So, General Motors has pulled its sponsorship from Survivor. Flackmeister Ryndee S. Carney claimed GM came to its decision “months ago, before the show made its recent announcement." The announcement in question: Survivor will divide its competitors by race and ethnicity. Carney quashed the idea that GM pulled the plug in response to the controversial formatting in no certain terms: “I think it's just a coincidence.” Think? Carney’s comment brings into question GM’s ability to tell the truth and, thus, to survive its evaporating market share, bloated dealer network, distended brand portfolio, lackluster product lines and horrendous cost structure.
Not to belabor the point (much), GM claims they pulled their $14.7m plug on Survivor three months ago. Yet on May 12th, GM and CBS publicly revealed The General's intention to increase their Survivor ad spend. In any case, Carney played dumb, insisting that GM was simply shifting support to TV shows offering product placement. "There's a limited number of possibilities as to how you can integrate a car or truck in a show [when] people spend their whole time on an island." Despite (or because of) the fact that a Pontiac Aztek played a role in a Survivor episode, Carney’s stab at PR humor set exactly the wrong tone. Instead of addressing a serious issue head on, GM smiled and sang “It wazzunt me.”
Not to belabor the point (again), is it too much to ask GM to tell the truth? OK, Survivor sponsorship isn’t a big deal– even if would be nice to see one of America’s largest companies declare its distaste for a TV program that engenders racial or ethnic divisiveness. What about the fact that GM is cutting production in the fourth quarter by 12 percent, or 150k vehicles? Now that’s serious; the move will torpedo fourth quarter revenues. The company’s press release states that the cut "does not reflect a reduction in GM's sales outlook but is consistent with our strategy to reduce low-margin daily rentals, and takes into account the plan to shift production of pickups to the next-generation pickups during the fourth quarter." No shit?
I guess I’m the only one who remembers that GM originally planned to cut production by eight percent, and consider the fact that the axe is falling on GM’s new[ish] gas-guzzling SUV’s somehow related to the increased decrease. To wit: during a recent conference call with reporters and auto industry analysts, GM’s Supreme Spinmeister Paul Ballew declared that GM’s production cutbacks were not a response to “a sudden deterioration in conditions.” "It's new news to you," Ballew said, "but it's not new to us." In other words, we know what we’re doing and we sure as Hell don’t have to tell you about it.
The first proposition is highly suspect, the second highly inadvisable. As I’ve said here before, GM CEO Rabid Rick Wagoner’s failure to articulate a specific, honest, clear and coherent turnaround plan that includes all of GM’s “stakeholders” will be his undoing. Yes, Rabid Rick says he has one, and frequently tells the world that The General’s adherence to this unexpressed timeline proceeds apace. Is it inconceivable that Wagoner’s reluctance to publicly declare his comprehensive recovery strategy reflect his unwillingness to be held to its dictates?
Yes, it’s inconceivable. If I held GM stock, or worked for the company, or ran a GM store, I would be furious at The General’s lack of transparency and accountability. “Keep the faith” is all well and good when you’re minting money, but that and $1.45 won’t get you downtown when the buses are no longer running (so to speak). Clearly, GM adheres to America’s new de facto standard for corporate citizenship: spin, gloss, weasel and waffle.
Take GM’s latest sales results. What are we to make of August’s 3.8 percent retail sales jump? First, it’s a year-on-year result, compared to last August’s cataclysmic post “Employee Discount for Everyone” hangover, when GM’s sales fell off a cliff. Second, sales of GM’s low-profit plain Jane sedans account for much of the rise. And third, we hear tell that GM’s “Anyone with a Pulse” financing continues, a development that will eventually hoist GM by its own petard. According to GM Marketing Maven Mark LaNeve, “Customers clearly are responding to the quality, value, versatility and fuel efficiency of our cars and trucks.”
Maybe so. But GM’s failure to change its business model, the implementation of forthcoming production cuts, the resulting affect on its cash position and the ongoing threat of a strike at bankrupt parts supplier Delphi overshadow any August cheer. And now that Billy Ford has admitted The Blue Oval’s dire straits, it’s clear that GM’s execs continue to live on an island of their own making, facing stronger, smarter and better fed opposition. News flash: GM’s tribe will not survive.
I would have been perfectly happy if GM came out and said they withdrew their advertising due to the racial and enthic division of the upcoming season. I know many other people would feel the same way.
“GM is cutting production in the fourth quarter by 12 percent”
I wonder though, what is their plan for the next quarter? How will things be different? Do they have any new products lined up? Do they think they will just suddenly start selling more vehicles in one of these upcoming quarters? I just don’t see any changes.
Actually the new pickups are due in October
What exactly are they cutting ? 12% of quarterly production is roughly 120K vehicles. I ‘d rather see them pull the plug on midsize SUVs and minivans than chase sales down with incentives.
Is it just me or is this whole death watch thing starting to get old ? GM certainly does not tell the whole truth but neither does this website.
I eagerly await these deathwatches more than ever because they seem to be one of the few instances where GM’s bogus business practices are aknowledged and questioned. Most media outlets seem to be feeding at the trough of “recovery is under way” the same way they bought into the WMD evidence the White House had before the lastest Iraq war.
