"We anticipate [that the U.S.] will still be the most profitable market in the decade ahead. It's really key not to be excessively dependent on the U.S., but you still need to be successful in the U.S." It’s no surprise that GM Chief Sales Analyst Paul Ballew sent mixed messages to the financial community when revealing GM’s Q2 sales results. Not to put too fine a point on it, the automaker’s U.S. market share continues to evaporate while its overseas operations continue to expand. The General’s growing foreign sales aren’t enough to compensate for the company’s North American sinkhole, but it gave GM’s spinmeister something to spin. Such is the way of things at GM these days.
That said, this just in: according to Mr. Ballew, GM should begin seeing a recovery in U.S. in 2008. As far as I can tell, no reporter or analyst asked GM’s mouthpiece what events or non-events are covered by the word “should,” what exactly the word “recovery” means, when in 2008 this recovery will arrive or how this sudden rise from GM’s fall from grace will be achieved. Oh, and didn’t GM say they were already in recovery?
Yes, well, it’s no wonder GM’s backed away from that idea. Thanks to a spectacularly lousy June, this financial quarter, at the height of GM’s new product cadence, the automaker’s North America sales fell seven percent. Once again, GM blamed high gasoline prices, a weak housing market and a planned reduction in daily rental sales. So are we to assume that gas prices will decline, the housing market will jump to its feet and the company will abandon abandoning daily rental sales?
The last point raises an important question. It’s all well and good to bolster residual values by limiting fleets sales, but what will take the place of these job lots and raise GM NA out of its current torpor? The new Saturn Astra, whose production and importation costs obviate the possibility of profit? The new Chevrolet Yukon hybrid, an enigma wrapped in a riddle (what kind of fuel conscious buyer buys a huge, poorly packaged SUV)?
How about the new Chevrolet Malibu? Last year, the current fleet queen Malibu racked-up 153,846 sales. If GM is getting out of the fleet business, they’ll need to replace every Malibu removed from fleet duty with one purchased by a retail customer. In other words, Chevrolet will have to sell tens of thousands more Malibus to retail customers just to achieve existing volumes.
The redesigned Cadillac CTS is also on the horizon. Last year, GM’s erstwhile luxury division unloaded 54,846 CTS sedans on its class-conscious customers. Even if Caddy doubles that total, it still wouldn’t generate anywhere near enough profit to rescue a company with eight brands selling 52 models.
Clearly, obviously, GM’s turnaround depends on the company shifting a lot more of everything. While there are some bright spots and heavy hitters in GM’s roster– the law of averages guarantees it– the overall picture is bleak. Other than reducing price, which kills profits and destroys brand equity, what can they do?
Rick Wagoner’s mob doesn’t have an answer. Thankfully (for them), no one’s asking. All eyes are now upon GM’s negotiations with the United Auto Workers (UAW). Wall Street, stockholders and GM camp followers are all watching the proceedings like hawks, presuming that reducing labor costs to transplant parity is the key to GM’s survival. That logic only works if you assume that GM would use the money saved to make better cars. Is there anyone out there who really believes that?
At the risk of sounding cynical (perish the thought), any money saved is likely to disappear down GM’s corporate rat hole. For one thing, if GM bosses pay themselves huge bonuses when the company’s losing billions, imagine what they’ll do after concluding a “historic union giveback.”
Whether or not GM “reduces” its health care obligations by going into subterranean levels of debt (to set up a VEBA for the UAW as described by Frank Williams), whether or not the two sides emerge from negotiations with the status quo intact or destroyed, Chevy and Saturn will still be fighting a losing battle against Toyondissan, Cadillac will still be struggling for sales, Pontiac and Buick will still be deeply damaged brands, Hummer and Saab will still be expensive irrelevances and GMC will still be… there.
Now that GM’s suffered a 24 percent sales drop in June against the transplants’ double digit sales increases, some analysts are beginning to understand the crux of GM’s problem: unloved, unwanted and uncompetitive product. If GM’s sales take another big hit in July while their competition moves upward, there will be even more pressure to do a deal with the UAW. And it will be even more irrelevant.
It’s going to be fun to watch the union stand firm for givebacks knowing full well that rabid Rick and the rest are in line for huge bonuses. meanwhile toyota,honda and nissan march on. Hyundai is bringing a v-8 out in their next car, chysler is bringing chinese cars in, and the Indians are eyeing our markets as well. there are going to be more choices than just malibus and yukons, cars and trucks that won’t sell unless heavily discounted.
I’m currently watching “Roger and Me” and while I want to stay impartial, I have to admit I’m a big fan of Michael Moore and Toyota.
Now, back to GM.
As per normal, GM are trying to put a brave face on bad news. I hate to say this, but I’m starting to not care about the bad news coming from GM. How can one have sympathy to a company who created there problem due to lack of foresight. One only has to look at the SUV craze as to how they put all their eggs in one basket.
For every piece of good news that comes out of GM (i.e sales went up second quarter) at least 10 pieces of bad news flood out (i.e lack of profitability, cash burn, UAW not willing to budge, etc)
The cynical part of me, believes that IF GM manage to survive this storm, they won’t learn from it. When the next craze comes along, GM will make the same mistake and we’ll have a new series of deathwatches.
One could also argue that GM distinct lack of a vision has contributed to their downfall. Make money NOW, are worry about long term profitability later. It’s no coincedence that Toyota’s rise to the top was a long, hard slog with one goal in mind, long term profits from sustainable markets and the best product on the market (OK, that’s 2!). It’s such a simple concept, why can’t GM grasp it?
