GM had an excellent May. Despite the title of this series, I’m not going to dwell on the fact that The General’s ten percent year-on-year sales increase is actually a rebound from a disastrous May ’06 (overall sales are still down 3.2 percent compared to the first five months of last year). And I won’t bother pointing out that the majority of GM’s one percent market share gain came out of Ford’s two percent market share loss. Or that GM’s “rising tide lifts all boats” progress pales in comparison with the sales tsunami that Toyota’s [still] riding deep into the American heartland. No I want to focus on debt.
GM is carrying a monumental amount of debt. Forbes pegs the stat at $445b, against a market capitalization of $17b. General Motors has so much debt that even their high-flying foreign divisions know it’s hammer time (“You can’t touch this”). Only a major recovery in the black hole known as GM’s North American market can hope to pay off the interest on the company’s loans– never mind reduce the principal, break even or, Heaven forfend, bank a surplus.
Less than fifty years ago, General Motors had no such burdens. It was one of the world’s largest multi-national, multi-industry conglomerates. The company was so big and so rich it spent all its energies extending and embellishing its status. GM had so much money swilling around its corporate coffers it made money loaning its money to other people.
Those days are long gone. While auto industry pundits focus on the fading fortunes of GM the carmaker, it’s important to remember that virtually all of GM’s ancillary businesses– from refrigerators to airplanes to defense research to locomotives– have been de-acquisitioned. More recently, GM's been jetisoning bits of its core business, from shares in foreign automakers to the entirety of their [now bankrupt] parts provider Delphi.
The full list of items included in GM’s epic family silver sale is too long to provide here. Suffice it to say, in the 15 months to January 2007 alone, GM shed $17b worth of assets. Last month, the corporation hocked their remaining 49 percent share of their GMAC financial unit for $4.1b. Allison Transmissions is next to go. Aside from a few under-the-radar bits and bobs, there’s literally nothing left to sell. (Would YOU buy Saab?)
So it’s on to the plastic! Last Wednesday, GM replaced $1.1b in convertible securities with new unsecured convertible notes. As we reported previously, GM plants and machinery have also been “monetized.” Not to put too fine a point on it, the quintessential American automaker has reacted to the violent contraction in its Empire by going into eyeball level debt. Their dynastic dreams are history (literally). Servicing the debt is Job One.
In the last decade, only two profit engines have been able to perform that life-sustaining task: North American truck sales and GMAC. Now that GM’s pawned its remaining piece of GMAC, the golden goose is dead. High margin pickup trucks and SUVs are the last great hope for bailing out the artist once known as the world’s largest automaker.
While GM's PR machine trumpeted May’s rise in full-sized truck sales, America’s once profitable pickup truck and SUV market continues to contract. Last month, for the first time since 2002, U.S. dealers sold more cars than trucks. Cars accounted for 51.4 percent of all new vehicle deliveries. Aside from the $5k+ incentives GM’s piling on its slow-selling vehicles to staunch the truck-shaped wound, here’s the really scary bit: transplants scarfed-up 61.4 percent of last month’s 804,196 car sales.
Strangely, the Dallas News reports that GM is planning to increase production of the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade at their Arlington, Texas plant in August. Either GM’s planning a major new incentive campaign in July or they’re stockpiling product for a United Auto Workers’ strike. No matter; there’s little expectation that SUV sales can generate the gi-normous profits that management squandered to get them into this mess.
On the face of it, everything’s going to be all right. GM will use the debt/cash to complete its turnaround plan, and then reduce its debt. But first it's got to placate (i.e. pay off) its former workers over at Delphi. And do something about (i.e. pay off) that union guy in Canada who’s watched too many episodes of Dallas ("I’m gonna bring Ricky down, if I have to destroy GM to do it!"). And fund their on-again, off-again, on-again, off-again, on-again range of rear wheel drive-cars. And, perhaps, pony-up a bil or so for the new “Beta” small car platform.
GM’s “We Heart Debt” strategy has topped-up their bank account to git ‘er done (even if it don't). But here’s the problem: they’re tapped out. If there’s a cash-related setback– be it a union strike, gas price spike or a big rise in interest rates– that’s it. Chapter 11. What are the odds?
