In the old fairy story, con men convince a naked sovereign that he’s wearing fine clothes. Applying that cautionary tale to General Motors is not as straightforward as it seems. Is GM CEO Rick Wagoner aware that the enormous automaker is tumbling towards bankruptcy? Or is he living in a dream world, demanding that his "kingdom" admire his invisible finery? Whether Wagoner’s deluded or deluding, his ”GM Statement on Turnaround Plan” indicates that GM is still buck naked.
"We're delivering on the turnaround plan we established in 2005, and have exceeded expectations on virtually all counts," Wagoner proclaimed.
Welcome to Wagoner’s world, where you can announce that you’ve exceeded your expectations without revealing them. In truth, Wagoner has never set hard targets for GM’s recovery. Not sales. Not market share. Not even a return to profitability. If GM doesn't say where they’re going, why should we believe they’re getting there?
Even a brief look at GM’s declining sales, lost market share and red ink-stained balance sheet reveals that Wagoner’s a legend in his own mind. GM’s decline is a trend that started before the unspecified 2005 “turnaround plan,” that’s continued unabated since its implementation. But never mind that, because “We've set a strong foundation that we can truly build on. We're encouraged by our progress in revitalizing our product portfolio, strengthening our brands, reducing structural cost and growing the business globally.”
Hang on; a few well-received products do not a turnaround make. For one thing, the Chevrolet Malibu, new Cadillac CTS and Lambda-based Crossovers may be media darlings, but none qualify as a runaway sales success. That's especially true as The General screwed-up the supply chain for all three cars, leaving dealers SOL. Lest we forget, GMNA is still juggling eight brands and 49 products (not including discontinued models still for sale or variants). Even if you spot GM five hit products, well, you do the math.
And while we’re at it, GM’s product portfolio is still truck-heavy in an increasingly truck-aversive domestic market. Using the EPA definition of a truck, 28 of those 49 products qualify. That’s 57 percent. Trumpeting the fact that [some of] the vehicles within GM’s product portfolio are “revitalized” is equivalent to boasting that you made a perfect three-point landing at the wrong airport. And that’s without questioning GM's trucks' diminishing profitability.
But we’re really off in “admire that naked man’s clothes” territory when considering Wagoner’s assertion that his administration has strengthened GM’s brands.
Chevrolet is gas-friendly to gas free (if you consider a diesel pick-up “gas free”), but it still sells everything from a rebadged Korean econobox to a $60k sports car without any unifying concept. Saturn asks potential buyers to “Rethink” without giving them anything coherent to think about. Cadillac, the supposed standard of the world, lacks a credible flagship– and looks set to fall further down market. What is a Saab? Does anyone care? Near-luxury Buick is near death (unless you’re in China). Buick's most aggressive competitor, GMC, is re-positioning itself as an upmarket Chevy. Which is what again?
Pontiac is in a Holden pattern, repositioning itself as an importer of rebadged Australian rear wheel-drive sedans. Meanwhile, it sells a farrago of rebadged Chevies (which is what again?), a couple of Toyota and Saturn homonyms and… the Grand Prix. Of all GM’s eight brands, weak-selling Hummer is the strongest; albeit one that’s a politically or gas conscious buyer's anti-matter.
If "strengthening brands" means eight automotive “companies” offering a range of mostly lackluster products that overlap each other in niche, price, engineering and style; products that don’t as a whole adhere to a clear branding strategy, mission accomplished.
So all we’re left with is “reducing structural cost.” As GM’s NA market share is shrinking, and cost-cutting is GM’s Beancounter in Chief’s forte, you’d expect progress on that front. But it should be remembered that all this cost reduction adds to GM’s mountain of debt. The bill for all those employee buyouts and plant closures will eventually come due, and GM’s forthcoming $29.9b VEBA contribution ain’t chicken feed neither.
As for “growing the business globally,” GM North America was, is and will be a financial sinkhole. It will continue to swallow-up all the profits GM can generate abroad– until GM’s Board of Bystanders will be forced to cut North America loose (i.e. declare Chapter 11) to save its European operations.
If you’re happy to admire the Emperor’s new clothes, the “GM Statement on Turnaround Plan” will inspire reverence. But let me draw your attention to one small statement therein. Wagoner promises to “build GM's advanced propulsion leadership position.” For Wagoner to even IMPLY that GM is the leader in advanced propulsion, or SUGGEST that they’re going to build that leadership from scratch, moves beyond hubris into an entirely new realm of fantasy. News flash: the Emperor is naked.
[Read the “GM Statement on Turnaround Plan” here.]
I’m tired of GM and their apologists saying that the company has turned it around. At best, they’re stemming the bleeding, and its still a gusher. The company hasn’t turned around until it can produce a profit for more than one quarter and not based on accounting tricks.
One other issue I’m getting tired of is the talk of the Holdenisation of Pontiac. By all accounts, the VE is a world-class product, which bodes well for the G8 (could have had a CTS?). However, what about the rest of the line up. Aside from the potential Alpha small rear wheel drive platform, the rest of Holden’s products are a collection of Daewoos and Opels that are to be sold in the US either as Chevys or Saturns. What else is Pontiac supposed to get that we should be breathlessly waiting for? Granted, I could see Pontiac going forward with only a Kappa roadster/coupe, Alpha sedan/coupe and Zeta sedan/ute(?), which if offered in the same showroom with Buick and GMC products might provide the dealer with sustainable volume. But the cupboard is otherwise bare.