Now, I know what people are going to say to me, “GM’s quality and reliablity are now on par with Toyota, so what’s the difference?” The difference is this, Toyota didn’t burn as many customers with their products as GM did. If you buy a pizza from a shop and it’s terrible, big deal, you’ve lost £10. You buy a car and it’s a bag of bolts, you’ve lost considerable more! So much more, that you’ll probably won’t trust that supplier again. Again, GM made their own bed, notice a trend?
But to end on an optmistic view for GM, maybe they’ve been doing this turn around all wrong? Instead of trying to be as good as Toyota, maybe they should wait until Toyota mess up, big style! I mean, their recalls are on the rise, the backlash is starting and the Tundras aren’t flying out as quick as they thought it would. But will GM’s cash hold out until that happens? Well, the race is on……..
KatiePuckrik:
Do you remember the old [US] Midas muffler TV ad?
A man in a limo lowers his window (electric!) and asks a technician about their guarantee. The Midas guy says “What’s a man like you want with a guarantee?”
The rich guy says “How do you think a man like me got to BE a man like me?”
Somehow I don’t think Toyota’s about to drop the ball. GM’s going to have to play to win or… lose.
Hello, Mr Farago,
OK, I’m from the UK so I’ve never heard of Midas, let alone seen that advert, but I can see your point.
But, treat my last paragraph with a little less respect! I know Toyota’s not going to drop the ball, you know Toyota’s not going to drop the ball, but do GM’s management know this…..?
KatiePuckrik:
Do they care?
Probably not!
Two words “Golden” and “Parachute”.
Question to all. Who will fare better—GM or Ford ? At this point–neither is in good shape—but at least Mulalley seems to have a vision (leaner and harmonized company with attrative higher quality cars)and a plan to execute against. He also has more “permission” than any “auto outsider” ever has had to affect change in Detroit.
While I find it hard to personally root for Wagoner—I am rooting for Mulalley to succeed.
Very soon, Paul “Ballast” Ballew, or GM for that matter won’t have anything left TO spin.
I too have grown tired of the same old story and same old spin from GM. I also have no interest in many of their new products. It’s beginning to feel as if we’re stuck in a twilight zone where GM will never learn from it’s mistake and where it will keep spinning the same thing over and over to the public.
KatiePuckrik – two of the sentences in your post jumped out at me. These two: “Now, I know what people are going to say to me, “GM’s quality and reliablity are now on par with Toyota, so what’s the difference?” The difference is this, Toyota didn’t burn as many customers with their products as GM did.”
I agree; it’s one of GM’s biggest problems now. Their huge legacy of bad product. We did a piece on it several months ago, titled GM’s Long Road Ahead – go HERE
GM really has it’s work cut out for it in this regard, and it’s true they have no one else but themselves to blame for this legacy, but the stubborn fact remains that it is quite a millstone around their corporate neck.
B Moore – Autosavant.net
The plethora of “brands” and models continues to baffle me.
Can anyone tell me why GMC exists? What message does it send? Why would I buy a GMC truck over a Chevvy truck?
They also seem to have destroyed the key marketing message behind Saturn over the last couple of years (Pontiac and Buick brand destruction pre-date my interest in such things). TTAC has examined the importance of brand value many times but it seems GM just doesn’t get it. Perhaps “deathwatch” should be changed to “deathwish”.
KatiePuckrik
You buy a car and it’s a bag of bolts, you’ve lost considerable more! So much more, that you’ll probably won’t trust that supplier again. Again, GM made their own bed, notice a trend?
KatiePuckrik you say it so well. And you are not even from the US.
I have been so stupid to have had 3 of these GM bag of bolts. One I bought and two more that were bought for me by my company. Bag of Bolts would be a nice description. To me, all three of these vehicles were Detroit Scrap Metal.
If GM or any of the Detroit auto makers want to even have me consider walking into one of their show rooms they will need to have something like a 10 year 150,000 mile warrenty and a 6 month buy back program. Them telling me that their cars are as good or better then the foreign ones won’t do it. Turn off the spin doctors and put your money where your mouths are.
I really like my Nissan Frontier.
Farago, Love the Deathwatch series, keep em coming!
If we’re talking ‘lack of vision’ from GM compared to Toyota, it all comes down the to culture at the TOP.
The big 2.5 are in their predicaments because of short-sighted Top Management. Everyone at the the top of each ladder (including the UAW) is just trying to get the biggest slice of the pie before there is no pie left to slice up! Get as much as you can today, because tomorrow, you may be out of a job!
At Toyondissan the upper managment is driven to make their companies competative, sustainable, and profitable for the long term.
That fact, and that alone will be the downfall of the NA Auto industry. No one since Lee Iaccoca has had any drive or vision to make any of the companies successful, long term.
The US consumer can be fairly fickle. The Exploder isn’t selling far fewer because it is suddenly a lousy product. I can forsee a future where more folks start to realize how the middle class is eroding. The big 3 could see a hefty benefit from a little guv-mint support and a healthy dose of consumer sentiment swing.
And lets not dismiss how a product like the Volt has the potential to shock GM’s sales slide back into a more profitable sales rhythm.
Not that these things are likely, but certainly possible.
The ‘plethora’ of brands exists because keeping them is the lesser of two evils.
Kill the brand – Pay out the UAW and the Dealerships.
Keep the Brand – Pay out a little more development to badge engineer a clone vehicle.
The union and dealer franchise contracts keep GM from killing Pontiac, GMC, Buick, Hummer, Saab.