I think Cerebrus Motor Company is going to put out some cool shit.
GM and Ford don’t tell the public how you make profits selling sub 20K econoboxes instead of 40K luxury suv’s and trucks. You can’t make over 10K gross profit in a vehicle that sells for 14K. If the truck market continues to shrink so will domestic profits. The other potential cash cow cadillac is not selling the quantities of 40K cars (the ones with real profit) to help gm. Why did I write domestic profits will shrink, they are non existant right now, make that the deficit from larger losses will deepen. If it gets down to a price war over economy cars with the likes of the Japanese and Koreans, Ford, GM, and Chrysler lose, they always did in that market place and there is no reason to see how that will change (no matter where the domestics import these little planet savers from)My cousin used to say in a battle for the bottom, Ford was better than GM in gutting a product (read models: T, A. falcon etc.) That was then, now it would be the Koreans and maybe the Chinese who will be the best deliverer of goodies in a low cost package.
So transplants took 61.4% of last month’s car sales. How about actual imports?
RF, How does Fords debts compare to GM’s, who’s in the worse position?
So transplants took 61.4% of last month’s car sales. How about actual imports?
What about fleet sales? If that 61.4% includes fleets then the domestics must be getting absolutely creamed without them. What percentage is critical mass, where if you sell below that you become an odd duckling like Isuzu and no one wants to be the oddball driving one?
Maybe GM only has to play last last domestic standing. If they can outlast Ford or Chrysler they can get the sales of the higher profit margin vehicles out of the hide of their domestic competitors.
I would disagree with the idea that “there’s literally nothing left to sell.” GM has a lot of assets that they could sell. XM, OnStar, Saab, various plants…
Maintaining a cash base through debt does not signal final desperation, it just means that they are playing with some of their assets to keep their cash margin up to operating standards. They are selling a lot, but they bought these assets with the understanding that they could sell them in the future for the dry times–just like people do when they make any investment. Just because you lean on your mortgage does not mean you are going to file for bankruptcy.
I think the bigger story is that Ford put the deed to the company property on the table.
In a saturated North American market, with an over abundance of product, driven primarily by “monthly incentives”
It becomes a game of chicken as to who can last the longest, discount the most, and steal the most market share. Those are the tactics that every manufacturer uses on a monthly basis. Although they embellish the simplicity of the tactics with all sorts of PR.
The manufacturers are not making money, the dealers are not making money, the product is on a constant “cost saving diet”, the consumer well trained by now waits for the last 2 weeks of the month for the “best deal”.
Is it the fact that a manufacturer might go out of business or that the profitability of the entire automotive business is on an inexorable downward spiral.
Now that Toyota has gained access to the mainstream of the Big 3, lets see how they fare in the future.
Nielberg, I’m pretty sure they don’t own XM anymore. When you sell off your proving grounds its sounds like desperation
If there is a strategy, it’s to be the last one standing.
The strategy is no different than it has been; let’s make it through the next quarter. And this brilliant strategy is why they are currently making a profit only on trucks and SUV’s selling in insufficient quantities to be profitable. The more Saturn Auras they sell, the more money they lose, so that dog ain’t gonna hunt either.
This brilliant corporate leadership arises out of bad accounting practices, loss of discipline on “the product” and longstanding poor management. At a time when they were making money, they lacked the corporate backbone to show the rank and file that the salary and benefit structure was unsustainable, and now whine about “legacy costs.” The legacy is mismanagement from R. Smith onward.
I hope they’re making money on the Corvette – perhaps they could sell that division.
Last man standing is how GM will survive.
If Ford or the Dog With Three Heads goes out of business first, that demand doesn’t goes away, and since Toyota is already running thier plants at 110% of capacity, they can’t make up for the demand-so the remaining domestic players will do so.
Ford looks like it’s doing the worst of the three domestics at this point, although with the chaos over Chrysler, that could change. But GM, amazingly, is doing the best of the three. Some (but not all) of thier overseas units (China, GM Daewoo selling cars in Europe as Chevys) are quite profitable and growing, enough to mostly balance the slow (but steady) losses in the US. Basically, they just have to service thier debt until Ford goes kaput. I think they can manage that.
