When the Half-Empty Glass Tips Over
By Mike DiGiovanni
Executive Director of Corporate Planning and Alliances, General Motors
The Detroit Free Press has — yet again — taken a glass-half-empty bias to tell a non-story today. Let’s cut to the quick. We predict (as does almost everyone else) that the industry will be up around 10-15 percent next year (some predict more). GM’s year-over production increase of “45 percent” is not a story. The increase reflects a dramatically lower production for this year based on the fact we cleared almost 500,000 of inventory…the baselines are not reasonable to shape the intended story. GM had indicated in a media call that it could produce upwards of 2.8 million units in North America — this is a number we COULD do…it’s not the number we necessarily WILL do. We only plan and report production estimates by quarter to reflect the current economic climate.
But let’s just run with the number the Free Press used; was it out of line? GM has taken a conservative view of 11.5 – 12 million US market for next year. This is lower than most other estimates that analysts and our competitors are using. So let’s assume carry-over share, and see where things net out. If GM maintains its current share in a 11.5 million market, that’s 2.3 million units right there. Carry-over share for Canada, Mexico and exports from the U.S. is worth about half a million more. With carry-over share based on the lower end estimates for the industry next year, the numbers would indicate a GMNA production run of about 2.7 or 2.8 million for CY 2010 – a more than reasonable estimate, remembering we’re at record-low inventory as well.
So what would production look like in a scenario that was below 20 percent market share next year? Even at the 18.5-percent share outlined in the viability plan for the U.S., we’re still talking around a 2.6 million run for next year. The bottom line is that we manage production on a quarterly basis, and we are aggressively managing our business. We will not revert to bloating inventories for short term revenue gains as we begin the slow recovery from this horrible economic environment. We are cautiously optimistic that 2010 will be better than 2009, and we will plan and manage our business with the same “glass half-full” cautious optimism.
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Until GM is growing market share… it does not have the products customers want.. it is that simple.
Quality and Value that is what is needed.
Market share has been declining for 30 years…… build the best and market share will grow.
Hyundai / Kia is growing market share in this market… they have made a tremendous turn around.
They have gone from being a joke as a brand to taking market share. What can GM learn from their turnaround?
Your comment was “So what if we go below 20 percent market share next year?”
If you go below 20 percent market share it means that you are not producing the quality and value driven products that customers want.
It is a big deal to loose market share!
For the last 30 years GM has not been able to understand that. You loose market share when your products need to improve.
Selling over 2 million vehicles per year does not constitute that GM “does not have the products customers want”.
Sheesh.
Toyota has posted sales declines every month this year except one and is losing share to Ford and Hyundai. Do they have the products people want? Toyota has yet to pass GM in US sales and got passed by Ford a few times this year. Doesn’t sound like they are making the cars consumers want to buy according to your standards.
Sheth, the last time I checked, Toyota’s incentives were half of GM’s. They’re not chasing market share by throwing money at it. In fact, if you look at the FreeP article, you see that Chris Ceraso asked, specifically about this sort of thing during the sales and production conference call. Lots of people are concerned that GM’s going to be chasing share at the expense of margins, pricing and customer value.
Here’s something else to consider… Fleet proportions weren’t in the sales release, so someone asked about it. “35%, pretty much the same as last year.” GM’s talked about cutting fleet sales for 4 years… maybe more… and they’re at “35%, pretty much the same as last year.” Where’s the progress?
Charlie:
You have to learn to read between the lines. Why are Toyota’s incentives lower? They sell more lower end product (Corolla and Camry) and thus lower prices are commanded. GM sells far more large trucks than Toyota and thus GM’s average incentive per vehicle is higher. Toyota is still offering record high incentives made up of rebates and unprecedented subsidized financing. Recently, it was reported that Toyota was spending $1B in the remaining months on ads and incentives to boost sales. Toyota is doing all this just to maintain its position in the market. In additon, Nissan, Toyota and Hyundai are relying on fleet sales like never before. I read that 12-14% of Toyota sales are to fleets. Nissan is up to 30% or so.