They should only have 3 brands, basic, midlevel, and luxury. Saturn, Chevrolet, and Cadillac. With ZERO common platforms between them.
Hmmmmm, Jeff,even Toyota shares platforms between its upper and middle models due to the benefits of reduced costs.
But if you look at a lexus and a Toyota they do not look alike. the bodies (in most cases) look totally differnt from each other. Look at the GX470 and the 4runner. Same chassis with totally different bodies. Look at GM’s clones and they really are clones. They grills and tailights are different but that is it.
Why do they call Wagoner “Rabid Rick”?
When I see him, I think he looks closer to comatose most of the time…..
I think GM could use a bit of rabies-induced energy…….
“Two words “Golden” and “Parachute”.”
Or as noted in Chrysler Suicide Watch #17 – Dieter Zetsche flew out on a Golden Jetpack. Golden Parachute is sooo last century.
It is just irrelevent…All of it…Even if the global economy grew at 10%…Just irrelevent. GM should hope that the UAW does not give concessions so as to put GM out of it’s misery.
What kind of consumer’s going to buy a GMT900 dual mode hybrid SUV? Good question, given that the cost is rumored to be $10k, and Americans are notoriously price conscious.
Rather, they’ll keep the old one and buy cars such as an aging C170 Ford Focus, whose sales are on the upswing this year – go figure. Since Ford is losing 3K on each one, that’s a zero sum game the 2.801 are losing.
GM needs chapter 11 to turn it’s business around. I don’t think there is any other way to fix some of the problems they face. Too many dealers, models, badges, health costs, labour costs and senior managers. I read somewhere that GM is a health care provider to 1.1 million people in the US alone. The City of Detroit has more drug stores per head of population than any other place on the planet.
“Good question, given that the cost is rumored to be $10k”
$10K to get maybe 3 MPG.
“The City of Detroit has more drug stores per head of population than any other place on the planet.”
I think Detroit is Pfizer’s main market. GM is a Health Care Provider that tries to make cars as a hobby.
There’s nothing wrong with platform sharing; even Toyota would go bankrupt in a hurry without it. The Ford Focus, Mazda 3 and Volvo S40 all share platforms, as do the Infiniti G35, Infiniti FX and Nissan 350Z; both do so successfully without any branding issue.
The problem is with “badge engineering,” which is the cynical practice of rebranding or repackaging a vehicle through the usual of obvious, transparent cosmetic changes. This is the practice that has made a typical Chevy indistinguishable from a Buick or a Pontiac, and your average Mercury virtually the same as a Ford.
Badge engineering is ultimately a marketing problem, not an engineering problem. It’s appealing because it reduces costs and increases capacity utilization and scale economies, but it is ultimately flawed because it destroys the brand equity of the badges.
Ironically, as Mulally discovered with the numbers of unique parts that FoMoCo uses across the various nameplates, they have managed simultaneously to have both used excessive badge engineering and not enough platform sharing simultaneously. In an amazing feat, Ford has managed to generate excessive parts/ assembly costs **and** kill its brands at the same time.
Oh – let’s start with getting burned on GM. I posted on the Volvo XC70 that we sold the Tahoe to get the Volvo. The Tahoe wasn’t a terrible vehicle in terms of reliability – it did have some horrid rattles and electrical issues and the brakes made you check your auto insurance policy each time you used them, but I was never stranded. On the other hand…
When I first got my driver’s license, my father got a new company car with a promotion. Well…the car wasn’t his choice – a 1990 Oldsmobile Touring Sedan. On the surface, it wasn’t a terrible looking car for the time – white paint, striking grey (not black or chrome) trim, light grey carpets and leather and real wood trim. It was as classy as GM got at the time and it didn’t have a hideous Cadillac digital dash.
To say this car was a piece of junk would be kind. What I would write would get me kicked off of this site.
The checklist:
Failed engine computer
Failed ABS system
Failed climate control system
Stalling problems
Broken steering wheel audio and climate controls
Both power seats broke in very awkward positions
Failed power windows
Failed sunroof
Trip comptuer displayed random lines and numbers but no actual information
The stereo volume would change on the fly and we couldn’t turn the stereo off
Trim pieces stored in the trunk
A rattle in the dash that would violate the Geneva Convention’s rules on torture
Niagara Falls through a “closed” sunroof
Gauges that worked when they wanted to
(is everyone catching onto the trend here?)
The next car was a Mercedes C280. It was decent until about 75,000 miles…but at least it made it to 75,000. Meanwhile the Volvo and the rest of the imports in the family keep on chugging along.
GM – we aren’t the only ones. Unless I win a Z06, I don’t think I’m hopping into your cars ever again.
Oh yeah…I want a formal apology for those wretched safety items called door belts. I loved the feeling of eating a seat belt each time I checked my mirrors!
In an amazing feat, Ford has managed to generate excessive parts/ assembly costs **and** kill its brands at the same time.
I have to agree, and I think that all the big 3 are guilty of that. I can’t help but think if you took a car completely apart, and took a good look at the bits and pieces, the vast majority of them could be shared between vehicles with vastly different form and function and it would invisible to the vast majority of buyers, and this includes the whole basic platform. (As an aside, look at the K car platform. I am not a proponent of it, but it served as the basis for sports cars, coupes, sedans, larger sedans, wagons and minivans.)
To me, the ‘skin’, the interior (design and materials), and the suspension should be enough to differentiate the vehicles.
In that sense I think GM could keep its brands alive if they concentrated on those areas. If they could differentiate based on engines, it would be boon, I think. Why not keep Chev as the more traditional, larger displacement OHV brand? Let Pontiac have the high winding fours, with or without forced induction? As for Chevy Truck and GMC trucks, I don’t know what you could do there…make one the luxury truck? Shrugs.