Neilberg: who would buy Saab at this point? GM took whatever was good and smashed it to bits. The Saabaru was the high point in recent memory for Saab. (The rebadged Chevy SUV was surely the low point.) There’s nothing to salvage but nostalgia.
I suppose the Chinese or Koreans might be interested in the brand, though. I think Opel comes with less baggage, though.
This is the kind of article and analysis where this web site really stands out.
edgett:
The Saturn Aura is probably profitable, provided they can sell enough to cover engineering and tooling costs, don’t have to put anybody in the jobs bank, and don’t have to slap heavy discounts on it to move the metal (it has been a poor seller, so they might lose money on it when all is said and done, but if it sold better, it probably would make money).
You make be thinking of the upcoming Saturn Astra, which GM will lose money on every single one they sell, best case scenerio, because they have to import them from Europe, so thier costs per unit, factoring in labor, materials, shipping, and tariffs, are higher than what they can sell it for. And that’s if it is a success!
I don’t understand the theory behind the Astra. If you can’t make money on a vehicle, don’t sell it, you moron. I think they may be testing the waters with it-if it sells well, they will open a plant in the US to make it, if not, well, they will just discontinue it. However, there is significant chance of failure here, because most GM products sell really well the first year or two and then have sharp drop offs. So, it could sell well the first year or two, then they open a plant in the US to sell it, and then sales drop off to the point that they lose all the tooling and other costs for that plant, with a shift of UAW workers back in the jobs bank, making them lose even more money.
Geotpf:
June 5th, 2007 at 10:41 am
Last man standing is how GM will survive.
If Ford or the Dog With Three Heads goes out of business first, …
Actually, the first man falling will get cannibalized by the rest.
RF’s point about GM prepping for a strike is interesting. Does GM management have the stones/competence to pull a Caterpillar? I’d have thought the Dog With Three Heads would play the heavy in the upcoming negotiations…
It’ll be interesting to see where the 2.XX are in October/Novemeber. You’d think some smart limey bookie would have a line on who files first…
Geotpf wrote:
If Ford or the Dog With Three Heads goes out of business first, that demand doesn’t goes away, and since Toyota is already running thier plants at 110% of capacity, they can’t make up for the demand-so the remaining domestic players will do so.
They don’t have to make up for capacity issues, they’ll just import more. When the first one heads into bankruptcy, it’s the Aisians that will benefit, not the domestics. Once one goes under, people I’ve talked to think the other two domestics will eventually follow suit so people will be staying away from the other two’s products. The Aisian players will reap the spoils. Time will tell…
If you can’t make money on a vehicle, don’t sell it, you moron.
I believe this is the crux of GM’s problem, and it is a subtle point. GM loses money on a lot of the cars it builds, but it would lose even more if it didn’t build them at all. You can credit a huge, fixed-cost manufacturing base (massive plants, large pool of unionized labor, etc.) for that.
Here is GM’s tradeoff: build a car and lose $1,000 or leave the workers and factory idle and lose $10,000. “Profit” is not even on the horizon… I don’t see how they will ever get out of this mess, unless demand for autos in the US and abroad grows so much so fast that every manufacturer can raise prices significantly.
GM is probably counting on a Democrat sweep in ’08 to rescue it. A combination of HillaryCare plus a taxpayer bailout might just get the company through it’s crisis. Whether this is good public policy is another question altogether.
that quiet that union guy in Canada
Buzz Hargrove? I heard him speak once. To say that his perspective on economics is ‘unique’ is an understatement.
GM might still make money (though not quite so much per unit) if their smaller trucks didn’t suck so much…yes, I am picking on the CC twins again.
The conventional wisdom is that a Chap 11 company is OK for airline travel but total poison for car buyers.
I’m not quite so convinced. So many companies have used it to do workouts, and so many individuals in their own lives, that I wonder if any “stigma” is pretty much gone.
With the right advertising (and some federal guarantees from Hillary) who knows?
I still don’t see Ch 11 happening for GM. Chrysler will be first, Ford will most likely be second according to the current industry trend, and the reforms from those two bankruptcies will have an enormous impact on GM’s bottom line.
I’m not surprised that no one here has mentioned GM’s business in Asia. It may very well be that GM’s business in this market may become larger than that of the US within the next 10 years. You may want to take a look at how Toyota & Honda handled their retirement obligations back in the 90’s to see where GM’s headed. The blueprint is already there.