Pontiac, Saturn, Saab, and Hummer customers can no longer be counted as solidly in the GM column for 2010. When I look at the YTD 2009 sales figures, GM market share, discounting the defunct marketing divisions, is 16.8%. CSM analysts say GM will be at 2.25 mil and industry will be at 13.6 mil for 2010, i.e. GM market share will be 16.5%. They are basically saying that GM will not recover any of the customers from their defunct divisions and will lose a slight number from their remaining divisions. Given consumer sentiment regarding GM, this doesn’t sound that far-fetched to me. Anyone have thoughts on this?
DS,
I didnt follow your math, but just to comment on your comment. There is no doubt GM will lost some customers of their now defunct brands. But I refuse to believe that they will lose EVERYONE. Granted I live in the Detroit area, but I know several people that would switch GM brands before going foriegn. I’m sure there are other people who would stay in the GM family.
We have to get back into the game as American auto makers before it’s too late
Yes GM lost customers but all car companies have. It is not just that it is an American brand, the economy has casued many people to hold of on buying cars.
Mike,
Can appreciate the logic of your argument. If the domestic market has a maginal increase in volume in 2010, GM may reach near the 2.8M unit level of production in GMNA to keep up with demand. But this projection assumes that the domestic market will ‘rise’ in 2010. And as I stated in this morning’s post in the Fritz: 90 days later…thread, what if this assumption is wrong? What if we only get to, let’s say 10.2M units in 2010? And what if in reducing our brands down to 4, that our market share drops as well, let’s say to a more realistic 16-17% share. And who’s to say, with our transaction prices increasing temporarily due to the usual short term demand of our recently launched vehicles will fairly quickly lose its ’steam’ due to the initial demand being satisfied (which is the reason I think our market share will drop next year). And what if the economy continues to flounder (along with the prospect of higher inflation, higher interest rates, higher fuel prices, etc.) that our model mix will suffer as well. You see, from my view, we are making fairly bold assuptions (not conservative ones as you claim for the coming year). Many potential customers may have to resort to buying ‘used’ instead of ‘new’ due solely to the ‘affordability’ issue. This is the ‘trap’ I fear we are walking into that will result in eventual overproduction compared to what the domestic market really demands from us. We have done a poor job of predicting where the market will be for a couple years now. And I fear that we do not have the luxury to guess wrong anymore, our jobs depend on being right.
Greg,
The point you’re missing is that the inventory is not what it was in past years, so the ability to ramp up or ramp down production is an easier bet. Second point…2.8 was not the actual firm number we are planning the business on…it’s simply the upside of what we could see developing. We’ve made clear in the viability plan that 18.5 percent share of a 10.5 million market for the US…or 1.85 million US, is the plan.
Perhaps this is being picky, but I think I can assume that someone from Communications chooses words very carefully. “… the inventory is not what it was in past years, so the ability to ramp up or ramp down production is an easier bet” is clearly not true. The ability to ramp production up or down has nothing to do with inventory. It has everything to do with how quickly we can change line rates and / or hire people and lay them off. Managing inventory is all about predicting sales rates and matching them to production rates and the changes and costs associated with changing those rates versus carrying inventory.
In the past one could look at inventories, look at production rates, listen to the news, and realize that something wasn’t right. I’m not convinced that the new GM is any better at managing inventory than the old GM because I see the same things happening. There was a news story about adding x thousand jobs at a plant because of the increase in sales rates, yet it didn’t take a rocket scientist to note that much of the bump in sales was due to the short-lived cash-for-clunkers program. We seemed to be anticipating a quick recovery outside of the additional demand from c-for-c. This is the same error we made when the GM Employee Discount for All was discontinued. One has to wonder if the announcement was for show (no, I’m not a conspiracy theorist). Side note on share: to the one writer’s point about the Korean brands, if there is a shift to lower-priced models, then the brands with more, lower-priced offerings would gain share (and lose it once people begin moving up-market).
Quote “We are cautiously optimistic that 2010 will be better than 2009, and we will plan and manage our business with the same “glass half-full” cautious optimism.”
Well, I’m “ecstatically depressed” that you are “cautiously optimistic” and I hope you don’t get “confidently unsure” about your future because that would be a “triumphant tragedy” and you might become “clearly vague” about your “successful setbacks”.
