Shooting Down More Myths
As the debate continues in Washington (and online) about whether to support the domestic auto industry with bridge loans, we’re consistently amazed at the extent to which people cling to myths about the “Detroit” industry. The Detroit Free Press yesterday did an excellent job of shooting down some of the most pervasive myths — about demand for US vehicles, quality, fuel efficiency and more — and we thought you should see it. We thought that facts might be an interesting addition to the discussion.” - Christopher Barger, Director Global Communications Technology, General Motors
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Myth No. 5: “The domestic companies’ lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.”
Yes, but the transplanted auto industries in the U.S didn’t “bet the farm” on SUVs and trucks like the Big Three did and ride the SUV horse into the ground, and Honda stuck to core business all along.
Toyota, Nissan, Mercedes, and BMW rather foolishly (in my opinion) spent money jumping into the SUV market trying to take advantage of the foibles of the American consumer, but they had the money to do it with, and never did abandon what they did best.
Here’s a question I’d like the Detroit Free Press to explore and answer: GM and Ford make great small cars and trucks overseas. Why is it so hard for them to translate that experience to North America?
Is this a myth or truth? Big Three CEOs Flew Private Jets to Plead for Public Funds
Isn’t it just common sense that if you are flying to Washington to plead for $25 billion of the taxpayer’s money that all three CEOs would fly coach from DTW to DCA or IAD? (Hopefully all on the same flight.)
I just took a quick peek at Expedia and found more than 40 flights available from DTW to DCA each day ~ some as low as $126. How much did it cost to fly GM’s private jet to Washington? You had better show you can take better care of our money than that.
Mr. Barger,
While there have been overstatements on both sides of this argument, GM’s approach has been overwhelmingly disappointing. Like an aggressive panhandler you keep telling us we had better help you or else. The overt condescension in the last line of your post is just the latest example.
Don’t forget whose money you’re begging for.
I actually heard the journalist who wrote that piece on NPR this morning. To be honest, I agree to some extent with most of the points. But its also important to understand WHY these points haven’t played out in GM or Ford’s favor and why consumer perceptions are as they are.
Myth1: ” Nobody buys their vehicles”
The answer was that yes- lots of people buy their vehicles. But its important to see whom is buying them. I’ve lives in several major metropolitan areas on both coasts. Of these cities, the majority of the inhabitants there drove imports- typically Japanese and European cars, or in many cases, cars that look ” smart” or “Chic”. It doesn’t matter that in some cases such as VW, the quality is actually bad, people in these cities seem to place status with their cars as ways in which to make them appear smart , sophisticated, or rich. These cities also tend to be national trendsetters and are also the seats of major publication and media outlets, whom employ the journalists that likely drive import brand cars and trucks, hence have no interest in being up to date with whats going on in Detroit.
That clashes dramatically with where I grew up in rural Tennessee. The story was totally different there. Domestic cars and trucks ruled the roost. Not only was owning a Ford/Chevy/Dodge something that was handed down from Father to Son ( keeping tradition is VERY important with these people) but it was also seen as a patriotic thing to do. People in my neck of the woods seem to have not gotten over the fact that there are American cars and these “newer” imports. Whats more, the infatuation with monstrous SUVs and giant trucks was high there. I haven’t visited in several years, but last time I was home, I blown away at the sheer volume of massive trucks and SUvs, the majority being Fords and Chevys. I’m almost certain that these folks found themselves in a pickle when gas prices shot up through the roof and hence were unable to buy a replacement- which might also explain another reason why sales fell dramatically: Tons of people with huge SUvs who couldn’t sell them nor afford something smaller.
The problem is that while Domestic cars and trucks seem popular with middle of the country folks, the image this creates is unappealing to those who live in large cities, who automatically see US made cars and trucks as products that good ole’ boys drive. This goes back to my previous point of people in large cities wanting to appear ” smart”. I know that sounds ridiculous, but I’ve seen it myself. So the problem here is similar to the political situation in the US: A cultural divide.
2: “They Build unreliable junk”
Sure- I am well aware that GM and Ford have made large strides. The problem is that we the public have been told that there have been improvements for decades. I recall when the Taurus came out. It was revolutionary. It used breaking technology, design, and engineering. The car could be worked on in some cases without tools. The ergonomics and interior was extremely modern. Ford told the public that this was a high-quality car for the modern American consumer. But in reality, the car was junk. The engine blew head gaskets and the transmission was prone to leaking since the case was made out of cast iron and aluminum, thus there was a problem with thermal contraction. We were also told that the last generation of the Chevy Malibu was the car that: “You knew America could build”. Once more, the car looked promising, yet also wound up being total garbage. This has happened over and over again. Each and every time that occurs, another generation gets turned off.
So if you’re going to convince the public that your cars and trucks are as reliable, or more reliable than say- Honda and Toyota, the proof will have to come with long-term results and cars and trucks that deliver the reliability without a fuss.
3:”They build gas guzzlers”
I don’t agree with this at all. I know for fact that I’ve rented numerous GM cars that all got over 30MPG.
4: “GM, Ford and Chrysler are idiots for investing in pickups and SUVs.”
No, they weren’t. Everyone else was building them, as the article mentioned. The problem is that GM and Ford ignored their medium and small car lineup while Honda and Toyota kept theirs updated and fresh. Right up to the early 2000’s, some of GM’s small cars were the likes of the late Cavalier, the old generation of Buicks, and the large, fluffy Pontiacs. These cars were almost jokes. But it was OK at the time because large trucks and SUVs made up for it. The cars that you have now are as good or better than the competition, but people were turned off by your cars for so long that they likely assume that you have nothing to offer.
5: “They don’t build hybrids”
Technically, yes, you do build hybrids, but these are nowhere close to being on par with what Toyota and Honda offers. They are not what I’d call a true dedicated hybrid. I have a Prius. It gets around 52MPG freeway. The Malibu hybrid gets what- 34MPG? Big deal. So until something dramatic like the Volt comes out, these hybrids will likely continue to be ignored.
To me, the biggest problem is point number 1. The perceptions people have of GM, Ford, and Chrysler are there for a reason. It would be in your best interest to be as honest with yourselves as possible and work on ways in which to win back those consumers who have abandoned you.
GM has improved, there is no doubt about it.
Correct me if I’m wrong but JD powers is about initial quality for the first 90 day of ownership.
Look at the Vehicle Dependability Study : http://www.latimes.com/classified/automotive/news/la-fi-autos8-2008aug08,0,7441416.story
Remember, it took a long time for GM to affect people’s perceptions negatively and it will take a long time to affect it positively.
Don’t be amazed. You cannot download information into people’s brains like you do on a computer. People are emotional beings first and foremost and GM aggravated a lot of them. Stats go a long way but they don’t make the same connection as a good experience with a GM cars. Problem is, customers that are mad at GM won’t buy a GM car for the next decades to experience the new goodness. Advertising, PR, Communication are all nice but GM was also advertising how great the Cadillac Cimmaron was. Once you say something and don’t deliver, people conclude you lie and don’t listen to you again. This is what is happening. You tell us that you are great now, guess what you have been telling us that even when you were making crappier cars. You lost your customers’ trust!!!! You lied and now expect people to believe you overnight!!
GM has a lot of trust to gain back and by being “consistently amazed” tells me you don’t understand people at all and are still in your ivory tower. All GM execs should go out and talk to customers who defected to learn how they have been treated in the past. Listen to people’s frustrations, understand them. You think that having a blog means that you connect with people, yes you do and you have a lot of guts for doing that considering the flack you are receiving from people like me, but there is no substitute to a face to face conversation over a coffee. You would learn a lot more.
No more ivory tower!!! Forget your MBA, or your degree in English writing and talk to people one-on-one! It is as simple as that.
“Only a fool does the same mistake twice and expects different outcomes”
http://www.nytimes.com/2008/11/18/business/economy/18sorkin.html
“Yes, but the transplanted auto industries in the U.S didn’t “bet the farm” on SUVs and trucks like the Big Three did and ride the SUV horse into the ground, and Honda stuck to core business all along.”
Would that horse include the Chevrolet Malibu, Saturn Aura, Pontiac G6, Pontiac G5, Cobalt, Ford Fusion, and Mercury Milan? I guess those must be SUV’s too.
http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
The CEOs of the big three automakers flew to the nation’s capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.
The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.
All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.
“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee.
While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company’s dire financial straits.
“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”
Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.
After the hearing, Wagoner declined to answer questions about his travel.
Ford CEO Mulally’s corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.
i would have thought that he would have driven down to washington in a GM hybrid. http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
GM,
no more money until you get the fuel-cell and electric cars on the market
ask the oil companies for help- they profit from your gas guzzlers!
As a U. S. taxpayer — my message to Chrysler, Ford, and GM is the same. In the simplest terms – you three are in trouble because you don’t sell cars. If you do some soul searching and do the following (or close variations of the following) you might be able to turn your companies around and once again become innovative world class manufacturers.
• Examine the pay and benefits packages to your upper level management. If you operate like the crooks which caused the Wall Street bailout you have plenty of savings to be had for your balance sheets.
• Unions — Examine the pay and benefits packages to your upper level management. This along with bringing union worker pay into a reasonable realm will help provide savings to run a successful company.
• Build fuel efficient, low emission, quality cars, at a good price. If you do that — people like me would buy American instead of foreign cars. Don’t kid yourselves. Dollar for dollar you produce an inferior product compared to the foreign manufacturers.
Filing for Chapter 11 bankruptcy along with greatly curtailing the pay and benefits for your highly compensated people might enable you to turn things around. America’s economy would be vastly better off with a vibrant auto industry. Do you have the will to provide one?
Having watched enough of the congressional hearings, I’m convinced the bridge loans won’t happen. Whether this is now a partisan issue or because of legitimate concerns, it doesn’t matter anymore. So what’s the next step. Let’s suppose it’s bankruptcy. Here’s my suggestion for tackling the issues to “change the business” as the congressional leaders want.
1. Suspend health care benefits for all retirees and current employees. This is a massive savings and if there is anything the government needs to change THEIR business model, it is on health care. The result of this will be a serious national health care dialogue, massive cost savings to the old economy companies, and a realization of how much the auto industry really takes care of America. With this, the VEBA situation solves itself.
