As a child I loved to play on swings. Leaning back and kicking my legs forward, I could propel myself into momentary weightlessness. Of course, every good swing ended with an acrobatic dismount. At the point of greatest forward momentum, I would let go of the chains and launch myself off the seat. For a brief moment I would be flying. Like an astronaut on NASA’s vomit comet, I would arc across the back yard. The sensation was thrilling. But I wasn’t a bird. Gravity’s hand never failed to pull me back to earth. And so it is with General Motors.
Today, The General defies gravity. Officially. The global automaker flies near the top of the newly released Fortune 500 list. Corporate revenues of $182b earned GM the number four spot (down one position) on Fortune Magazine’s Fortune 500, trailing only Wal-Mart Stores, Exxon Mobil, and Chevron. As Borat would say, “High five.”
What’s more, General Motors also scored on the list of The World’s 50 Most Innovative Companies. Collaboratively produced by BusinessWeek (BW) and the prestigious Boston Consulting Group (BCG), GM took eighteenth spot on this tally of cutting edge companies. Unlike the Fortune 500, which is strictly a measure of revenue, the BW-BCG list is based on the survey of 2,950 “senior executives” (weighted 80 percent), records of three-year margin growth and revenue growth (5 percent each), and three-year stock returns (10 percent).
GM, who BW dubs a “dark horse,” must have killed on the executive survey because their financials suck. (More on that later.) Fifty-five percent of survey respondents cited General Motors’ products as their most distinguishing innovation (as opposed to innovative customer experience, processes, or business model).
Clearly, the tens of millions (not to say billions) of dollars The General’s spent greenwashing its image has successfully advanced the automaker’s high tech rep within the business community’s chattering classes. One thinks specifically of GM’s highly-promoted, oft-delayed, completely unproven, Prius-chasing gas – electric Chevrolet Volt. And then of GM’s Green Car of the Year Award-winning dual-mode hybrid SUVs. But not specifically of anything actually selling in any number.
I’m at a loss to explain how GM ranks eighteenth of fifty overall behind Toyota (#3), Tata Group (#6), BMW (#14) and Honda (#16) while it is second on the top ten list of innovative automakers produced from the same data by BW-BCG. On that list, GM trail Toyota but edges-out Tata, BMW and Honda. Go figure.
Nonetheless, let us imagine GM flying through the air like a boy slung from a swing, intoxicated by the sweet air of high praise and honor. Now picture a speeding Chevy Aveo slamming into the unyielding off-set crash barrier at the Insurance Institute for Highway Safety. Let’s call that wall GM’s financial report.
During 2007, General Motors suffered $39 b-b-b-b-billion in losses. Among the Fortune 500, GM takes first place in that metric (or last place, depending on how you look at it). Earnings per share fell $68.45, revenue fell twelve percent and assets shrunk $26b.
In fact, General Motors is the only company in the Fortune top ten that lost money, save FoMoCo (who lost a paltry $2.7b). Even the two banks that cracked Forbes’ top ten– Citigroup and Bank of America– managed to turn tidy profits. This despite the ravaging impact of the well-publicized sub-prime mortgage loan losses. To top that off, from 2004 to 2007, GM stock returns slumped eleven percent.
If that number doesn’t put things in proper perspective, consider that General Motors lost nearly as much as Exxon Mobil made ($40.6b). Combine GM’s losses to those of GMAC ($2.3b)– which The General mostly and wisely unloaded during the year– and GM’s losses would have eclipsed the most profitable company in the world.
Unfortunately, conditions in 2008 are no better than ’07. Near-bankrupt suppliers continue to threaten disruption to GM’s manufacturing plants. Commodities market speculation is driving oil and gasoline prices to new highs, and GM has no credible economy car for the vital U.S. market. The American economy continues to flag and consumers are buying fewer new cars. E85, in which GM is so deeply invested, is fast emerging as an eco-fraud and the Volt’s got no batteries. The labor unions are proving that they will yield no quarter so long as the General has a dollar in the bank, no matter how fast their cash is burning up.
Couldda, shouldda, wouldda. Things would certainly be different today if corporate management had started hopping with their new found sense of urgency, say, ten years ago. Or twenty. Or thirty. Can General Motors get its feet back under itself before it hits the ground or are they going to land squarely on their head? Either way, despite this week’s headlines, the company is in a financial free fall and it’s going to hit the ground.