Another thing that hasn’t been mentioned yet, and this applies to the big 3, is the brutal resale values. It is hard to consider buying a vehicle that is whose value is going to collapse. (I looked at the Ford 500 recently. You can get a 2007 demo for 50% of MSRP. HALF! In less than a year! The Impala is no different. No one likes seeing their money vanish.
I am one of the burned who will never again in my lifetime buy another GM. And neither will my kids, relatives and friends if I have anything to say about it, and I don’t keep my mouth shut on this subject.
They are getting the dirtnap they deserve. Hope it’s cozy with the dirt piled on.
Complete solidarity with those telling their “got burned – never again!” stories.
It was Ford for me rather than GM but after we traded the repeatedly fixed Windstar in for a pre-owned Lexus (ironically at a Chevvy dealership) my wife and I celebrated being a “Ford Free Family” with a nice bottle of wine :-)
pete: “It was Ford for me rather than GM but after we traded the repeatedly fixed Windstar in for a pre-owned Lexus (ironically at a Chevvy dealership) my wife and I celebrated being a “Ford Free Family” with a nice bottle of wine :-)”
Funny—after we traded in our 2002 BMW X5 (marginal vehicle with terrible reliability) for a new Lincoln MKX—-we split a nice 6 pack of Budweiser :-)
oboylepr:
July 20th, 2007 at 4:05 pm
GM needs chapter 11 to turn it’s business around. I don’t think there is any other way to fix some of the problems they face.
That would be the kiss of death. GM would have an even more difficult time selling vehicles if consumers felt that GM could fold. They would concerned about warranty and recall issues?
You buy a car and it’s a bag of bolts, you’ve lost considerable more! So much more, that you’ll probably won’t trust that supplier again. Again, GM made their own bed, notice a trend? – KatiePuckrik
The coup de grâce! The bag of bolts’ manufacturer cajoles, deceives, and belittles the customer and withholds warranty repairs.
Like I’m going back for more of that.
I am rooting for a strike.
Someone mentioned the K-car. Ugh. Chrysler had no money as it was on another of its roller-coaster rides, so it conceived of every possible (read, quick and cheap) variation of a single platform, from the actually decent-looking Daytona to the Caravan. They even stretched it to form the last Imperial, IIRC. That’s badge engineering; nothing else compares.
As for GM, they continue to say they are going to stop with the badge engineering, then they… continue with the badge engineering. Does GM really need the Saturn Outlook, GMC Acadia and Buick Enclave, not to mention the Chevy version that’s replacing the TrailBlazer? We all know why the answer is Yes: to keep the plant(s) going.
Two solutions, I think, to this issue: either cut costs (labor and health care) so that you can reduce supply to meet demand or, more achievable, spin truly different cars off of each platform while cutting brands (less achievable).
For example, you don’t need GMC when you have Chevy selling the same trucks. You don’t need a Pontiac Solstice when you have the Saturn Sky (either/or, but the Sky is a lot better-looking, IMO). But, since you want to leverage economies of scale, you build instead the Chevy Nomad concept.
GM had the guts(?) to kill Oldsmobile. Yes, it cost money, but it probably also saved some. GM needs to rediscover the same guts to kill another division. They also need to resist the temptation to build a version of EVERY SINGLE THING it makes for each division.
If GM didn’t need the money; they wouldn’t have sold off Allison Transmission. They sell something each time they need money. Or did they sell these things off to save money because these things were losing them money?
How did GM used to make money? Bigger market share? Higher profit models? When was the last year they made money selling vehicles? I think a lot of years were overshadowed by GMAC Financial Services making all the profit for GM.
Union(high wages), legacy health care; without these, could they turn a profit from selling vehicles?
They have a major quality perception that will haunt them for some time. “I don’t know if they make good cars and I’m not willing to try one to find out.” Also, the meek, bland offerings. No must have vehicles. No excitement. Just average, generic offerings. They don’t call them generic motors for nothing.
Why don’t they take the initiative and partner with a major gas station chain and get hydrogen distribution setup and available in all the major cities in the 48 states using existing hydrogen distribution sources?
Here’s two:
http://www.airliquide.com/
http://www.airgas.com/
You likely have both of those in the major cities in your state and you can currently get hydrogen(liquid and gas) from them.
One station per large city would be a huge start. Around here, at one time, they had some stations with a CNG pump. At one time also, we had a station that sold gas with 10% ethanol. So it’s not entirely impossible to have a station that dispenses hydrogen at the pump.
GM is going to have to sell things that others don’t so they don’t have to directly compete head to head. Will a Malibu ever be a Camry or an Accord? How’s it better? In what way? Price, performance, mileage, luxury, resale, value, reliability? How about is it in style, trendy, and desirable? That is what GM is up against.
There is a way though they could take over and have most of the market share back again… No down payment. $99 a month no interest ever. You want to sell cars; that’s one way to do it. Everyone has $99 a month to blow on any car or truck of their choice.
You want cars sitting on dealer lots for months or you want those lots cleared out constantly and you bringing in $99 each times thousands instead of nothing most of the time? Those cars will get paid off eventually.
Is there a business case for that method of moving the metal?
That fire sale sure sold some cars that one time.