What if the glass gets emptier?
A nagging question I have is that we’re seeing the boom years from the baby boomers waning.
Most of these boomers have purchased their cars and homes, sent their kids to college, paid off a lot of their debts and the market “adjustments” which hammered almost everyones 401K and other retirement accounts is keeping them from spending more than they have done in the past.
I suspect that the typical “affluent” consumers won’t be buying a lot of hard goods in the future – they’re tapped out.
Lets face it, retiree’s may not put as many miles on their vehicles so they last longer. The tailing-end of the Boomers are scrimping and saving their nickles so they have money to retire on, and the younger Gen-X and Gen-Y (Z now??) buyers haven’t the same income levels nor do they have the same levels of loyalty to the domestic car makers as their parent had in the past. Immigrants are less likely to buy US vehicles too. Costs for medical are going higher, home values flopped so there’s no equity for HELOC’s and banks are stingier with their (our) money.
If the newspapers are skeptical of the forecasts, and they supposedly have a lot of similar resources that GM has, where will the numbers truly fall? Is a 2.6 million vehicle run feasible?
This is why I think Mr. Preuss was absolutely correct that: “18- to 30-year-olds are the key to our future”. Simply put, the boomer can’t be counted on for propping up the US economy for a number of reasons. A: They spent like drunken sailors and saved little for retirement. Secondly, as you mentioned, they are aging and retiring, and even though they’re more reliably loyal to domestic brands, its now up to GM and frankly the other 2 domestic automakers to win younger people over.
That’s really all it boils down to. I live in a SF and the majority of people in my age group ( early 30’s) drive Japanese cars and trucks. Either that or they like “cute” cars like Minis and VW Beetles and so forth. I do see slightly older 35-40something adults living out in the burbs driving newer GM and Ford products. I think GM is doing a much better job with their products and marketing. I actually find some of their vehicles attractive and desirable. But part of this story is getting the younger generation to buy GM, and once they do, then we can more assuredly say the glass is half full.
It’s been no obervation that people in the big city tend to gravitate toward things that are trendy. GM will have to change peoples’ minds like Hyundai has over the past few years. GM cars today are good; unfortunately perception is reality for people.
Hmmm… meant to say “an observation” not “no observation”.
Edvard –
True – our young is the key to our economic prosperity, the 18- to 30-year-olds are the key to our future, but only when they can afford to purchase $20 – $30,000 vehicles. Many transplants make cars with US “domestic”: content which matches our domestic suppliers and can do it cheaper, with better “percieved” quality and value.
The rest of the country has pockets of affluent 18 to 30 yr olds, but most live in the more upscale cities like NY, Chicago, Dallas, Boston, etc and probably take cabs, ride the rails or live and work close enough to walk. Many can’t afford cars because the cost of simply parking the darn things in garages, so they use what’s available and rent a car for the weekend or vacations where flexible mobility is required.
You mentioned The Bay Area – rent on a two bedroom apartment is something in the neighborhood of $1300 a month, gas and auto insurance prices in California rank at the top of the nation and taxes in the major cities in California are pretty darn high. Most 18 to 30 year olds are more inclined to buy used, take the public transit systems, walk or ride bikes (weather permitting). Those who live outside the main city probably take the BART.
I am just keeping a healthy skepticism on these numbers, and our economic viability. And yes, I am keeping my budget under control. I am 48 years old and don’t spend my money like a drunken sailor. I can’t afford to make poor financial decisions, there’s not enough time in my career to make up for the losses if they occur.
This country has no real Energy Policy in place and the impact of high gas prices is still fresh in my memory. The use of Flex Fuel or ethanol makes sense, just as CNG and both can be developed here in the US. Along this note – can GM identify whom has been assigned the task of watching the petroleum industry so they can work with the government to make certain the investors don’t artificially get the gas prices all whacky again? The Volt is a great opportunity, but I am not an early adopter of technology since it’s unproven outside the labs and proven with the masses.