I wouldn’t hold their stock for very long nor invest in the company. 30+ billions in losses on the heels of losses in previous years. The only profits they saw came from hawking off divisions and acquisitions, not from market share or product.
Things would certainly be different today if corporate management had started hopping with their new found sense of urgency, say, ten years ago. Or twenty. Or thirty.
Did GM get a sense of urgency? When?
Wasn’t most of that 39B a one time tax credit? I think they’d have lost something like 1.5B w/o the one time charge. So still a loosing year, but still better than Ford. If I recall correctly they actually made some money in 2006.
This sort of thing is why when they compare professional stockbrokers to random guesses they come out even in the market. These people obviously don’t know s&*%.
Maybe all these rich farts have been impressed by the new Cadillacs? Or they failed to notice that the Volt DOES NOT EXIST. Or mabye these guys are spending so much time in China that they’ve failed to notice GM’s failures in the US.
Of course, arguably GM is a very innovative company. They made the EV-1 (before they crushed them all), they have been researching hybrids for forever (except they still don’t know how to make and sell a decent one), they even had a brand with neat plastic body panels (before they gave up on that for as yet unclear reasons), heck, they have lots of interesting innovations. They just don’t turn them into anything, and abandon those that do come about.
This is why the US is suddenly in trouble economically. Beyond the housing market fiasco, there lies a fundamental stupidity in the business and financial sectors.
@dynamic88:
I thought all of that was a one time tax credit. But then again mentioning that takes away from the sensationalism.
All the same, the basic message is valid: the General needs to tidy up the financial house quickly.
@adamatari:
The 2 mode hybrid is more than a decent system, its an excellent system. Any unbiased engineer will tell you that. Whether you think it belongs in a 6000lb SUV or not does not take away from its credibility.
Now the BAS mild hybrid, is another story. I’m not sure I would even call it a hybrid. Maybe a “fuel economy enhancement system.”
Raskolnikov
I forgot that they sold Allison Tranny for around 4B, so w/o that, they’d have lost well over 5B. So, yes, they need to get the financial house in order.
Bingo, Adamatari. Our car company executives bitch and whine and complain and take home massive pay packages while delivering little to shareholders. Meanwhile, Toyota and Hyundai, with much more modest executive pay packages, speak softly and carry a big stick, with which they have proceeded to beat the snot out of the domestics. It makes me embarassed for American industry.
Seriously, it’s one thing to get into financial distress during bad times – it happens. But all 3 of our domestic car manufacturers managed to get themselves in trouble during a period of tremendous economic growth. HOW IS THAT POSSIBLE AND WHY HASN’T EVERYBODY BEEN FIRED???
Typical TTAC extremes and double standards. Extremes being comparing ones best case scenario to ones worst case scenario. Double standards being it’s ok for one but not ok for the other to do the exact same.
Here’s a great example of TTAC extremes with worst case scenarios. GM didn’t lose 39 billion in cash last year. It had cash losses of 400 million. TTAC had an article on the 38.6 billion non cash accounting loss.
https://www.thetruthaboutcars.com/?p=6235
Anywho, TTAC completely misses the point everytime it analyzes GM’s problems. And GM’s problems have nothing to do with it’s cars. It has everything to do with it’s entitlements. This quote says it all.
“Corporate revenues of $182b earned GM the number four spot (down one position) on Fortune Magazine’s Fortune 500, trailing only Wal-Mart Stores, Exxon Mobil, and Chevron. As Borat would say, “High five.”
The problem is GM is the largest health-care provider in the United States. By far GM’s biggest problem is it’s entitlements. As of 2007, GM has around 71 billion in health-care liabilities and it’s pension liabilities aren’t far behind. I haven’t even touched on GM’s outrageous salaries as well. $75/hr to tighten screws.
It doesn’t matter how good GM’s cars are. If Toyota had the same ridiculous entitlements GM has, it would be in the same predicament GM currently is in. The negotiations late last year with the UAW will help for now. Until GM can further cut into it’s entitlements, it will continue to stagnate.
I agree with you, I won’t be owning GM stocks anytime soon.
William, there is simply no need for this kind of yellow-journalistic sensationalism. GM did NOT lose $38.7 billion dollars; it was a one-time charge that did not come out of GM’s earnings and did not actually result in GM ‘losing’ any money.