“Here is GM’s tradeoff: build a car and lose $1,000 or leave the workers and factory idle and lose $10,000. “Profit” is not even on the horizon… I don’t see how they will ever get out of this mess.”
Brownie the way out is the contract is renegotiated later this year. Unlike many I believe they will get concessions from the UAW. The UAW will be dragged kicking and screaming and in many cases they will be dragged by their own leadership.
Union leadership is not always as stupid as many here think they are. However, they are subject to political pressure as they are nominally elected officials. It has been my experience that they will never in public disseminate what is really going on.
Suppose the following happens. The jobs bank goes away and total job flexibility is given. GM could then shut down any line that was not selling to match demand. In addition GM could have flexible factories like Honda making multiple vehicles off of one line. Large SUVs cooling off and smaller crossovers taking off, simply change the production mix.
Pensions are not killing the big 3 the health care coverage for their union retirees is the killer. Among my many jobs, I am also a government union represented (by my choice) employee. No one in the government has the health care coverage of the UAW retirees with the exception of maybe Federal law enforcement and the very very very top people.
Now suppose GM looks at their health care coverage for union retirees and if it figures they are spending 2000 dollars a year per retiree (I don’t know the figure). They can’t simply go cold turkey and hand them over to medicare but they could say we will give existing retirees a set dollar amount 2000 dollars annually for medicare supplement insurance. The amount is capped and won’t go up. The difference is paid by the retiree. If the premiums go up the retiree has to cover it. This would cap GM’s retiree health care costs and as retirees die of the costs would go down. Employees who have less than say 20 years would not get the health care at all but instead may get a little extra now for an IRA.
Don’t confuse what unions say in public for what is really going on. In many ways their public pronouncements resemble wartime propaganda news accounts. Often they are meant for home front (union member) consumption. They need to show that they are “fighting the good fight” and when they come up with the new contract they will say whatever it is they feel they have to say.
I would think that GM-HK (Hong Kong) is just around the corner. The far-east and Euro operations are making money, it makes no sense to keep them part of the GM NA division. Since much of their debt is unsecured, and that which is secured (GMAC) is simply irrelevant at this point, the switch to a non-Sarbanes Oxley controlled US corp. is fundamentally sound, and also allows for NA to be sent spinning into the wind. Stockholders and US debt holders may not be happy (not to mention the workers – just ask all the former Hoover workers in the US how that HK holding company thing works…), but tough.
I can never quite understand how a company can go bankrupt to screw over their shareholders (the owners) for the sole pupose of reorganizing the company. Such a plan has to be approved by the board of directors who supposedly are there to look after the interest of the shareholders. I know it happens but are the board of bystanders that brain dead. If it happens it will just prove what I have always suspected, that GM is really run for the sole purpose of benefiting the managers. Why else are they never fired by the board?
ihatetrres Does GM management have the stones/competance to pull a caterpillar?
Answer—-NO!
You can’t say competence, and GM management in the same sentence.
A lot of us can’t figure out what GM is up to,with the increased production?
Untill the other shoe drops I’ll take the O.T money though
“Buzz Hargrove? I heard him speak once. To say that his perspective on economics is ‘unique’ is an understatement.”
The “economics” of plunder is hardly unique. It started back in caveman times when the laggard Grog picked up a club and swung it at Great-Hunter Ug’s head and dragged Ug’s babe off by the hair. Economic plunder is at root envy and mental laziness.
I am wondering how much more GM has to sell. I also wonder if GM’s global business is profitable enough to pay finance charges on borrowed money….. I doubt it.
Perhaps after today’s “hybrid” news you’ll have to start a Honda “Malaise” watch series…
I see a number of car companies making missteps in this crowded market. Almost makes one wish that one or two would indeed go away.
It won’t be Honda. They are bringing diesels into the accord line which can hardly be described as a misstep in this market.
Yes I saw that news. Is that part of a bigger better plan or a knee jerk reaction to their Accord Hybrid failure?
Also – I admit I’m way out of date in diesels. Last time I drove one (15 years ago) they were dirty, noisy and lacked oomph. I assume things have changed – but isn’t there still a problem bringing them into some states?