-They “think” it’s just a coincidence? Listen lady, it either is or it isn’t, double check with someone who knows before putting your foot in your mouth. I don’t think it’s a coincidence, but even if it is, there’s no shame in wanting to pull out of a show that is now being heavily criticized anyways.
-GM’s PR and governance practices are reminiscient of the late 80’s and early 90’s when the public became more demanding of companies in terms of recognizing stakeholders and being held publicly accountable. Unfortunately, they don’t seem to have progressed to the more modern model where there is true accountability and transparency, not just a blonde bubble-gum teenage executive eye-rolling formulaic answer. Everything that comes out of GM execs and PR lately (except for loose cannon Lutz who just spouts off random manifestos) is diplomatic drivel that completely fails to aknowledge issues to an extent beyond what has clearly already been pre-calculated behind closed doors. Actually I suppose it’s just more like that than ever, now.
What boggles my mind is no one in the mainstream media (and to some extent some industry analysts) seems bothered at all by this, they just swallow the usual corporate bull and reiterate the company’s optimistic lines. They were optimistic a few years ago about getting back up to 29% market share, what the heck makes anyone think things are different now, below 25?
“What exactly are they cutting ? 12% of quarterly production is roughly 120K vehicles. I ‘d rather see them pull the plug on midsize SUVs and minivans than chase sales down with incentives.”
Yeah people keep saying that but it gets us back to the good old UAW problem, where they need to keep paying people if they aren’t building anything. GM can’t make money by right-sizing (reducing) its supply, because paying off the employees that are not working will sap away whatever profits they make by selling vehicles for more. GM’s only option then is to keep volume the same but having desirable products people will pay for. That’s the harder of the two options and they haven’t succeeded yet.
Cutting production might be OK now if some of the bought-out workers have already left, or they might just be thinking that sales (and transaction prices) will be high enough that they will actually be OK paying off whoever isn’t working. Either way, if they are saying it won’t affect their sales volume, to me that indicates they have ample inventory at the plant (can’t say dealer lots because their vehicles are sold when sold to the dealer).
The employee buy-out start to kick in the 4th quarter BTW.
GM is no saint or victim by any stretch of the imagination but it seems the coverage is either regurgitating corporate releases or spouting knee-jerk GM hate-speak. I just want to see some objective coverage.
“I eagerly await these deathwatches more than ever because they seem to be one of the few instances where GM’s bogus business practices are aknowledged and questioned.”
It is so obvious that GM’s cardhouse is about to collapse that I cannot understand how irresponsible the general media can be by buying unquestioning into GM’s half-truth’s and flat out lies.
Ever since the finance scandal last year has it been proven without doubt that GM’s leadership will lie, cheat and break the law to ANY EXTEND if it means to stay in power for just one more month.
Gee, you uncovered a “finance scandal” ? Someone needs to go to jail.
GM’s “cardhouse” might yet collapse. But that’s not going to happen unless the bottom falls out of the truck/SUV market. Might happen, might not.
Everyone seems to think GM is at some watershed moment where it either goes into bankruptcy or rises from the ashes. There’s a third option.
Management does enough and the UAW gives back enough to maintain the status quo and it continues it’s long history of marginal profitability. If the truck market holds that is what will happen. Sorry folks.
If you want to see a slow painful death by a thousand cuts you might want to look at Ford. That’s just my 2 cents
I thought the August retail sales were 8% higher than August 05.
Let me get this straight:
GM’s management is not to be trusted because they chose not to wade into the murky waters of race and ethnicity. They saw the upcoming format for the show, decided that they wanted no part of it and did the right thing. Issue a bland, generic statement and walked away. What would you have them do? Give the press ammunition to keep the story alive. Give me a break. What do you the headlines would have been if GM had said “We can not support a format that promotes divisiveness”
They are a car (actually truck) company not the NAACP. It is not their place or in their best interests to offer opinions on race relations, the war in Iraq or celebrity child names.
At 89 editorials and counting I realize it must be getting difficult to come up with new material. But please, GM death watch just sunk to a new low.
I caught the bit about GM pulling ads from “Survivor”. I had thought this was on account of the new whites vs blacks format which is certainly controversial, if not downright racist, until I read your piece. So if GM is now saying they just pulled the ads to put the money in a better place, and the white vs black format had nothing to do with it, they aren’t getting the word out very effectively. Most folk think GM pulled the ads off Survivor because the new format was racist.
More disturbing is the contradictory stories floated in the Wall St Journal. On one hand GM claims sales are up 3.8% but on the other hand they are cutting production 12%. Sounds like sales are actually down and expected to go down more.
Then you complained about “sales increases in plain jane sedans”. GM’s survival depends upon selling more cars. The “plain jane sedan” is the most common car I see every day going to work on Rt128. You see 10 little and medium size sedan for every SUV or pickup truck. If GM wants to survive it has to get into the largest auto market, small economical sedans. Pickups and SUV’s and Devilles and Corvettes are all niche markets. There isn’t enough volume in niche markets to float GM. GM has to jump into the mainstream and compete with Toyota Corolla, plain jane small sedans. What little new product development money GM still has must go toward a world beating small sedan, not wasted on a restyle of niche market gas guzzlers whose market is cratering.
