restore confidence and faith in the companies they run. Mr. Paulsen made it fairly clear that one of the reasons he feels that any sort of financial bailout for Auto makers is inappropriate is because he wants to see long-term solutions. Just like a politician, a corporate CEO or president must show leadership by discussing plans- even if they are pie in the sky ideas- to show aggressive initiative. Promise the moon. Deliver results, and win over the public. I know there are people like that at GM. Lutz comes to mind as does Mr. Welburn. This is a fight for survival. Thus it is your choice to make. Show the American public and politicians making plans for what your future holds. Go out there and make your case. Its no longer sufficient to mention the reasons WHY there are troubles. We’re already painfully aware of the situation. Instead, talk about what you will DO to solve the problems you face. Look at it this way: What more do you have to lose? Now is not the time to be conservative nor to hold back. The time now is to be bold, brave, and confident. Now go out there and show us what you’ve got!
I’ll be rooting for everyone at GM, Ford, and Chrysler.
Brian Olson
Mr. Lutz,
When you go to Washington, hat in hand to meet Speaker Pelosi and ask for our money, how do you get there?
Corporate jet or do you fly coach like the rest of us?
Hyatt or Holiday Inn Express?
McDonalds or some tony Georgetown eatery?
Just curious.
Joe
Michael Dunphy…
You don’t do ANY independant research do you? GM has more vehicles with 30mpg out there than ANYBODY….ANYBODY. The Prius is a joke — rarely do consumers get advertised fuel economy (they get worse)…
Second, buying an SUV is not a bad thing. Believe it or not…as I imagine you won’t: Some people, like contractors, and yar-workers, etc NEED towing and load-bearing capacity…But, buying one for single-person-use is not mandated…the fact that people buy SUV’s for such purposes from GM is not their fault, and likewise, they should not be held accountable for what foolish people want to buy. Similar to foolish people buying foriegn cars out of some percieved quality superiority or, in your case, fuel economy.
Bottom line, do some research…GM has a LOT to offer you. And I like to think that buying from and therefore supporting a company that supports the country that supports YOU would be a good idea….as opposed to buying a cursed Toyota which sends money directly to Japan, never to be seen on these shores again….
Do some research: the Prius is overrated, and GM is vastly underrated in the fuel economy dept.
GMisCARKING
The Congress is finally acting to save the Big Three. But that doesn’t mean you can spend the money however you want, even though the downturn is caused by the credit crucnh started by Wall St. After thinking again, I think Pontiac should go, since they are no next-gen RWD models. I think it’s far better to market perfomance-focused Chevy SS brand and make RWD models part of the lineup with turbocharged and direct-injected engines. You MUST shut down and sell all brands except CADILLAC, BUICK AND CHEVROLET to take out the fat, so to speak. Redundant products must be eliminated. Throw out the Board of Directors. Excessive costs must be cut. This is the LAST chance for the reformation, rejuvenation and renaissance of GM. If you DON’T do the RIGHT things this time, I suggest you sell the RenCen and move out of it.
TaG
Geee ! How marvelous it is to see you or i shall say read you threatening the entire world if such an organisation like GM should desapear !
You all knew for a long time now that your situation was bad. And what did you do ? You preferred to do some dumping of over production at 0% interest rates.
Now that the trick dosen’t work any more your threatening. mmmmh
edvard
Krista Robertson,
No offense, but your statement represents the poster child of GM and Ford’s problem. It doesn’t matter if German cars are “impeccably” engineered or have great styling. The fact of the matter is that if you flip open any quality or reliability publication, VW, Mercedes, Audi, and BMW all sit below the big three in terms of quality and reliability. This goes back to something I mentioned earlier: Perception. That the German automakers have successfully pulled off prestige over actual quality is admirable. That;s their shtick. But don’t confuse the facts. GM builds a pretty decent product. That they have failed to communicate this to the masses is their biggest problem at present.
Chris R
For all of you people saying Chevy has to go. I’d like to remind you that Chevrolet is GM’s core division. More so than any other. GM can’t survive without Chevrolet. If they lost everything else, they could still stay in business with Chevy. Cadillac is the only other division that could survive as a stand alone. So, if GM were to scale way back in the US, Chevy and Cadillac would be what’s left. Pontiac, Buick, Hummer, Saturn and SAAB are all extras economically speaking. Nice to have, but not necessary for the survival of GM.
That said, I’m encouraging everyone who lives in the US to write to their Congresspeople and Senators and demand that any bailout of the “big 3″ require a mandatory reorganization of those companies. There’s a reason this happened, and we don’t want GM pulling an AIG and burning through billions only to come back asking for more.
Jack Monroe
Bob,
No, the talk is not about the “domestic auto industry.” It is mainly about the issue called GM.
After years of collaboration with the unions, management and unions both have a stake in preserving the status quo, or at least their jobs and comp. That’s what it looks like, if you strip all the PR and politics off it.
All stakeholders lose, especially the shareholders, and if we bail you out, the taxpayers will lose bigtime.
Say it aint’t so, if this makes no sense, please. In a free democracy, don’t poorly performing companies deserve to die?
Eric Gentry
GM is building the best looking, best performing and best made autos in the 100 years of the company’s history.
Having said that, it’s sad that everything else is in place for tremendous success, but the cash burn has accelerated to unforseen levels.
I truly believe that the management team has put GM on track for long term success and if they can get the “bridge” financing from the govt. they can return to profitability in late 2009-2010.
I don’t think there is any doubt that guys like Rick Wagoner and Mark LaNeve bleed GM blue!
Danny K.
Normally, I would say “screw you” to GM asking for bailout money. You have had long enough to fix yourselves and after countless restructurings, you have very little to show for it. That said, this is an unprecedented situation where GM was pushed over a cliff by dogooders in Congress throwing around other peoples’ money to put people in houses they couldn’t afford. Basically Andrew Cuomo & Co. (aided and abetted by many Republicans) started handing out loans to people who couldn’t afford them and sold off fraudulent securities to the public. Enron was a $6 billion fraud. This is a government-caused implosion that is basically Enron times 100. So, under the circumstances I support bailout money for the automakers, but these companies really need to clean up their acts ….. as much flack as Nardelli gets for his lack of knowledge of the auto industry, Nardelli understands efficiency and that’s the kind of person you need to straighten out this mess once and for all.