As for vehicles, I am still on the fence with respect to my next purchase. I may buy a good quality used vehicle, get an extended warranty and use Telecommuting where possible to keep me off the road when it makes sense to work remotely. If a really great deal comes along at the right time, then I may buy new. Right now my car has 67K miles, so I have a little time to decide.
Maintain share?!
That delusional thinking will put you right back where you were: 100+ day supply of vehicles that require the next 0% or Employee Price deal to move them off dealer lots. GM has lost about 1%market share per year for the last 30 years. And there is no indication that GM’s market share will stabilize now, especially with shutting down two mainstream brands and closing dealers for the other brands.
The Free Press article was completely fair. LaNeve’s defense of the production increase was printed along with concerns from all the skeptics. His argument, repeated by Mr DiGiovanni above, just doesn’t stand up to logic. History shows that Old GM had a bad habit to over-promise and under-deliver — well, except on the quantity of vehicles sitting at dealers.
Last month GM had over 20% share even though Saturn and Pontiac sales were way down. Saturn’s sales have been plummeting for most of the year. each month people keep predicting that GM’s share is going to nosedive due to loss of Pontiac and Saturn and it hasn’t happened yet. 18-20% is realistic considering the vehicles GM is launching. Earlier in the year some “experts” were predicting Ford could pass GM by the end of the year. Those predictions have all but ceased as most realize that is not happening this year and it may not happen ever.
Quote “Even at the 18.5-percent share outlined in the viability plan for the U.S., we’re still talking around a 2.6 million run for next year.”
I don’t understand GM’s casual attitude about drop in market share. If they continue to drop 1% per year, they will be selling pencils on street corners in 18.5 years.
It is not unlikely China and India will try to break into the American market with their own brand of cars in the near future. If they take as big a bite into GM’s sales as the Japanese, Korean and German car makers have over the last 40 years, Gm will really be hurting. Lutz seems to have a dismissive attitude about that possibility but it does not seem improbable considering the success imports have had since the 1960’s.
If GM had not alienated so many of its customers back then, they wouldn’t be having the problems they are experiencing now. GM’s only hope is to hang onto the few loyal consumers it has left and the only way they will accomplish that is to produce quality – not excuses or propaganda. The clock is ticking and GM is running out of time to get its stuff together. GM’s managed to do a spectular job of getting through bankruptsy, negociating new labor contracts, etc but it won’t win the battle until it can deliver satisfaction to car owners.
Randal,
The point wasn’t to be casual about share…it was to point out that the estimates that the Freep tried to paint as outlandishly high were more than reasonable, given current share. As for history and the need to perform in the market, only time is going to tell…we’re 100 days into the new GM at this point…we understand the clock is ticking. Thanks for taking the time to comment.
I don’t understand the “Quality and Value” comment? Are you talking about 1980’s GM cars? Is that when you had your last bad experience and are still holding a grudge?
The fact is when you look at the quality reports, such as JD Power or Consumer Reports GM’s core brands sit in the upper half. Please explain how Hyundai’s $9,000 child-labor car that sits on the bottom of the quality pile is better? They sell cars at the cost of a 5 year old used car. Are they really stealing marketshare, or are they just pulling in people that could never afford a new car before? It’s funny to bring up Hyundai/Kia when they sell half as many cars as Chrysler, or a 1/3 as many cars as Chevrolet!
Value in resale, or value in total cost of ownership? Yeah, I can buy that Camry or Accord at 6 to 9% financing (which is an extra $3-$4k in interest over the course of the loan) or I can go over to GM and get my 0% financing. Yeah, my resale value is $2 or $3k less, but I didn’t mortgage it in the first place. I buy a $20,000 car and pay just that. You buy a $20,000 car and actually pay $24,000 after interest. Whose the real sucker on value?
Brad:
Excellent points. I try to get people to think about financing costs when they talk about resale value. Residual values do not tell the whole story and any car that costs you 5% to finance vs 0% is not going to cost you less over 60 months of ownership. Unfortunately, there isn’t any metric out there that accounts for financing costs. Import automakers have been coasting on their reputation for high resale value while offering higher loan rates that cost customers thousands extra over the course of the loan.
Brad,
You get 0% financing when GM passes along a special payment incentive to the finance company to buy down the cost of the loan. Your 0% interest payment is an effective reduction in the price GM gets for the car.