My GM experience is limited to the…drum roll please…fleet car sitting in my driveway. It’s an 07′ Chevy Impala with the 3.9. It replaced my old 04’Impala. I gotta give credit when and where it’s due. The 07′ is much nicer than the 04′ in every aspect, except handling above 7/10’s. It appeared to me that GM made a strong effort to bring a better product to market. With that said, I still asked myself if I’d step up to the plate and actually make payments on one of these and the answer is no.
A turnaround at GM isn’t an impossibility, but it is highly unlikely to happen as long as the people who got the company where it is today remain in charge. They are simply too invested in their deluded decisions to be willing to have another look in the mirror.
Which is why I have GM off my shopping list when looking for cars. I know that what management isn’t earning in “good product profits” they’re trying to make up by cutting the cost of building a car to the bone.
Sure, they can be pretending to be working on a Volt – won’t fool me.
A friend of mine got burned by the Audi Experience in the very early 90s. A car that went back to the shop way too often due to issues with just about everything – it was one of the top models.
Since then, Audi has spent an enormous amount of hours and resources rescuing the brand, by tackling what was wrong straight on, applying fixes and solutions that were lasting and cutting-edge. The brand is now out of the “lousy quality” morass and clawing its way back to the top tier.
It’s taken a loooooong time, it’s taken ruthless dedication to excellence, and it’s taken a willingness to accept the outcome of a painful reality check: “No, our cars suck and we have to do something about it.”
Do you think Wagoner or Lutz are anywhere close to initiating that process? GM sales are down because of rising gasoline prices, a slumping housing market — sounds like reality is a long way off.
“GM sales are down because we have consistently disappointed consumers with sub-par products and terrible after-sales service, with pretend premium aspirations, with bland brands due to far too obvious cross-platform synergies, and with irrelevant performance measured against real-world customer concerns.”
Would have been more like it.
(Whenever anyone mentions the brand Audi while my friend is within hearing range, a litany ensues about what a terrible brand Audi is. Takes a long time to rub out the memory of a terrible product.)
GM and Detroit can crow all they want how they are now equal in quality and reliability to the imports. Maybe it is even true.
But they have been making the same claim for the last 30 years. Since the 70s they have been essentially saying that we have learned our lesson, oops you caught us, and from now on quality will be most important.
They kept saying this through the 70s. They said it through the 80s. They kept the refrain through the 90s. All along it has been a lot easier to claim quality parity than to deliver it. And that claim has been a decades-long lie.
So what about the, shall we say, disappointed Vega or Gremlin or Pinto or K-car owner who was enticed to try Detroit again in the 80s? and in the 90s?
Why on earth should they believe Detroit now, or ever again?
It is a pity that Detroit completely squandered vast goodwill and anti-import sentiment. It is bad enough that they ran over the consumers in the 70s. But to pick up the customer, dust them off, then run them over again and again? That’s just nuts.
Speaking as a foreigner, I’ve noticed a very disturbing image.
Up until the 1970’s GM, Ford and Chrysler were the top dogs in the North American market. Then, the MOMENT an element of competition came into the market (i.e Toyota, VW, Honda) then the big 3 fell to pieces. It seems that the big 3 were only big….as long as there was no competition! Which brings into play another question.
Where has the competitive spirit of the United States gone in the Auto industry?
Now I can’t speak for the rest of the world but In Europe, don’t believe the hype. Yes, GM MAY be breaking sales records, but they still have a long way to go. In France, to drive anything other than a France car is heresy. In Germany, if you drive a foreign car, you’re a degenerate and in Italy, it’s FIAT’s all the way (and watch FIAT’s market share soar in Italy when the FIAT 500 comes out). Trust me, GM and Ford have a loooooonnng way to go to achieve dominance in Europe.
But back to my original point, if you look at most industries, there’s an American company at the front with superior products to the competition and it’s been that way for a long time. But the moment competition comes, what did GM and Ford do? Did they build a superior product? Did they make their operations more efficient? Did they launch a market offensive? No, they first said, that it was unfair that these transplants were making cars abroad where the currency is weaker, for an even playing field they had to build them in the United States. SO the transplants did! So then GM and Ford, whined about how the transplants will never build a car to American tastes like they can. I think you know how that one ended! Now, after all of this bleating, you’d think they’ start to do some of the things I suggested earlier, Right? Wrong, they played the patriot flag, again, again and again. All the while, burning their customers with shoddy products (Knowing full well, that a superior product now existed on the market in the shape of a transplant. So what was the logic behind that?!). Now, even to this day, GM and Ford are still whining, not even about anything in particular. Their lastes whinge is artifcially weak currencies. Now, there’s 2 problems with this argument:
1. The United States are in no position to complain about a weak currency when the Dollar is running at all time lows against the Euro and the GBP.
2. Most of the cars which are popular in the United States (i.e Camries, Corollas, Accords) are BUILT in the US, thus currency fluctuations are next door to irrelevant! (Also, for any “patriots” out their who say “the money is going back to Japan!”, May I say that, only the PROFITS go back to Japan which is only about 10% of the product, the rest of the 90% gets reinvested into the US, in the shape of new raw materials, labour, keeping the plant running, etc.)
So the real question here is not “Will GM survive?” it’s “How have GM survived for so long…..?”
“If you buy a pizza from a shop and it’s terrible, big deal, you’ve lost £10.”
Holly Cow! 20 bucks for a pizza? Here I can get 3 for $15.
Anyway Katie, I’ve always thought it interesting that you pay attention to the US car market. I don’t pay much attention to the UK market, except that our Honda CR-V was assembled in Swindon.