It was the result of a change in accounting laws, (referred to as the Sarbanes-Oxley Act) which required GM to report the deferred tax assets. (which under the past system they were not required to report) It makes a nice headline to say that they lost that much, but it is not true. In fact, the only reason GM reported the $38 billion dollars as a loss was the fact that they reported a net loss for that quarter; had they made money they would have been able to not pay taxes on $38 billion dollars worth of income. What this means is that GM recognized that it would not be making that much money (profit) any time soon, so they decided to write that down as a loss, instead of dealing with the new penalties related to it. It was a paper loss only, and has NOTHING to do with GM’s financial situation.
Here’s a great example of TTAC extremes with worst case scenarios. GM didn’t lose 39 billion in cash last year. It had cash losses of 400 million. TTAC had an article on the 38.6 billion non cash accounting loss.
I did not say that GM lost $39B in cash. I did say they lost $26B in assets, which includes cash. No company can sustain this for long.
If Toyota had the same ridiculous entitlements GM has…
But they don’t and GM does.
Instead of constantly admonishing GM, wouldn’t it be better if you prodded Tata,BMW and Honda to strive for improvement and perhaps at least equal the General?
Give it another quarter or two, it should be done soon
“General Motors lost nearly as much as Exxon Mobil made ($40.6b)” And GM’s market capitalization is about $12 billion; Exxon’s around a half-trillion.
“GM didn’t lose 39 billion in cash last year.” Yes, most of the loss was due to write-offs of deferred tax credits generated in prior years. In other words, they had to reverse bookkeeping entries that assumed there’d be future profits to absorb those tax deductions.
“I won’t be owning GM stocks anytime soon” Nor will many others, directly. Institutions and mutual funds (some of which, like index funds, are required to) own about 95% of the stock. It’s mostly a trader’s play.
Now, if you want a chuckle, go to Yahoo’s Finance section and look at analysts’ opinions on GM stock. Some say buy, some say hold, some say sell. Then reflect on the fact that some of these experts are firms now in shell shock because they failed to realize they were themselves holding huge time bombs in the form of subprime mortgage securities.
brownie_”Seriously, it’s one thing to get into financial distress during bad times – it happens. But all 3 of our domestic car manufacturers managed to get themselves in trouble during a period of tremendous economic growth. HOW IS THAT POSSIBLE AND WHY HASN’T EVERYBODY BEEN FIRED???”
Well put. It’s like some friends I have that could not hold a job in the ’90s when virtually all that was needed was a pulse. And not a steady one.
It clearly takes more than just a good product (and the average at El Generalissimo is not impressive) to win in the business world.
Pathetic relations with suppliers and employees and smoke and mirrors games trying to keep the books looking good have compounded the problems that come with decades of crappy products.
Bunter
GM did NOT lose $38.7 billion dollars; it was a one-time charge that did not come out of GM’s earnings and did not actually result in GM ‘losing’ any money.
While I appreciate the attempt at unbridled optimism, this misses the point.
If GM honestly anticipated becoming profitable on the level of Toyota, it would not have taken the charge off because it could have used them in the future to offset their future tax liability.
Last fiscal year, Toyota generated almost $14 billion in net profit. If they had had the loss carryforwards on their books that GM had, they certainly would not have punted them en masse because they could have used them.
But GM had no choice to dump them…because they do not expect to earn the profits needed to use them. The accounting rules forced them to make an accounting statement that contradicts all of the happy talk coming from Wagoner et. al. GM’s management does not honestly expect to pull out of this nose dive anytime soon; the accountants blew their cover.
it was a one-time charge that did not come out of GM’s earnings and did not actually result in GM ‘losing’ any money.
Then whose earnings did this loss come out of?
It was the result of a change in accounting laws, (referred to as the Sarbanes-Oxley Act) which required GM to report the deferred tax assets. (which under the past system they were not required to report) It makes a nice headline to say that they lost that much, but it is not true. In fact, the only reason GM reported the $38 billion dollars as a loss was the fact that they reported a net loss for that quarter; had they made money they would have been able to not pay taxes on $38 billion dollars worth of income. What this means is that GM recognized that it would not be making that much money (profit) any time soon, so they decided to write that down as a loss, instead of dealing with the new penalties related to it. It was a paper loss only, and has NOTHING to do with GM’s financial situation.
You cannot dismiss “paper losses” as insignificant. Ultimately all accounting entries transactions are real dollars. They impact a company’s net worth, cash flow, ability to obtain credit, issue bonds or stocks, etc. Losses are losses, be they against current period operations, deferred earnings/losses from prior periods, or future earnings/losses. And this has EVERYTHING to do with GM’s financial situation.