So, yes, it’s great for you but it’s an example of buying share. They move a unit but they take a hit on profitability. There’s some other variations on that theme, too, that either reduce the automaker’s effective price or add a risk of future payment for the automaker.
Sheth,
One can compare discounted loans vs excess depreciation, etc, with a Net Present Value calculation.
CharlieH:
You are great at stating the obvious. We all know that incentives affect profitability but that has no bearing on Brad’s point. He merely pointed out that you cannot talk about resale values without mentioning financing costs. Many claim they don’t buy American cars due to lower resale value but they don’t ever talk about how import manufacturers typically offer higher financing rates. While lower APR does affect profits, its an effective incentive because it doesn’t damage resale value in the same manner as huge rebates. Gm is smart to focus more on APR and less on cash back offers.
GM does not offer 0% APR across the board and its certainly not offered on the newer launch vehicles. MAny trucks have so much profit built in that they can be sold with huge incentives and still make money. Everyone is playing the incentive game now so criticizing GM for “chasing share” is ridiculous. Everyone is chasing share in this market. If any major automaker stops incentives right now they will immediately lose share. This applies to Toyota as well although I know you are loathe to acknowledge Toyota needs to offer extra reasons to buy its vehicles.
Brad -
I stated “percieved” quality and value. The JD Powers stats clearly show GM gaining and holding their quality benchmarks. However there is a perception that domestics still don’t stack up to the imports or transplants.
I will say that I have owned a Toyota, Subaru, three Fords (one new) and three GM (two new) over the years. My personal experience with the imports was good. I got a lot of miles on those used compact cars. My experience with the Fords was mixed and my experience with the GM products was mixed as well. Never owned a Chrysler product, but Nana loved her Diplomat to death till she lost her ability to drive.
“And there is no indication that GM’s market share will stabilize now, especially with shutting down two mainstream brands and closing dealers for the other brands”
Jon said this correctly. Market share will continue to fall until someone learns getting rid of a large portion of your customer base (dealers) will not increase sales.
GM does not sell to the customer, they sell to the dealer, the dealer in turn sells to the customer.
Andrew:
When people make the argument that GM wont be able to sell as many cars because it will have fewer dealers they neglect to mention that Toyota is the #2 US automaker in spite of having less than half as many dealers as GM and far less than Ford. There is no evidence that you are guaranteed lower share just because you have fewer dealers. The point of the reduction in dealer count is to leave behind the best, most modern and most effective dealers to do battle with the import dealers. I know in my area the Toyota dealerships tend to be larger and newer than the GM dealers. There are very few old Toyota dealers in my region.
When people make the argument that GM wont be able to sell as many cars because it will have fewer dealers
It’s not the number of dealers that count, but the quality of the dealers. People will drive a long distance to get to a superior dealer. If GM actually intends to increase the QUALITY of their dealer network, the QUANTITY won’t be that important.
My understanding is that remaining dealers have to meet tough quality benchmarks and make strides to improve facilities. Sounds like that is exactly what you are saying should happen.
That’s exactly what I’m saying should happen. But I’ve yet to see any evidence that GM will do that. So far, it’s been all talk.
The Saturn dealer in our town just closed on Tuesday. Our dealership which is a GM dealership, is allready getting calls from customers peed off that the closest dealer is now 35 miles away. We have gotten calls from the customer assistance center asking us if we will service those cars in our market because customers are upset at the drive to get service. I personally have talked to a customer today that says she has been ready to trade but will not buy another Saturn because it is to far to drive to the dealer for service.
I know that Saturn is closing but in areas that GM dealerships are going to be shut down their local customers in a lot of cases will buy from anoher brand that has a dealership that is more convienient for them. In alot of cases dealers that are to be closed are signing with another brand. In a lot of cases the loyalty is to the dealer not the brand. It is just logical that closing dealerships will result in fewer sales. It wasn’t that long ago they closed Oldsmobile expecting that customers would buy Buicks or other GM brands and we all know that did not work out so well. The same thing will happen closing dealers.