AM at Ford seems to be making decisive action to pare down the company’s bloated portfolio, which was funded on the 90s truck/SUV profits to create a smaller, smarter company mirroring Toyota’s model. GM needs to wake up and start doing the same emphasizing Chevrolet and Cadillac. The money being spend on the other brands (especially Pontiac, Saturn and SAAB) is throwing good money after bad.
BTW, GM’s above domestic projections include 2008 total US sales almost matching 2007’s volumes at 16 million units, and once again a general market recovery in 2009. Wait a moment, I thought that the “R” word was still verboten in financial circles, but is being whispered louder this month.
Part of GM’s optimism is projected growth in emerging markets such as BRIC: Brazil, Russia, India, and China with the expectation that sales and profits will deluge onto the financial cesspool that is GMNA. One analyst doesn’t think that GM’s growth opportunities aren’t quite as good as they appear and aren’t enough to offset the CARnage in North America. FTA: “The GM dream may have the ring of hope, but it does not yet have a foundation in reality.”
I don’t know what’s going on in Brazil other than that Ford has reached capacity and can no longer send north Verves or dressed up EcoSports.
In Russia, Renault outbid and outschmoozed Putin for Lada. Plan B?
India is being driven by the race to the bottom with the announcement of the Tata Nano, but Rick has so far declined to join that limbo party.
China, as we know, has laws and regulations to keep the ownership of car production in-state, which will likely come home to roost in the next few years.
Let’s look on the bright side. Five “hits” out of 49 is ten percent; pretty good for GM work. And in a year’s time! Extrapolating from that trend line, we can expect all their vehicles to be hits in only nine more years. By that time GM should have the whole fleet converted to plug-in electrics, cold fusion or perpetual motion.
And though 28 of 49 products are trucks in a declining market for trucks, that still leaves 21 cars or reasonable facsimiles thereof. That’s a good base to build on. For starters, GM could add a Saturn-badged Corvette, a Buick-badged Aveo, a Hummer-badged Lucerne, and a Cadillac-badged Impala. (I’m hesitant to suggest a Cadillac-badged Cobalt because the Cimarron was less than a smashing success. Maybe the LaSalle dies and tools are still in a warehouse somewhere.)
But if you remain pessimistic, watch for GM’s 2007 financial statements. I bet RenCen and the auditors will be sweating bullets over the “going concern” assumption required for a clean opinion.
I agree with Lichtronamo. The best thing GM has demonstrated lately is that they can build a great car when they put their minds to it. Many of their new products are very good but GM can’t sell them to save their lives. They can thank their own brand image and the abundance of mediocre products they still produce for that.
Like Ford GM needs to cut the overlap and bloat in their structure which means dropping brands fast and hard. The only reason I can guess as to why they don’t is that they figure feeding the brands one good product and mass rebadges is cheaper than buying out or fighting against hundreds of franchisees in court if they close more brands.
GM’s core business should be Chevrolet and Cadillac at this point, nothing else. All the other brands are completely redundant money pits and don’t do anything Chevrolet and Cadillac couldn’t do better. I’ll make an exception for HUMMER, it’s a very visible niche brand like Jeep that can’t really be emulated by branding the products something else. I also hear GM makes more pure profit in every HUMMER unit sold than anything else.
That great Holden muscle sedan GM is bringing to Pontiac would be better off at Chevrolet, along with it’s coupe-utility (Ute) and wagon body variant. Pontiac’s pig-nose grille and awful brand image will probably sink that car where it could have prospered as a Chevrolet with just a badge change. That’s going to be a shame.
Can anyone imagine how good Cadillac could be if GM had all the money they waste on other brands invested in it? I have no doubt they could come up with a stunning flagship, a CTS with a midlevel V8 to motivate it instead of a V6 that has to be caned, an XLR with a truly premium interior and no need to go downmarket because Chevrolet already has every niche there entirely covered.
GM is a morass, they can produce a competitive and desirable product but are satisfied with mostly mediocrity, mass-rebadging and cannabalization.
Going Chapter 11 could be the best thing that could happen to the company to get their house in order. That is if they’re smart enough to do so.
Would it have been better if Wagoneer said:
“We’ve set a strong foundation that we can truly build on. We’re very encouraged by the reception of our most recent new products, the rebirth of our build-quality reputation, reduction of our future labor costs, and our high global sales.” ?
In government, the primary purpose of any beaurocracy (sp?) is self preservation, regardless of whatever their stated mission or reasons for existence are.
GM has become so bloated, insular, out of touch with the general public, and large over the last several decades that their main purpose in life is to maintain the beaurocracy, keep their way of life in the corporate culture. Just keep the share holders happy, the Board of Bystanders complacent, keep throwing money after ridiculous R&D projects and unmarketable concept cars in order to make a media flash in the pan. If they keep doing that, then somehow everything will turn out alright.
And oh yeah, as an afterthought, keep excreting inferior products for the consumers in America, many who are trying to be patriotic by “buying American” – whatever that means anymore.
GM just doesn’t get it. If I read of Rabid Rick one more time using his wimpy statistical bean counter methods of talking in circles and using meaningless big words and popular flavor-of-the-month corporate speak, all the while saying nothing, then I’m gonna scream. Gawd almighty! GM is lost in space.