On another note, I hope GM isn’t so brainless to continue to call what was supposed to be the Buick Invicta the LaCrosse! LaCrosse is an old, dumpy, bubbly, ugly car. For the life of me I can’t understand why you wouldn’t want to make a clean break from that car! OTOH, the Aurora had an upscale image (at least in the first generation) ……. a Buick Aurora wouldnt be bad. But I still think the Invicta is a cool name.
Wendell Mercantile
We’ve got the “old” auto industry in Detroit that is failing. We’ve got the “new” auto industry in the South that has been doing well in new factories built and run by foreign companies such as BMW, Daimler, Honda, Toyota, and Nissan.
What do those foreign car companies all have in common? The answer is that they are from Germany and Japan — two countries we bombed to rubble in WW II forcing those companies to start over from scratch.
I hate to say this, but it looks like what sometimes has to happen is the complete destruction of an industry with a total rebuild from the ground up. The German and Japanese auto companies had to do that after the war, while the old, stale auto makers in the U.S. just kept on doing things the way they had always done them, using old–sometimes antiquated–infrastructure while relying on reputation instead of innovation.
Gunter Navarro
Here’s an idea: How about the executives in GM’s senior leadership group all voluntarily reducing their salaries to $1 per year until they get the company back on track? GM’s Senior Leadership Group
That would be an incentive for them to do the job well and quickly, as well as sending a powerful signal to GM’s rank and file of their dedication and commitment. There is along tradition of the senior executives of troubled companies reducing their salaries to $1 a year. Are GM’s leaders ready to do that?
Michael Dunphy
I’m glad to see that I can get a rise out of some of you out there. The fact of the matter is that fuel efficiency is something that the younger generations care about, and GM’s constant whining about increases in CAFE standards is off-putting. And whether or not GM makes fuel efficient cars is not the major issue; the issue is public perception. People are inundated with commercials pushing for SUVs, when there should be commercials showing us the next generation of vehicles. Don’t tell me it’s the public’s fault that GM is failing - that’s total BS.
Edwin
Today, Speaker Pelosi and Senate Majority Leader Harry Reid proposed a bill to support the auto industry. This is very commendable. Everyone should get behind this and support aid to the auto industry during this economic downturn. Helping GM, Ford, and Chrysler will turn around the U.S economy and help the financial sector and the economic recovery more than anything else.
No strings attached. Help the Auto industry to help America.
This is the most important part of the econonimc recovery, both parties need to be behind this in the most ugent way. No strings attached.
GM, Ford, and Chrysler are among the best managed companies in the world. Those of us who’ve studied them say so with the highest confidence. Congress should help get the retiree costs and health care funds (OPEB funds) in balance.
If there are any leaders we can trust its the auto companies, they’ve stood by America.
The American auto industry offers the best products, GM enthusiasts are not the least bit worried about the competition. In fact we are more certain than probably than the execs themselves.
The American auto industry can turn the entire economy around with this help. Its real folks. Everyone will benefit. Don’t listen to some uninformed media pundits or their rented economists. If Congress had acted to help auto industry OPEB funds after 9/11/01 and there wouldn’t be a banking crisis today. These issues are important. Those of us who have studied them agree that Helping the auto industy is crucial. Its the right thing for all.
The auto companies can offer many of the vehicles people would like to see with the legacy costs behind them. The retirees are an important part of the economy, they buy products too.
I would encourage GM, Ford, and Chrysler to stay separate and distinct companies. Mergers are not helpful and only confuse the customers. There is no benefit from mergers. GM would not benefit from taking over Chrylser. Downsizing the auto industry is not necessary and won’t help in the long run. In fact, just the opposite is true. A vibrant auto industry will revive the American and global economy. The synergies are real.
People will return to buying vehicles and getting the economy back on track the sooner Congress acts. There won’t be a recession if Congress helps the auto industry. Investor confidence will be very strong. Forget what the rented economist said, they’re wrong. We are right and we will prove it. Help the auto industry and the economy will rebound sooner not later.
No one will benefit from griping and complaining - No one.
This economic crisis could worsen into something none of us in either party wants to see if Congress does not help the auto industry.
The economy can easily be set on the path to a quick recovery if Congress helps the auto industry.
And at the same time GM, Ford and Chrysler (Cerberus) do not need to panic and resort to sell outs and mergers. Products drive the business and the business will be strong for every one if Congress acts. There will be plenty for all if Congress and the President act.
getalifeagain
Just let the Big 3 go under and watch what will really happen to the economy!
Dr. Turkey-Belly
Andrew said:
” There will not be an end to building cars in the United States.
BMW in South Carolina.
- Daimler in Alabama.
- Honda in Alabama.
- Toyota in Mississippi and Kentucky.
- Nissan in Tennessee.
- Mitsubishi in Illinois.
- VW has announced they will build a billion dollar plant near Knoxville. ”
Guess what ?
NONE of these are American firms.
NONE of these keep their corporate profits in the US.
NONE.
Therefore, NONE of these firms will improve your standard of living and their loss will have a major, 10-20 year impact on the US economy.
Think jobs, think prosperity, think the American Dream.
This is what is at stake. There will be no smaller, leaner American firms to spring up to fill in the void. The void will be filled in by the firms you mentioned taking their profits out of this country.
Why, why, why is this so difficult for most of the bloggers here to grasp ??!??
edvard
Danny K. brings up a good point. The whole reason that we’re even having this conversation is all because of the US housing market. Perhaps some of you live in states where things didn’t get as crazy. I live in San Francisco- the cream of the overpriced bubble cities where even now, a small, boring house is around $700,000. The American dream for me and my Wife has been totally out of reach for years now, and we actually make better than average money. That isn’t to say that we wouldn’t have qualified if we wanted to “buy” during the boom. We knew plenty of people who bought and made a lot less than we did, and many of those same people are now going bankrupt.