Don’t get me wrong I am a GM fan and want them to succeed I just think they are going about this the wrong way.
As far as people talking about how good the Toyota dealerships are they sure have not visited some in my area.
David,
One thing I don’t understand is why people are so concerned that a dealer is 35 miles away. Granted, yeah that’s a long way, but it’s not like a grocery store where you go once a week, or a gas station where you go twice a week. I’ve only been to a dealer 2 twice in the last 6 years. If I had to drive 35 miles every week then yes, that’s a bit far, but if it’s once a year or whatever, that’s not a big deal I don’t think.
If we’re looking at this from a truly logical perspective, it is obvious what a few of the major causes for this increase in production are:
1) Cash for Clunkers. The “CARS” or “CFC” program ignited a huge boost in sales for all automakers, both foreign and domestic. In my area, I saw GM dealerships in particular that were once totally packed with new car inventory (a majority of which were suffering from months of “lot rot”) become desolate ghost towns in very short order.
This created a drastic shift from a time when getting a vehicle optioned exactly how the customer wanted it was very easy (most anything you could want was dime-a-dozen) to a time where even finding the make/model you want can be next to impossible locally or through dealer trades. Even still, these dealerships aren’t getting in new car inventory to replenish the lots.
Most have had to resort to selling massive numbers of GM Certified Used vehicles or other auction-purchased pre-owned cars and trucks not only to pay the bills, but to keep the lots looking full so that customers will be attracted to them. In order for GM corporate to thrive financially, they need to be certain that new vehicles are making it onto dealer lots to be sold.
2) By killing off some brands, notably Pontiac and Saturn, the inventory of dealers will further decrease without as broad a source for replenishment. Especially with BPG channel dealers, once Pontiacs have all been sold off, they will need to ensure their inventory of remaining Buick and GMC models, along with new releases, are plentiful and available if they have any hope of retaining their Pontiac customers (who would otherwise potentially defect to Chevrolet, Cadillac, or a non-GM brand not part of their franchise/dealer network).
3) Planning for a higher production output just makes good sense for GM, plain and simple. Not knowing exactly what the economy is going to do through 2010, GM needs to be at the ready to ramp up production as need arises. Having a reasonable excess of production capacity is far less expensive (especially since in most cases, parts to build cars are delivered from suppliers “just in time” preventing them from being left with a large surplus of parts) than finding out too late that they can’t keep up with sales to deliver vehicles to potential buyers.
The “new” GM has made quite a few cuts from their excess capacity, however to liquidate all of it would be careless and irresponsible. If GM has any hope of gaining market share, they MUST produce or be ready to produce enough vehicles, especially newly rolled out models, to attract more customers into the showrooms. The product portfolio GM is currently transitioning to is vastly improved over past models, and exposure is the number one thing that will get the improvement noticed.
Not to belittle Mr. Lutz’ marketing efforts, but seeing actual vehicles on lots and being driven on the road is just as if not more important than TV and print advertising. I see people craning their necks on a regular basis wondering “what that car was” when a new Camaro, LaCrosse, or Equinox drives by; and mostly it’s because they like what they saw (as opposed to the reactions the Pontiac Aztec would get…. “eww, what’s THAT ugly thing?”).
I think GM is doing just fine, myself. Bravo, and keep the cool new products coming! (Especially a civilian available Zeta sedan here in NA, hint hint!!)
I hope Obama holds the executives to the “ACCOUNTABILITY” metric and fires them if they are 20% off
Some of the people spewing the same typical drivel against GM here haven’t noticed that GM’s new products are stars in the market, and are selling before they hit the lots. Vehicles like the Equinox and Camaro are now the most sought after vehicles on the market. If you want to talk about bloated inventories and subsidized leases to move stale product that people aren’t ‘rushing’ to get…….stop by your Toyota store. We need to give GM a little more time. If each new model GM brings to market has the initial impact of the most recent models, you will have a good chance of GM taking back share very quickly. Cars like the Malibu are moving fast and without large incentives. Cars are rotting on the Nissan and Mazda lots too in case you haven’t checked recently. And Honda apparently cannot sell its inexpensive ‘green’ impact, either. GM is holding its own through the closure of half its brands. For the record, I am pretty angry that GM killed Pontiac. They get my venom for that, it was pretty irresponsible and incompetent for them to run that popular brand into the ground. But I sense that decision was a factor of several things.