David Starr
Personally I believe they withdrew their sponsorship because of the new format. The question is: What is to be gained by saying so? Right now it is a
survivor/CBS controversy. Why insert yourself into that mix. With the way the press is in this country – that’s all Rick Wagoner will have to talk about for the next six months. It ‘s just not worth it.
“GM’s survival depends upon selling more cars.” From the above post.
One thing (among many) I dont understand… If GM loses money on every passenger car it builds and sells here in the US, how would selling more of them help the company? Sounds like the more it would sell, the more money it would lose. If this is the case, then GM is on the exact right path.
Kinda like “Up to the basement!” line from The Three Stooges
“What little new product development money GM still has must go toward a world beating small sedan, not wasted on a restyle of niche market gas guzzlers whose market is close to cratering”
True up to a point. But any recovery at GM starts with holding the line on trucks and SUVs. GM can not afford to walk away from that market. If they can not hold market share in that segment they might as well close shop now.
“More disturbing is the contradictory stories floated in the Wall St Journal. On one hand GM claims sales are up 3.8% but on the other hand they are cutting production 12%. Sounds like sales are actually down and expected to go down more.”
There’s a simple answer to that question. Inventory is up. Definitely not a good sign.
“One thing (among many) I dont understand… If GM loses money on every passenger car it builds and sells here in the US, how would selling more of them help the company? Sounds like the more it would sell, the more money it would lose. If this is the case, then GM is on the exact right path.”
Manufacturers have a lot of fixed costs: payments that are the same and are not dependents on how many items you manufacture. Such thing as interests on debt, rent, amortization of equpments…
All those things don’t go in the final product but weigh on the cost of the final product.
If I built 10,000 cars in my factory, I have to devide the factory fixed cost / 10,000 and tag that cost to each car (plus of course the cost of the material and all the stuff that makes up the cost per car, like labor, subcontracted part…). this gives me the cost per car.
If I build 80,000 cars in the same factory, given that I can without buying more equipment and tools (yes, that would mean I had a lot of excess capacity) then my fixed cost per car will be much lower (divide by 80,000)
Gee, that’s a long winded explanation.
GM has to cut productions because their wares don’t sell. But they can’t pay less on what they owe on their equipment. And thanks to the unions, they can’t even downscale their workforce (jobs bank and all). They also have a huge bloat of bureaucratic white collar mid management that suck the life out of the organization. But that;s nothing compared to the idiots at the top.
Thanks for the explanation. Makes sense.
Bit the 1st sentence in your last paragraph says it all.
General Motors Death Watch 45692: An asteroid hit the earth today and General Motors is finally dead………so is everybody else.
“They also have a huge bloat of bureaucratic white collar mid management that suck the life out of the organization. But that;s nothing compared to the idiots at the top. ”
Believe it or not, top to bottom GM is actually one of the more efficient and cost effective car companies in the world.
Let's use a little common sense here…
It's pretty obvious GM pulled its ads from Survivor because of the new format. CBS let them claim it was a coincidence because there are a LOT more GM ads on the net. I say fair enough. In fact, I applaud the move. What I can't abide is their craven inability to condemn the format. What would be wrong with saying it was wrong? Who would they alienate? (The mind boggles.) And even if the ad pull was a coincidence, what would be wrong with taking a stand against divisiveness?
It's part and parcel of GM's inability to step up to the microphone and tell it like it is. You want to know why GM is in such rough shape? Because the truth hurts, and they can't stand the pain.
2006300C:
Oh ye of too much faith.
“I caught the bit about GM pulling ads from “Survivorâ€. I had thought this was on account of the new whites vs blacks format which is certainly controversial, if not downright racist, until I read your piece. So if GM is now saying they just pulled the ads to put the money in a better place, and the white vs black format had nothing to do with it, they aren’t getting the word out very effectively. Most folk think GM pulled the ads off Survivor because the new format was racist.”
-exactly; if this is just a coincidence then yes it’s just that, and really bad timing too. But then, shouldn’t your PR people be saying it is, not “I *think* so”. If that was a mistake on the part of the employee that would be grounds for severe reprimand.
“Believe it or not, top to bottom GM is actually one of the more efficient and cost effective car companies in the world.”
-You’re going to have to back up that statement. While GM may be pretty darn efficient given the UAW’s effect on automation in assembly lines, those lines are still part of the company.
“You’re going to have to back up that statement. While GM may be pretty darn efficient given the UAW’s effect on automation in assembly lines, those lines are still part of the company. ”
You just did. They are also continually improving their purchasing processes.
And trust me when it comes to bloated layers of white collar mid-management, you could do a lot worse than GM.
GM real problem is this: It’s a 20% market share company with 50% market
share legacy costs. That’s the root cause of their problems. Everything else you see down to the shoddy interiors is a sympton of that
I just did? I said they MAY be pretty darn efficient. As a whole the company seems extremely innefficient, how much of that is attributable to the UAW is debatable but I doubt anyone without insider info has a definite answer.