But who created the environment that enabled people without the financial means to buy overpriced houses? It was everyone involved. It was banks, lenders, real estate agents, and even the homeowners themselves who should’ve known better. EVERYONE wanted a piece of the easy-money action, and as much as I hate to mention this- GM got in on it too with their GMAC mortgage division.
In essence, the US became irresponsible and gambled away the future by putting its populace into unnecessary debt. People like me and my Wife, who saw the writing on the wall years ago and stayed out of it are having to pay the price via our damaged retirement and investments. Countless companies like GM, Ford, Chrysler, and now even tech companies are all suffering as a direct result.
Perhaps GM needs some major changes. But we as a country need to also change our own attitudes towards money and finance.
motorman
joe you are correct as i buy a new corvette and a new impala every 3-4 years and i get 22/24 MPG everyday driving and 28/30 MPG on trips with both type of cars. what more could you ask for ???. i am retired and put about 12,000 mile these 2 vehicles and another 3000/4000 miles on my silverado pickup so i spend about $160 a month on gasoline with gas at $2.50 a gallon. i know people who spend more than that on smokes and booze.
Beaugrand®™©
Breaking news (13 Nov 2008) is that Congress probably won’t pass the “bailout” package that Detroit wants until January.
I think it might be a really smart idea for the top brass at the US car companies to make the rounds of news and talk shows to bring their case before the American people…
Andrew Bazalgette
Guess what ?
NONE of these are American firms.
NONE of these keep their corporate profits in the US.
NONE.
Therefore, NONE of these firms will improve your standard of living and their loss will have a major, 10-20 year impact on the US economy.
Turkey,
I know that. The point was that if those companies can run successful plants in the U.S., why can’t ours? Building a car is building a car. It’s not rocket engineering.
Somehow our Big Three has to get rid of the horrible legacy cost they are burdened with — and that includes getting the UAW to stand up and say they are part of the problem.
Chris R
Edwin, I don’t agree with you on the “no strings attached” idea. To me, it’s highly irresponsible to lend obscene amounts of money to ailing companies without something in place to ensure accountability and a plan in place for how the company will return to profitability. Plus oversight to be sure that the plan is being followed. Otherwise we’ll keep getting companies quickly burning through the money and coming back asking for more like AIG did. I understand the need to assist these companies, but we need to insist on accountability.
edvard, Good point. I hope the Government learns a valuable lesson in irresponsible deregulation, and trusting banks, lenders and insurance companies to police themselves (ha).
Blue Wing
Wow, I just heard a scary thing for GM, Ford, and Chrysler on the business report on National Public Radio: Auto lenders are now much more likely to approve a loan for a Toyota or Honda, than they are for a Ford, Chevy, or Dodge.
The reason is that they are worried about what a possible bankruptcy could mean for the future value of Big Three cars. They are reluctant to loan money to someone wanting to buy a Big Three car as it could mean getting back a car with little value if/when the borrower defaults on the loan. Apparently they don’t have the same fear for Toyotas and Hondas.
GMisCARKING
Based on this article from Bloomberg (http://www.bloomberg.com/apps/news?pid=20601087&sid=aE1iUp.nNyNk&refer=home), it seems the auto loans bill is unlikely to pass this year. GM might have to wait until Jan 20 next year.
The consequences are clear cut and fire, and Wagoner should be telling them this: When GM files for Chapter 11, it wouldn’t be just a bankruptcy. GM actually goes straight to Chapter 7, which is liquidation! Even though Wagoner might not want to sell Saab, it will eventually snapped up by Fiat; Opel-Vauxhall, by Renault; Chevrolet, by Chevy; Buick, by Shanghai Auto; Cadillac, by Hyundai; Hummer, by Mahindra. And the effect will spillover to Ford and Chrysler, causing a domino. America will become just like Britain, where its auto industry is foreign owned. And Mr President Bush, when you don’t make your own cars and work for foreign automakers instead, you have nothing. Japan and South Korea, these so-called US allies, have auto markets that are closed to US automakers. The money goes to foreign countries for each Mercedes-Benz assembled in Alabama. The foreign automakers could bend you to their wills and decide not to set up plants in America but rather Brazil.
And it won’t be just the auto industry. Other industries could follow. America is fast losing its indepedence, where its assets are snapped by foreign corporations at a staggering pace. Eventually America will have more debt than the savings owned by American consumers. It’s such as an irony than America, being the greatest military power and having the highest military spending, is financed by foreign money. When America goes bankrupt, it’s game over for America, where its assets are no longer owned by Americans.
America and GM now has a lot in common with 18 century China. China at that time was dominated by foreign powers, where its land was carved into different territories. China only had independence in name only. America saved China by calling other powers to “keep China in one piece”. During WW2, American fighter pilots fought to save China from Japanese aggression.
Fast forward now, China is Communist,viewed more as a potential rival, but it has its markets opened to America, compared to Japan and SKorea, American allies, that have closed markets. America actually lost more, in dollar terms, white collar jobs to India, than low-paying blue-collar jobs to China. When America goes bankrupt, Alaska will go to Russia, Hawaii to Japan, Newy York to France, Florida to Brazil.
The end of American global leadership is near, when the Land of the Free is no longer Free, and Home of the Brave…Brave? Except auto critic like Peter De Lorenzo who has the foresight, and President Obama, can save the Republic. The day when every inch of American land, building, asset, and forest is owned by foreign power, that is the day America ends, where freedom dies, and darkness clouds mankind forever. American will never be the Beacon that guides the world from tyranny and injustice. And when America dies, the World dies.
“I am a Jedi Knight. I love the Republic. May my body be shattered saving the Republic.”
- Luke Skywalker
Sanford
I think there absolutely must be conditions to any bailout monies to ensure we are not right back in the same scenario again in a couple years. The Big 3 have refused to be innovative and keep up with the times, which led them into this mess. The only way to solve this is if they leap-frog ahead of the foreign manufacturers with a mass-produced, all-electric vehicle. This is the way of the future. Extremely cheap operation, and minimal maintenance. A bailout must mandate that each of the Big 3 have an all-electric vehicle ready for market within 18 months. This should be even easier for GM, assuming they have not shredded the plans for the EV-1.