So he has a huge sell off of GM assets over 18 months, release a few decent products and a few more less then remarkable clones and because he’s not showing the massive losses of the previous year his “turnaround plan” is a success, going just as he planned. What are they going to do in 2008 with nothing left to pawn. He hasn’t said anything about fixing the enormous GM bureaucracy and inefficient product development, that is where the real problems is. How can anyone expect a turnaround if that doesn’t get fixed.
I think this is my favorite, “GM will continue its efforts — most clearly demonstrated in the recent launch of the Chevy Malibu in the U.S. — to more effectively integrate product and brand marketing strategies“. So they plan to repeat the supply and marketing screw ups of the Malibu on future products.
What happens when they have to pay up on the VEBA with only $27billion in cash, they going to use the Volt development money for that.
I haven’t seen anybody claim that GM has turned it around, that is a straw man argument. GM has been bleeding sales, market share and money for decades, but as a company that generates hundreds of billions of dollars in sales every year, they simply do not have the option to turn it all off like a tap and turn it on again after everything is fixed. After wasting a few decades in denial it became evident to anyone paying attention that GM was starting to clue in to the problems and to affect change as far back as the 80’s with their W platform vehicles. One small step has followed another ever since then, but it will be at least another decade before it is fully rehabilitated. It’s called ‘working with what you got’ and it constitutes a turnaround plan for a responsible industrial giant, despite anybody’s wishes that all their problems could simply be covered under a layer of fine silk.
Consider that there was a time when the reliability of GM products was, well, not. Now their products compete and even surpass the best on that score. There was a time when GM brands were sold out for a small and brief relieve in sales volume. Now brand revitalization is underway and they are reaching their target markets with force. There was a time when GM was thought to be doomed by it’s legacy labour costs, and now an agreement is in hand to release them from that fate. There was a time when GM was justly criticized for failing to anticipate future trends, and now they are described as ‘overreaching’ for striving to be the first to market a PHEV.
Today nit-picking shoppers can very reasonably be expected to find that a Chevy mid-size family sedan compares advantageously against any other on the market. This was unimaginable 10 years ago, when every one was complaining about that very weakness! So you may not like the General’s style or timeframe for the turnaround but the substance is very much there.
Now it remains entirely possible that Wagoner is talking out of his bare behind, but if so then I’d like to see the data you have that makes that such a clear conclusion. But as long my perspective on the ‘turnaround’ remains a valid one, even only in theory, then there is no more Truth in your version of events than in mine.
Wagoner’s assertion that GM is a leader in alternate propulsion systems for cars is hilarious. It is but the visible result of the underlying arrogance, myopia and shear stupidity that characterizes the way GM operates it’s business. I wonder if he ever heard of TTAC much less reads it. I would say that his high priced minions make sure that Rick only sees websites that blow sunshine up their asses. As someone has already said, he seems to be totally isolated from reality. If so GM is being guided by a frightened ostrich. Not too much different from putting an Orangutan in the left seat in the cockpit of a 747 and telling him to land it! If he is acutely aware of what’s going on then he is deliberately following a course which will end up in the destruction of General Motors. In this event he would rate as an evil, cold and calculating CEO who cares little for all the people that make up GMNA. By all accounts Rick is considered to be a decent fellow and not the type who would destroy an enormous enterprise for his own bottom line. So we are left with blissful ignorance and incompetence not only on the part of RW but also Bobus Maximus and the Board of bystanders. This truly is the automotive story of our time. I wonder if Rick really believes His own BS.
i6:
This nit-picky shopper has purchased 3 vehicles this decade. None of those 3 times did GM field a competitive entry in the mid-size sedan (’02 Camry 12/01), minivan (Sienna 6/04), or small people-carrier (Mazda5 2/07) categories we were looking to buy. We’re now looking to sell the Camry on the cheap to an older relative and replace it with a $16k-ish compact with state of the art safety features. Honda and Toyota look like they’ll be fighting for the check this go-around.
And what does GM have to offer us this time? The competent, but relatively uneconomical Saturn Astra, which has no front seat cupholders (you’re not supposed to hang those aftermarket door cupholders in cars that have side curtain airbags). The Mrs. will have our next car as her daily driver, and she’ll be damned (and her office staff, especially) if she can’t have her mug of coffee going into work. Details matter, Bob & Rick.
My Truth clicks quite nicely with the editorial; GM has 8 divisions but not one car we’re willing to take a look at – again?
Consider that there was a time when the reliability of GM products was, well, not. Now their products compete and even surpass the best on that score.
That’s arguable. GM is nowhere near many of it’s competitors as far as reliability, longevity and durability is concerned. As for it’s latest collection of new releases – Aura, Malibu, Acadia etc., it’s far too early to tell. The recent report that rates Buick on par with Lexus just proves how ridiculous these rating systems are. When you squeeze your supply base to extremes to cut costs you end up with garbage parts which barely make it through the warranty. All of GMNa’s Domestic built products are chock full of parts like this. The result is inevitable. It is because of this that a huge number of people will not even consider GM and why should they? Like it or not, in the eyes of many people GM is considered a low quality manufacturer and it’s not because they do a bad job in the assembly plant but because of the low quality of the parts.