Vehicles like the Equinox and Camaro are now the most sought after vehicles on the market.
They are? For the last two weeks my local Chevy dealer has been running the same ad in our paper: “Twenty-two new Camaros in stock. Make an offer.” The number hasn’t decreased in two weeks.
KArl;
Do some reseach, Many are complaining about waiting months to get their hands on a Camaro. The dealers I pass have no more than 2 on the lots. HAve you actually seen 22 on a lot anywhere or just an ad? GM has increased production of the Equinox, Terrain, Camaro and LAcrosse to meet demand. I’ve seen numerous comments from prospective Camaro owners who are anxiously awaiting delivery of their cars. It may be hard to accept, but newer GM vehicles are in demand.
Have you actually seen 22 on a lot anywhere or just an ad?
No, knowing the reputation for honesty that GM’s dealers have, I haven’t bothered to drive across town to see if this particular dealer actually has 22 new Camaros on the lot, or why the number has remained fixed in his ads for the last two weeks.
But if that is what the dealer claims, why not believe it? You wouldn’t question the honesty of the ads a car dealer runs, would you?
If GM maintains its current share in a 11.5 million market, that’s 2.3 million units right there.
Buick now represents 25% of your brand offerings. In order to maintain share as the Buick demographic ages, you will need to start offering Geritol dispensers as a built-in option.
Mr. Lutz, you state “As I said in the previous chat, we’re going to take away every last excuse people have not to consider our products”.
Well I have several excuses not to consider the Malibu as does my dad who will be in the market for a new mid-size car in the next 6-12 months and has pretty much made up his mind to buy a Ford Fusion SE with the V6 engine.
Why?
It has a standard 6-way power seat and V6 engine like his current 2008 Impala but includes Fog Lights which are not on his Impala but were an often used feature on his previous 1998 Malibu. He loves the 3500 V6 in the Impala and gets 23.2 to 25.6 MPG in mixed driving of 70% stop and go traffic with many steep hills and finds the 4-speed automatic very smooth and quick shifting. I have driven his Impala in these same driving situations and found the 3500 V6 with 4-speed automatic perfect for the speeds, terrain and overall traffic conditions of the area with better MPG than some of his friends 4-cylinder “economy” cars.
He has been buying GM products since 1975 (along with most of the family) and still has a 1992 Lumina Coupe which runs great and gets 22 to 24 MPG under the same conditions and is what the 1998 Malibu delivered and still does for my niece who loves it.
Bottom line is that he has been more than happy with the performance of the 3100 and 3500 V6 and 4-speed Automatic and would like another wrapped in a 2010 or 2011 Malibu 1LT since he loves everything about the Impala except the lack of Fog Lights and the fact it is too high for him to comfortably wash (something he does quite often). He also prefers the sportier styling of the Malibu and the overall size is more like the 1998 Malibu which he stills says was the easiest car to drive of any he has owned.
His next car will be a mid-size (Accord, Fusion or Malibu?), sticker between $23K and $25K, have a V6 (preferably a GM 3500 V6), 6-way power seat, and Fog Lights on it and right now the only one that qualifies is the Fusion SE.
I appreciate your CTS-V challenge but have to confess that I did not even drive it at the August 10th event.
When will GM do something different on the 2010 Malibu to increase sales to beat the Impala and Fusion, sell at a 20,000 to 25,000 unit monthly rate on a regular basis and give the Accord/Camry/Altima a real run for the sales title?
So far GM has:
1. Greatly Improved Exterior Styling – didn’t work
2. Greatly Improved Interior Styling – didn’t work
3. Offered a class MPG leading 4-cylinder – didn’t work
4. Offered a class competitive DOHC 3.6L V6 – didn’t work
5. Offered a 6-speed Automatic with both 2.4L I4 and 3.6L V6 – didn’t work
6. Offered a Manual Transmission option on the G6 – didn’t work
What GM has not tried:
Offer the 3500 V6 in a price competitive 1LT model and match the 6-way power seat and Fog Lights of 2010 Fusion SE which is experiencing rapid sales growth.