Brett J
Why not try offering ‘blacked out options’ online by a process locator database that outlines cost of all possible variations or the earliest moment the vehicle can be delivered for alternate installing at local workshops not under the GM brand group. A blacked out option would allow different localities to meet local standards without the need of the full factory or the full GM mechanism. Could be offered worldwide! It could stabilize cash sales during a credit crisis in alternate economies previously unable to house the GM dynamic structure. Options could be leaving out any system for stripping or alternate installation and the final product requires no legalization by GM whatsoever it’s only about the quality of the delivery and information and the regulation adherence is then in the customers domain. (Same as used cars) GM could therefore sell a car in parts to some people who would enjoy the project!
PacerX
Mr. Wagoner and Mr. Lutz,
You need to show real leadership here, that you are fully committed and invested in your companies.
You need to follow Lee Iaccoca’s example, and cut your own salaries to $1.
Thousands and thousands have been laid off and had their salaries cut to $0.
I’m not saying to do this because that’s what is monetarily going to save GM, but when you go before congress - DON’T GIVE THE B******S ANYTHING TO SHOOT AT YOU WITH. Republicans, like the clown from Alabama (now would be a good place to point out I’m a Republican… for now…) and Bush (a free trade deal for COLUMBIA????” COLUMBIA?????) are going to load up on you with both barrels and fire everything they have at you.
Furthermore, follow Lee’s example just because it’s a good example. You’re both very rich men, and when the time comes, and GM recovers, you’ll still be rich men… and right now, GM needs the engineers that can be hired/retained on your salary more than you need your salary.
GMPARTSGUY
How about a show of good faith?
Everyone from “red ink rick” down should take a 30% pay cut, lose the big bonus payments and the perks until the company returns to profitability.
wath
i think it is time for gm to come up with a car that actually sells. simply, a car that sells. and cut down on this fence design that only a few folks would and i believe that gm fleet is full of fantasie car that dont sell. It is time to come up with a fleet that appeal to global market. yes there are people who like the hummer 2 the big gmc, the extra big, the extra large hummer h3 there also the majoity of people more comfortable on the super nice and well cut camery, we dont wake up every day riding on dirt roads with a hummer, we need to many super trucks on our roads just riding top work. we need people who can design, super slim car, well fit geral public. then you want take the camero as a Masai. more like cartoon hobbies car. actually i like the camero the design is nice but i don’t think average people would buy it. and average people do not appeal to extraordinary designs. at all the design to good to appeal to anyone. even colorox bleach can do better.
abbwath2@yahoo.com, come to me i will give a design concept that will sell for years.
edvard
I think its pretty clear that GM isn’t going to get government aid. I also heard on the news that GM and Ford sales are at per capita the same level as they were in WW2. Yes- WW2 when most production was for war related machinery. That doesn’t lead me to believe that GM or Ford will make it out of this without filing for chapter 11, as much as I hate to say this. Again, I feel that the US auto industry is part of our national identity and as pointed out- employees a massive chunk of the workforce. If they fail, then this will have a absolutely horrendous effect on the economy.
There are a few things I can think of. First, if the government can’t help with financial assistance, then at least perhaps they can work to somehow temporarily protect GM and Ford brands from being totally taken over by foreign interests. Chapter 11 for corporations means a chance to reorganize. There’s PLENTY of ways that GM and Ford can immediately streamline, improve, and modernize their companies. I don’t have many answers, but here’s a few I thought about.
1: Sell GM current headquarters and relocate elsewhere. Sell GM Renaissance center. Its HUGE and surely worth a considerable amount of money. Secondly… move out of Detroit. Sorry to all the Detroiters out there, but when anyone mentioned the city of Detroit, its like the poster child of a failed rust belt city on its way down, crumbling in decay. GM, Ford, and Detroit have become synonyms for failed US industry and manufacturing. Much of that is undeserved. But perception is everything. Relocating corporate headquarters to a younger, growing, more vibrant city like say- Atlanta would not only place you in a city with a lot of energetic young people, but it would also change perceptions. Removing the legacy of Detroit would be one. This would also give you a ripe opportunity to streamline your physical office and administration facilities.
2: Sell all unnecessary brands. That means Saab, Hummer, your stake in Daewoo, and possibly Buick. While Buick does well in China, I’m afraid the stodgy old person car image is still strongly attached to the brand in the US, and the last few models have been anything but inspirational. Sell it to the highest bidder. Its perhaps the most valuable brand that you could totally do without in the US.
3: Re-tool and refocus efforts on the remaining brands. Chevrolet should become like Toyota, with a limited yet refined lineup of cars and trucks. Design a better small and mid-sized truck. Get rid of the monster sized trucks. Cadillac should be more refined. Get rid of the Escalade. Pontiac should be re-branded to be more like the Acura or Lexus arm. Get rid of the more youthful, teenager adrenaline aspects of its branding now and replace it with something more along the lines that would be appealing to young professionals.
4: Re-invent the dealer system. One very good reason I seldom visit showrooms is because I realize I’m being hounded by commissioned salespeople. If you ask me, car dealerships should become more like retailers. Increase the base pay of the salespeople, but get rid of commissions.Require the dealers to sell the cars at a set, determined price. Even more extreme would possible be setting up working relationships with existing retailers like Wal-Mart or Home Depot: Perhaps have small sections of their parking lots set aside for selling cars, with several salespeople at each. This makes the cars and trucks more accessible to the public and since they’re already shopping, it makes them more open to at least looking. It would give them more exposure. If someone wants to buy a car, they’re going to go to a dealership. But that’s the problem. Assume that Joe Sixpack has always driven Toyotas because his Dad told him GM is junk. So Joe never bothers going to the GM dealerships at all, thus he never sees the “new” GM products and therefor proceeds to assume they are junk. BUT what if he saw them when he went to Wal-Mart? he would see them up close and personal perhaps several times a week, see that they are actually decent cars, and be more likely to have an informed opinion. This idea would expose your products more to people who might have written you off. A simple, cheap, easy idea that would be cross-beneficial to retailers and yourselves.