Ford seems to have a sense of urgency, but GM? Maybe I missed it among all the blame shifting and touting of great new old products.
The negotiations late last year with the UAW will help for now. Until GM can further cut into it’s entitlements, it will continue to stagnate.
They don’t seem to be helping all that much if local unions can still strike, because they’ve decided they don’t like the agreement that their union bosses reached and they approved (as a whole).
Those paper losses represent $38b in losses carried over from prior years when they were not declared in order to make the company’s profit and loss statements look better; thereby, propping up the stock price and allowing the company’s top level management to cash in big on stock options. Gee, doesn’t that make everyone feel better; much more so than if they actually lost all that money in one year. I’m so happy that they’ve only been lieing to me and the rest of the general public for several years until a change in the corporate accounting laws forced them to report their true losses. Don’t kid yourself; these losses really did occur. They just weren’t reported as they occurred.
GOD “$75/hr to tighten screws”… where do I freakin have to sign? REALLY!!!!
That’s the salary of a GM assembly worker?
It’s impossible a factory worker gets 18K $ in one month or 216K $ in one year…
There must be a mistake in that number.
Anyway… I still don’t think they’re going bankrupt anytime soon.
And yes, they’ve got a lot of good tech.
William, do you know anything about accounting? It was a paper loss; it affects nothing. The only way in which it would have affected GM would have been if the company actually turned a profit, as they wouldn’t have to pay taxes on that income (up to $38 billion). It means nothing. GM lost nothing. I’m not quite sure what is so hard to understand about that.
Stingray:
I believe the $75 per hour represents the total compensation including medical and retirement contributions on behalf of the employee. I believe they only get paid ~$40 per hour, $83,200 per year before taxes.
Sounds like to me that the same wall street types that were pushing subprime paper have now switched to GM and the rest of Detroit. IMO there is no way to avoid a chapter 11 since the UAW will fight until every last dollar is spent on them. It is a nightmare scenario and I think all three companies will have to pay the price. Sure it is GM now, but once they are done for, the UAW will surely go after Ford too. By that time Chyrsler will have folded and been bought up by some foreign company. Shame it has to come to this, but that is the free market system. There seems to be no fundamental understanding on management and the union’s part that there is a limit even GM has to face.
How come certain airlines over the course of the decades always seem to go bankrupt over night? Much tighter budget and margins? GM seems to linger on forever.
How can one lose 39 billion and it have no effect? I predict they will lose billions every quarter. How can they maintain that?
rtz:
Big airlines take forever too. Pan am took decades to die. They sold off everything- Intercontinental hotels, route system, catering operations, headquarters building,planes, gate rental rights, planes…but in the end they ran out of things to sell off. Eastern airlines was the only big one, they went in a few months due to union work stoppage. United airlines has been at death’s door for years, as has United. I think Delta has gone in and out of C11 too.
Shame it has to come to this, but that is the free market system.
No, this is NOT due to a free market. Had we had a free market in auto manufacturing in America, we would not have had only three manufacturers. This is due to government regulation (most of it sponsoredencouraged by the big three) and utter greed on the part of both management and the UAW.
JBlair:
They did lose something, approximately $38b of something. The fact they carried these losses until they were forced to report them all in one year doesn’t mean that they didn’t occur; it just means they weren’t telling the public about them.
Rday:
Even though I am not a friend of big labor, GM management has also been bleeding the company dry for decades. The reason that all of the losses referred to in this story-and argued about in the comments section-were reported in a single year was because GM management wanted to make the company’s bottom line look better than it was, IMO. This would serve two purposes for them, 1) an increase in their bonuses/salary which was undoubtedly tied to profit and loss and 2)an increase in their bonus/salary that was also undoubtedly tied to the stock price. If a company is reporting billions in losses instead of billions in profits, their stock is very likely to drop. So, they hide the losses, report a small profit, and hope that things are better next year so that they can report some of the prior year’s losses without giving the company and its management a black eye. String together several bad years and a billion here and a billion there eventually adds up to real money, ~$38b.
@Lumbergh21
Which is precisely what happened – and why this is not a “paper loss.” It indicated an absence of resources with which to realize the greater ambitions of GM, and when you’re hiding that shortfall, year after year, you end up tying your hands.