2. Cancel all dealer franchise relationships and restructure the car sales business model for the 21st century. Why can’t I buy a car off the internet and have it delivered to my house without being forced to go to a dealer? I did all the research on the web anyway. Or why can’t I buy the car at Costco or Sears or Walmart? The result of this will be a cost savings to the consumer, a more efficient and fast process, and a signal to all the states that auto franchising is a significant part of their economy.
3. Cancel all union contracts and implement the lower wage plan already negotiated. Better this than moving more work to China.
4. Establish a moritorium on automotive manufacturing capacity – prohibit any new construction by anyone (foreign or domestic) on new automotive assembly plants, since car manufacturers can’t help themselves with overcapacity, then set a national policy. That’s another business model change. Anyone wants to open a new plant, they have to buy existing capacity from closed plants. Other industries like airlines and such have finite capacity and managing to it works.
Just a few ideas for the next step.
Ben,
The Saturn lineup features a car direclty from Europe called the Astra.
But nobody’s buying them even though they got good reviews from the magazines.
When (if) the credit crisis ends, and the UAW healthcare and pensions come off the books, GM can then build the next generation here at Lordstown, charge less, and offer a sedan model.
Ford is bringing over it’s Euro lineup starting a year from now.
Problem solved.
I love my GM car but am offended that I get e-mails asking me to lobby for a “bridge loan” on behalf of GM and other auto makers.
For years GM and other American auto makers have spent millions lobbying Washington not to lower mileage standards or create incentives for alternative vehicles. Now they have thoroughly missed the boat on the implementation of key innovations and they are turning to us for help. If the banks consider bridge loans for the auto industry too risky, we as tax payers should too.
The ones with the worst business strategy going out of business is called “capitalism” and we should stick to that concept in good and in bad times.
By the way, I just lost my job because my company is going under but since it is only a few hundred people nobody asks for loans from the government. I don’t see why the auto industry should be treated differently just because they managed to make a much bigger mess.
In addition to automakers recieving a loan from the government or any other source,
the Congress should incentivize CONSUMPTION of fuel-efficient vehicles by
offering a $2,500 down payment assistance for every DOMESTIC car sold that offers
30 mpg city or more, which means most 4-cylinders and hybrids in production right now.
Offer this through the calendar 2009 as a bridge for CONSUMERS till 2010!!
You hearing that Rick!! NOT ANOTHER TAX CREDIT. DOWN PAYMENT ASSISTANCE.
Excuse me,
30 mpg or more highway!
It’s not that they bet the farm on trucks, it’s the fact that due to past labor costs they were the only types of vehicles they could make money on.
Would you invest billions of dollars in a small car that you knew you would lose money on the day it hit the lot?
GM makes great trucks & SUV’s because they can make a return on investment.
In 2010 GM with their new labor agreements should be in a position to finally make money on small to mid-size cars. The Chevy Cruise will be the first one that will be top notch and a money maker for GM.
Is this a myth? Why can a U.S. car company offer a car like this in Great Britain but not in the U.S.? GM, why can Ford offer a car like this, while you can’t? British Motor Show: Ford Fiesta ECOnetic, 63.5 mpg (US)!
It seems that if both GM and Ford offered more cars like the ECOnetic in the U.S., neither of you would need a bailout.
‘Yes, but the transplanted auto industries in the U.S didn’t “bet the farm” on SUVs and trucks like the
Big Three did and ride the SUV horse into the ground, and Honda stuck to core business all along.
Toyota, Nissan, Mercedes, and BMW rather foolishly (in my opinion) spent money jumping into the SUV market trying to take advantage of the foibles of the American consumer, but they had the money to do it with, and never did abandon what they did best.
Here’s a question I’d like the Detroit Free Press to explore and answer: GM and Ford make great small cars and trucks overseas. Why is it so hard for them to translate that experience to North America?’ -Ben Dewberry
Ben,
GM, Ford and Chrysler didn’t “bet the farm” on Trucks and SUVs, as you put it. They just happened to be more highly dependent on those sales because that’s what they were asked to provide by the American public. Perhaps you don’t recall the early to mid-90’s when Ford, GM and Chrysler were roundly criticized in the American public and media because American consumer thirst for big trucks and SUVs was such that they couldn’t keep acceptable levels of stock in those vehicles in dealership lots. Perhaps you don’t recall or had experienced complaints of people who wanted to order these vehicles but were forced to wait weeks or months for them. Truck sales in the United States didn’t start a strong downward trend until mid-2007, when fuel prices hit $2.50 per gallon. Until then, Americans loved their full size, American made vehicles and showed little to no interest in smaller cars. Don’t blame a profit driven company for continuing to do what makes them a profit, and expect them to have a ‘crystal ball’ and envision a global financial and credit crisis, and a meteoric rise in fuel prices that would create the “perfect storm” that deeply damaged the large vehicle market in the United States.
In any retail market Ben, in order to exist and survive, you must provide a product consumers want. In the U.S. market that product was not the small car. All three automakers did have small car offerings, such as the Chevy Aveo. However, Americans were walking past those vehicles and going right to the big sedans, the performance cars, or the trucks. Fuel prices were relatively low, and getting credit to purchase those vehicles was a non-issue. It wasn’t that those vehicles were poor in quality, it was that the small cars were undesirable. Call it the “foibles of the American consumer” if you wish, but the fact that our foreign competitors, ALL of them, were seeking a greater piece of the full size pie up until the start of 2008 should tell you just how strong that market really has been.
And it is true that the Big Three have small vehicles that are marketed in other countries. But the North American market has unique requirements in the form of federal regulations that these vehicles may not meet, and it would be costly to modify them to meet those regulations. Those markets in India, Eastern Europe, and parts of Asia have a strong demand for those types of vehicles, and have had that type of demand for quite some time. Those vehicles are not built here in North America, but instead are built at plants in other countries for the express purpose of those vehicles being marketed and sold there. The capacity of those plants may not support the demand that addition into the North American market could have. At that point, other plants would have to be dedicated to the building of those smaller vehicles, and retooling plants and replanning production lines is not an overnight process Ben. It takes months, if not years, for things like that to happen.
Remember also, Ben, that while GM, Ford and Chrysler were selling trucks and SUVs, they were also working to develop alternative propulsion technology such as Flex Fuel (E85) vehicles, Hydrogen Fuel Cell vehicles, hybrids, plug ins and electric vehicles. These companies didn’t just start looking into these, but instead were doing early research and development while times were prosperous. Remember also that GM promised the Volt and the battery technology to drive that vehicle, before that technology even existed and before a supplier of that technology was even contracted to supply the battery packs. That doesn’t sound like “betting the farm” on trucks and SUVs to me.
I hope that this helps enlighten you and answer your question.
Is it a “myth” that the Bob Lutz, Chairman of GM North America said in early 2008 global warming caused by carbon emissions is, in his words, “a total crock of sh**” ??
Is it a “myth” that GM sued the State of California in 2006 over higher fuel economy standards?
Is it a “myth” that Beth Lowery, Vice President for Environment, Energy and Safety Policy told PBS Frontline in 2007 that she believes the Prius did not make sense from a business perspective?
Companies like Toyota, Honda, Nissan, Hyundai, BMW, Porsche and Audi have all been extremely successful because they have consistently made improvements to their products over the last 20 years, have pioneered new technologies, raised the bar for quality, design and engineering. They invest and plan ahead for the long term, allocate their earnings efficiently and are always prepared for market changes.They have maintained their Brands’ images and equity and never lost sight as to what they stand for and what their purpose in the market is. They have gained and maintained a loyal customer base and have gained the trust of the public.
Detroit is making the best cars it has in decades, but it is still making products that lag behind the competition. Even some of their better products are so blandly designed that very few have taken notice. For the most part, they were late to the market with many products and technologies. They have diluted their brand’s images and equity to the point where they’re simply redundant copies of one another. For example: Pontiac, Buick, Lincoln, Mercury have lost their way completely in the market. Pontiac supposedly stands for affordable performance, but with such products as the Torrent, Vibe, G5 and the G3, they’re all clones of other cars and have absolutely no performance capabilities. Buick was supposed stand for the ultimate in American comfort and near luxury and elegant design. With the exception of the Enclave, they were nothing more than re-bodied Chevy’s with bloated and bland styling that made even the blandest of Toyota and Honda look elegant. Even Cadillac had no direction for a while, but its revival is one of the few great decisions Detroit has made recently. Lincoln was once equal to the best of luxury from the US and Europe, and now they’re nothing more than Fords with different rear and front ends and interiors. Mercury is an absolute pointless brand that is nothing more than a Ford trim level. Chrysler group is truly the biggest disappointment of the bunch, they went from producing world class cars in the 90s to producing some of the worst cars in the industry, you can blame Mercedes-Benz or Cerberus all you want, but at the end of the day they got themselves into this mess on their own will. The only categories that Detroit still lead in are the Full Size pickup-trucks and Full Size SUVs. The Detroit Three have proven they cannot be consistent in their products, decision making, investments. They have failed to deliver on their promises. They have lost direction. They have lost their place in the market and the public is tired of them. They want results and they are fed up with the way the management has run down their most beloved brands right into the ground.
How is $25 billion going to fix a broken company? That money would go a lot further as prize money for Darpa style challenges (http://www.darpa.mil/grandchallenge/index.asp) then it would toward pulling any of the ‘big’ 3 out of the crapper. Give some university students the chance to show the world what they are capable of. And then after those students blow you away with their innovative solutions, open their research up for everyone’s use.
Shawn said: “In 2010 GM with their new labor agreements should be in a position to finally make money on small to mid-size cars. The Chevy Cruise will be the first one that will be top notch and a money maker for GM.”
Shawn,
If GM needs new labor agreements to be profitable, why doesn’t the UAW make the necessary concession to GM and allow the new labor agreements to go into effect IMMEDIATELY? Then GM could be profitable immediately. Wouldn’t that be a “win-win-win?” Good for the UAW and GM ~ plus good for American taxpayers?
Michael Morelli said: “But the North American market has unique requirements in the form of federal regulations that these vehicles may not meet, and it would be costly to modify them to meet those regulations.”
Michael,
Perhaps what Congress should do instead of giving GM a bailout is synchronize those “unique” North American requirements with the rest of the world ~ particularly Europe. How can it be that a car that is safe on European roads is not safe on American roads unless it undergoes a completely new certification and complies with different specs?
It only makes sense that any car that can go down the Autobahn at 160 kph (100 mph) safely should be safe on American roads.