I agree that some of the problem is 50% market legacy costs, but I have my doubts that their interiors would be any better even if it wasn’t for that. In my opinion, and from what I’ve seen of GM over the last 15 years, their shoddy interiors are because they never really cared or tried. Quite frankly, even if a car is cheap, an interior can still be designed so that it makes sense and is driver friendly. Plenty of GM designs and subsequent known issues can be attributed to either trying to build in extra maintenance (eg serpentine belts) or engineering laziness (especially true in the 90’s). While we could debate whether this is because the company was trying to do too many things at once or because it didn’t care enough to do things properly, i can say based on my experience driving and working on GMs, I am firmly in the latter camp.
It all comes down to money. There is nothing inherently flawed about GM’s car making process. 15 years ago they punted the family sedan market to the Japanese and effectively became a truck company and now it ‘s coming back to haunt them. There is nothing such as “engineering laziness”. You do what the bean-counters and your budget allow.
My point was when it comes to production and purchasing they are one of the best there is. That is a fact. I didn’t say so. The university of Michigan’s center for automotive research did.
Pretty funny that GM is in effect playing “The Race Card.”
It wasnt too long ago that Cadillac Division’s General Manager made the statement..”We want to position the Escalade as the car of choice for the “Urban Male”.
GM clearly sponsors the show PAYBACK on speed. Where celebs like Jay Leno take select a GM product modify it how they see fit then finally hand off the result to either a loved one or a friend.
Just how much more product placement and Celebrity endorsement could GM buy? The likes of Leno, some nascar driver and others seem all to happy to put one of their friends/family into a brandy new GM product.
Interestingly enogh tho in one scene I noticed that a couple of brand logos were blurred in the background… one of those logos was a blue oval.
Dale Jr gave away a chevy SUV to his sister
Leno gives a friend a Vette
Brooke Burke gives somebody a Caddy SRX
http://www.speedtv.com/programs/456/
How much payback are they getting from PAYBACK? I’ve never heard of it.
Not never watched it, never HEARD of it. I’m thinking low, low exposure there.
G.M did the right and proper thing.G.M is enough doo doo with out taking that can of worms on.I do agree with R.F.though G.M should shout it from the roof tops.
“G.M did the right and proper thing.G.M is enough doo doo with out taking that can of worms on.I do agree with R.F.though G.M should shout it from the roof tops. ”
Please explain to me what GM has to gain by playing moral arbiter of the airwaves and inserting themselves right into the middle of an ongoing controversy.
I am on your side double e as a life long employee I am proud of my company taking a stand on this issue I just wish they had been more vocal.
I’m having a hard time here. Since when is it the right thing to take a side in an important issue and then pretend you did nothing so that you can appear “above the fray”?
I’m sorry, but there is a moral component to business. My wider point: GM does not conduct its business honestly and above board. That’s a key reason the company is in such deep trouble.
tms1999: "And thanks to the unions, they can’t even downscale their workforce (jobs bank and all). They also have a huge bloat of bureaucratic white collar mid management that suck the life out of the organization. But that;s nothing compared to the idiots at the top."
34,000+ employees taking the special attrition program? Salaried headcount down 40% since 2002?
I am not sure about salary,but I started in 1972 we had 15000 plus hourly today maybe 9000 .and we build more cars now then we did then.
It understandable that when you see a once proud american icon reduced to making middle of the road cars, you get angry and want to lash out at somebody and management is the obvious target. The truth is many of GM’s problems are not of it’s own making. America’s style of capitalism (which I think is the best in the world by the way) produces winners and losers. And right now the auto industry is in the loser category. That’s just the way it is.
There is nothing anyone can do to turn GM around in the immediate future.
The only quick way to get rid of the legacy costs is to unload them on us the taxpayers. The other alternative is get the most concessions you can from the UAW regarding future employees and wait for time to do the rest. Retirees w’ont live forever.
D’ont get me wrong – I ‘m not giving GM management a free pass. They ‘ve made many bone-headed decisions.
Just remember – armchair quarterbacking is easy when you are not the one juggling the UAW, GM balance sheet and Kirk Kerkorian at the same time while shouldering the pension obligations of a small country. There is just no “easy button fix” to this problem and anyone who thinks the UAW will give back their hard worn benefits to save the company does not know the UAW. GM is like a battleship. It ‘s not going to turn on a dime. I actually give management a B+. I know that is blasphemy on these pages, but then it’s just one persons’s opinion
Uh, did someone actually endorse the Chevy Celebrity? Speaking of product placement, didn’t Ford have a TV show a couple of years ago where there was some serious truck placement? It didn’t last long, did it? I can’t remember what it was called, why is that?
Speaking of business (and other) practices, in this new millenium, “dishonesty” has been renamed/downgraded to “spin”.
Mr. Farago:
I disagree with your contention that GM does not conduct it’s business honestly. Wagoner has communicated “a specific, honest, clear and coherent turnaround plan that includes all of GM’s stakeholders. It’s right in the annual report. Let’s review:
– Keep raising the bar in the execution of great cars and trucks.