Dynamic,
The UK doesn’t have a car industry anymore (Well, we’ve got Aston Martin back, but it’s not enough) so I have to focus my attentions elsewhere. It’s just amazing how the United States are replicating EXACTLY the same mistakes as the UK car industry. Militant unions, shoddy products, over reliance on home market and playing to “true patriots”.
“The cynical part of me, believes that IF GM manage to survive this storm, they won’t learn from it. When the next craze comes along, GM will make the same mistake and we’ll have a new series of deathwatches.”
It was less than thirty years ago a spike in the cost of fuel nearly destroyed the Big 3 – at this point I would be completely ashamed to have to use that as justification for poor sales…to this day.
If one thing should reaffirm the belief that GM (and Ford?) are well and truly done for, it’s that the product push of the last couple of years (and each one since the early 1980’s) has done absolutely nothing to slow market share loss. The perception of GM/Ford/Chrysler is so bad, so deeply entrenched, their best efforts are still so irrelevant, that the fall in market share has continued completely unabated.
Why on Earth would anyone think this is going change now?
KatiePuckrik:
Yeah, doesn’t this just sound like British Leyland about thirty years ago?
I still hold out hope for Ford and GM. (Chrysler, I don’t know)
They could still re-realize that it’s the Deming philosophy that is making Toyohondissan the leaders in quality. The D3 did improve quality significantly when their backs were to the wall, and they might swallow their pride long enough to re-learn the lesson.
It’s also possible to turn around perceptions, but it takes time, and money. Others have pointed out that Audi has remade it’s image, and given the image they once had, it’s somewhat remarkable that Audi can even sell cars in the US.
Or we could look at Hyudai’s turn around.
I don’t think it’s impossible for GM and Ford to survive, and even prosper, but it will take some long range thinking. It will take a comittment to still be in the auto business 20 years from now.
Maybe all the management should be replaced with Japanese managers?
Stein X Leikanger “GM sales are down because we have consistently disappointed consumers with sub-par products and terrible after-sales service, with pretend premium aspirations, with bland brands due to far too obvious cross-platform synergies, and with irrelevant performance measured against real-world customer concerns.”
Thats it exactly and the total inability to face or admit the TRUTH about their mismanagement and lack of accountability for years. They always plead innocence and point to the 70s and 80s as the problem years. How about their cars through at least the year 2000.
Dynamic88:”Maybe all the management should be replaced with Japanese managers?”
They need to be replaced but that ain’t happening and that fact is a leading cause of what is wrong with GM. No accountability at the top.
“GM sales are down because we have consistently disappointed consumers with sub-par products and terrible after-sales service, with pretend premium aspirations, with bland brands due to far too obvious cross-platform synergies, and with irrelevant performance measured against real-world customer concerns.”
Never was a truer word spoken!
only fair game can bring back gm to where it was. but i haven`t seen a single evidence in US hardware manufacturing field,where it would have happened. Watches, trains, motorbykes, tv sets, video cameras, optics, industrial workbenches, ind. robots, helicopters, planes, space ships— all these fields give as a hint, that gm is destined to die, among other car manufacturers in usa.they all were sleeping on laurels, and only cared about stock prices, while REAL products were always missing, too slender, or rebadging each other, obsolete or only hoping on advertizing.there is only one way long term plan to succeed in industrial manufacturing- SWEAT OUT REAL , QUALITY PRODUCTS CONSTANTLY. there is no miracle mathematics of products covering each other audience, no service of dealer`s centre, or advertizing campaigns, or internet media, or generation appeals, no savior colours or savior names. the number one thing by far( imagine comparing the radius of the Sun to radius of VV Cephei)is the product itself. a company that portrays her comeback of the most luxurious divsion by exploiting the cheapest brand in europe and quickly tuning it up by hands of wallabies …USA, are you scared of movement manufacturing? greed makes a nice circle, and you return back where you belong…. to flippin burgers in fried chicken kitchen.
Do you think Wagoner or Lutz are anywhere close to initiating that process? “GM sales are down because of rising gasoline prices, a slumping housing market” — sounds like reality is a long way off.
To be fair, even if these guys were the best management team in the world, they would need to say this publicly. A lot of GM’s public rhetoric is meant to support the stock price, hence the need to make shortfalls appear to be interim or anomalous in nature.
So I don’t blame them for fudging the facts a bit in their speeches. The real question is whether they actually believe this stuff, or whether they’ve drunk so much of their own Kool Aid that they believe it, too.
Unfortunately, I’m inclined to think that it’s the latter. GM seems to think that it can manage its way to success through cost cutting (wage and benefit cuts, squeezing suppliers, badge engineering), but none of those things make the product more appealing or interesting to the customer. There seems to be no interest in implementing a serious, radical, focused turnaround plan, and now they are running out of time and money to implement one.
Does anyone out there have a bad experience related to their piston slapping engines made by GM? If so, please share. I have a story and it goes like this: “Deny, Deny, Deny! It’s NORMAL for a gasoline engine to sound like a diesel and to burn oil at the rate of a quart every couple of weeks”.
http://pistonslap.com/
It’s no wonder this company is on life support. Why can’t GM just build a quality vehicle? And why can’t they simply honor their warranty? I mean, a GM vehicle depreciates faster than the twin towers falling down when it is in top notch condition….to toss piston slap onto the conflagration only heightens the vehicles “junk” status.
Granted, I DO miss the quacking ducks of the Cadillac Catera (Opel by any other name). I mean, how does a company which is no longer “engineering-centric” and which is now “marketing-centric” even DREAM UP A YELLOW SQUACKING DUCK”???
And the duck was nothing new anyway…Europeans used to stick duck stickers on cars in the 70’s, so perhaps Rick Wagoner thought that was such a wonderful idea as to justify his ridiculous salary.