To oboylepr I could not agree more on the parts issue. After almost forty years in the car business and the last thirty with one Cadillac Chevrolet dealer parts quality is a big issue. I have seen it be a combination of poor design of the parts to the vendor not using the best materials or building parts with poor tolerances.Gm has squeezed the buffalo too hard. Thru the years I saw components like starters and alternators that had very long lives in the vehicle turn into replace every three or four years be the norm. Gm batteries are a real joke as well. Transmissions became a joke as they failed at forty or fifty thousand miles at a high rate. Now expensive items like dash clusters , window regulators,electronic modules etc fail for not really any good reason. I just got to the point where my advice to anyone was don’t own a GM car or truck out of warranty or if you do you better buy an extended service contract. Pretty sad.
Vettemen, maybe you hit the nail on the head: GM doesnt WANT you to keep a car beyond the warranty date! To do so gives you reason NOT to buy a new car, NOT to see the dealership for warranty repairs.
Youre not really supporting a company if you havent bought a car from them in 10 years, are you?
Looking ahead to 2010:
Newsflash: “After Toyota’s introduction of the 2nd generation Prius and its new diesel Tundra, GM sales of Chevy Malibu, now 3 years old, and Chevy Silverado, now 4 years old, plummet.
GM launches a new strategic program called “GM Onward”. It involves shutting several factories and voluntary buyout offers for 30,000 employees represented by the UAW.”
Just for the fun of it, I took a look at GM’s list of factories and their 2007 production.
What strikes me is that there are a lot of assembly plants that each have quite small production numbers. I’m certainly not an expert on this, but it seems to me large, flexible factories are more efficient.
Some examples:
Hamtramck 130K
Fairfax 190K
Lordstown 280K
Orion 150K
Arlington 184K
Flint 169K
Shreveport 157K
Compare with:
Toyota Kentucky 514K
Toyota NUMMI 408K
Toyota Indiana 280K
Also, GM has a lot of models with very small production runs. I know that’s the way Alfred Sloan designed it in the last century, but it can’t be efficient.
GM sells 92 models that add up to 3.8M sales in the US in 2007. That’s 41K per model on average.
Toyota manufactured 1.6M of 10 models in North America in 2007. That’s 160K per model on average.
This simple Saturday afternoon project tells me GM may continue to have a problematic manufacturing footprint. (no offense intended to all the folks who work at those factories)
The real shame of it is that GM has produced some really good cars lately. The GMT900 trucks/SUV’s look awesome and have great capabilities, the Saturn Opels are great machines, the Malibu looks promising, and the Lambda crossovers are pretty good too. Almost all of their new products could at least be described as class competitive. But, when you break it down, the GMT900 ‘s quality isn’t enough to overcome the market, the Saturn’s loose money, the Malibu’s just a reskinned version of the slow selling Aura, and the Lambda crossovers are just as big and thirsty as the SUV’s they’re supposed to replace. This shows they have the talent to build world class cars but not the leadership.
The Volt performance market will be interesting. A rear wheel drive two door Volt?
The Volt power-train in every vehicle?
One of the strangest things to me has been the narrow use of the Corvette/XLR platform. It is essentially a body on frame, they could put whatever they want on top. If they can sell a 400 hp world-matching coupe for mid 40k, why can’t they put out a v6 or t4 powered small sedan to compete with the 3 series/a4/G35s of the world?
Ole Wagoner is just concluding his argument unconditionally – the ole bootstrap hypothesis. The media is too in bed with ad $ from GM to really want to shake up that tree until the Chapter 11 papers are final.
But these empty promises have been the whole strategy of US businesses, having no real products to stand behind market share, they artificially avoid plummeting of stocks by David Copperfield illussion -like promises. Whenever it is a field of building anything dealing with mechanisms, it is always nice CGIs. Whenever i ask- where the fuck and when I will be able to buy this product, no answer. A nationwide cancer of obsoletness, lack of diversity, and lack of update, tied together by a corporate greed. Bob Lutz, do you feel proud being the boss of the supposedly biggest car manufacturer( weird math applied)in the world and yet being unable to build a single platform of your own? how is it being so rich and being able to buy everything, yet being unable to buy anything that would have be completely engineered by your company or country? just look at your watch, i bet it is not Timex. What Tv set do you have at home, Blender, DVD player? Phone? Why don`t you have an american brand household appliances? i will tell you why! because all of them have the same attitude like your company does, that`s why there are no products you would buy.Bob, make products look and work the same way, like the import ones work at your home or garage!!!! it is that simple!
I would like to see any Balance Sheet (account form or report form) with red ink entries – I haven’t seen one in 10 years of public accounting.
Wagoner came come out in the media and talk about exceeding expectations, but when he talks to the Board or the investment banking community he is speaking to individuals who are aware of the company’s performance goals (via their strategic plan) versus actual performance. They won’t be fooled by flim-flammy, fast talking city-types.
For those of you who really want to know what’s going on, get a copy of GM’s latest annual report (FY2006) and read the disclosures section (called footnotes to the financials.) Then go to Yahoo financial and join the web board discussing GM (there will definitely be insiders from their accounting and finance divisions posting anonymously; the trick is to filter those entries from the crazed nonsense that other less-knowledgeable folks will be posting.) The FY2007 report should be available to the public sometime after June 2008.