You can’t argue that any car released this year, or even the past two, isn’t head and shoulders above it’s predecessor in design or quality. Are they equivalent to the best of the best in every segment? Of course, not, no one company is. But each one is better.
– Revitalize our sales and marketing strategy.
GM is doing what it said it was going to do, targeted incentives to move certain segments, reduce low margin fleet sales and start selling the vehicle, not the deal. Residuals are moving up, (one reason they can take more risk in the financing customer base) and retail sales are hanging in there. A nice flow of new products is coming, since GM has finally gotten it’s global engineering process firing. (by the way, the Aveo is out, now, looking forward to the TTAC review)
– Significantly improve our cost competitiveness.
Plant investments are aimed at lower cost flexible manufacturing, every vehicle coming out needs less time and labor to build than it’s predecessor, special attrition plan will permit removing unneeded capacity. The most productive auto manufacturing plant in North America (according to the Harbour report) is GM Oshawa #2. So GM knows what it has to do.
Address our health-care and pension legacy cost burden.
– Salaried employee health benefits were modified to reduce costs (including higher out-of-pocket contributions) and defined benefit pensions will be frozen at the end of the year. Hourly employees also voted to increase health care contributions. More significant reductions will be contingent on ’07 negotiations
So, GM is making progress on all of the objectives in the turnaround plan. Now, you can justly argue whether the tactic of publically disclosing specific goals around each of these objectives is the right thing for GM to do. Everyone points to Carlos Ghosn’s deft wielding of this tactic with the Nissan turnarounds. But Nissan has a different relationship (or, in NA, no relationship) with it’s unions than GM, so you can’t point to their success as proof that GM should follow suit. And GM Management will do it if they believe it’s in the best interest of stockholders, employees and customers, not because website pundits are jumping up and down.
And regarding GM’s decision to terminate Survivor sponsorship, well, it’s GM’s decision where and how they spend any of their money, within the law of the land and the approval of the board of the directors. They don’t owe an explanation, true, false or otherwise, to you me or anyone else. Arrogant? Of course. I would hope that the largest motor vehicle manufacturer in the world was at least a little arrogant. Just not too much.
Captain Tungsten,
As I care about the vehicles themselves more than any other aspecxt of the car-game, let me address your first point
“You can’t argue that any car released this year, or even the past two, isn’t head and shoulders above it’s predecessor in design or quality. Are they equivalent to the best of the best in every segment? Of course, not, no one company is. But each one is better.”
Honda is.
Every segment Honda enters, they are the best. Even the S2000 (seven years ago) was the best.
Accord — best
Civic — best
Fit — no competition, even.
Odyssey — see Fit
Ridgeline — best
and on and on.
And you can argue that the new Impalla is better than the old Imapalla, but the Accord from three generations back is better than both combined.
1. Raising the bar for great cars and trucks
See GMDW 88. The Sky/Solstice twins are nice, the Aura’s OK and the GMT900’s certainly more refined (and 1mpg more efficient), but even these vehicles aren’t anywhere near the class leaders. Relative improvements aren’t going to cut it. GM needs to set the bar, not raise it.
2. Revitalizing sales and marketing strategy
Oh please. “Value pricing,” to Employee Discount for Everyone, back to value pricing, to a promise of brand differentiation, to more badge engineering and product overlap, to incentives, to “Anyone with a Pulse” financing, to MORE incentives, etc. GM has become the K-Mart of cars, and I see nothing that’s changing that image, like… killer product.
3. Significantly improve cost competiveness
Again, GM’s made a significant improvement compared to what? Toyota? Hyundai? Honda? The jobs bank still exists. GM’s out of control health care program still exists. Hourly wages are still high. The only major improvements in cost containment come from Chinese out-sourcing and importing more foreign-built cars. Meanwhile, buying out workers and shrinking the biz hasn’t improved GM’s cost competitiveness, it’s just moved the costs around a bit.
4. Address our health care and pension legacy cost burden
The UAW health care giveback was a sham; GM put $3b into a fund to cover for the “cuts.” The worker buyout program did not trim health care provision. GM’s health care program is still gold-plated and riddled with fraud. And if you’re waiting for more health care “givebacks” by the union in the ’07 contract, well, dream on.
At the end of the proverbial English day, what everyone wants to know is exactly how and precisely when GM will return to profitability. This Wagoner’s mob ain’t sayin’. I guess the company’s continually shrinking market share says what we really need to know.
And now Mr Farago we come to the million dollar question:
What would you do to solve GM’s problems?
File for bankruptcy. Start again.
It’s been my casual observation that GM is beginning to recover while Ford is in an irreversible death spiral.
If you really want an answer, see what the Vegas book makers have to say about it. I’m guessing that they’re betting on Ford to go tits up first.
Wipe out shareholder value, dump all your pension obligations on the taxpayer. SWEET.
Hang in there. It might yet happen. I just fell a little sorry for the 80year widows in Michigan. Those $800 dollar a month checks from GM sure help.
Of course if GM were to file for bankruptcy today I ‘m guessing the shareholders (especially KK) and the UAW will stand idly by and watch it happen.