Our “unique” North American safety (NHSTA) requirements are largely a result of the Big Three and UAW lobbying for them to make it more difficult for foreign carmakers to bring their products to the U.S. Now those overly bureaucratic regulations are coming back to bite the Big Three and UAW.
Let’s get Congress to forget about the bailout and bring some sense to the regulations that our carmakers must endure. Why don’t they push for homologation of the NHSTA and Economic Commission of Europe (ECE) automotive standards? Anything that passes ECE standards should be acceptable to the NHSTA ~ and vice-versa.
Phil said: “The Saturn lineup features a car directly from Europe called the Astra.
But nobody’s buying them even though they got good reviews from the magazines.”
Phil,
That’s because GM calls it a Saturn instead of an Opel. They should instead sell it here as an Opel and take advantage of it being a Euro-car with “cutting edge, sophisticated German-engineering.”
I am a dealer employee for the last 22 years. I work for Chevy,I ownd Chevy’s,I only drive GM’s……As with the corporate end of GM,the independently owned dealers are hurting……badly….We were selling 125 cars/truck per month until the gas went up,then this happened.Now we are lucky if we do 2o-30. I am worried about my job.I started with GM at 18 and this is my career.It looks like at 40, I will have to learn a new trade….problem is in case no one realizes,there are NO jobs anymore. I dont want to lose my job.
I dont want GM to die out either…..but if you file Chapter 11,I can bet that most every GM dealer are going to fold one by one.Then what have you got? I hope the Congress realizes this,but somehow I dont think they do……..For the people….yeah right……
I also think that you need to do major restructuring and take some huge pay cuts along the lines. I still believe in you guys but you need to change things. I hope we are all still in business after the new year…..but I have a bad feeling I am going to be unemployed for the first time since the age of 16.
One point that I haven’t seen anybody make is that GM, Ford and Chrysler all pay taxes at many levels to the US government, too – over the years, this has added up to a staggering amount. So, it’s not as though they haven’t already made a substantial contribution to the government funds that they’re asking be used as bridge financing until the economy recovers. Taken from this perspective, their request seems not at all unreasonable.
Charles – Bob Lutz did say it was a crock of s**t, then also said his views do not matter, and that his goal is to take the automobile out of the enviro debate by having the smallest impact on the environment. That is why Bob is behind the Volt, which the New York Times said this week could be EPA rated at 100 mpg. And many many people stated that the Prius was a money-loser from the get go, and the funding for the project came from Toyota’s marketing budget, not product development. Yes, GM should have been working on a 2-mode hybrid. But how many companies design a product with the intention of losing money on it?
GM and Rick Wagoner are financially irresponsible and I hope you go under. I’d prefer to walk than bailout a spoiled CEO who can justify taking a ridiculous bonus and private jets while his employees get laid off and is company fails. Hello. If you make bad decisions, you might have to live with them. Maybe you should put your bonus back into the company rather asking us to bail you out. Shame.
Okay, it’s time to destroy one more myth here–that American consumers “demanded” large SUVs. That’s not quite accurate, and I’m tired of hearing how GM was just meeting market demand for these dinosaurs. It was the other way around. GM, Ford, and Chrysler figured out they could make much more money if they convinced the American public it wanted SUVs and not the small cars they were buying from Toyota, Honda, Nissan, Mazda, et alia. It was all about savvy marketing. Let people think they were not going to be safe in anything less than a Chevy Suburban; that they were somehow being bad to their families if they didn’t buy a Blazer; that the only status symbol worth having was an Escalade.
Marketing made the SUVs, not public tastes. But when gas hit $4, suddenly all that marketing went right out the window. The true taste of the American public prevailed and no one wanted to buy an SUV anymore. Quel surpise! The sales drop is the loss of SUVs. People are still buying cars even though credit is tighter. GM, in its less than infinite wisdom, never tried to figure out how to actually make money on cars like it did on trucks.
I’m not going to weigh in on whether a bailout is warranted. But I’m just so tired of hearing that the American public demanded SUVs. We didn’t. It was just good marketing of a lousy product. And as I learned in Advertising 101, eventually nothing kills a bad product as effectively as good advertising.
from ABC news..
[GM Chief Exec] Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.
After the hearing, Wagoner declined to answer questions about his travel.
NO BAILOUT!!!!!!!!!!!!!! YOU GUYS STILL DON’T GET IT!!!!!!!!!!
GM, Ford, and Chrysler invest $10 billion a year in research and development. They are the technology leaders. The world automotive industry knows it, but some uniformed folks in America and their politicians don’t. Utterly amazing.
One has to admire the big three auto CEO’s for their patience with Washington.
GM, Ford, and Chrysler could move their headquarters to Canada or the UK or Germany or maybe Australia. Perhaps those government would be more pro-business and appreciative? That way the U.S Congress could start a plan of its own to transition to a third world county trying to find help for its jobless.
Amazing that the Republican party which just got beat by a large margin in two major elections still has no sense of the 2.8 million manufacturing jobs that were lost since 2001.
Other governments around the world are giving a credit line to their auto industry to weather the financial crisis.
Patriots, have your passports in order.
The debate continues in Washington? Really? To me it looks like the debate is over. You lost.
I think it’s disgusting that your CEO took a private jet on his trip to DC to be for taxpayer money. Disgusting.
Enjoy bankruptcy guys.
Dear GM,
I have been loyal to you until I decided to buy a foreign car this year. I just can’t figure you out? Is it the Unions? It appears that the people making the cars are overpaid, it probably doesn’t take a college degree, they had great health insurance, and other benefits, etc.. Is there an age requirement? Could you hire part time teenagers they don’t have to necessarily get health insurance if they are under their parents? You might be able to offer college incentive packages to teens who make good grades and work at your plant for 4 years? Additionally, they don’t need to get paid as much a lot of teens are happy to just have a job, but I don’t know about the new teens today? Can you hire contractors and when going gets tough be like the government and cut contractors to conserve? Robots make a good portion of the car, so why can’t robots make more of the car? I don’t know, I don’t work there so I can’t understand? It just appears your company got too big, maybe too bureaucratic maybe people just stopped innovating and taking their job for grated? You do offer wonderful perks in the car such as Onstar, but I guess the car isn’t well made, so there are just maintenance problems people don’t want to deal with. How about this, make quality, with the perks, just not quantity and don’t be afraid to downsize, if you make a great quality product then you can always get a little bigger. Keep it simple stupid as they say? I can’t wait to buy a great GM from you again one day.
Good luck!
The language used here and in the propaganda press is really a joke
Begging, Pleading, Bailout ?
Hey do all you do the same when you go for a loan, do you know the difference ?
It is clear those on one side of the political isle are getting even for how the UAW membership voted for who won the whitehouse by stating it is fine to bailout even non American banks but the heck with US auto nameplates.
As how GM flew to these one sided meetings, are some of you that ill informed ?
How come Obama who spent over $100,000,000 of donated money had a full sized private jet and GM who has owned one for decades should just park it and park more for commercial flights?
It’s clear most of you just take the buzz the press feeds you without thinking.
As to GM, want Americans to feel your part of our family ?
How about selling off the global growth and get rid of all the hugh costs in China, Russia, Europe, Mexico, Canada, etc and become a real domestic nameplate using American workers and parts ?
Why should we really care about a nameplate that is is no different then non American car makers that sell products in our country not caring one bit about being 100% American bred ?
GM quit allowing non American nameplates to falsely market themselves as an American company, this is a war and one that can bring down this country when in fact the quality of your products are better then even you claim.
Get mad, get into the trenches and get proud to be an American which you have lost due to your worldwide greed to sell outside the USA.
When the press via blogs even has put Toyota nameplates on images of the Corvette makes me want to puke.
Why is it OK with zero input from the taxpayers billions of dollars are just being given out to banks and your so upset GM or Ford wants a low interest loan and when it comes to some of the blame, it is you for all the non American products you buy and use the quality issue which we know is bogus.
As I owning GM cars since mid 1960’s and only once requiring warranty work and owning some as long as 10 years I know the word quality is only a red herring and your excuse as why you allowed most American jobs to be overseas where in fact most of the ill quality parts in American cars come from.
GM had to go to Washington to tell them “It’s the economy stupid!”
Then Washington had to host the Detroit executives to say to their face “It’s the brand stupid!”
Yeah, can you guys just – uhh – switch?
As a blogger I have to tell myself “It’s the truth stupid!” Okay I will tell the truth, and I will be the first to say I was wrong, or maybe I stretched the truth a little, I will explain.
When I said cars like the Malibu, Pontiac G6, and Aura were just the greatest designs or if I said they were above and beyond anything else out there, and perhaps they were, I knew that they didn’t spark the emotion, nor connect to the heritage, soul, and passion that once defined Detroit. Even if they were good or on par, the bottom line is, it was not enough. It was on par with the imports but we needed to be superior.
Bottom line is, we are using design as a defense. We as American automakers have ALWAYS used design as an offense. Defense is redesigning cars every three years to keep them fresh.
Offense? Well let’s break it down.
Offense = Offend sence
Or offend what makes sence, and that is what we needed. We needed a Solstice 4 door not a G6. We needed Malibu to reach for the ‘57 Chevy not the ‘07 Camry.
We should spark the imagination of Americans by making our mainstream cars as good as our show cars and trophy cars like Solstice, Holden FJ Efigy, and the Camaro. Our designs are good, but good is not good enough. Not today.
If the conversation is about Detroit’s failure in Washington and a Malibu shows up in the middle of conversation, will it change the conversation? NO.
If the conversation is about Detroit’s failure in Washington and a Holden FJ Efigy shows up in the middle of conversation, will it chance the conversation? ABSOLUTELY.
If the conversation is about Detroit’s failure in Washington and the Beat, Trax, and Groove show up in the middle of conversation, will it change the conversation? ABSOLUTELY.
If our designs are not strong enough to change the conversation, or if design is not the center of conversation, then the conversation will invariably be about Detroit’s failure to deliver on design, and with that we are losing. We are losing the race. Design leads to everything else whether it’s profits, capital investments, technology for improved fuel economy, or capital to invest in new breakthrough segments like hybrids or minicars.
Well the fact is our designers delivered, and continue to deliver but our leaders didn’t deliver those designs to the showrooms where they belong. So there is failure on all of our parts, I will take part of the blame. If I said heritage or if I said build it now, at once, then I should mean what I say and accept no compromise or anything less. But I got into this mindset today of good enough, it’s safe, it’s a step in the right direction when we needed to break the mold, be unsafe, and take risk. Our leaders say they believe in design but fear stops great designs like the Holden FJ Efijy, Beat, Trax, and Groove from entering the showrooms where they belong.