When you squeeze your supply base to extremes to cut costs you end up with garbage parts which barely make it through the warranty. All of GMNa’s Domestic built products are chock full of parts like this. – oboylepr
Bingo! Our final GM product, a 1996 model, gobbled up ECUs ($750 each), shock absorbers ($700 pair) and window mechanisms ($350 each). Their OEM replacements raced through even briefer lifespans.
Wagoner came come out in the media and talk about exceeding expectations, but when he talks to the Board or the investment banking community he is speaking to individuals who are aware of the company’s performance goals (via their strategic plan) versus actual performance. They won’t be fooled by flim-flammy, fast talking city-types.
I would hope that you are right about this..but the banks allowed themselves to get really screwed up over the subprime mess, so my [lack of] faith in the banking community rivals my [lack of] faith in Detroit to get its’ act together. Both of these groups ends up smelling like dog crap.
Wagoner came come out in the media and talk about exceeding expectations, but when he talks to the Board or the investment banking community he is speaking to individuals who are aware of the company’s performance goals (via their strategic plan) versus actual performance. They won’t be fooled by flim-flammy, fast talking city-types.
I’m not buying into this “conspiracy of smartest people in the room” theory. More like a confederacy of dunces.
GM is a publicly held company, with a huge range of “stakeholders”– from workers on the line to customers on the vine. Including suppliers, dealers and tens of thousands of “ordinary” shareholders.
ALL of them deserve a company with genuine accountability. That means a company that states its goals, works to achieve them and honestly reports progress, or lack thereof.
Ricky knows best? Trust in the Wagoner? Dude, Watergate happened.
Bingo! Our final GM product, a 1996 model, gobbled up ECUs ($750 each), shock absorbers ($700 pair) and window mechanisms ($350 each). Their OEM replacements raced through even briefer lifespans.
My last GM was beautifully assembled. Unlike my prior GM there was no missing parts, sheetmetal and interior parts lined up correctly and the paint was almost flawless.
On the other hand it was filled with parts the Chinese would have been ashamed of. Failures of simple things like pinion seals, t-case seals, seat heaters, window motors and on and on.
Whatever assembly plant this vehicle was built at was built by UAW (I think-1999 Suburban 2500) members that seemed to care about their job. The issues I had with this particular vehicle can be laid totally at the hands of engineering and management.
Regardless of whether it was the UAW or management, it was the last GM I will ever buy.
Bingo! Our final GM product, a 1996 model, gobbled up ECUs ($750 each), shock absorbers ($700 pair) and window mechanisms ($350 each). Their OEM replacements raced through even briefer lifespans.
I currently have a 2000 Cadillac with a busted PCM, 3 broken window modules, the dash, climate control and interior electronics are starting to give me problems now along with transmission slips and engine that dies whenever it wants. Sure the fit and finish look ok, not the best materials for a Caddy but well put together, but the parts you cant see are crap. It has barely 90,000 miles on it, you would think they would make a $40,000 car last longer than that.
One could argue that the “cut to the bone” supply-line ethos of GM has resulted in cars that are borderline dangerous to drive — whittled to where they’ll just pass inspection, but with no give or leeway.
Which is worth thinking about. Why should GM be different from other businesses that have been operating at a loss for a long time – you’re simply forced to try and cut corners to keep going. What guarantee do we have, as consumers, that critical parts aren’t giving out as we drive fairly new cars?
Stein X Leikanger :
One could argue that the “cut to the bone” supply-line ethos of GM has resulted in cars that are borderline dangerous to drive — whittled to where they’ll just pass inspection, but with no give or leeway.
I agree, but this is not a new thing. My first GM nearly met its demise in a ball of fire, and that was over 20 years ago. I was just lucky it was an extremely cold day and the fire went out by itself!
…What guarantee do we have, as consumers, that critical parts aren’t giving out as we drive fairly new cars?
Out of warranty, that car wasn’t new, but the flaw was most certainly a design defect or maybe an engine manufacturing defect. Luckily for me, it only took me two more GM cars to learn my lesson…
Keep on eye on the leaked story about GM allowing ‘metro’ stores to ‘supersize’ by becoming one-stop shops for all GM brands.
This is a story that is going to have legs….it’s the path to winnowing the dealer ranks in ALL markets down the road.
motownerDo you have any links to this leaked story?
OK, let’s get on with this. RF makes several points that i have a different take on:
“That’s especially true as The General screwed-up the supply chain for all three cars, leaving dealers SOL. Lest we forget, GMNA is still juggling eight brands and 49 products (not including discontinued models still for sale or variants). Even if you spot GM five hit products, well, you do the math.”
Screwed up the supply chain? Well what would you do? With the state’s franchise laws it’s not like you can just walk away from a brand, the bill to close up Olds was, what, several hundred million, maybe in the billions? So, different plan, not all the brands are going to have full lines like the old days, some brands are going to channels (Buick, Pontiac, GMC; Cadillac, Hummer, Saab) These things take time, but at the end of 2007, 72% of BPGMC sales were through aligned dealerships, and there are now 6800 dealers, 600 fewer than when the turnaround plan started. That’s progress to a plan. (those numbers from Rick’s presentation to the analysts, available on investor.gm.com)
“GM’s product portfolio is still truck-heavy in an increasingly truck-aversive domestic market. Using the EPA definition of a truck, 28 of those 49 products qualify. That’s 57 percent”
Uh, under the EPA’s definition, HHR, VUE, Equinox, Torrent are “trucks”, Lambdas, too. I don’t think the market is averse to those classes of vehicles….