1. “GM needs to set the bar, not raise it”. Whose bar? Your’s? Mine? VW/Audi sets a damn high bar…but they sure aren’t very profitable. Cost counts, those hundreds of lasers in the new VW bodyshops haven’t made them a dime yet. But they sure make pretty cars.
2. I’m counting the time since the announced “refocus” of the marketing strategy last fall, leading to the sticker price reductions announced in January (and watching carefully to see if the knees are buckling). So far, LaNeve’s stayed on message. No argument, though that things were f’ed up from when Zarella came on board until the “refocus”
3. C’mon, 34,000 hourly folks out the door, and they don’t miss a BEAT? And, do you have any examples of “Chinese out-sourcing”? I don’t think there is much coming to GMNA out of China, because they are going hammer and tongs just to supply their own market. It certainly isn’t a significant impact on the bottom line. The plants are GM’s best kept secret, if GM could staff them at the required level, they would be the most productive plants on the planet. And don’t underestimate the impact of global engineering…not much product engineering being done in NA these days…..(some probably think that is a good thing….)
4. I read your post on the health care shell game, and it is well argued. But both hourly and salaried employees are paying more out of their pockets now than they were a year ago. I missed where the programs were riddled with fraud, i’d be more inclined to believe bureaucratic incompetence than malice. And if you are indicting the GM programs, you are indicting a lot of others, as GM uses the same providers that many other companies do. And I think you are underestimating what can be accomplished in the ’07 negotiations, though that is only my opinion. It is distressing that the issue isn’t getting more national attention than it is, health care is broke in this country.
I agree that business results (including, but not exclusively based on NA market share) will dictate which of us is correct. Let’s play the game.
But, if you were to ask me, admittedly a GM fan and supporter, what would constitute the knife that would slice the corporate aorta, I would answer their relationship with suppliers. The pressure on reducing price of purchased components, and the disastrous relationships with suppliers is truly putting the company at a compeititive disadvantage. GM can’t do as much of it’s own engineering work as it could back in the good old days, and is much more dependent on what they can obtain from the supply base. I’m much less a fan of Bo Andersson than Wagoner
Mr. Lieberman:
How do you quantify “best”? I’m a big fan of Honda product, I agree that the Civic is the best small car in the market. But Odyssey? Better than Sienna? Based on what? And it wasn’t the best when it entered the segment A 3/4 size swing door minivan wasn’t the best for the market back then. So they fixed it. (They may want to resurrect the tooling for that car, they probably could sell the hell out of it today)
And Fit? Agree it’s better than Yaris, but what about Versa, and the new Aveo? And they all compete in the B-segment. And Ridgeline, you have to categorize by itself to call it the “best”, if you compare it against other compact pickups, and you worry about load carrying and towing, several other pickups have it beat. It’s the best….what?
And, I think you should like up that ’06 Impala vs. 1990 Accord comparo. I want to hear how you sell that one….
And now I’m going to bed….gotta work tomorrow.
Every segment Honda enters, they are the best. Even the S2000 (seven years ago) was the best.
Acura is such a dominant player in the luxury field……..wait ….no.
The Camry is better than the accord (if you’re into the whole appliance thing)
Civic: you’re right.
Fit: if your too cheap to buy a real car /too lazy to walk or afraid of public transportation have we got the car for you. Saying the fit is superior to all others in that category is like saying having Gonorrhea is better than AIDS.
Odyssey: the Toyota is more refined, the quest is cooler, and the DCX vans still sell the most.
Ridgeline: is to real trucks what the H2 is to real off roaders, the avalanche is better in every way. At my local Honda dealership, the ridgelines are in the back and not even visible from the road.
>One thing (among many) I dont understand… If GM loses money on every >passenger car it builds and sells here in the US, how would selling more of them help >the company? Sounds like the more it would sell, the more money it would lose.
Toyota and Honda make money selling small economical sedans. GM has to learn how to make a desirable low cost car that competes head to head with the Japanese. The mass market is small sedans. GM cannot survive unless they get into the mass market. If you are as big as GM is, you have to make a product that sells in the millions, otherwise you are toast. There are 10 small sedans (mostly Japanese) on the road for every SUV or pickup. GM has to make the hi volume small cars rather than the niche market pickups and SUV’s. GM needs something that sells as well as the Toyota Corolla for about the same price. The car needs good styling, good gas mileage, decent interior, reliability, and some pizzazz. Pizzazz is relatively cheap to mass produce It starts with a good name (Chavy) nice paint, nice interior, and perhaps some racing. GM needs something cheaper than Impala and more attractive than “Classic”. Call it Monza, or Monte Carlos or Bel Air, or even 210, to capitalize upon Chevy’s legendary history. Offer a performance version (Z-somthing) with a big engine and stiffer suspension and race it. They won’t sell all that many of the hot rod version but the pizzazz will rub off on the plain jane get-to-work version and make customer’s willing to shell out a few extra bucks for it.
David Starr
If I held GM stock, or worked for the company, or ran a GM store, I would be furious at The General’s lack of transparency and accountability.