Racing the world class CTS-V against all competitors is one thing, but selling 240,000 Malibus in one model year is quite another challenge.
I will challenge you that I can sell those 240,000 Malibus in a model year by doing the above changes along with other revisions to lineup trims and low cost marketing changes, and setup the next generation Malibu to dethrone the Camry as the best selling car in the U.S.
How about it?
One thing of interest that caught my eye in the current Newsweek was the article titled “There’s no Place Like Home” from Joel Kotkin. There a little good and bad in there for the car companies.
His research points to a significant trend in the US that offers hope that people will be less nomadic in the future, which means they’ll be staying in their homes longer and increase homeowners equity over time. Great for home equity lone based consumer purchases like big ticket items like vehicle purchases. I am assuming that banks will loosen up their purse string a little bit to provide home equitly loans again so consumers can make those purchases.
He also states that by 2015 there is going to be a signiifcant trend in working from home via telecommuting. The Federal Broadband initiative will wire up most of the US with inexpensive internet services which will be used by US workers to avoid the use of vehicles, fuel, parking and other daily costs associated with driving into work. In my opinion, this will have significant impact to the auto industry, so hopefully there are some watchful eyes on this for guaging how many vehicles are produced annually. I think it will also have a significant AND positive influence on the overall price of gas.
Theoretically the Supply of petroleum will stablilze or increase as Demand drops off. The oil producing countries can scale back output to shore up prices, but will see a pretty signiciant financial hit as a result. Along with this thought, it seems that lower mileage vehicles may be reconsidered by consumers since fuel will (or may) stay inexpensive. This helps out our domestic producers quite a bit.
I fail to understand how Toyota or anyone else loosing market shares has any effect on GM unless GM products gained said market shares. GM has lost market share for years and at this time has no vehicles as the top sellers in their class. Until they stop loosing market share and start gaining market shares and their vehicles become class leaders in the sales charts I say the still have a lot of work to do. I am no marketing expert but my suggestion to find out why GM vehicle are not selling as well as the competition is to ask the people who purchased the competition vehicle.
There are going to be bias reasons but you weed those out. But there will also be legitimate reasons and if your vehicles are lacking in any respect other than perception fix it. The perception part will be a hard fought battle but if you build them good enough long enough that battle too can be won.
Last month Silverado sales were down 61%, Ford F-Series up 5%. I think the all American pickup truck buyer is avoiding a company that exists only because a union and govt confiscated property from others (GM shareholders and bondholders). My last 2 were new GM trucks, but they are my last GM products.
Sounds like it’s time for Bob Lutz to issue another challenge — Silverado v. F-150. May the best truck win.
GM — you need to listen to your customers……..for too long you have ignored their complaints and market share declined. Listen to your customers and try to fix whatever the complaint is.
You have been loosing market share for 30 years. You just came out of bankruptcy.
You can not continue to loose market share and customers and survive. The clock is ticking.
How many more vehicle launches (chances) are you going to get?
Build the best…… Quality and Value will sell and bring back customers.
If your vehicle is not taking market share in it’s class .. find out what is wrong and fix it. Do not wait for the next model make over.
Just saying you have quality vehicles does not make it so. When you are taking market share from the leaders in the class the Quality and Value of the product will speak for itself.
I would like to see GM succeed but I am not sure it can be done with the old blood running thru it’s veins. You need some new blood and some new ideas.
Why not try to get some talent from APPLE to help with technology. (joint product development?)
Why not try to get some talent from Toyota to figure out this quality and reliability thing.
Why not get some talent from Hyundai to see how they turned around a company that was a joke a few years ago into a company taking market share now.
Why not look at how Ford stayed out of bankruptcy and is producing some interesting Green vehicles. (think eco boost)
Why not look at how Toyota and Lexus are using hybrid technology to actually improve milage of their vehicles and not just a cosmetic boost for their trucks.
Why not look at Nissan and see why they are moving fast with electric vehicles in your home market.
Why did GM do so poorly in the cash for clunkers sales?