“Chevrolet is gas-friendly to gas free (if you consider a diesel pick-up “gas free”), but it still sells everything from a rebadged Korean econobox to a $60k sports car without any unifying concept”
The unifying concept is value through a full range of vehicles, as it always has been, and as it is continuing to be on a global basis. And one thing folks need to realize is that there is only one, just one, engineering organization in GM. The new Saturn VUE, which is hailed (or on TTAC derided) for it’s “German engineering”, was actually developed in two different GM regions, neither of them Europe…. You can certainly look back at vehicles that were developed by regional engineering, but that isn’t the case now.
“Saturn asks potential buyers to “Rethink” without giving them anything coherent to think about.”
Saturn’s design theme is pretty darn coherent, even though the vehicles are coming in from all over the world. It is waiting to be rediscovered. The marketing will come.
“Cadillac, the supposed standard of the world, lacks a credible flagship– and looks set to fall further down market. ”
Just curious, but what do you want for a flagship? And you REALLY think they are backpedaling after having a look at the CTS Coupe (and knowing that it’s a production prototype?)
But, enough about marketing…
“For Wagoner to even IMPLY that GM is the leader in advanced propulsion, or SUGGEST that they’re going to build that leadership from scratch, moves beyond hubris into an entirely new realm of fantasy.”
Wow. This is the statement that actually got me off my duff to write a comment. GM is certainly among the leaders in advanced propulsion, and is THE leader in some. How quickly they forget the EV1; GM was the only carmaker to make an attempt to satisfy the California CARB royalty when they demanded ZEV cars. And the first hybrid vehicle in North America that actually saved it’s owners money wasn’t carrying Hybrid Synergy Drive, it was a city transit bus, plying the streets in Seattle, holstering GM’s two-mode hybrid system (yes the one that’s in the big SUV’s now, and will be in the VUE this fall). Say what you will about the fact that it’s not sold to the public, but rather than using hybrid technology as a marketing tool (and, really, all hail Toyota for creating the hybrid that people want, the one that saves you gas and rubs it in your neighbors face. That capability is the one that won it over half the hybrid market in the U.S.), used it to reduce fuel consumption AND operating costs for transit authorities, AND, actually made a few sheckles along the way. There are now over 1000 of these on the road today.
And, regarding the race for the plug-in hybrid, commentators here like to beat up GM for being a bit non-specific regarding a launch date for a PHEV vehicle. Chairman Watanabe-san says, “Toyota will accelerate its global plug-in hybrid R&D program. As part of this plan, Toyota will deliver a significant fleet of plug-in hybrid electric vehicles (PHEVs), powered by lithium-ion batteries, to a wide variety of global commercial customers, with many coming to the U.S.” Uh….did I miss the “hard target” in that announcement? Royal sartorial splendor (or lack therof) cuts both ways…..
And don’t forget that GM is leading the way in implementing ethanol technology, is in the game in diesels, and is as far along as anyone with fuel cells.
GM got elbowed out of green-dom by dismissing hybrids early on, which was as much a function of not having enough $$ in the coffers to take another flyer on a risky program, as any other factor. That same resource problem may well come back to haunt the PHEV and the Volt. But don’t confuse financial strength and marketing savvy (or luck…) with technical capability. Rick is firmly rooted in reality on that point.
And, regarding the race for the plug-in hybrid, commentators here like to beat up GM for being a bit non-specific regarding a launch date for a PHEV vehicle.
That’s precisely the opposite of the critique being offered.
GM has been quite specific about release dates for the Volt. The problem is that the dates keep changing, and don’t mesh with other information that is available about components required for the Volt (namely, its batteries).
Messrs. Williams and Farago have gone to great lengths to publicize the contradictions. All of these suggest that it is unlikely that the Volt will be anything more than either vaporware or a limited release meaningless experiment ala EV-1.
From this vantage point, the Volt sounds a lot more like marketing hype, meant to distract consumers and stockholders from assessing the desirability and profit potential of the largely mediocre lineup that is actually available at the local dealership, by putting the spotlight on products that don’t exist instead of on those that do. It’s an exercise of rhetoric over substance, which is exactly what the problem has been all along.
Captain Tungsten: “GM is certainly among the leaders in advanced propulsion, and is THE leader in some.”
Really? What alternative propulsion systems do they offer for sale today? Which ones sell in any significant volume? How many have they sold since 2004?
Captain Tungsten: “GM was the only carmaker to make an attempt to satisfy the California CARB royalty when they demanded ZEV cars.”
I don’t see how you make that claim when Toyta Rav-4 EVs are still in use.
You can go to an aftermarket supplier (referred by Ford, apparently) and get a LiIon PHEV upgrade for your Escape. Toyota is delivering demo PHEV units for people to use this summer; the USA Today writer got to drive one. If not today, then very soon, you can lease an H2-powered Honda. Until recently, VW offered diesels. Mercedes, VW and Honda will return with clean passenger-car diesels before GM offers one.
You can not possibly claim GM has any kind of alternative leadership position here. The Volt is an also-ran in what’s becoming an increasingly crowded field.
“Saturn’s design theme is pretty darn coherent, even though the vehicles are coming in from all over the world. It is waiting to be rediscovered. The marketing will come.”
Saturn never should have been started and remains a bit player in the marketplace. It simply drains resources from the core brands while adding nothing. The last thing GM needed in the 1980s was yet another division/brand.