Having lived in GM country (Western NY) most of my life, I can say that the myopia of the above groups when it comes to GM is boundless. They’re blinded by family loyalty and traditional values (as they see them). Heck, one of my most economically astute co-workers just bought a new GM truck. When I asked him about the possibility that a GM bankrupcy would leave him with a worthless warrenty, he said it wasn’t possible.
They don’t get it. They won’t get it. GM’s management knows it can get away with it.
GM’s only chance is if the Dems take congress. Speaker Pelosi and congressman Dingell may strap on the populist kneepads for Rabid Rick’s benefit.
-Mike
File for bankruptcy. Yup, that would do it. A clean slate.
Why does that have an odd smell? Perhaps because I have this evil suspicion that the only thing which would change would be GM’s obligations to its workers (you know, like pensions?).
I guess that’s the American way — if the managers screw up, make the workers pay for it.
It’s called the “ownership society.”
dstarrboston: There is a car kind of like that coming with base small engines and a halo model, its called the Camaro. Let’s just hope that it’s not watered down too much (or at all). The mustang sells 200000 plus and 70%of them are V6s. There is definitely a market.
BTW, the only car in the US market that come close to selling 1 mil a year is the F150.
Robert,
I think that everyone assumes that GM pulled the ads from survivor because of the racial divisions in the new serious but seriously is it in GMs interest to pick a fight with one of the largest media companies in the country. Especially at a time when it attention and energy needs to be spent elsewhere.
It is the same with other issues that face GM. I do not think that the full frontal attack that you seem to propose would be in anyones best interest. Can you imagine the sh** that would hit the fan if GM said that it was going to cut wages, fire dealers and close brands. GM would be gone in 60 seconds as the UAW started a strike, the dealers sued for as much as they could get and the brands loyalist that have been supporting GM turn into GM haters.
While GMs management are not the best and brightest on the planet I do not think that they are the complete incompentant corrupt fools that you make suggest.
Fortune favors the brave.
This just in from one of the top analysts, re: August:
GMT-900 sales also showed moderate signs of fatigue, dropping 23% sequentially. Large SUVs declined month-over-month, including Tahoe (down 16%), Yukon (down 8%), and Suburban (down 18%). With truck inventories rising and sales coming under increased pressure, potential exists for an inventory imbalance and production correction in H2 2006.
To Robert Farago I have read the Gm numbers for August two ways. The first is 3%ahead the other was that adjusted for the one more day of selling this year, the sales were flat, who is right? If the corner is turned, then how did toyota get another 9% of someone elses business yet again. Can these competitors keep moving ahead with no utlimate harm to GM? Finally, as I have asked before, can a company like GM become a Bethlehem Steel where they become so insignificant in the overall market that when they finally do go Bankrupt, it makes little difference in the market place?
One second you criticize gm for being too heavy on the SUV sales…
The next second you criticize GM for selling less SUV’s and selling “low-profit plain Jane sedans†OK….
Pulling the Survivor adds? Why do they not publicly tell the “truth� What?
Publicly telling a TV network to go “screw yourself, we don’t agree with your content†is what we like call “burning bridges†and may not be in the best interest of GM or anyone… you all might of heard of it.
“Hi Judge! I have billions in liquid capitol… Yeah, enough to pay for our debt 20 times but I would like to declare bankrupt!” Wheeeee!
I was not criticizing GM for selling more sedans in Q3. I was simply pointing out that the shift from SUV’s to cars hurts the company’s profitability.
Again, there’s nothing wrong with a company taking a stand on an important issue in which they are directly involved. Do we really live in such amoral times that we want our corporate citizens to avoid “controversy” at all costs?
Besides, do you really think CBS would say “screw you” to GM ad millions?
I’m sure it’s a mutual agreement between CBS and GM not to say “screw you” publicly to anyone. It just does not make any business sense to start a pissing contest with TV networks right now…
GM/CBS – Why make a stink? The film’s already in the can, as they used to say. Possibly CBS let GM off the hook a bit in exchange for not criticizing the network.
There have been complaints that Wagoner doesn’t really have a plan. Captain Tungsten, objecting to that view, provided Wagoner’s plan. It’s worth another look:
– Keep raising the bar in the execution of great cars and trucks.
– Revitalize our sales and marketing strategy.
– Significantly improve our cost competitiveness.
– Address our health-care and pension legacy cost burden
Umm… where’s the plan? Those are strategic goals that almost every company shares. If I went upstairs and said, “Hey, let’s have stale sales and marketing…” or “Let’s keep our costs right where they are…” I’d get laughed at, or worse. The “keep raising the bar…” is a joke. Honesty would have required “meet the bar and then raise it…”
That 4th item; I can give Wagoner an actual plan. Push for national health care, it’s your only hope. Specifics of the plan would be “invest heavily in Congressmen.”