It’s not unusual – and often happens when new management comes on board, as it doesn’t want to begin with having to suffer from the mistakes of those it replaces. (And is naturally tied to the stock options/bonuses you mention.)
GM is unique, in that no one in management gets fired, when its year-over-year-over-year cluelessness is made clear to all through such a write-off.
It doesn’t matter how good GM’s cars are. If Toyota had the same ridiculous entitlements GM has, it would be in the same predicament GM currently is in.
That’s a complete lie. If GM was selling cars at the price levels Toyota is, rather than having to pay them to go away, they’d be making a small profit even with their higher healthcare costs on their medium/big cars, and on their small cars they’d at least break even.
Likewise, if Toyota absorbed GM’s costs, they’d still be making money on most of their vehicles – just not quite as much.
Lumbergh21 :
I believe the $75 per hour represents the total compensation including medical and retirement contributions on behalf of the employee. I believe they only get paid ~$40 per hour, $83,200 per year before taxes.
I believe they deserve every penny of this! How is a man supposed to support a family on less. I aint gonna slave away making cars while big boss makes his millions living on our backs. Bout time we get some recognition for what we brings to the company. With some good running this company would still be the leader.
“I aint gonna slave away making ”
Well said. There are many careers open for uneducated and unskilled workers which pay far more. Quit, grab some of that easy action! Stick to the man! Bring down GM.
(PS, I’ll take fries with that…)
DetroitIronUAW:
Go job hunting – see what everyone else gets in compensation. And get used to it because if things don’t change at the top and with the UAW that’s what you are going to get. Welcome to the rest of the world.
EVERYBODY BEEN FIRED???
AlmostFamous :
Anywho, TTAC completely misses the point everytime it analyzes GM’s problems. And GM’s problems have nothing to do with it’s cars. It has everything to do with it’s entitlements. This quote says it all.
You’d fit right in at the RenCen.
DetroitIronUAW :
April 23rd, 2008 at 8:49 am
Lumbergh21 :
I believe the $75 per hour represents the total compensation including medical and retirement contributions on behalf of the employee. I believe they only get paid ~$40 per hour, $83,200 per year before taxes.
I believe they deserve every penny of this! How is a man supposed to support a family on less. I aint gonna slave away making cars while big boss makes his millions living on our backs. Bout time we get some recognition for what we brings to the company. With some good running this company would still be the leader.
You can’t be serious…
This entitlement attitude is exactly why the UAW is such a huge factor in sacking the American carmaking industry.
The real irony in all this is that there are two camps of GM apologists: the Almost Famous “…GM’s cars are perfect and it’s 100% the union’s fault” people and the UAWDetroitIron “…it’s 100% the fault of the rich executives and we deserve our $80+ grand/year plus lifetime health coverage for our distant relatives because that’s union history” people. Well, really, there are three (there’s also the Rick Wagoner/Bob Lutz “…our cars are great and it’s the consumer’s fault for letting a few decades of shoddy quality and service create a ‘perception gap’ and keep them from buying the cars” mentality, but it isn’t represented here). Anyway, I love how it’s always the other guy’s fault, which brings me to my big sociological point: how else could these people operate in America? This culture is so entitlement-centric and blame-happy, it’s a given.
We’ll all pay for it in the end.
6G74 :
Well, really, there are three (there’s also the Rick Wagoner/Bob Lutz “…our cars are great and it’s the consumer’s fault for letting a few decades of shoddy quality and service create a ‘perception gap’ and keep them from buying the cars” mentality
I agree with this 100%. The preception gap is a huge problem. We are building american cars that compete with the japanese for quality. Look at the good JD Powers and car of the year showings. But people don’t get it. They buy into the propoganda about the Japanese cars.
Also, I’m not sure where your getting the entitlement thing from. We all work for our money, it isn’t just handed to us. We just expect to get paid what we are worth. Not no slave labor.
The Japanese and European perception goes far beyond any “real” statistics. It is intangible. It’s irrational (kind of like Hillary Clinton supporters who cannot be swayed through any argument whatsoever that she is not God’s gift to (wo)mankind) A decision to buy an import says something about YOU. It is a way of expressing your personality. You buy a American pickup truck because you are manly, you buy an Audi because you are upwardly mobile and “worldly,” you buy a CamCord because it demonstrates that you make “smart” and “rational” decisions, you buy a Mini because you are / want to be part of youth culture, you buy a Surburban because you already have the biggest house and nicest yard in the subdivision.