Unions failed to deliver enough concessions, automakers failed to deliver enough great designs and product segment breakthroughs like the Beat, Trax, and Groove. Our politicians failed to help Detroit when they needed it most, and bloggers, if we told the truth, we failed to come up with the right answers. (And don’t even say anything because I read you blogs and…)
In the end the truth be told. The answer is always, ALWAYS out there and not everyone has the right answer. But bloggs are always right in and of themselves if we tell the truth even if we give the wrong answers. In other words bloggs are good to observe how consumers feel. The perscription to their ailments will take no less than the thought and care of a physician and obviously we all are not physicians. But as patience we always know exactly what ails us, and I have the cure, yes I got the perscription.
And this is the truth after all is said and the last blogger tears GM a new one. The truth is this…
GM failed to win the hearts and minds of ordinary Americans. They forgot how. They win hearts by design, they win minds by having great brands. In the end if they fail we all will agree and continue to say, “They delivered neither.”
If I had to identify GM’s greatest sickness I would say it’s fear. Fear stops GM from building great designs that they play with with clay and at autoshows. Fear also at giving brand heads power to achieve individual brand goals which lead to continuity of product and strong identity and heritage. Well there is a lot to fear now, but fear is exactly what should be inspiring us to achieve our best.
In the end GM as far as design is not at its best and I think there we all can agree from the top boardroom, to the hill in Washington DC, and all the way down to the passing glance from the casual observer walking on the street. GM is not at it’s best today, and today is exactly the time when we need you, excuse me WE need to be at OUR best. And everytime I strike a key I try to remind us all of this fact, we need to have our best designs, our greatest brands NOW, not tomorrow, TODAY.
Fear made us fail to deliver and now we should really be scared.
Detroit listen to me, this is exactly the feeling that you should have had when you approved the FJ Efijy or Beat for production. But that safe design that you approved, the only thing that was safe was your competitors.
I personally am offended by the lack of action on the part of Washington today. Granted Mr Wagoner, Nardelli, and Mullaly SHOULD have flown commercial. But that really is a moot point. The sheer fact that they ALL were there at the same table should speak enough to the dire straights that our beloved domestic auto industry is in.
While the bridge loans may not be the BEST solution, it trully is the ONLY solution. Bankruptcy is not an option with automakers, they don’t fare well and stand a slim chance of coming out of it.
While there is ALOT to be done, there is also ALOT that has been done. Remember Rome wasn’t built in a day.
The decision is in and no vote means no bailout money. Their biggest mistake was for each CEO to arrive on their private jets to beg for money for their respective companies. Ironic and arrogant. “They just don’t get it” was the perfect way to sum up the lavish and wasteful ways in which Wagoner has run GM – and he of course was not willing to cut his multi-million dollar salary either. What would they think at the country club?
They have absolutely no sense of what is going on for the average American. And their arrogance has now cost them any chance of a loan. Good riddance – you are now reaping that which you have sown.
Hey RICK!!!
Hey BOB!!!
“http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
Big Three CEOs Flew Private Jets to Plead for Public Funds
Auto Industry Close to Bankruptcy But They Get Pricey Perk”
This is typical Dee-troit arrogance, and really, really stupid PR.
Idiocy like this may well cost you that bailout you need. And if you don’t understand WHY, maybe you shouldn’t get it.
I understand it’s peanuts in the big picture, but-
Maybe you need to explore the concept of “jet-pooling” with Ford and Chrysler?
Thoughts on Senate Hearings today from Canadian
1) HealthCare Costs
USA manufacturers work in the only country in the world that does not have a national health program. These costs make auto companies uncompetitive in manufacturing costs.
Auto companies are good corporations by honoring these obligations
2) Made in USA only policy
USA, Canada & Mexico have a Free Trade Agreement
This makes products move country to country without taxation
Each country benefits from more trade and lower prices by reduced taxation
Example: Each car made in Canada must be matched with one from USA
These agreements were hard fought to be fair to each country
Foreign manufactured cars pay dues to sell in USA
3) Auto Companies failed to build Energy Efficient Products
USA Auto manufactures sold products in a market with a national policy of low taxation
on gasoline leading to lowest Fuel costs in the world. There was no reason to drive
a fuel efficient car for 15 years. 1960s Muscle Cars were worshiped.
This is not the manufacturers fault they made product to match market.
4) Oh,Just Let the Auto Companies Fail
But what about national security with no domestic companies
What if the pieces be bought by foreign investors ?
Will the presidential limo become a Lexus in 10 years ?
Will US troops travel in Mercedes Buses ?
5) Travel by Jet
Don’t most Senators travel every weekend by air with little thought
on the carbon footprint of their actions ?
Dan Dewberry,
Its even simpler then that… The foreign companies jumped into a market they say room for improvement in. They made SUVs better and nicer and people bought them. Thats what the German and Japanese do. Sure GM may have invented the SUV but their competition refined it to the point that it was much better then GM could ever have done.
You are right… a friend of mine was talking to me today and commented that you can’t find a small US car thats not a super cheap piece of junk. You can’t find a small car with the options of a high end luxury model… Where are the $35K Cobalt sized cars from GM?? Europe probably.
Edvard,
I think styling has a lot to do with what people buy and why… so do cool features and things that are new and novel.. as does warranty, reliability, no hassles and mileage and price… all these things GM is OK at… they aren’t horrible but aren’t great.. in contrast many of the European and Japanese brands are much better at these.
I agree the area I grew up there were a lot of larger cars and even in the south that is the case. But people still are buying foreign. The other issue with people not buying is that trucks cost twice as much as cars. On the up side they are usually built to last longer.
It is exactly this problem that haunts GM. Half their buyers like their current lineup (country folk) the rest of the people who aren’t buying like the new imports. GM needs to cater to both in the right proportion.
Pierre Roberge,
GM has to win people over and that takes time and it takes products that will make people look twice.. Most of all it takes products that appeal to the import crowd who are vocal and will speak of GM’s great new cars. Cars like the Opel Insiginia are great and shoudl appeal to those people. GM has to realize that half its customer base doesn’t want anything do do with GM and should market a brand or two of cars at those people that are totaly unlike anything GM makes in the US.
I couldn’t agree more. GM execs and designers need to go take their competition for rides. GM needs to get more people into the mix and actually read and respond to these blogs. They need to do what you see on TV for political elections… Get a group of sample people and sit down with them and talk to them ask them what they like about their cars and what they want to see in GM.. Then they need leadership that can see beyond these things and look toward the future to bring options and features that no one else has thought of yet. Then they need to make these standard on ALL their cars… not like now with Chevy not offering many models with Navigation or bluetooth or 40 gig MP3 players like Caddy has… GM needs to bring these options to their other cars EVEN IF no one buys many of them. The options speak numbers to GM making a great car.
I and I’m sure many others on this blog site would love to help GM and recommend products. GM isn’t’ getting that the small things win customers.. the little niceties that other cars have… like Acura’s mirrors that look downward to the curb when you put the car in reverse. Etc…
David,
I really don’t think the Malibu, Aura, G6, G5, Cobalt etc.. are competition for Camary, Accord etc… They just are missing a certain something thats hard to put my finger on. But I think styling, quality and design are the big ones… Sure GM runs by the numbers fairly well but they just don’t do much for me.
As my friend put it “I bought a Camry in white because it was the safe buy… it’ll last long, and retain its resale value”
Do GM customers say that?
Phil,
The Saturn Astra in my opinion suffers from a plain interior. Compare the european Opel Astra to the Saturn Astra and you’ll see what I mean
Klaus Hummler,
GM didn’t even know there was a boat… they totally missed future technologies and “IT”.
Micheal Morelli,
Smaller GM vehicles are still of poor quality. And compared to competition and even GM’s own SUVs ill equipped… what ever happened to cars like the Cadillac BLS…
So why not simply design these models for Europe to meet the US requirements. That way your engineering costs are covered from all the sales. GM is foolish for not doing this.
So why wouldn’t GM plan for other plants to produce European cars? Like Opel etc..
Each of the transplants have the SUPPORT of their governments when economic times are tough. The US Government has been trying to “downsize” GM ever since the time GM had over 50% of the US car market. They slowly kill the golden goose then during her last dying breath tell her she didn’t try hard enough. They have created the “perception”, because perception IS NOT reality.
I would love to see every employee of the Big 3 ask for our taxes back, my 35 years of income taxes, when combined with ALL the Big 3 workers would easily cover the cash flow needed to bridge to the VEBA wage structure.
56% of the American market is STILL Domestic Manfufacturer products. Who gains from the elimination of the Domestic Manufacturing base? Alabama?
Sen. Shelby -Alabama should be recusing himself from participation on this subject as the only vehicle manufacturers in the state of Alabama are transplants- Mercedes, Honda, Hyundia and a Toyota powertrain plant.
E Chau – so let’s slam the laborers are retirees (who are on a fixed income and/or seeing their life’s retirement savings go down the drain) but not one mention of starting at the top where the decisions contributing to this crisis were/are made? CEOs with 28+ million dollar salaries, private plane perks, commuting from Seattle to Detroit, and plenty more I’m sure the general public does not know about. Who do you think is going to be buying the Big 3’s “cars of the future” when the only ones putting any money in their bank accounts are the execs? When the big wigs take a 20% or more pay cut, then it’s fair to ask those in the lower tier to take cuts as well and then maybe I’ll have more of an open mind about providing taxpayer bailouts.
Africa beats GM with first electric car
http://www.dvorak.org/blog/?p=31768
Nate,
“I really don’t think the Malibu, Aura, G6, G5, Cobalt etc.. are competition for Camary, Accord etc… They just are missing a certain something thats hard to put my finger on. But I think styling, quality and design are the big ones… Sure GM runs by the numbers fairly well but they just don’t do much for me.
As my friend put it “I bought a Camry in white because it was the safe buy… it’ll last long, and retain its resale value”
Do GM customers say that?”
That “something” is a Toyota badge or Honda badge to show off in the parking lot at Macy’s. Maybe when the economy is in the dumper because we just added 10 million Americans to the unemployment rolls we will figure out that the Toyota wasn’t really the “safe” buy.
All GM needs is for people blinded by gleaming perceptions to give them an objective consideration.