Those are just a few idea…
Nate
Blue Wing,
No loans… sounds exciting… Does that mean that dealers are going to have to drop prices a lot to sell?
I’ve been itching to buy a CTS maybe they’ll be in the price range I’m willing to spend soon… with or without warranty doesn’t bother me.
Nate
Dr. Turkey-Belly,
We know those companies will do fine and that their profits do go overseas… but why not just invest in them. What is the difference between profits going overseas and jobs going out of the country? Both effect our bottom lines.. and in the long run it effects all of us.
It doesn’t matter whether profits go overseas or not at this point.
Define standard of living… if buying a quality car at a low cost is part of quality of living then these foreign companies are already doing that.
There will be smaller, leaner American companies (not firms), who will address local US needs in the auto business. And even if other companies fill those need which they probably will, their profits leaving this country aren’t a big deal. If the US were competitive none of this would be a problem.
Jobs vs Profits which is worse?
Edvard,
No it was the people in this country wanting something for nothing… wanting profits without doing anything for them. People wanting more pay with less work. Every one is at fault and the only real solution is working more on anything that contributes to the future of the country.
GMisCARKING,
Does it matter where the profits go if the jobs are here? Tell me which is more important?
Even if the industry is owned by other countries the US still has its industry base in the Aerospace and Defense segments (which by the way are light years more advanced then almost any other country out there).
It wouldn’t take much for some technology spillover to allow engineers working in those sectors to breathe the very new life that the auto makers need… or more concisely to create a totally new and innovative auto industry.
As long as america has resources and people willing to work for the name America it won’t be game over. I think a lot of people miss that. Do you know how many resources we still have. The problem is we squander them to the rest of the world for trade of cheap goods and services. Its really in the hands of the people to stop giving in to cheap and inexpensive products made outside the country. We’re not just talking about the auto industry but American consumerism in general. I can’t even buy certain things today without a made in China sticker on them……
I’m curious how you get your country divide ups…. I don’t see it that way. But do explain….
America sold out for 401Ks and retirement plans….. but think about this… even if we are foreign owned what do you think will happen the owners of the property try to claim it? I’d be willing to be that America will spring to action and not allow it (whether that is legally right or wrong is beside the issue).
America has resources and people… all it needs is motivation to work and work to do… and a call to action.
Sanford,
I disagree on the bail outs… if the government is going to bail the industry out it needs to be by small upstarts and new companies that have no legacy issues and that can be innovative and take America where it needs to go into the next chapter of America’s future. The gasoline car’s days are quickly dwindling… in 10 or 15 years a totally new and improved industry can be built up from the ground up… America simply doesn’t have the initiative, motivation or inspiration or interest to do any of what needs to be done.
IF GM is to leap ahead of the industry with an all electric vehicle… the government in this country d*!n well better be pushing (backing) the industries to support that…. That means backing to build more power plants (and not gas turbines or coal units), an upgraded electric system and the fuel distribution systems required for it all. While they are at it they might as well add in new railroads that are high speed for passengers. The country needs an infrastructure upgrade badly, but no one wants to put the effort and resources forth to do that… it NEEDS to be done…. badly!
Brett J,
How about saying that in english please? I don’t follow you… did I miss something?
edvard,
Moving to Atlanta?? Might work but I can think of some better places. I agree that Detroit needs to go. But really I think the us Auto industry is better off starting from scratch elsewhere. Take it to Silicon Valley where all the talented engineers and software people are. Let the people with money to invest fund small garage size car companies that can be grown into large companies with quality, new and innovative products. Its a better use of the money then trying got keep a giant like GM afloat. For that matter if GM were smart they’d spin off their Volt, CTS, and Corvette teams as separate companies and let them flourish on their own.
If GM made its showrooms like Apple stores people wouldn’t get hounded and they’d sell a lot of product. Also while they are at it fix the prices to avoid inter brand competition… That way people buy at their local dealership not the cheapest place… and if prices don’t move no one loses.
I agree with putting products in correct places… I too avoid dealerships because I just want to look at products without any of the hassles. In fact when I want to see how a GM vehicle is I usually rent one from Enterprise rental for a day or two so I don’t have to deal with any of the BS.
If GM got their products out there doors wide open and staffed them with knowledgeable people not lame marketing people but real sales/mechanics they could at least answer questions about the cars.
Edwin
Let’s recall for the misinformed and the naysayers that GM, Ford and Chrylser were making strong profits in the years and months prior the 9/11/01 attacks. Let’s recall that the American auto companies helped keep the American economy moving after 9/11/01 with concerted efforts. Its time for Washington to return the favor.
GM, Ford, and Chrysler have highly successful plants and invest in America and the future. They are a leading force for research and development in the United States, and one of the largest in the world, they are strategically important to the United States and the Freedom we all enjoy. They are among the best managed, most talented companies in the world. Their products are the best and second to none. They are more than companies, they companies filled with American heros that protect our freedom and Americas economic security. “Its not just your car, its your freedom.” And Freedom is what is at stake. Not to mention the millions upon millions of American jobs, and jobs in communites around the world. The American auto industry drives the world’s economy.
The American auto industry aleady has a lean efficient operation, it does not need to downsize and downsizing is not the answer anyway. The American auto industry has the finest facilities in the world and they are ready to produce. The American auto companies are best suited to manage their overseas operations and brands. They are the best managed companies in the world, its true. Selling off or elimating brands is not the answer. Restoring the American economy is the answer, and vibrant auto industry will lead the recovery very soon if Congress does the right thing and helps the auto industry.
A vibrant America auto industry improves the standards of living for people in America and throughout the world. Foreign competition would also suffer without the leadership of the America auto industry. There is plenty of market share to go around when the economy is strong. So let’s restore the economy with aid to the American auto industry. They did not cause the economic downturn or the banking crisis, but they can prevent a recession if Congress and the President act.
The UAW has done the right things in the most recent union agreements too. American labor is not the cause of the banking crisis or the economic downturn.