Whatever. Point is: What does having an American car say about you? Because just being pro-American is not “cool.” That IMHO is way more important idea to develop. Quality is a red herring — a way of justifying a decision you have already made.
DetroitIronUAW: We are building american cars that compete with the japanese for quality.
You are building some American cars that compete with the best of the Japanese with quality. The reliability among GM’s lineup, in particular, is still very uneven.
DetroitIronUAW: Look at the good JD Powers and car of the year showings. But people don’t get it.
To the average person on the street, “Car of the Year” awards are largely meaningless. They don’t care. Those awards are designed for gearheads who read the buff books and websites such as this.
There are also so many of them that most people can’t keep them straight anymore – much like the various awards given to movie and television performers.
“Car of the Year” awards are given to the most exiting NEW car, not the most reliable car, or the car that is the best value for the money. Most people look at reliability and value (along with comfort, fuel economy and “mainstream attractive” styling) when deciding which car to buy.
Past “Car of the Year” winners include the Chevrolet Vega, Chevrolet Citation, AMC/Renault Alliance and (1997) Chevrolet Malibu. Enough said…
DetroitIronUAW: They buy into the propoganda about the Japanese cars.
The superior reliablity and build quality of the best of the Japanese cars (Honda and Toyota) is not based on “propoganda.” It has been verified by independent sources (Consumer Reports, etc.) over the years.
What you call “propoganda” is really a reputation that has been earned through focus and dedication.
“I thought all of that was a one time tax credit.”
Not exactly. GM recognized that they had been cooking the book in prior years by taking P&L “gains” for future expected tax deductions they now acknowledge they are never going to get. So in effect they said, oops, we lied to you about over $30 billion dollars of past “profits” which didn’t exist then and never will
“Instead of constantly admonishing GM, wouldn’t it be better if you prodded Tata,BMW and Honda to strive for improvement and perhaps at least equal the General?.”
Admonish them for what? That they need to increase market share, show strong profitability and demonstrate that they know how to grow their businesses while protecting their brand? Well, Tata, BMW and Honda consistently demonstrate that they know how to do all those things.
Nobody should give a hoot what the rankings on some silly Business Week survey are. Do you care how your home town scores in the Places Rated Almanac? You shouldn’t. Currently Pittsburgh, PA was #1 on that survey. Oddly enough, Pittsburgh has been loosing people for the last 60 years. Sample population numbers: 1940 – 672k, 1970 – 520k, 2000 – 335k. If Pittsburgh were truly the best place to live in the USA people would not be leaving it at a steady clip. The analogy to GM is very, very strong.
DetroitIronUAW
I am usually a union sympathizer.. to a point.
The idea that you “deserve” a job making a certain wage is what troubles me. That is called entitlement. It makes people complacent and takes away the need to make yourself marketable in the job market. Decades of this (which we have had) makes for a weaker workforce, which is a prelude to disaster should the company ever go tits up.
If I were in control of a company in the current market, I would do absolutely anything within my power to keep a union out. Companies today need to be able to right-size themselves from time to time. That is hard to do when you have to wait for your workforce to retire/die before you can significantly reduce your size. Of course, I would be just as staunch about salary employee accountability.
This isn’t just a rip on unions. The same mentality exists in salary employees, but it is less significant because they are not protected by unions.
Looks like the General Motors dinosaur just got passed on the highway by a lean, fit Toyota.
http://news.yahoo.com/s/ap/20080423/ap_on_bi_ge/gm_global_sales
This time, no fiddling of figures on a part-owned Chinese microtruck manufacturer on the part of GM diddlers and fiddlers of figures is going to change the reality that Toyota actually passed them last year.
I pretty well “knew” GM was screwed a few years ago when I realized that TATA, the Indian conglomerate, was valued several hundred percent higher than Generous Motors, though GM was a far larger company.
That absolutely speaks volumes. All you have to do is stop, listen and understand the language.
Although the editorial may be an attempt at sensationalism, the responses have been from a wide range of people, with varying opinions. Very refreshing for a change. Not the usual bunch who just mimic the editorial.
It was a paper loss, but 2008 will tell the tale as there is little left to sell off.
The UAW are overpaid compared to others outside the auto industry.
All US corporate execs are overpaid, so don’t pick on GM.
Wagner and Lutz have no idea.
If GM or Ford fail, every US citizen will pay for it. Either is higher taxes or lost wages.