(Sorry for the diversion from GM – perhaps GM death fatigue is creeping in)
So who has plundered the company more, the union or top management? Which group has enriched themselves beyond all belief? Which group is responsible and which is not? Or were all the contracts just signed in the normal course of business? Isn’t that just the independent free thinking individual way here in the USA?
The Law of Attraction states that you attract into your life what you continuously think about. GM has reason to be optimistic at this point in time – they are focusing on what they should be – which is new product that pleases the public. For the first time in a long while – GM has some quality products in its dealerships – and also has some great new cars and trucks coming out this year – 2008 chevy malibu/hybrid tahoe – and they are finally getting serious about their global platforms. If there is any time to be optimistic for GM – its now considering the harsh environment for Auto companies this year.
“The Law of Attraction states that you attract into your life what you continuously think about.”
Then why wont Lauriane Gilliéron return my calls?
“Or were all the contracts just signed in the normal course of business?”
Contracts signed with labor unions are signed under duress thanks in large part to the 1935 Wagner Act and other govt-gun-backed labor laws. Labor Unions operate with the threat of violence.
To ruffneck858:
I could not agree with you more….product wise GM is in its best position in my lifetime. This is no longer the 80’s…they are no longer peddling Citations or Chevettes. Rather, every new vehicle is either competitive or superior in MOST segments it is strategically choosing to compete in….I no longer believe this is opinion…but the truth.
That said—Robert does bring the truth regarding finances….their leverage profile is not pretty. I agree with other posters that they are buying time for the improved product to seed and for other key drivers like the UAW mess to sort itself themselves out. The planets and stars probably need to align in order for their current plan to succeed…while possible…not even close to a slam dunk.
umterp85: Rather, every new vehicle is either competitive or superior in MOST segments it is strategically choosing to compete in….I no longer believe this is opinion…but the truth.
umterp85: What ‘other’ models have you owned/driven that were inferior to GM’s?
“I no longer believe this is opinion…but the truth.”
It’s always opinion. If it wasn’t then we wouldn’t have so many different choices in vehicles. Everyone would just buy the one that is “the best”.
“I no longer believe this is opinion…but the truth.”
Well I suppose everyone believes what they want to believe however it seems to me that the only area where GM is clearly competative is in trucks/SUV’s. Unfortunetly with fuel prices trending as they are, it’s a case of great landing, wrong airport!
I would give GM at least SOME credit on the product side in passenger cars. Most reviews I’ve seen would label the Solstice/Sky, Aura, Outlook/Acadia, Corvette, and Enclave (Megan’s excepted)as clearly competitive.
And to Umter85’s point, GM’s recent product introductions have been well received–Aveo excepted. You can’t say that about Ford (Edge, MKX)and you certainly can’t say it about Chrysler (Sebring, Aspen, Avenger, ComPatriots, Nitro).
I found interesting that many people are refering “Chrysler” as Cerberus or “Three-headed-dog”. As if they had become a sort of he-who-must-not-be-named because it is now owned by a financial group.
Another funny point is that many people are already talking about Hillary as the defacto next president…
I would not bet the house that GM will be saved their chinese division. Talks about China economy implosion are already popping here and there.
Lucky the one living in interesting times…
CAW Chief has threatened to Strike GM in 2008 if they decide to make Transmissions in St. Catherines Ontario rather than in Windsor, Ontario!
Also heard some one who purchased a Wave(Aveo) vehicle thought she had bought a Vehicle made in North America, found out it was made in Viet Nam by GM Daewoo, interesting eh
Does anyone have the latest S&P and/or Moody’s credit ratings on GM?
Hasn’t GM been operating for the past two years under the “Junk” rating?
Someone mentioned “truth and the universal justice” a day or so ago…how fitting is that??
A “Junk” rating for a car company which has made a name for itself producing “Junk”! That’s not such a far stretch, now is it?
Granted, there are some companies which are financially well-off, and which product junk.
But then again, those companies haven’t been working HARD at if for 30 years~!
All’s well that Ends well :D
(But
Geotpf:
You’re correct that it was the Astra I was thinking about as the chief loser, but I think you’ll find that GM hasn’t made a dime on cars in a long time, save some highly optioned Buicks or Cadillacs. And now that they’re trying to make the Aura a decent car, it’s sure to be a money loser.