Aid to the auto industry is the most important component of an economic recovery. I’ll say it again, there won’t be a recession if the Congress helps the American auto industry. All will benefit. There would not be a banking crisis today had Congress helped restore the auto industry’s OPEB (other post employment benefit) funds following the 9/11/01 attacks. If Congress can help the industry deal with the legacy health care costs and a bridge over this economic downturn, the American auto industry can lead the way to economic recovery very soon. We don’t believe there will be a recession at all, if Congress takes the simple step of helping the Auto industry.
The American auto companies do need to offer more luxury and near luxury cars to reduce expose and improve profits going forward. Designs at Buick need to improve, but these are matters for enthusiasts to tackle.
Chapter 11 would lead to severe prolonged recession in the U.S., it is not the answer. Critics and the pundits are wrong.
The people know why health care costs are so high, why don’t the politicians?
Just for starters, deal with the $2,100 for a CT scan, $1,000 for an EKG, often unnecessary tests from space age machines that hospitals have to lease at exorbitant rates to satisfy the FDA’s standard of care in order to avoid lawsuits. Even when doctors don’t thing the tests are needed, they have to give them to avoid future lawsuits. This kind of paranoia is driving up health care costs faster and faster each year.
The American auto industry has also had to pay for a morass of conflicting regulations and unfunded mandates from Washington over CAFE/emissions regulations and safety regulations that have driven up costs of vehicles but not necessarily benefited consumers. Misinformed do- gooders need to let the auto industry do their job.
There is always room for good ideas and innovations in the American auto industry.
Let the auto industry lead.
Nate
Edwin,
I think you are sadly mistaken on many accounts. American companies like GM aren’t being run that well. There are two ways to look at run well… profits and stocks and successfulness and the ability to be self sustaining. Anyone who thinks a business about to file bankruptcy is being run well is clearly mistaken. GM has made a lot of poor choices in the past 5 or 10 years. And it now shows.
For that matter America is in the same boat regardless of GM. GM is just another straw thats breaking the camel’s back.
I think a lot of the purchasing made in the past reflected money made from stocks and real estate. It appears that the real estate market is headed back to “normal” values, from its over inflated values of the past few years. If that is true, then it makes sense people are less willing to spend a year’s salary on a car.
As with all products on the market there reaches a point when there are enough of them out there…. cars are no different…. at some point the buying public just doesn’t need or want any more cars. At that point production slows down until a short supply of them drives production back up.
As to you’re health care comments…. Are you a doctor? Do you have the schooling and expertise to determine what an unnecessary test is? For that matter do you know what it costs to build 500 of those space aged machines?
One of the reasons medical costs are so high is because they can be. Additionally if you use insurance there are a lot of losses since hospitals are required to treat a certain number of people who don’t have insurance. The costs get spread around to those of us paying medical insurance. Additionally people are sue happy these days and it costs doctors quite a bit of money to just stay in business.
I’m willing to pay high medical costs (because I have to) over other expenses in life like a new car. I can live without a new car… I can’t live with out many of my internal organs.
If you want to complain about the cost of medicine, and complain about the cost of the FDA’s level of care… Perhaps you’d be better off not using doctors that charge so much. No one says you HAVE to have procedures done that are that expensive. If you want to blame anyone blame the greedy Americans who sue doctors… and the lawyers that aid them. For that matter look at what greed does to ALL American industry…..
I think you need to take another look at a few things you mentioned in the post I am referring to. The last thing that the US economy needs is a GM bailout without any kind of accountability and responsible plan.
GM’s problem is looking 15, 20 and 30 years into the future not 5 years. And thats a huge reason they shouldn’t be bailed out. I’ll take the long term future over short term… The American auto industry needs to be rebuild from the ground up.
jinwa
“Chapter 11 would lead to severe prolonged recession in the U.S., it is not the answer. Critics and the pundits are wrong.”
Thanks for your opinion - care to give any substantive reasons to defend your statement? If not then your opinion is worthless. Many large companies and industries have found new life after Chapter 11. Often it is a long and painful process but the company continues to move forward, often stronger in the end.
Andrew
I love GM, and I appreciate all their brands and their rich history, but times have changed since Alfred Sloan was alive. Having as many brands as GM does just does not make sense. Plleeaassseeee GM, kill off all brands except Chevrolet, Pontiac, and Cadillac. I think it would work beautifully. To make up for losing Buick, the Impala just needs to return to the car it was in the 50’s and 60’s. GMC would not be noticed, as every GMC can be bought as a Chevy with slightly different sheetmetal. To make up for losing Saturn, how about you just make Chevrolet’s better? Replace the Equinox with the new Vue, and if the Cruze lives up to its hype, it will trump the Astra. Which brings up another point. Stop changing your cars’ names!! People need recognition. A lot of non car people still call the cobalt a cavalier anyways, and don’t even know what a Cobalt is if I just say the name. The Cobalt isn’t a great car, but it wasn’t horrible, so keep the name that at least some people already know, and put it on the supposedly great Cruze, and keep the name Cobalt, and people will start to recognize your small cars, which in turn will help them think of Chevy when they need a small fuel efficient car.
Marcel Peelen
I’m not just going to rant on the inadequacies of the automakers, I’m actually going to offer suggestions - perhaps naive, perhaps radical, perhaps to much to the left, but GM might as well listen. If GM & other US automakers want $50B+ from the US Gov’t - here are the rules.
1.GM & other automakers get 25% of what they’re asking for for the first year - they will sign a contract that states they have to build a sedan that will get 45MPG minimum - preferably much more - that shouldn’t be that hard. If the automakers fail to do this - no more government money.
2. I’ve heard that GM & other automakers have shut down plants - retool all these plants to build hybrid-electric and hydrogen-fuel-cell cars - period. You have two years to do it - or no more gov’t money. That will be the second 25% you guys get for that project - you got two years.
3. Compact electric cars are all over Europe - what - you can’t sell them here??? SO here are some radical incentive ideas, because we have to change the way the US & world consumer buys cars. (a) build a hybrid or all electric car - a basic model that will be (not could be) sold to consumers on basis of income - radical! Build a subcompact “yugo” or “vw” type car avaiable for a price of $15,000 for families making under $50K/yr, financial information is checked anyway with credit checks, so it’s not really a privacy issue. (b) Tier more expensive cars to higher income families, over $50k to $100K a mid-size hybrid/all-electric car for $18 - 25K - period (c) high cost hydrogen cell cars for people over $100K. (c)No easy financying for any of the vehicles - financing for these vehicles will be offered at GM dealers, participating banks & credit unions - no 0% down deals - 20% down only with a minimum APR around 2.5%. Trust me you will sell the cars.