ANYONE SPEAK CHINESE?
“GM has no credible economy car for the vital U.S. market”
“Economy” is not a segment of the market. Small, mid, large, SUV, CUV, etc. are segments. GM has class leading economy in some segments (typically the bigger ones) but not others. But they have “credible” entries in all segments except for the B-class (Aveo)
Regarding the award to GM for being innovative. I think the answer lies in the number of GM ads in the magazine. Usually any magazine that ranks the same products/vendors who advertise in them can’t be trusted to be unbiased.
Regarding the idea the people are buying “Foreign in better” propaganda. There is no propaganda. It is memory.
The most powerful influence in the perception of a car is personal experience and the experiences told to a person by friends and relatives. The cold hard fact is that GM has put out crap for a long time. So it is going to take a very long time of real experience to overcome that memory.
Don’t insult the intelligence of buyers by telling them that they are stupid. You are only reinforcing their perception that 2.8 just doesn’t “get it”.
JBlair is quite wrong, and his knowledge of accounting poor.
FASB 109, issued in 1992 and long before SOX, says “The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.”
In fact, FASB goes on to say “A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized.”
The fact is that those deferred tax assets were not all expiring in 2008, but GM determined that it was more likely than not that those deferred tax assets would not be used before they expired.
That means the return to profitability is not happening anytime soon.
JBlair: William, do you know anything about accounting?
As a matter of fact, when I’m not writing for TTAC I am a financial controller for one of the world’s largest banks. I stepped into my current position after managing a corporate accounting department for ten years for the same company.
JBlair: It was a paper loss; it affects nothing. The only way in which it would have affected GM would have been if the company actually turned a profit, as they wouldn’t have to pay taxes on that income (up to $38 billion). It means nothing. GM lost nothing. I’m not quite sure what is so hard to understand about that.
Recording this loss is an acknowledgement that GM had grossly over accrued for deferred tax assets in prior reporting periods. In other words, in prior yeas, they paid their taxes in full but thought that they would get some of that expense back in later years when differences between tax value and accounting value of various taxable assets flipped in their favor. So they accrued for that benefit by reducing losses and creating a deferred tax asset on the balance sheet. In other words, the company has been overstating profit for years to the tune of $39 billion.
By GM’s own admission, “We had determined in prior periods that the valuation allowances were not necessary for our deferred tax assets in the United States, Canada and Germany.” GM’s 10-K for 2007 explains that things have gotten so bad that the long-term methodology they had been relying on for these accruals became so profoundly unreliable that they could no longer justify maintaining such a large asset balance. They use sanitized words like “uncertainty” and “weight of the negative evidence” to explain the change. No word on what elicited this epiphany. It was probably pressure from their external auditors, Deloitte & Touche, who refused to be a party to this monkey business any longer.
Interestingly, they blame Toyota (without naming them) for spoiling their defunct long-term deferred tax asset valuation model. The 10-K reads, “[Increased long-term competition] was seen in the external market in the third quarter of 2007 when a competitor introduced its new fullsize trucks and offered customer incentives to gain market share. Accordingly, we increased customer incentives on our recently launched fullsize trucks, which were not previously anticipated.” They go on to also cite high fuel prices, emissions standards, and GMAC’s sub-prime loans.
Anyway, this has nothing to so with Sarbanes-Oxley as you previously asserted (unless you want to say that D&T didn’t want an Enron on their hands). And it has nothing to do with pushing the entry through in a year with negative operating expenses (GM’s operations generated a loss of $3.351 billion before interest and taxes). While not from current period operations, these are REAL dollars and the loss is evidence of a company in crisis.
“speeding Chevy Aveo”
Still laughing at that one!
Unfortunately, there is a “blame America first” mentality out there. GM, Ford and Chrysler are falling victim to this far left propoganda. Simple as that.
我會說中文。 你要學嗎？
M1EK: That’s a complete lie.
If that is true, why did the UAW agree to make concessions in the latest round of contract negotiations, and allow the companies to offload their health care costs to the VEBA? Why is the UAW agreeing to competitive operating agreements in Ford and GM plants to make those plants more efficient, and thus more cost-competitive?
Blaming everything on the UAW is wrong. But the union wouldn’t have agreed to these changes if the companies weren’t facing real cost disadvantages compared to the transplant operations.
Two years ago the union hired an outside accounting firm to examine GM’s books. When the report was submitted to the UAW, it said GM is in WORSE shape than had been previously thought, or had been reported in even the business press.