The Detroit 3 should receive bailout from the gov’t. Every worker should take a cut in pay to show faith.
If Wall Street received bailouts, the Big 3 certainly should!
“Africa beats GM with first electric car”
Pretty neat. Six-passengers, plus 400 km (250 miles) on a single charge. Let’s see, the last I heard GM said the Volt would be able to go 40 miles on a charge, as long as the driver didn’t turn on any electrical equipment such as the A/C, stereo, or headlights.
There are other industries that only sell “what the customer wants.”
Gambling.
Pornography.
Prostitution.
Illegal drugs.
As a nation, the US is addicted to oil, so the comparison is valid.
A lot of people believe that’s true, and the wretched excess demonstrated by the Big Three CEOs arriving in DC in their private jets only underscores the “Pimp Daddy” image.
It’s very late in the game for “Detroit” to act responsibly and build responsible vehicles, might actually be too late.
Maybe VW, Daimler, and Toyota can pick GM’s carcass clean in a few weeks.
‘Way to go Rick!
The b3 bailout. We all know about the plight of GM, Ford and Chrysler, and being a long-time car guy it pains me to see these historically grand companies now facing severe problems. The “big 3″ (b3; we used to actually capitalize the “b” in big, because they were Big, but those days are gone) are in a very difficult situation. I almost feel their pain – almost. Much of their commercial pain has been self-inflicted by mismanagement, short-sightedness and inflexibility. We taxpayers are now supposed to pay for their utter lack of vision? NO; unless b3 AND UAW sr. management agree to the following 3 actions: IMMEDIATELY suspend ALL forms of monetary compensation for them, except for health care – their personal sacrifice is necessary. STATE that within one week, the b3 will reduce by 50% their cash draw-down. This painful reduction will force the b3 to set some priorities that will need to be eventually made anyway. AGREE to renegotiate ALL contractual obligations, including labor (white- and blue-color), suppliers, dealers and other 3rd-parties so that costs are reduced. If and when the b3 and UAW senior management depart, each person will willingly decline to receive any golden parachute and deferred compensation money. Each sr. manager will instead provide these accrued funds to an account that will be made available to b3 workers who have been fired/laid off.
Complete missing from the Big Three hearings before the Senate and House of Representatives was the question of health care.
How can the Big Three compete fairly when the employees of Toyota, Honda, BMW, et al, receive their health care from the government while GM, Ford, and Chrysler must pay for the health care of their employees? What if Rick Wagoner had said to Congress, “Look fellows, you figure out a way to pick up the health care costs and level the playing field, and we won’t need the $25 billion.”
It amazes me that people who obviously are rooting for the demise of GM and the domestic auto industry come here and expect their opinions to be regarded. The first thing we all should do it get our facts straight before making accusations. Many of the comments here reveal a general ignorance amongst the public about the auto industry. HEre are a couple of things that need to be addressed:
1. GM doesnt sell Euro products here because those vehicles are expensive by American standards. In Europe people will pay a premium for a nice small car because they are dealing with extremely high gas prices and space constraints. Anyone who thinks that cars like the Corolla and Civic are “high end” small cars by European standards is delusional. I have been in the Cobalt and 2009 Corolla and can tell you the interiors arent that far apart. If you think the Cobalt is cheap crap then you might as well say the same about most compacts in America. By and large American hasnt endorsed the concept of a premium compact.
2. The notion that GM abandoned cars in order to make trucks is totally false. Not one person has provided any justification for this stance but it is repeated over and over again. The SUV boom took off in the mid 90s. Since the mid 90s GM has debuted the following CARS: CTS (twice), STS (twice), Corvette (twice), Aura, G8, Solstice/sky, G6, cobalt, Lacrosse, Grand Prix, Grand Am, Alero, Intrigue, Aurora, Lucerne, XLR and Ion. I’m sure I missed quite a few vehicles but that is off the top of my head. There is no proof that GM stopped making cars when gas was cheap and SUVs were profitable. It’s really not a debatle point.
3. This idea that losing the big 3 simply because the Japanese automakers have US operations is a sad joke. It doesnt matter how many camrys are built in the US when it comes to paying corporate taxes. Those taxes are paid to Japan. The government is bleeding red ink and the last thing it should be doing is abetting the demise of large US corporations in favor of Japanese corporations that happen to assemble some cars here. MAny “experts” are saying if the Big 3 go under the imports will simply fill the void and world peace will follow. That is a crock because the Japanese do not have enough capacity to replace the Big 3 in the short term. Furthermore, the loss of tax revenue related to the implosion of the domestic auto industry would blow holes in local, state and federal budgets. You don’t want 250k-1 million people to stop paying taxes within a matter of months, that is a terrible scenario for governments. Not only would those people stop paying taxes, they would start relying on the government for unemployment and other services with would cost us money.
4. This isnt a “bailout”, its a loan and loans are designed to make a profit. So many folks are talking about not spenting their tax money on GM but they fail to realize the money is already accounted for. Some want to use part of the $700B package and others want to redirect $25B that has already been appropriated for retooling plants. Either way, the money will NOT be coming back to taxpayers. Ever. People need to accept that and ask themselves if they still oppose this loan. If the industry collapses and 2 million are eventually put out of work no US taxper will get a refund check for their portion of the $25B that was never spent. It makes no sense to plow more and more money in the banks when they have done nothing with the $250B they have gotten thus far. The money should be spread around to help various industries and homeowners.
Nate,
The Astra sold in the US is virtually identical to the Euro model. Only a few cosmetic changes were made, mainly the badging. The interior is Euro spec. Sorry to disappoint you with those facts. I also would like to point out that the Malibu has beat either the Camry OR the Accord in every comparison test its been involved in thus far. I would say it definitely competes with the Camry in every way.
Without further comment from my side:
http://media.www.sjuhawknews.com/media/storage/paper763/news/2008/11/19/Opinion/Unions.Not.General.Motors.To.Blame.For.Automotive.Industrys.Struggles-3550283.shtml
“Its even simpler then that… The foreign companies jumped into a market they say room for improvement in. They made SUVs better and nicer and people bought them. Thats what the German and Japanese do. Sure GM may have invented the SUV but their competition refined it to the point that it was much better then GM could ever have done.
You are right… a friend of mine was talking to me today and commented that you can’t find a small US car thats not a super cheap piece of junk. You can’t find a small car with the options of a high end luxury model… Where are the $35K Cobalt sized cars from GM?? Europe probably.”
The only premium compacts in the US now are the Mini, 3, and C30. The top sellers are not premium and neither is the Cobalt. You will not find “premium” features except nav on Japanese compacts sold in the US unless you are talking about the Mazda 3. The Cruze will be more premium than the Cobalt according to released information. There is no appetite for a $35k compact in the US.
American brands dominate the SUV market. The imports had the crossover segment under control until the Edge and Lambdas hit the market. Now they outsell the Pilot and Highlander. When it comes to large SUVs the dominance of GM and Ford was never in question. In recent months sales of foreign SUVs have plummeted as bad or worse than their American counterparts.
You also say that European and Japanese brands are “much better” than GM offerings when it comes to mileage and value. I would love for you to provide some examples. Malibu gets 22/33 and camry gets 21/31 so your theory doesn’t hold true there. The same would apply if you compare crossovers or pickups. A quick review of prices will prove that GM entries often provide more value for your dollar. A loaded Malibu is close to $30k while a loaded Camry is over $33k.
Edward Hayes above offered a great opening line:
GM had to go to Washington to tell them “It’s the economy stupid!”
Seriously, the the Big Three build many of the world’s best vehicles. And not just GM and Ford, the Chrysler 300 is well established. The small Chrysler sedan is also turning heads.
During these hearings, the media has incredibly ignored that US vehicles made in Canada don’t have the cost differential, since the Canadian health care plan takes the burden off the manufacturers.
The US auto companies are merely seeking a credit line, they are planning to handle the costs and they’ve done so thus far since the economic downturn in the US following 9/11/01.
But the Congress should have balanced the heath care funds and pension funds 5 years ago.
Nate:
You’re posts are puzzling. Its just the reverse, objectively GM improved on what the foreign competition was doing, GM refined the cross-over beyond the foriegn competition. GM bested them all with the latest round of SUVs. Unquestionably the world’s best cross-overs right now are the Enclave, Acadia, and Outlook. As well as the Lincoln MKX and the Ford Edge. These are very popular.
Also, its pretty obvious that the Malibu is superior to the Camry or the Accord. It just shows that with the capital, American auto companies are really better at building cars. The Malibu offers better fuel efficiency. Almost no one should buy a Honda or Toyota, the responsible consumer choice is the Malibu.
Earth to Mr. Gettlefinger: What a wonderful answer to Senator Corker when asked to rank the Big Three in terms of financial viability. Why in the hell didn’t you just say “I’m am not completely privy to the exact financial situations of each but they all equally need this bridge loan to get them through this recession”. I’m sure the GM dealer network was helped by your ranking of GM as in the worst shape.
Did you ever play poker Mr. G? And Mr. Waggoner, why didn’t you just bring a laptop and a power point presentation? You droned on an on about “Structural savings” bullcrap that no one really gives a hoot about and what you iterated has already been said many times by you and your minions. Your performances were worse than a GW press conference, absolute agony. After your performance, I find it hard to believe you made it out of grad school. For crying out loud, get someone up there that can at least articulate the reasoning behind the request. Good Lord, between Waggoner and Gettlefinger, we’ll be lucky to get a nicklel from Congress.
Sheth, re your #4 of 11/20, 3:06pm: Are you spinning, too, or are you in denial?
A loan at favorable rates from the government, politically awarded, when the commercial sector won’t loan you money and your cash flow is unsupportably bad, is a “bailout.” We are talking about “bailouts.” GM is asking for a “bailout.” If GM didn’t need a “bailout,” Wagoner would not be flying to DC in his private jet to beg for “bailout” legislation, he’d be at the bond market, bank or credit union filling out the loan application and then flying off to Santa Barbara to play golf.
Ask any economist. It’s a “bailout.”
Can you please tell me why our leaders, with our future in their hands, did not go before congress with a detailed plan of cost savings and future plans? They look stupid. Now I see why everyone was calling it a bailout.
Michael,
You are incorrect.
The SUV became popular because CAFE rules resulted in the elimination of the full-size station wagon. The demand for this type of vehicle didn’t go away…the supply did. So people started buying Suburbans.
Another example of how government regulations end up having the exact opposite effect as what was intended.