I wish GM well with a revived Camaro. I also heard it won’t be here until 09, which is a long time to wait. Does anyone know if the revived Camaro will be a two seater guy’s hot rod, or a four door get-to-work and get-the-kids-to-soccer car? Don’t get me wrong, I like hot rods as well as the next man, but not all that many folk have the money for sports/sporty cars. And the girls are not, and never have been, into hot rods. The real volume market is plain jane four door sedans. GM is so big that it has to compete in that volume market. Nowhere else can they sell enough cars to meet the expenses of being GM. The old Camaro was a good selling, but niche car, like Corvette. GM can make money on them, but there just aren’t enough guys with Camaro or Corvette money to sell enough of them to keep GM alive. Right now, GM’s products (with the exception of Corvette) are bland, over priced, have quality control issues, and lack the sales appeal of Toyota and Honda. GM has to turn that around, so the customers look on Chevy as more desirable than the competition. Until that happens , GM is in trouble.
The camaro ,dstarrboston, will be like the new mustang a 2+2, if it were not there would be too few sales for a poor man’t corvette. The design is good but to be indtroduced seven years after the new ford mustang is a bit late out of the gate. The last time mustang came first in 1964, GM was in the game in just over a year with the first camaro, but that was when they could turn on a dime. This despite with half of the American market they were truly a gigantic company. That original camaro (and firebird cousin) were good looking cars and sold well, even though the mustang created the market.
Having read the last few “run out of ideas GM deathwatches” Are we going to get back to some decent deathwatch articles, particularly now Bill Ford just let another down and out of ideas CEO take over Ford?
I get two versions of the G.M.story.The first version [from GM] tells me sales are up,share price is up,and we are turning around At the loading dock I d`ont see much evidence of a company in trouble.The second version come from the media,and other sources,and my favorite DEATH WATCH all of wich tell me car and truck sales are off,our vehicles are ok,but not good enough and we are on the edge of bankcruptcy.
I am sincere when I say,I d`ont know who to believe.
I love how opinion turns into fact around here…What a childish agenda.
So you all hate GM. Some unknown Blogger will post a rant and all of the sheep will follow and agree. How tiring and predictable can it get?
I remember watching the first Survivor series and enjoyed it. But over time and reguritation, it has become rather mundane. Apparently, controversy is the only lever left to attract viewers. I’m pulling for “Rock Star”, though. CBS hasn’t completely gone mad.
Have the ratings for Survivor held up? Is it still a worthwhile “vehicle” for advertising vehicles?
Something tells me that the prescription drug companies won’t have a problem with Survivor’s racial overtones. Who knows – some product placement ala Viagara or Cialis could suddenly boost “ratings”.
.
To capture viewers, “Survivor” needs the right chemistry. Over time, the various groups of Survivors have had varying levels of chemistry and varying levels of viewer attention. Until they’ve been on the island for a few days, though, CBS really can’t tell how the crew is going to work out for chemistry.
CBS would like to make this less of a crapshoot by guaranteeing a mix or a gimmick that will capture viewers’ attention and hold them for the season. Whether or not dividing by race will work that way remains to be seen.
I’ve been a moderately loyal “Survivor” fan for many years. I don’t plan to watch this season. I couldn’t say what CBS is doing is “wrong,” but I find it distasteful and disturbing and I don’t need that.
Robert
Why would GM in thier right mind want to dive into the same mess Ford got into with the Gay Christian fight. Personally pulling their ad funds is statment enough and requires no explanation on their part. Unless wagoner has a sign on his pants that says (“Kick me again I haven’t had enough”) IMHO.
“I get two versions of the G.M.story.The first version [from GM] tells me sales are up…”
Sales are up, slightly. If you adjust for selling days, though, I believe they’re flat to last August.
The loading dock may be very busy but one of GM’s problems is that you don’t save too awfully much money if you shut down, which is one way Detroit used to cut costs when things were slow. GM is continuing to build product and letting prices slide to keep “market share.”
Smart moves? Wagoner thinks so. But Wagoner wouldn’t be the first CEO to put a company that was already floundering right onto the rocks.
The big new product, the Sky/Solstice have combined sales of about 2500 units/month. That’s not going to drive the turnaround.
Wagoner just committed to 5/100 on the powertrains, which should help move cars but will also drive warranty costs up. IF the cars are good enough, this won’t cost GM a lot of money. IF Wagoner’s wrong about the reliability of the cars, GM’s costs are going to go up as a result of this.
I’d point out, though, that Toyota (and Honda and others) already has 5/60. For anyone who only drives 12K miles or fewer per year, 5/100 is not an advantage. The advantage here is only for people who put a lot of miles on their cars.
My personal take on this is that if 5/100 powertrain warranties were justified by the reliablity of the cars, Wagoner wouldn’t have waited for Ford to go to 5/60 first.
I believe things are so desperate at places like GM that no one cares what the warranties will cost in five years, they need oxygen now. It was the same story with 0% financing an no credit good rating needed.GM and ford have got to make sales now, clear their inventory and hope the new stuff sells easier. AS I previously said, how big can they ever be again with half the plants and people to staff them? Dhathawa has it pretty good, if you think the sky and solstice will save gm think of their production as equal to corvette, with a ticket price half as much. These are halo products not large sale cars like camry, accord, civic etc. When they can invade those turfs, then success may be near, but who is to build this stuff?