Rick, please bring back the duck, hear? There is an untapped market with legions of previous Renault Le-Car owners who would DIE for a yellow duck on their Cobalt.
BRING BACK THE YELLOW DUCK!!!! Your future depends upon it!!
So I don’t blame them for fudging the facts a bit in their speeches. The real question is whether they actually believe this stuff, or whether they’ve drunk so much of their own Kool Aid that they believe it, too.
I respectfully disagree — There is a fundamental dishonesty about the domestics and their marketing, and they absolutely need to address it if they ever hope to move on and stop bleeding market share.
If one of them would flat out say “we sold you crap in the past, we apologize and hope you’ll give us another chance. Here’s what we’re doing to earn your business back…” AND slapped on a 10/100 warranty, I may actually consider looking at a domestic product.
Otherwise, sorry. They had their shot.
There is a fundamental dishonesty about the domestics and their marketing, and they absolutely need to address it if they ever hope to move on and stop bleeding market share.
I agree. But there is a way to do it, and a way not to do it, and associating a specific fiscal period’s performance with a vague attack on the product line and management would not be the way to do it.
I’ve said this before, but my strategy would be:
-Build a few GREAT — not mediocre, or kinda sorta competitive, but class-leading — products in core segments, such as mid-sized sedans and compacts. (This would be much easier to accomplish if the number of nameplates was slashed by 2/3rds. This would also require development of a class-leading 4-cylinder DOHC motor.)
-Make those products stylish and interesting to the consumer, so they have an additional advantage over the market leaders that tend to have styling as their Achilles heel.
-Include an extended warranty and free maintenance package to show support for the product, and to reduce the purchase risk. Back those up with friendly service that doesn’t habitually dispute claims.
It’s not tough, but you need to have product that is up to the challenge. GM’s real challenge that even if they understood the problem, as Lutz claims to have in the past, and even if they believe that something has to be done about it, it will still take them years to actually achieve this. I don’t think that they have that long to wait…
Build a few GREAT — not mediocre, or kinda sorta competitive, but class-leading — products in core segments
Certainly, its all about the product. But honestly, unless they have some super-secret, game-changing project under wraps at GM or Ford, i think they are both headed for the scrap-heap of Chapter 11.
Chrysler is setting themselves up to be the only survivor, as their new private ownership doesn’t mess around. They have made it clear that if necessary they will outsource 100% of their product to China and other low-cost, non-union regions, leaving the UAW and CAW twisting in the wind, IF they are pushed to do so. (And as an aside, I don’t think Chinese quality will be too far different from the crap Chrysler has been shoveling onto the market for the past several years. Why pay workers a premium if the end product is nasty anyway?)
I see no evidence of such steely resolve at GM or Ford.
rollingwreck –
Your statement:
I respectfully disagree — There is a fundamental dishonesty about the domestics and their marketing, and they absolutely need to address it if they ever hope to move on and stop bleeding market share.
If one of them would flat out say “we sold you crap in the past, we apologize and hope you’ll give us another chance. Here’s what we’re doing to earn your business back…” AND slapped on a 10/100 warranty, I may actually consider looking at a domestic product.
Although this sort of mea culpa is admirable in a couple of different ways, it is probably not the best strategy for a company like GM. The first, and the biggest problem, is the fact that the public will take that statement and run with it – the typical reaction will be ” AHA! So you admit you knew you were selling us bad cars all along! You guys are the worst sort of lowlife there is, and I hate you!” This will occur not only among people that already dislike GM products, but will occur to some extent among the millions of GM customers that were really pretty happy with their ownership experience until that public mea culpa.
And then the press, sensing that there is now a story here, will work that mea culpa like a terrier with a bone.
I’m sure you can extrapolate out from there, in terms of ripples and consequences.
So, yes, there is some upside for GM with potential customers like you in terms of making such a statement, but there is far, far more downside for GM in the overall market if they own up to the product failures of the past per your suggestion.
With the exception of beefing up the warranty coverage some more, I think GM is probably doing everything they can in terms of turning around public perception of the company. It’s going to be a very slow process.
Now, on the product front, that’s a different story – I don’t think they’re doing everything they can (although it’s ever so much better than the huge product disasters of the past 30 years), and they really need a great 4-cyl engine in their stable, and some small cars to put it in, and pronto. But that is a much longer conversation…
B Moore – Autosavant.net
Guys, GM’s marketing team HAS done this!!:
http://goliath.ecnext.com/coms2/summary_0199-2838961_ITM
…though only 5% of the ad is (was) “mea culpa” and 95% of the ad discusses “what’s going on that’s good at GM.’
In other words, GM HAS admitted they build achy breaky crap vehicles…and guess what?….STILL nobody will give them the time of day (HAHA).
You ever think you are reading an Archie comic strip with regard to this company? Yes, GM is a joke and an embarrassment to anyone who has ever put in an honest day’s work…and that’s the Truth.
That logic only works if you assume that GM would use the money saved to make better cars. Is there anyone out there who really believes that?
The moneys got to come from somewhere.And the newer models are an inprovement IMO.
Robert,I understand you’re point I believe,but will the same vigor be put into an editorial if & when G.M. has a decent quater?
GM needs chapter 11 to turn it’s business around. I don’t think there is any other way to fix some of the problems they face.
What difference does it make if you have the same management in tact.Or roughly 3 quaters of said managemet still around??