Dump CAFE.
Just a thought,
It seems obvious that the perception of the auto industry from out side groups and even our own government is negative. Instead of our top officers flying on corporate Jets to Washington next time, why don’t they all drive Hybrid vehicles or Volt (prototypes) to Washington. This will show Washington, we understand and can put the product on the road that people want to buy and need. I’m tired of the perception being always negative, we have to change that in everything we do.
MArtin,
I would love to believe that showing up in hybrids would make a difference. I believe that Ford’s CEO did arrive in a hybrid but that wasnt reported by the media. The media had it in for GM from the start and there was NO objective coverage of GM’s offerings or situation. The media reports simply talked of Hummers and $71/hr UAW wages. There was no mention of the MAlibu getting better mileage than the camry, GM’s hybrids, the Volt or GM’s reduction in labor force over the years. If Wagoner showed up with a Volt the FIRST thing the biased media would have said was “Wagoner showed up in a concept car that most analysts doubt will ever be in showrooms”. It would have backfired big time. Even if he had shown up in a hybrid they would have pointed out that Toyota sells far more hybrids and all GM does is “push” Hummers and Escalades on the naive public. I didnt see one report or one comment from a politician that acknowledged that GM sells cars as well as trucks. According to the “experts” on TV GM only sells Hummers.
The Big Three CEO’s going to Washington and begging for a bailout just shows that they are no better business men than the idiots that signed the terrible union contracts that got them into this mess in the first place.
Rather than begging for our money they should be rushing to bankruptcy court to restructure while they still have some money left and get rid of these contracts that are drowning them.
Why should Congress take money from U.S. tax payers to help a company, an industry that has had it’s head in the sand for so long. They had a chance to reinvent not only their own company but the entire auto industry with the EV1 (http://en.wikipedia.org/wiki/General_Motors_EV1), but instead they decided to continue to build larger, more gas consuming vehicles at the behest of the oil industry. The auto industry should be required to stop shipping jobs overseas, to immediately be held to higher standards of developing alternative fuel vehicles for production set down by scientists aware of what technology is available.
Even if this happened I find it hard to believe that a few mistakes in mismanaging finances and anyone of us could be out on the street, mismanage billions and you get a hand out.
The CEOs of GM and all of the other U.S. auto makers should be ashamed of the money they make while cutting corners, burning jet fuel and raking in so much money while their companies fail. As a last requirement for bailout, all automakers executives should give back all of their bonuses, and salaries for the last 5 years and be required to work for a typical middle-class income. Then maybe they would understand the needs of the American people.
Because of all of these things, I haven’t driven an American-made car for years.
“Dump CAFE.”
Even better — make CAFE apply to SUVs and trucks. That might force GM to start selling the nifty Chevrolet Montana compact pickup truck they now sell only in South America up here also.
I am shocked that more car consumers don’t go into GM showrooms to look at the cars. What’s wrong with this picture?
They make good looking, quality cars that obviously an unlearned public doesn’t know about. The commercials GM puts out are excellent – and the product is excellent. Forget about patriotism, these are the best out there.
I’ve owned five new American cars. (The Fiero was one of them). I never owned a Japanese or foreign vehicle. But I have been in them, and had to rent them. There was nothing stellar about the Japanese vehicle over my American counterpart. It was just a car. (Japanese cars do not hail from the heavens).
It’s very simple. All the American consumer should do is go to their local GM dealer for the car they are looking at, and really compare. They’ll be surprised at the giant leaps forward GM has made.
When will the auto makers pull thier heads out of thier collective behinds and start building a 100% electric car like you did with the EV1. The country is screaming for it and Toyota is going to blow you guys out of the water. You guys need to be first to get it out there. Toyota is already planning it in Japan and if you guys don’t get on the stick your really going to miss the boat. Electric Cars will sell like wildfire and also help drive fuel prices even lower for the people that require gasoline vehicles.
Electric cars would meet the demands of 90% of americas daily drivers. I’ve never purchased anything but GM cars. You guys are the “SLEEPING GIANT” Now wake up and become the leader in the industry for automotive excellence you once was. 100% Electric is the futre and you can be the leader. I know you probably wont post this but I had to try. Thanx anyway
Rick Wagoner must step down and let Henderson take the rein. It’s time for a fresh start at GM. It’s time for an Obama at GM. Wagoner has the personality and temperament as a CEO, but he never had the vision, insight and determination. The acquisition of the Hummer brand from AM General in 1998 is a mistake. The Hummer or more exactly, the Humvee, is a symbol of foreign occupation. Henderson has proved himself as a visionary leader by turning Chevrolet into a global brand in markets like Europe and Asia. He negotiated the labor agreement with UAW, while Wagoner never showed up. It’s time to send a new face to Washington to prove that GM is ready for a fresh start, a CEO that will never be embarassed by tough questioning by Senators like Richard Shelby of Alabama who lured foreign automakers to his home state by giving tax breaks. And you wonder why Bob Lutz was never a CEO? Because his personality comes across to me as prickly. What you think may not important ,but what you say matters. You are the public face of GM, and whatever you say symbolizes GM. Whether GM is respected or not depends on the action by its leaders. And why do you need two Vice Presidents for GM North America? What’s Troy Clarke’s responsibility.
Although many of GM’s woes started with Roger Smith, Rick Wagoner is nevertheless held accountable. Now is the best time for Wagoner to exit gracefully. Henderson will ultimately decide how and when to shed the redundant brands. One of the best ways is to starve a brand with new products, the dealers quit and the brand dies. It’s the best strategy for Pontiac. They have started anyway by killing RWD products like the Solstice and G8. A poor man’s BMW is an oxymoron.
And if you still don’t think a change of management is needed, please read this article at http://www.nytimes.com/2008/11/18/business/economy/18car.html?fta=y&pagewanted=all. It chronicled the fall of British Leyland, a car company that went through £11 billion of inflation-adjusted British taxpayer money, or $16.5 billion, in the ’70s and ’80s before going out of business. All that is left of the company now are memories of cars like the Triumph, and a painful lesson in the limited effectiveness of bailouts. And the article concluded precisely:
“If Washington does go ahead and help Detroit, Mr. Edwardes said, it is crucial that the government overhaul the management of the Big Three. “Throwing money at them isn’t enough,” he said. “They need money and they need new management. They need both, not one or the other.””
David,
What GM needs is their own Toyota or honda badge. GM needs a new badge that can live up to what people think they get when buying a Toyota or Honda. What GM needs is the Opel badge and some careful updates to its current product line. The interiors need subtle things fixed… Mainly the plastics used look to much like plastic and sound hollow on almost every new GM I’ve been in. I don’t see that in my friend’s Honda Accord and another friend’s Toyota Camry… I tapped around on the plastic panels in both interiors… they need the leather seating and the refined feel that people think Honda’s and Toyotas have.
If GM can bring out a new badge thats modern and can market it to the toyota, Honda, VW crowd they’ll be in great shape. People need to say that about a GM. But they can’t another person I know leased an Acura and said even the Corvette he didn’t think was worth it because lease prices were to high and residual values to low. He said he liked the Acura because it came fully loaded with all kinds of goodies and was still reasonably priced. Both of these are things I think GM misses. Can Chevy, Pontiac, Saturn and Buick customers buy a fully loaded car with Nav Systems, MP3 Hard Drives and Blue tooth hands free? I’d be willing to bet no to the bluetooth and MP3 players. GM is missing the high end of the entry level segments in my opinion. All they have is Cadillac and nothing in between their other brands. They need either a smaller Caddy or to offer their high end options on their other cars.
Sheth,
As potential GM customers and people representing the people GM is losing (who don’t care about posting here) of course we post here with these things…. No one wants GM to go under… but I don’t want to see GM bailed out and go about business as they have been for the past 5 or 10 years. I don’t think any sane person does. What we do is bring GM the things that we hear and see that turn their customers away. That way instead of GM proclaiming they are the best in the world they can find out why people aren’t buying and fix the problems. Some people think GM is the best thing since sliced bread… four years ago I did. But after driving their competition and honestly liking it, I want to see GM change and fix their problems, and do what has to be done. That certainly can’t be done with half the crows saying there is nothing wrong with GM. Sales numbers should speak about what really is wrong. As good as GM is or isn’t.
GM is fighting general ignorance with the public. Their best tool is to understand this ignorance and then combat it with more then advertising and waving studies and numbers in front of people. Their best defense is a strong offense. If they figure out what their competition is doing right and can do the same and more they can build cars that people want. All of a sudden instead of people I know telling the rental car agency at the airport “Don’t give me a Buick, or anything GM” they’ll get one and drive it and like it. But that can’t happen until GM is aware of the issues and fixes them.
People aren’t logical and certainly don’t react to products logically. GM may look great by the numbers but obviously thats not enough for a lot of buyers.
GM didn’t abandon cars… it abandoned keeping up with its competition because it put less effort or less care into cars.
GM makes a lot of cars but few of them can truely compete with the competition. The ones that I can think of that can are their most recent cars…. CTS, Enclave… yeah thats about it. The Malibu and G8 are one step away from their competition. The Cobalt is about 3-4 steps from the competition… and GM has nothing on the extreme low end to compete with Toyota Yaris etc… well nothing I find attractive at least.
Does GM make decent cars from a mechanical standpoint.. probably. I have a 20 year old car that still runs (granted it just rolled 120K and the transmission is dieing… but it gets me from point A to B and costs me very little monthly).
On the other hand GM has abandoned their interiors until recently. And to some extent their styles are about 2-3 years behind their competition. So yes GM has abandoned their cars for all practical purposes because many of their previous buyers are buying the competiion. Gaining back these customers should be GM’s dedication (at least for one brand of them).
The Japanese may not have the capacity if GM goes under to fill the void… but they don’t have to ALL companies will step up. There will also be a bidding war to buy out GM facilities and equipment in the US to produce more of the competition’s cars. Companies like Toyota will either buy GM facilities or build new ones elsewhere in the country. I don’t see why people don’t GET that. Its quite simple really.
It would blow holes in budgets but what else is new… government spending has always been too much. How is a bailout any different? Whether the government pays out to GM or loses revenue to the un-employed its all the same on paper… a loss.
What foolish person thinks that a company with a 10 year reputation for making poor products who is spending a ridiculous amount of money a month is going to turn a profit and repay a loan of that size? GM would have to stop paying its share holders profit for a long time to pay it back. Its a bailout for the share holders at GM and not a loan from the taxpayers. Though I suppose the easy way to fix that is charge the GM shareholders extra tax to recollect this supposed loan.