4.Used vehicle return credit: ALL car owners will be encouraged to trade in their combustion/non-hybrid cars. GM & automakers can retool closed plants & build new plants to completely retool these vehicles to hybrid cars or to completely recycle them for parts, scrap. etc - buidling recycling plants wil create lots of jobs - even lower skilled jobs - you don’t need to be a certified mechanic to take apart a car! New smelting plants can be created to recycle the metal, new plants can be buiilt to recycle any of the other materials - plastics, electrical, copper, etc - can you imagine how many jobs that would create? And I’m talking - return , rebuild, retool recycle every gas vehicle made. (a) Provide a tax credit incentive for consumers to buy hybrid cars in the first place - a one-time good sized reduction of the base price of a new hybrid - lets say $1500 - $2K for the basic $15K model. (B) Provide a yearly tax credit for people who return their gas vehicles for retooling - once the car is retooled for hybrid use that person will get a yearly tax credit during the life-time or ownership of that car.
5. Automakers will get more gov’t money - with a 5yr cap - let’s say $50B/yr based on contract performance re: these ideas. Trust me, with these incentives -people wil buy the cars, lots of jobs will be created with the retooling/recycling idea.
6.Make gas mower, snow mobile, boat, small farm machinery, etc - hybrid or all electric motors & do the same thing with the old engines - retool, recycle.
7. Set aside a $100MM award for an affordable long lasting viable battery pack for electric cars or an all hydrogen fuel cell viable engine - enlist universities such as MIT, CO School of MInes, other technical universities & engineering firms & financially suport those programs designed to make cheaper hybrid engines & light weight cars.
8. STOP making those silly oversized cab trucks that get a whole 20MPG - who needs them?
9.Finally - start working on semi truck engines to get 60 - 100MPG
10. Read and consider this. I am really that far off?
Pete poholek
Why don’t GM sell all on hand new cars and trucks with no interest? That should make GM money and not the finance companies.
If you need to get gmac money, then you are hurting the people who want to spend on your over inflated prices.
The best idea is not to pay so damn much to the workers. A lot of people in the whole country make only $20,000 or less. Their the ones who have been going into debt with interest payments , trying to get your products.
I won’t buy a new car or truck because the taxes and interest on them is too much.
If the auto workers made less. GM would get a better return and the lesser paid auto workers would say you should sell a cheaper priced.
Build what people can use, not what you think people need. Remember how GM got to where it is. Build stripped cars and trucks like the old days and let the customer add what he or she wants, not sell them something they think they want with all the expensive frills.
Thank you
Chris R
Andrew, You’ve hit on something many of us have been complaining about. GM sacrificed it’s model recognition and perhaps a bunch of customers by changing names on their various models. Why? No one really knows. Grand Am was a name everyone knew, and it was attached to some darn good cars and people knew it. The latest Grand Am was mysteriously renamed G6 and instantly no one knew what that car was. Initially it didn’t sell in anywhere near the numbers that the previous Grand Am did. I’m not sure it’s ever sold in those numbers. How the good people at GM could underestimate the power of name recognition is beyond me. If your product had a good name that everyone knows, keep it. If it has a bad name, then go searching for a different one. The Buick Lacrosse is actually a Regal or Century, the Lucerne is a LeSabre or an Electra. All good names that people know. If GM really wants to abandon the Cobalt and Cavalier names, then why not name the car Nova? At least everyone knows the name Chevy Nova.
Nate
Pete Pohelek,
I totally disagree with you Pete. GM needs to keep building high end cars. They lose a lot of sales because they can’t compete with the high tech brands. I suppose they do also lose sales because they are too high tech. They can do both though. If they do they need to distill the model names to get the ones that work and don’t work for each buyer segment.
Chris R & Andrew,
As a GM owner I am very very glad they changed the names. I associate anything Chevy as a stripped down piece of junk. I associate Cavalier as a car that was ok but had a lot of problems. I associate Grand Prix and Grand AM the same way. They were cars that were close, but never something I would be willing to pay full brand new price for.
The new G series on the other hand is easier to differentiate products AND is new so it cleans the slate that a name brings with it. I agree that Cobalt is a better name then Cruze only because I think Cobalt doesn’t sound lame… Cruze (when spelled correctly) is a verb, Cobalt is a noun. Cobalt as an element is extremely useful and used in many of the best high tech aerospace metals typically found in jet engines. Coblat is just a better name in my opinion.
Cobalt hasn’t lived up to its name in my opinion… the Cruze though is a chance to do so.
In any rate I don’t feel GM’s old names are working anymore on a younger public who is accustomed to buying name-less cars from the likes of Audi, BMW, Mercedes, Lexus, Infiniti etc…
If you notice VW, Nissan, and Honda all sell cars with names. Acura, Infiniti, Lexus, BMW, Audi, Mercedes all sell cars with numbers. There seems to be a differentiation between high end cars using numbers and average cars using names. I think GM needs to stick with the high end image on most of their cars.
I do agree that names need to be kept and a product made to backup that name. But in GM’s case that reputation was soiled by the cars sold in the 1990’s and 2000’s it is time for new names. Make a solid car to back the names and then keep them around for a few years. But people always want newer and better. So renaming them IS important. It keeps GM and buyers from stagnating.
Its not about just brand recognition. GM can make any name recognized… But everyone I know hated the Novas so… I think the Nova would be a mistake… and its old. Give up on the old names already they are tired and worn out.
Everyone that knew cars in the 70’s knew the Nova, but that was 30 years ago, leave the past in the past. Most younger people don’t know what the Nova is.
Edwin
Nate:
You said, “GM needs to keep building high end cars. They lose a lot of sales because . . . .”