Today there are many more brands competing for the buyer’s attention than there were when Saturn was introduced and it simply isn’t possible to gain the kind of mindshare Saturn would need to be a player.
“How quickly they forget the EV1; GM was the only carmaker to make an attempt to satisfy the California CARB royalty when they demanded ZEV cars.”
Totally wrong. Honda produced the “EV+” in that same time frame and like GM took ’em back and destroyed them. Honda has continued agressive alternative propulsion work and is one of the few companies from which a US customer can buy an LNG powered vehicle today. Have a look:
http://www.arb.ca.gov/msprog/zevprog/symposium/presentations/knight.pdf
Toyota built and SOLD the RAV4-EV and is the only company which didn’t pull them all back and scrap them.
http://en.wikipedia.org/wiki/Toyota_RAV4_EV
Certainly GM is in the hunt on next generation propulsion systems, but to claim that it is way out ahead simply isn’t true.
The Honda Civic GX (LNG) is MSRP $25,225 with shipping. US availability is currently limited to California and New York dealerships, Don’t know if there’s a state residency requirement, but I’m guessing there probably isn’t one as I saw one of these on the DC Beltway a couple of months ago. Just for fun, if you run a search for GX dealers near Houston, TX, you’ll get dealers in both states.
(BTW, this is the only variant of the current Civic that hasn’t been reviewed here at TTAC.)
And don’t forget that GM is leading the way in implementing ethanol technology, is in the game in diesels, and is as far along as anyone with fuel cells.
As far as the vehicle is concerned E85 capability is a minor modification of existing fuel system. It is not a new or breakthrough technology. For GM it was the cheapest way to take advantage of the CAFE loopholes which was their sole motivation for doing it. GM apologists are all the time talking about this flex fuel stuff as if it were the greatest thing since sliced bread! It doesn’t matter that you cannot find ethanol to put in your tank. It doesn’t matter that your vehicle will get a lot lower mileage than than the same amount of gasoline. It doesn’t matter that ethanol uses more energy to produce than it contains. It doesn’t matter that widespread corn production for ethanol fuel production will push up the prices of all other corn byproducts, some of which are staple foods.
No, what matters is it will give something else for GM to brag about in order to usurp the efforts of it’s competitors. In short GM’s attempt at being ‘green’ via E85 is absolutely meaningless. It’s worse than meaningless in that people think that a vehicle with a flex fuel badge is something special. E85 has been a crass and deceitful attempt by GM to treat it’s customers and investors as if they were a bunch of idiots by claiming that it proves GM’s ‘leadership’ in alternate propulsion. It is in fact a farcical attempt to raise their CAFE rating. It is but another example of the BS that flows in torrents from the RenCen. Talk with no substance! Just like the Volt, driverless vehicles and a whole lot more pie-in-the-sky GM projects.
Meanwhile, it sells a farrago of rebadged Chevies
Yes yes, we know you like to use the word “farrago” but just once can’t you use, I don’t know, gallimaufrey?
Screwed up the supply chain? Well what would you do? With the state’s franchise laws it’s not like you can just walk away from a brand…
Building enough cars to meet demand after a massive marketing campaign has nothing to do with dealer franchise laws. How long has GM been in the auto business? Is ‘The Plan’ so sacrosanct that it’s considered sacrilige to make contingencies and flexibly adapt when demand comes in above projections?
When you squeeze your supply base to extremes to cut costs you end up with garbage parts which barely make it through the warranty.
The spirit of Ignacio Lopez lives on. Remember how GM lauded their purchasing chief to the heavens in the mid-90s for bullying suppliers to slash costs? He typified the rank arrogance of the GM organization in throwing its market power around and cutting corners instead of working smarter.
Then this crook exited for VW, stealing industrial secrets on his way out the door. That was about when VW’s quality started going into the can, come to think of it.
Right on Robert. The emperor has no clothes but nobody at the General has the guts to tell him. In the good old days The Big 3 dictated what people would buy so if your car broke down prematurely you had no choice but to buy the same thing again. Now the field has a myriad of players but GM continues to assume they’re the same big dog they were. The dealers are also to blame for assuming you will come back for your next purchase because you like being told “they all do that”. Nuff said.
Saturn needs to be killed ASAP. I agree with jthorner’s comments. In my opinion, Saturn was a stupid idea from day one !!!!!!!!
Saturn’s original mission was to compete with the Japanese and to a lesser degree the Europeans when it came to economical small cars. That experiment sure failed miserably !!!!!!! Now, with the exception of two models(Outlook and Ion), Saturn’s line-up is based on European vehicles(Opel). Maybe, GM, in a back door sorta way is trying to re-introduce Opel to America and is doing it through Saturn??? Why not just market them as Opel’s??
GM still has WAY too many divisions. Pontaic or Buick (keep one)needs to go. All 3(Saturn, Buick and Pontiac) are competing for the same slice of the GM pie. All 3 are going after the customers moving up from Chevy and not quite ready to go to Cadillac.
GM needs to get a reality check before the company joins Ford and Chrysler in chapter 11 bankruptcy!!!!!!!! The day will come. And i believe Ford will be the first one to arrive in court. Better watch out for all the rats fleeing that sinking ship when it finally does start to go DOWN!!!!!!!!!
red dawg-
I predict that there will be no more new Saturn models-this last batch is it. They doubled the number of models Saturn sold (from three to six models), and total sales increased by only 6%. Looking at that another way, sales per model dropped by 47%.