Sheth I think you are mistaken about the US economy and the world economy. Dollars just circulate. They always go back to our government one way or another (except those we send out of the country, but eventually in the long run they will come back too). The question is merely one of how many times does the money get traded before it winds up back in the government pool via taxes.
First off I don’t want a refund check. I just want a government and US business who are responible with money. GM has had their chance… and lord knows the bloggers on this site have told GM how to fix their products…. but at what point is throwing more money after GM a losing proposition.
I’d rather see the bailout money put toward R&D of future vehicles and starting new companies without all the legacy BS that GM now has. Its a far better expenditure of money AND those employees of GM who are willing to work for reasonable compensation can start companies and start new industry.
Jobs aren’t lost only antiquated or updated. If people aren’t able to keep up with the modern world they need to learn how to change and adapt.
Sheth… exactly the point “a few cosmetic changes to the Astra were made” Take a look at the pictures tell me which you like better….I think the European one looks nicer despite the changes being subtle… These are things GM does all the time that the buying public notices and is sometimes deterred by.
Joe Sixpack,
No need to be rough on our side. Critics like Senator Richard Shelby sat back and watched his state of Alabama subsidize foreign automakers, and he had no outrage for this. Alabama has given away hundreds of millions of dollars in land and tax incentives to foreign automakers. These foreign trade zones also receive certain federal tax breaks.
A vote against American jobs, especially in this economic crisis, is a vote against America.
Let’s hope Congress passes and the President signs the compromise bill in December. It will help the economy.
Sheth,
What about the likes of VW and Audi… Surely a VW Jetta or Passatt or an Audi A3 or A4, then there’s the newly released BMW 1 series… and lets not forget the Acura’s… There are plenty of high end small cars.. just nothing great from GM.
Then there is also the new Civic.. a nicely priced car with a look and feel thats above its price range… sure not high end but available with more then just the base level stuff and certainly nicer then the Cobalt in my opinion. Its got a sporty style that just is appealing to me.
There are a whole slew of things GM is missing not just one or two dozens… One of them is the availability of a premium small car. Another is a quality mid end car with semi-premium options (not just chrome trim).
No appetite for a premium compact? IS that why my friend just bought an A3 and another is looking at a 1 series?
GM and GM fans keep looking for big numbers… the big numbers are in the sum of the small numbers.. GM is missing that for some reason.
What does the Japanese and European competition get? I’ve heard accord owners claim 33 and 34 MPG actual mileage. How about the new Nissan that gets 34-36 MPG (CVT technology).
I have no doubts that GM gets better mileage.. but for some reason truck buyers are STILL buying Toyota and Nissan trucks in masses. They also buy them used….
When I say value I also mean resale value.
Edwin,
I agree to an extent with your statement the crossovers from GM are pretty nice. But I looked at them and they just were missing something I couldn’t put my finger on. I think my issue was with the smaller crossovers… Equinox etc…. The larger ones weren’t in my target fuel mileage range.. BUT they did have the two capacity I was after… though its hard to have both.. I think it CAN be done. All I’m looking for is an Enclave that gets 29 MPG or 30 MPG and can still tow 4000 lbs.
I’m not sure how its obvious the Malibu is better then the accord. I’ve driven all three (Camry included) and overall feel of the Accord and Camry were nicer.
I fully believe the Americans can build great cars the CTS is proof of that (though there is about 2% improvement left).
I don’t see how consumers should be told what to buy.. they are choosing just not GM. A new badge would solve that problem very quickly… Bring out the new GM stuff with a different branding and people would jump at it and once they figure out its GM it’ll be to late for them because they’ll have realized its a new and improved GM… or at least thats how it should go… Then when GM brings out the legacy brands (the ones they have now) with the same body styles they’ll tick off their new brand customers because their shiny new cars will be nothing more then rebadged cars by GM and the illusion will be clear. GM isnt’ going to win both segments without some very very careful branding and development work. The traditional GM people will oppose change while the customers GM is losing to Toyota and Honda will embrace change…
B Knotts,
Also I heard that SUVs are considered trucks under emissions laws… and trucks are excluded from a lot of the normal regulations… So GM had a way to sell these to people at lower costs.
Martin,
People won’t drive to washington because they can’t “afford” the time to. Thats why they have private jets. And if they drove the Volt prototype it would cost as much for them as flying. They’d need all the GM engineering and support team to tag along in case something went wrong. Where do you find parts for a car that officially doesn’t exist to the public yet?
Though that idea makes me think of a cross country competition event… How about a cross country cruse with the Volt to set some records.
Since Washington will apparently not come directly to the aid of Detroit, what about a $7500 taxpayer credit for buying any 2008 Detroit offering or a fairly fuel efficient 2009 offering or a really fuel efficient 2010 offering? This helps unload dealer inventory, finances Detroit and provides fuel efficiency motivation as a matter of tax policy. Meanwhile consumers get a tax break that allows spending in other areas of the economy.
Mr Barger,
It’s dificult to get the facts out because nobody wants to hear. Good news doesn’t sell.
The auto CEO’s came across as wounded animals surrounded by wolves in congress. They need to take the offensive.
Congress and Obama want energy independence. Give it to them. GM’s two mode hybrid is great. The new direct injected engines have great mileage. Porsche is just catching up this year!
Tell congress what is needed to expand this technology to accelerate energy independence. Put the ball back in their court. Show that we can do what’s needed with the proper support.
For the first time in my life, I am NOT proud to be an American. I hope the 3 car execs do not return to DC, and they find another way to stay in business. Errors may have been made in the American car industry, for whatever reason…but these execs do not deserve any condescending actions and threats, from government representatives, who approve of and support legislation that jeopardizes humanity. If government reps think it is inappropriate for these execs to use corporate jets to respond to, and resolve automotive issues, then, any use of any corporate & gov’t jet should be banned. Our state governor uses OUR state jet to fly around in ( i.e. the Grand Hotel), and she doesn’t complain. It disgusts me to think, that Pelosi, Reid, Franks, Dodd, Obama, Clinton, Waxman think that they are a step above any of us, when they have stolen, cheated, lied to every American taxpayer. Think of what these government officials have done, and what they are going to do to America. I’d rather have, GM, Ford, and Chrysler lead this country, since they have higher qualifications than members of our government. (They have more than a one page resume, with foreign affairs experience, among other things.) This is the second time in automotive history, that the US auto industry has asked for a loan from the FEDS. I believe in the auto worker, at any level, whether they are UAW, a designer, engineer, or auto exec over any government representative. EVERY year taxpayers are bailing out states who are faced with fires, floods, hurricanes, and whatever natural disaster, due to those states unpreparedness – now how many trillions of $ is that? And can they “prove” they can pay it back? Frankly, I’m sick and tired of having to pay for it. Move all manufacturing and design back to Michigan, and let the rest of the states fend for themselves. This may sound like protectionism, however, it is extremely apparent that our State & Fed gov’t, including both major political parties, could care less about Michigan or the automotive industry. They have written us off.
I’m surprised that no one at GM posted a list of senators in Washington who oppose bailout, along with their contact information. This would be very helpful………..
Nate,
You are 100% correct across the board. You alone have all the answers to GM’s problems and have correctly analyzed every single mistake and prescribed the right remedies. It’s apparent that according to you no one at GM has a shred of common sense and every decision they have ever made is wrong.
If you think Opel is the answer to GM’s problems you are mistaken. The only thing people trust less than an old brand with a less than stellar history is a new brand. People in the US do not recognize Opel and would not believe Opel quality was akin to Japanese quality.
Also, if you think all GM cars have hard plastic interiors and cheap leather you need to get in more GM vehicles. The Lucerne, Lacrosse, DTS, CTS and STS are just a few cars that have soft touch dash materials and nice, soft leather seats. There is nothing upscale about the average Honda or Toyota interior. The Camry, Corolla and Highlander are full of hard plastics. The Avalon’s interior is several rung lower than that of the Lucerne from a design and materials standpoint.
You also need to review vehicle size classifications so you will understand what I mean by “premium compact”. The TSX and Jetta are not compact cars. They are midsize cars. The Mini is a subcompact and the 3 is a compact. The sales figures of most of the “premium” cars you mentioned pale in comparison to sales of the Cobalt, Focus or Civic.
“I have no doubts that GM gets better mileage.. but for some reason truck buyers are STILL buying Toyota and Nissan trucks in masses. They also buy them used….”
Sales of GM’s pickups and large SUVs dwarf the sales of NIssan and Toyota trucks combined. I am not sure where you get your data but it is inaccurate. Nissan has been a failure when it comes to large trucks and SUVs in the US market. This is why they decided to abandon the idea of a replacement for the Titan. The Titan has been a sales flop from year one. Toyota may face a similar situation if they can’t find a way to stabilize Tundra sales.
Everyone needs to stop believing everything they here in the press if everyone just got out there and noticed what a great product GM puts out there wouldn’t be so much scrutiny against GM. The Media hammers GM on everything you never here about plant closers for Toyota, Honda or any of the foriegn automakers because everyone out there believes that “THEY CANT DO NO WRONG” get your heads out of the clouds and come back to earth!
Sheth,
Respectfully I think you are dead wrong… People believe what people tell them. People believe consumer reports, their friends and the media…. just not GM itself. Now take a step back in history and look at Saturn it was a new brand to avoid GM’s reputation and a new customer focused car company (back in the day). I have HEARD it worked quite well. The only problem is they were targeted at the low side of the market. Now GM has nothing much to compete with Lexus, Infiniti, Acura etc…. What GM needs is a car that doesn’t look feel or act like a GM. And isn’t easy to tell is a GM (ie no GM badgings)…. Sure its a new brand but with a new brand and name people will evaluate cars from a fresh slate… The auto press will drive them and rate them on what they see not what the badge says…. Hyundai is good example… they are still a Hyundai but they have gotten decent reviews lately because they have made huge steps in the right direction.