As to the generally good write-ups, most of them are in the “not bad for a GM offering” vein, and not necessarily when judged against the competition. The Solstice/Sky is a sad example – they have since 1989 to figure out the Miata/MX5 and bring a car to market which weighs 400 pounds more than the current Miata, has a convertible top that would embarass MG, and the same old not-at-market 4 cylinder GM has been peddling for years.
The Corvette remains the one stand out in the GM mix of mediocrity. One can only hope they’re making money on that one.
(I’m European and living in Asia.)
Why do I sometimes get the impression that GM and Ford are cutting away the healthy branches to save the deadwood, the American operations?
These are multinationals that originated in the USA, but does it make business sense to try to save the American operations?
GM does well in Asia, so-so in Europe, and abysmal in the States. Ford does – after some heavy restructuring – very well in Europe, India, and some other parts of the world, their European line-up is wonderful, and Mazda, LandRover and Volvo are doing well too.
Wouldn’t it make – business – sense to focus on Europe, Asia (China, India, ..), South America and other growing markets, and leave the USA to the Japanese and Korean?
Tommickx: interesting point, i’ve thought about that since moving here, but theres too much pride at stake, not only company but nationally. Does America really want to admit it can’t compete any more in another industry? Business wise you can’t make vehicles forever that lose money?! I still believe that the only things GM/Ford etc will retain in the US is a design and engineering base with marketing and an HQ. Maybe some production but i can see that disappearing as problems with the union will increase and profitability wise it will make sense to build outside of the states, more flexibilty will occur, time to evolve or die. It’s a global company/economy after all.
I still think this would have been a better deathwatch for Ford though, especially in light of their recent rumblings to sell off Volvo. Whens the next FoMoCoDW installment, these are interesting times.
What constitutes victory? For Gm it seems to be losing less money than their two domestic competitors. But make no mistake they are still down 3% for the year and toyota is ahead twice that much for the year. Ford is skidding the fastest but chrysler puts out over $4000 discount average (compared to about $3000 for gm and ford) to keep selling at about an even pace from last year. At least half of those discounted numbers are needed to show a healthy $1500 per car profit. If you can't return say 8% of selling price as profit, why bother? GM FORD and CHRYSLER don't need to just sell more vehicles they need to make a profit that justifies staying around. When it becomes clear you are worth more dead than alive (ala Bethlehem steel) let me assure you the plug will be pulled on these companies. At present we probably can only justify two of the three domestics and half of all their combined models and dealers. How to do this I don't know but they have lost combined in thirty years one whole company in market share. The chrysler deal is the first step in reorganizing. I predict in the future, chrysler will not be a full line car builder. There are some good niches for the domestics to sell in, but as full line builders (without the fleet sales), I don't see it. By the way where do the fleets now get their cars since the domestics say they no longer sell to them?
I actually read “death watch” for the same reason that I watch those baby-daddy episodes of Maury. Just when you think the young girl has DNA tested the real father, he comes out child free. And once again she’s shocked until the “real daddy” is brought forth and tested negative once again. GM long term strategy has the same problem. Big hype, no payoff, and government assistance can’t be far away. On both counts, irresponsibility on their part is largely to blame.
On the topic of debt, GM’s debt is at a record high. Similarly, the United States’ debt is also at a record high. Are the two related? Are GM’s problems a sign of a bigger issue: that corporate America in general is a mess?
There are definitely some diamonds in the rough of corporate America, like GE and Intel for example. For the most part though, it seems that American corporations have bad management, bad corporate culture, and are up to their necks in debt.
Ford has put up its plants as collateral, and I expect GM may do the same soon.
Agreed Tommickx… Ford has a terrific line-up in Europe. I was living there when Ford replaced the contemptable Escort with the Focus and the “Mundane-o” with the Mondeo. My first impression, as an American, of the new Mondeo…Ford built a great car by accident.
johnson,
I think you just got a bullseye! The problem GM has is the problem most corporate america is having. GM is a microcosm of the USA which is bankrupt, living for the short term, and hopelessly bankrupt yet so big that they are impossible to kill or let die.