I do agree with you on the partial quote here. I have related in prior topics that GM has missed sales in the near luxury and high end luxury market, especially cars, since it has been unwilling or unable at the present time to muster the capital to offer more high end choices. They’ve had other priorities lately. So let’s hope they can and will offer more near luxury and high end luxury cars. They do offer especially nice luxury cars from Cadillac. The CTS and CTS-V offer luxury well above their price.
GM made the decision to work on crossovers first, now hopefully they are turning more attention to cars with offerings like the Malibu and the Invicta.
However, GM’s success with the Enclave, Acadia, and the Outlook do show that GM is a well managed company.
The macro economy has been the issue for these last several years.
The observed pattern overtime is that the foreign competition mainly gains share when the US has a recession. This really shows its the US savings rate. In the late 1990s, the US auto companies gained market share and had record profits.
Today, GM offers twice as many models that get over 30 mpg as its nearest competitor.
That just one more example which shows GM is well managed.
Contrary to the media assertions, the American auto companies do invest in the future and in themselves. In fact they are the leading force for innovation in the world, investing $10 billion a year in research and development.
You asked about the the medical tests. (eg., $2100 for each CT scan, $1000 for an EKG). In general, its true that some medical professionals may believe a test is not really necessary, but may give it anyway to satisfy a legal requirement, or to shield themselves from future lawsuits in some cases. These machines were not the norm in decades past, and the people received quality care without them before them came along. One doctor may order complex test, while another may just take a swab and look at it under the microscope and beable to diagnose the problem.
What is needed is a meeting of the minds between hospital budget directers, FDA officials, and experienced doctors and attorneys to come up with Tort reform in order to sensibly limit liability and reduce the structure of medical costs in the USA.
jinwa
You referenced my sentence:
“Chapter 11 would lead to severe prolonged recession in the U.S., it is not the answer. Critics and the pundits are wrong.”
You asked:
Thanks for your opinion - care to give any substantive reasons to defend your statement? If not then your opinion is worthless. Many large companies and industries have found new life after Chapter 11. Often it is a long and painful process but the company continues to move forward, often stronger in the end.
My response:
Even in a perfect world where people would continue to purchase vehicles being confident of the warrenty from a company in Chapter 11, there would be slowing down of the supply chain which would most likely pro-long the US recession.
According to Chamber of Commerce recent numbers the American auto companies support some 3 to 5 million jobs that may be at risk from a pro-longed recession.
We are hearing talk that it may take 3 years for US to recover from the economic slump.
I submit that the recession would end fairly soon if Congress shores up the American auto companies. American jobs help pay the bills and boost confidence of investors. There’s plenty of money out there sitting on the fence.
The UAW has already done a fair job of giving concessions, investors have been generally pleased. However, an out of court settlement that gave further concessions would be fine as long as it didn’t interfere with the companies receiving a credit line soon.
The auto companies have a great product plan going forward and its likely to generate sales. So be confident of an economic recovery.
Chapter 11 is probably not the best way since it would probably complicate the sales situation and slow the supply chain and result in incidental lay-offs. A high media focus of this type would also delay an economic recovery and ultimately cost even more that it might save.
A swift action by Congress to aid the industry with a credit line would restore confidence, and probably boost sales, and help the economy to recover much more quick - within six months to a year perhaps.
I strongly support credit for the auto companies. I’m not opposed to further concessions from a type of out of court settlement theme proposed by some, as long as it is relatively quick. Chrysler may need some concessions. I just don’t feel its necessary unless the auto companies seek it, since the auto companies aleady negotiated. Any delay just delays the US economic recovery.
jinwa
Unfortunately I do not see GM, Ford, or that other company being able to become competitive with their foreign competition unless they have a radical restructuring of their legacy contracts and current labor contracts. Chapter 11 seems to be the best way to get those burdens straighten out and in line with the real market. Giving GM money is just going to allow them to maintain the same bad contracts that got them into this desperate situation. I don’t want to see GM die - I have three GM vehicles and have owned many more over the years. I have been thinking about buying another but don’t want to pay GM twice - once in a taxpayer bailout and then by rewarding them and buying a car. Frankly if GM gets the bailout I will likely consider a foreign make instead - because I absolutely do not agree with government bailouts of private companies.
If GM stopped production on most of these duplicate products (Acadia/Enclave/Traverse/Outlook) discount the current inventory, retain the remaining production parts for future repairs/replacement. Maybe extend the warranty for those discontinued models to entice buyers. Considering they are all built on the same frame they share the same mechanical parts.
Do whatever it takes to slap the UAW into reality. Otherwise the UAW will not have a domestic auto industry to manipulate.
Sure it will be painful for GM and the US, but we will overcome this economic challenge. We can do the right thing now and let those who created this mess (GM, UAW, Retirees) to take responsibility. Or we can add more burden to future generations in US debt. That will weaken out financial standing in the world even more that it is right now. China is rising, Russia is strengthening again, Europe has finally figured out how to work together, the middle east continually buys up assets around the globe. All the while the US keeps printing money, borrowing from our enemies. I see that as a far worse outcome than letting GM, Ford, and that other company file Chapter 11 and figure out a better business model.
Edwin
jinwa,
Well since its a loan and not a bail out, there’s no need for you to worry.
They do have new contracts that are to go into effect.
The 9/11 attacks sent benefit funds out of balance - if the funds were restored, there would be no burden on the companies.
The American auto companies generate a high level of economic activity and tax revenue, every taxpayer should support the loans.
The American auto industry pays America’s bills.
The Congress gives hundreds of billions of dollars in US tax money to the World Bank, some of which is not even repaid. Where are the critics on that score.
American manufacturing is an integral part of the the national and econonic security.
As far the UAW, these workers live in middle class neighborhoods, not mansions. The media and Hollywood can’t have it both ways, showing auto workers in middle class settings in movies and then claiming they make as much as doctors. Don’t believe all the phony propaganda numbers you hear on the news.
And those million or so retirees spend money and pay taxes too. It makes no sense whatsoever to politicize the jobs and retirement issues.
The foreign competition mainly gains share when the US is in recession. Recession is the adversary, then not the other stuff.
And the American auto companies can lead the US out of recession much faster with these loans than without.