I haven’t read all of the comments, but I would like to pose a question. Instead of trying to reduce fleet sales and fighting to make up those sales with the public, why doesn’t GM dedicate a brand to fleet sales. Buick would lend itself nicely to this as you can’t really hurt that brand any further. Rebadge the current malibus as buicks and sell them to fleets. Meanwhile, move the chevy products more upmarket like with the new saturns. That way you don’t lose any current sales and don’t have to worry about fleet sales wrecking resale values and new car sales on other products.
Am I the only one who thinks GM doesn’t have to die?
Currently GM has 25% of the American market – and it’s a big market. That makes it a shell of it’s former self, but still the number one seller in the US. (Toyota has about 15% of the market -Scion and Lexus included)
So, somehow, GM still has a big slice of a big market. I know they will continue to loose share for some time, but they could loose half their share again and still be only a bit smaller than Chrysler is today.
Of course, it won’t take another 30 years for GM to be cut in half again, but it isn’t going to hapen by the end of this decade either. I think they have time to turn around. Whether GM can find management w/o their heads up their backsides – that’s another matter.
Sanman:
The problem is that at some time, rental cars have to be re-sold to the public. After 5 years, those rental-only cars wont even be worth the lint in your pocket.
So, yes, there is some upside for GM with potential customers like you in terms of making such a statement, but there is far, far more downside for GM in the overall market if they own up to the product failures of the past per your suggestion.
You can say it without saying it. That’s what marketing is for.
BUT, it has to be backed up with DYNAMIC PRODUCT.
I can see an ad where Waggoner comes on and says that to prove to you, the GM non-believer that we’re as good as anybody out there, we’ll sell you this Chevy Greatcar at a price that undercuts the competition. We’ll also give you a 10 year/100,000 mile bumper-to-bumper warranty, do all the maintenance, and gaurantee your resale.
Now, I know that some of you will chuckle at this and say what about the cost?
I say that you need to spend money, to invest in the company for a long term benefit.
Otherwise……
mike frederick:
Robert,I understand you’re point I believe,but will the same vigor be put into an editorial if & when G.M. has a decent quater?
GM may indeed have a “decent quarter.” But that’s part of the problem: long term health sacrificed for shorter term gain.
I will post a laudatory article– indeed, kill the entire Death Watch series– if and when GM’s biz is on a firm footing.
I fear The General is a LONG way from that eventuality.
Nemphre,
Just to clarify, I wasn’t suggesting that you shut the dealers down. Simply, that GM shift its fleet sales to a single brand so as not to devalue all of their brands so badly. I simply thought buick would be the best as it is the most damaged already. It is true that buicks would have a lower resale, but so what. It isn’t like there are that many buyers anyhow. True, the rental companies might wise up, but isn’t it worth the shot of increasing their bottom line with fleet sales while only devaluing a small brand. It is better than devaluing the chevy brand, which has a performance (so much for pontiac) leg to stand on with the vette and the soon to be Camaro.
Instead of trying to reduce fleet sales and fighting to make up those sales with the public, why doesn’t GM dedicate a brand to fleet sales.
The problem with this idea is that GM doesn’t build these cars in the hopes of selling such a high proportion to fleets. Rather, the cars become fleet darlings because the public doesn’t want them.
Fleet sales are a symptom of a problem, more so than a problem unto themselves. Fleet sales are an indication of bad design and poor branding, the byproduct of peddling cars that are designed around a price point rather than consumer needs. If the cars were improved and the public trust in them could be restored, the proportion of fleet sales would naturally decline as the retail sales volumes increased.
The only way to boost this retail sales number in a sustainable and profitable fashion is to build stuff that people want to buy at retail. That requires making the product/service ownership experience so compelling that customers are willing to buy these products without gimmicks or giveaway incentives to lure them in. You could rebrand the Impala as a Buick Rentmaster, but at this moment, Chevrolet would have absolutely nothing else to offer in its place.
All GM would have to do is to start making the EV2 and sell in all 50 states.
http://www.speedreadingcourse.com/hopeforhumanity/02_theev2.htm
Instant home run.
GM actually has the best automotive engineering resources in the world, and their fu*king stupid MBA management kills the company.
As a Service Advisor at a large Chevrolet dealership, I can see why GM is in such trouble. While the drivetrains are adequate, the interior trim and electronic devices are the absolute worst quality. GM should be ashamed of the product that they peddle to the American public. I currently in the market for a new vehicle and there is no way I would consider purchasing a GM (or any other domestic) vehicle. It’s a sad state of affairs that the American manufacturers can’t produce a quality vehicle. But, I guess that I shouldn’t complain about the quality because that is how I make a fat living fixing Detroit’s junk.
“Can anyone tell me why GMC exists? What message does it send? Why would I buy a GMC truck over a Chevvy truck?”
The same could be said, “why is there a Chevy Truck ? Wouldn’t make more sense to get Chevrolet OUT OF THE TRUCK MARKET? Merge Chevy and GMC together, have Chevy the car line and GMC the Truck division? That is what GMC was originally for ! Besides, IMO GMC is a better quality vehicle then Chevy. Chevy has a rep of being cheap. Why not use it to GM’s advantage?
Then close Buick, SAAB and Hummer (leave the first two overseas, kill Hummer). You could even go as far as killing Pontiac In the end you would have a three/four division company:
Chevy/GMC – Affordable & truck division (i.e. Toyota)
Cadillac – Luxury (i.e. Lexus)
Personnally, I have higher doubts of Ford’s survival then GM’s. GM is making money overseas, while Ford is not. Besides, Ford just got started on the “revival”. It will be at least another two years before Ford is on the upswing, if at all.