If GM brings a new unknown brand into the US with what people want and delivers the goods the word will get out much quicker then if they do it with Caddy or Buick etc…
Only half the customers of GM are worried about a GM brand…
Well Sheth I’ve been in a CTS, Malibu and a new Buick Lacrosse and there was STILL hard plastic.. And thats not bad if I dont’ know its hard plastic.. but a lot of panels still have a hard feel and this new plastic is really weird to touch compared to the 2007 Camry I was in and the 2008 Accord I was in.. not to mention the 2004 Acura TL I’ve driven. Don’t try to sell me on GM not using hard plastics on their interiors I know its a pure lie. Maybe you have yourself convinced…. if you don’t believe me
go to your local dealer and hop in a Malibu.. tap around on the side panels of the doors and in the back seat area its all hard hollow sounding plastic. I can’t say the same about the Camry and Accord I was in. Same goes for the CTS tap around on the side door panels and the side are of the dash where the door opens… hard plastics… In the past GM had some type of padding over these.. I think hard plastics are OK if they are not hollow sounding and damped properly.
What I don’t get is why people are so focused with sales numbers.. and car classifications.. if I want a smaller car I look to certain companies… it seems to me like using sales numbers is a way of saying “yeah they make a better car but we sell more so we’re better” Thats the most idiotic thing I’ve ever heard.
Yes, there are misconceptions about the Detroit Three, their products, and their quality; but Mr. Phelan’s argument can be countered. As has been stated, foreign competitors did not depend on light trucks for their sales. Ford, Chrysler, and the General devoted a bulk of their resources to the sales of their full-size V-8 pickups and sport-utes. Should gasoline costs further reduce and stay low, will the Detroit Three succumb to simple temptation and return to building millions of mechanical behemoths?
On the matter of sales, what number of Chevrolet, Pontiac, and Saturn vehicles sold per year are to rental lots? That has been the sneaky little factor for preserving US automaker sales figures.
Yes, the General does offer a gas-electric engine option for several vehicles, but there is a twist. The gas-electric powertrain found in the Vue, Aura, and Malibu has failed to impress critics with modest fuel economy gains for the premium added on the price tag. The impressive two-mode hybrid system found in the Tahoe and Escalade is simply too expensive to catch on, especially in our economic climate.
This is a great video about GM’s interior design by Dave Lyons, GM Interior Design at http://www.youtube.com/watch?v=rFGFBSEA2vQ.
What I am about to say is going to say GM’s life. Whether you want to listen is up to you.
The auto business is a simple business. To maximize profit, you just need one global model in every segment, whether it’s with a different brand or different name. Ever looked at a Japanese Garden? It’s serene and simple, isn’t it? That’s right, simple. That’s also the philosophy of Zen Buddhism. Or like Bill Clinton said:” Keep it simple and stupid. ” Every American should aspire to own a Cadillac. When you try to see a $40,000 sedan with a healthy profit margin, while the Pontiac guy next door sells the same thing at $25,000, it damages Cadillac. Likewise for Chevrolet. Chevrolet and Cadillac are the BIGGEST assets of GM, and the ONLY assets. There’s nothing else. These two brands define GM, instead of the other way around. And I say to hell with the beancounters. Stop using inferior materials in your cars.
Ever wonder when Warren Buffett didnt invest in GM? Because GM is a VALUE DESTROYER. Or CAPITAL DESTROYER. GM has $40 billion in debts as a result of years of losing money and depleting capital. And you are a dinosaur because you have a broken business model. You think it’s OK to offer $3,500 or more cash incentive on every car you sell when you make $10,000 or more out of SUVs and pickups. When the SUV market goes down, you implode. In a sense, GM is like the trampled Walmart worker who died last Black Friday. It’s constantly trampled by outrageous demands by every third party. You know who you are. The world is full of bad guys, America included. There’s one running the Treasury right down who wants to keep everyone out of his pot of money. We don’t need more bad guys. We need SUPERHEROES. We need Jedi Knights!!! To survive, GM needs to be a Superhero. And I never thought GM to be a bad guy. GM built EV1 the electric car to save this planet even before Toyota built its Prius. In order to survive, GM needs to change. And you need to change WHOLE HEARTEDLY. You can’t change reluctantly.
You need to change because you want to change, not because the circumstances force you to. You need a change of HEART. America doesn’t need bad guys running our country. The great Republic needs more Jedi Knights. Not some Senator from the South that only cares about his home state. No , sir, that’s not what we won the Civil War for. We might as well let the Confederates broke away from the Union. And I am not against UAW either. I’m supportive of UAW to preserve their rights and benefits. But when you can’t build small cars competitively enough or to compete with the Southern states, what’s the reason to prevent GM from making cars in Mexico?
We don’t need a North-South Divide where Southern foreign automakers make cars competitively South of the Ohio River. No sir, Detroit can compete with the best, even with the Southern automakers. We can compete with the best in the world. And to obviate the South’s cost advantage, and if that means moving car making operations to Mexico, SO BE IT. GM has NO obligation to serve anyone’s interest but his own. GM is a global automaker, not a tiny truck maker in Detroit. And it’s really foolish to think that the Southern automakers can replace Detroit Three!!!
Why do you think the foreign automakers set up plants in the US? Because they want to gain POLITICAL MUSCLE, not because they can make cars cheaply in the US. They can do the same in Mexico and make 10 times more profit!!!!! Those Washington lawmakers are really foolish that they haven’t figured it out yet. And it’s the same foolish lawmakers that run this great Republic into hundreds of billions in budget deficit, billions in current account deficit and trillions in foreign debt!!!
GM must be a Superhero, in a world full of bad guys. You must change and adapt to survive. There’s no way around it. The world is not perfect, and it never will. Every decision you make will ultimately determine your survival.
GMisCARKING,
You are wrong for several reasons. The first of which is that GM isn’t really paying much attention to this blog right now.
You are right that GM’s mutliple brands on multiple platforms are hurting sales. However you are wrong in that Chevy and Caddillac are the only two GM brands that are assets. Saturn, Buick, Opel, Caddy and Corvette are all asets. I don’t quite think Chevy (and pontiac) is an asset since it is the very brand that dillutes the other brands.
You are right GM needs to change because they want to. If you look at other companies they embrace change and strive for new product and new technologies… something GM hasn’t shown it knows how to do except maybe put bigger engines in cars.
How can you support the UAW and say they need to build cars competitively.. the UAW i just one part that keeps them from doing so. You are right workers need to be treated reasonably/well. But workers shouldn’t take advantage of the company and the company shouldn’t take advantage of their workers.
GM may not have any interest then its own but I doubt its own self interest is going to rescue it… thats just the wrong attitude for any business. They must respect their customers or else they will go else where.
The Romans had similar thinking to what you suggest and where are they now? GM needs to be aware of the Southern auto makers who CAN and ARE making better products at a lower cost. They can and will replace GM if GM doesn’t get its act together.
The attitude you express is the exact reason GM is where it is now. It thinks it can do as it pleases and all will be ok… but how long is that going to be true?
While the idea of a Political agenda is possible it is more obvious and likely that unlike GM they realized the good publicity of having cars made in the USA. For a while people were not buying foreign cars because they were made over seas. Once they realized people would buy foreign cars made in the US the idea took off.
It is not the government that is to blame but the people allowing all this to happen and those people who aren’t willing to work as hard as is required to sustain and maintain this country. That is the real truth.
How about addressing the real problems facing GM?
I read the proposal, it says “long term sustainability” only because that was mentioned by Pelozi. There is not Long term sustainability in that plan. So, you want to cut the workforce and close plants? How is that going to help GM become a long term success? You need both of those things to make cars.
Here’s the problem, it costs billions of dollars to develop anything. A small engineering company can engineer a chassis for a million dollars or less. You can hire Lotus or Cosworth to engineer a new engine for under 5m. Yet it costs GM billions.
GM has built it’s business model to make it necesary for a model to sell in the millions in order to be profitable. Today’s market can not support this business model.
Want to hear my plan? Of course you don’t. My father worked for GM from about 20 years old until the day he died. My grandfather worked for GM for 35 years. I’ve watched you guys run the company into the ground. I’ve gone and studied economics and business, and always keep an eye on the auto industry. I see stupid decision after stupid decision.
If you guys set up the company right, you would make an average of 2500 dollars per vehicle in profit. At 16m units a year, that’s 40b in profits. At 10m units, that’s 25b in profts.
If you guys actually read these comments and are saying “it can’t be done” (meaning lowering the required number of units and development costs) that’s exactly why you will fail. I could do it, so can you.
The news media has given GM a bad rap. GM is a solid Company who needs to survive in order for our country to avoid a deep depression. The loan is necessary to acomplish this. This is not the only thing that needs to happen. The Union have to give up some real concessions. The bottom line is that the hourly retirees need to give up their health care in line with what was taken away from the salaried retirees.
rumor is wagner is in place to close north american operations. facing a big loss in sales without a war chest makes perfect sense.
Brian Colvin,
The difference is a small company often times works harder, more efficiently and for less immediate compensation then a large company does. In fact many upstart employees don’t always get paid that much at all. But when their product sells they make their money back. GM isn’t this way and people aren’t that passionate about it in my opinion.
I am disgusted in the outcome of this I really dont know how the goverment figures dening the money will help the economy, After all a large majority of the econamy works for a auto industry, including myself…They will give money to help out the rich but will not help the ones who really need the help, the people that are trying there hardest to stay afloat only now to wonder where are they gonna be able to find a job because i will say this michigan has the highest rate of enemployment, The econmy will only get worse now for everyone, that doesnt have that silver spoon handed to them, adc will need more money to help all us single parents the unemployment office will run out of money because now there will be millions of people unemployed, so how are they saving anything its seams the goverment will be forken out way more then the 10 million ,
tinamaria,
Respectfully. A large majority of the economy works for an ineffective automaker. I’m not sure why people don’t see that. If GM were effective it would be Toyota or Honda asking for a bailout/loan.
People aren’t giving money to anyone right now at GM. The real problem is ALL of GM. From the workers, to the management, the engineers and the products. If they were better the products would be better. and if the products were better GM wouldn’t be losing customers. I don’t understand why people don’t get that. The workers can only build the products the engineers design. the engineers can only design the products they are told to or can afford to. And the management can only figure out what kind of vehicles to build if it has the pulse of the customers and is making sure the products are right… I haven’t seen any of that happening.
So I guess I’m not seeing where the mystery is.
Why does Michigan have such a high unemployment rate? Maybe it is because there aren’t jobs. Maybe it is because people don’t want to work. I’m not sure which but one of them is right.
Silver spoon handed to them? What are you talking to? There is no silver spoon that I’m aware of.
Sorry to be harsh but a bailout without a lot of change from GM won’t be an effective one. If I were in that position I’d look for a new job or go back to school.