GM gave them all of this new product and none of it has sold well at all. Apparently, early reports of sales of the just released Astra are poor as well (even best case scenerio that would sell worse than the outgoing Ion, and, due to currency issues, GM loses money on every one sold, best case scenerio).
Saturn never made any sense, and it never will. It never made sense when all it sold was Corolla-clones, and since everybody associates Saturn with Corolla-clones, it’s attempt to go upscale is failing as well. That, and the no-haggle pricing bit doesn’t work on more expensive vehicles, especially those that have similar vehicles sold at other GM dealers that DO allow haggling.
Suppose Wagoner were to tell the truth the whole truth and nothing but the truth. Bancruptcy would be almost immedediate. The stock value would tumble, creditors would call in their debts and 40,000+ people at GM would be unemployed, not to mention Delphi, and thousands of other parts suppliers.
Major economic disaster.
And you say you support the US Auto Industry.
Not that the critcism isn’t valid, just that this country’s investors can’t handle the truth.
Bancruptcy will come soon enough, do’t worry about it. Just let GM get smaller and smaller, so that the unemployment impact is spread over a longer period of time.
Until then I will wait for the “GM is DEAD” editorial.
Queensmeet:
Until then I will wait for the “GM is DEAD” editorial.
After death, rebirth, as a stronger, faster, better company. One hopes. BUT
If they leave it too long, they won’t have the human or financial resources to avoid Chapter 7. That really IS death.
The facts are that GM has made solid progress on the quality of new model introductions but the company isn’t yet turned around. The incidence of dramatic quality and desirability gains in new models are not yet majority in the line, and their existence will take some time to be assimilated by the market. This isn’t 1964. Big gains in product will not create a half-million to million units hit in half a model year. Moreover, all the product in the world will not fully overcome the company’s lost expertise in marketing and the effort (and talent) it will take to restore marketing prowess to the equation. They’re learning all over again things the company used to know, just not fast enough to make the immediate impact this community demands.
Is the trend positive? Of course. Is it sufficient to declare mission accomplished? Surely not. So to get there, the perceptions of the public markets, creditors, employees and partners have to be managed. You might say “manipulated,” but it’s no less necessary.
Do you think GM’s senior managers don’t know how closely they are walking the line separating them from bankruptcy? Of course they do. If they forget, you can be sure Fritz is reminding them. In Jack’s words, “You can’t handle the truth!” That is, the market can’t handle the truth, so “truth” has to be massaged, spun, explained — without misrepresentation. The mob needs to be mollified that there really is a path out of the corner GM painted itself into for 40 years. And the market that needs to be mollified includes buyers, ’cause God forbid anyone might ask people to consider their fellow American’s economic well-being and dig into their pockets to buy the company’s best products for their next vehicle purchase. This was true for IBM in crisis circa 1992, true for Sears circa 1980, true for Lincoln running a Civil War in the 1860s, true for Franklin Roosevelt managing the Depression and a World War, and it’s true for GM and Ford today. Could Wagoner & Co. be doing a more artful job? Sure, but the basic elements of shaping perceptions are mandated whatever your style.
You know the actual thinking of the company’s leadership if you have a seat inside, and by what you can observe in products and practices. None of us have the seat in the executive suite or the boardroom. So we’re reading tea leaves, divining for water, and hurling tomatoes at every utterance by Lutz and Wagoner. Face it, that’s nothing more than recreation. On practices, the company is slow to change. On product, immense progress that shows engineers and designers are gaining leverage over beancounters is plain as day. The question is, how can we help?
There’s much I’d be doing differently if I ran GM. Obviously that’s true for most who contribute here. But the criticism in this editorial doesn’t seem to have constructive value. It’s hammering the obvious. Of course there’s spin! Companies must try to shape the psychology of their markets.
Why can’t GM become the leader in new wave propulsive technology? No one else has a firm handle on it yet. Toyota planted a flag in parallel hybrid architecture — a gap filler at best. There are hydrogen projects by multiple makers that have little practical value anytime soon. GM has prototyped a new physical architecture that puts electro-mechanics in a “skateboard” to enable dramatic gains in space utilization, interchangeable bodies with standard coupling, and low center of gravity. They’ve prototyped a series-hybrid architecture and are working with a battery partner to bring it to market. They’ve led the 2Mode hybrid architecture that brings real gains to America’s heavier mass market vehicles and will move that down to lighter weight cars. They have a hydrogen initiative. The E85 push is misguided if corn ethanol is its target fuel, but cellulosic ethanol gives it more credibility.
Yeah, you might say “pick one, GM.” But there’s *no* indication that putting all resources on Volt will get that battery to market sooner. And all resources on hydrogen could just push out practical gains by decades, if ever. The truth is, there will be a mix of propulsion technologies in play while the next energy platforms get sorted out. GM is using its scale and depth of engineering to put multiple bets on the table.
Toyota has a tremendous advantage in its profitability. Leading takes more than money, so, GM, have at it.
Phil
it still sells everything from a rebadged Korean econobox to a $60k sports car without any unifying concept.
What is Toyota’s “unifying concept”?
georgejetson:
What is Toyota’s “unifying concept”?
Reliability.