I sincerely hope to be wrong.
And sorry to all for politic ranting in an automobile blog, but ultimately we are talking of corporations that are so big that the consequences of their management goes well beyond any design change of their products.
What is an incentive? It is the value you have to replace in your pricing to make it even with the competition. So toyota is $1000 overpriced on average and the domestics are $3000-4000 per vehicle. Obviously no one wants to discount, but the thing was invented by gm to flex it’s huge mfg. arm in the 90’s and blow away the competitors. Well Toyota and al hung tight and Gm Ford And Chrysler now have a lot less cars to blow out each year as they have downsized. However, the point made here is that with all the downsizing almost 50% in some cases, they still can’t retail the cars for their MSRP. If giving up a huge amount of your mfg. capacity and the pricing it gives you for this volume doesn’t stop the discounting, will it ever stop? Or is it the genie that GM unleased 15 years ago that won’t go back in the bottle.
I would give GM at least SOME credit on the product side in passenger cars. Most reviews I’ve seen would label the Solstice/Sky, Aura, Outlook/Acadia, Corvette, and Enclave (Megan’s excepted)as clearly competitive.
How is it good that the former #1 car company in the world has finally turned out a few competitive models? What happened to leadership?
One of the most famous advertisements of all time was Cadillac’s “The Penalty of Leadership”:
http://www.ciadvertising.org/studies/student/99_spring/interactive/manzano/mac/penalty.html
“In every field of human endeavor, he that is first must perpetually live in the white light of publicity. Whether the leadership be vested in a man or in a manufactured product, emulation and envy are ever at work. In art, in literature, in music, in industry, the reward and the punishment are always the same. The reward is widespread recognition; the punishment, fierce denial and detraction. When a man’s work becomes a standard for the whole world, it also becomes a target for the shafts of the envious few. If his work be mediocre, he will be left severely alone – if he achieves a masterpiece, it will set a million tongues a -wagging. Jealousy does not protrude its forked tongue at the artist who produces a commonplace painting. Whatsoever you write, or paint, or play, or sing, or build, no one will strive to surpass or to slander you unless your work be stamped with the seal of genius. Long, long after a great work or a good work has been done, those who are disappointed or envious, continue to cry out that it cannot be done. Spiteful little voices in the domain of art were raised against our own Whistler as a mountback, long after the big would had acclaimed him its greatest artistic genius. Multitudes flocked to Bayreuth to worship at the musical shrine of Wagner, while the little group of those whom he had dethroned and displaced argued angrily that he was no musician at all. The little world continued to protest that Fulton could never build a steamboat, while the big world flocked to the river banks to see his boat steam by. The leader is assailed because he is a leader, and the effort to equal him is merely added proof of that leadership. Failing to equal or to excel, the follower seeks to depreciate and to destroy – but only confirms once more the superiority of that which he strives to supplant. There is nothing new in this. It is as old as the world and as old as human passions – envy, fear, greed, ambition, and the desire to surpass. And it all avails nothing. If the leader truly leads, he remains – the leader. Master-poet, master-painter, master-workman, each in his turn is assailed, and each holds his laurels through the ages. That which is good or great makes itself known, no matter how loud the clamor of denial. That which deserves to live–lives (Smith, p. 223).”
Now not only is GM in danger of a full scale war with the American UAW unions in the fall, the CAW Canadian union is expressing a desire to kill the goose that continually lays the golden egg on their doorstep.
See for yourselves.
http://www.autoblog.com/2007/06/07/caw-union-head-buzz-hargrove-threatens-to-take-gm-down-in-08-if/
Perhaps it’s time for GM to simply bring in pickup trucks and SUVs from Mexico, and Chevrolet (rebadged Daewoo) cars from South Korea.
Looks like Daewoo was the best buy that GM ever did, to me. To think they paid pennies on the dollar, too.
Well, just goes to show that even perennial screw-ups occasionally get SOMETHING done right.
It shows you how retarded the UAW can be, there needs to be big changes with those monkeys. Why the masses don’t look at their leadership and see the dangers they are leading them into and do something is beyond me.
I suggest take big risks. Put the Camaro into production next week. Select A123 batteries and start building the Volt now. GM can’t wait till 2009+.