Skooter :
April 23rd, 2008 at 12:47 pm
Unfortunately, there is a “blame America first” mentality out there. GM, Ford and Chrysler are falling victim to this far left propoganda. Simple as that.
You’re absolutely right. It has nothing to do with my mom’s 1994 Oldsmobile Eighty Eight Royale’s brittle plastic intake manifold gaskets.
Or the faulty instrument clusters in GMT800 trucks/SUVs that tend to die at 70,000 miles.
Or the stalling problem our $38,600 Aurora developed at 24,000 miles.
Or the fire that wiped out my aunt’s 1997 Bonneville SE.
Or the two transmissions my other aunt’s 1998 Grand Prix GT went through in 50,000 miles.
Or the cracked dashboard that afflicted my dad’s 70,000 mile ’91 Blazer (he swears it’s the last American car he’ll ever own – so far, true).
I could go on.
Yep, nothing but anti-American spin by the evil “liberal media” and their bias.
May I recommend therapy?
“May I recommend therapy?”
May I recommend some newer anecdotal tales than the mid 90’s?
Detroit1701 :
“…….You buy an American pickup truck because you are manly….”
I have to provide a slight correction to that rather sweeping generalization of truck buyers. In truth, most people buy a full size pick-up truck (import or American branded) because either :
a) you actually really do need one for some business use or other real need , or
b) you don’t actually need one but you want to try and project the image of manliness so that others around you might believe you are manly.
Sure, some truck buyers/drivers will be manly, many other just like to pretend they are. Remember, REAL men don’t need all the “dress up and pretend” theatrical props.
“Blaming everything on the UAW is wrong. But the union wouldn’t have agreed to these changes if the companies weren’t facing real cost disadvantages compared to the transplant operations.”
The original contention was that the ONLY reason GM is in the soup on small cars is because they’re unprofitable because of the extra costs. That’s a lie; if you make shitty small cars, you’re not going to be able to sell them for very much money.
EITHER making better small cars (assuming costs to make better small cars aren’t much higher than to make shitty small cars, which seems to me to be quite obvious), OR reducing costs would help, but the only one that would help in the long-term is making better small cars.
Which GM has never, except for a brief period with Saturn, wanted to do – because they quite clearly hate small car buyers with the white-hot heat of a thousand suns.
JBlair, you got pwned pretty hard there. You may want to lie down for a while.
M1EK: The original contention was that the ONLY reason GM is in the soup on small cars is because they’re unprofitable because of the extra costs. That’s a lie; if you make shitty small cars, you’re not going to be able to sell them for very much money.
UAW chief Ron Gettelfinger himself recently said that the reason Ford is not making the upcoming Fiesta in the U.S., with UAW labor, is that Ford could not manufacture that car here and make a profit – at least, not with the content level and engineering that the Fiesta needs to compete with the Fit and Yaris.
One would assume that we can take his word for it, given that the head of the UAW would be the last person to justify outsourcing production of a critical new car line to another country.
As I said before, the UAW wouldn’t have agreed to the recent contract concessions if the domestics weren’t at a serious cost disadvantage compared to the transplants.
M1EK: EITHER making better small cars (assuming costs to make better small cars aren’t much higher than to make shitty small cars, which seems to me to be quite obvious),
The costs to make a better small car versus a crappy one ARE high enough to make a difference…the profit margins on smaller cars are razor thin, and even a small difference in costs can mean the difference between a profit (however thin) and a loss.
Your entire argument collapses right there.
“May I recommend some newer anecdotal tales than the mid 90’s”
After so many obviously flawed cars, why would he buy another recent one to have a newer “anecdoctal tale”? Why would ANYONE who was sane and not just brainwashed into buying American just because it’s American (even though it’s made in canada or mexico)? Just out of the goodness of their hearts? “Well they’ve screwed me with crappy products for 30 years, but now they say it’s all fixed and and it’s all liberal propaganda, and they are hurting so I should help them.” BULLSHIT. GM is not a charity, it is a corporation. It doesn’t matter what they build now. They’ve screwed too many people, and now they are facing the consequences in lost sales. They reap what they sow, just like any other company. If Toyota, Honda, or Nissan did it, people will give them the finger too. And it has already started with Toyota to a certain extent.
Skooter- It doesn’t have to be anecdotal. Or old.
Look at the majority of GMs brands being below the industry average in the JDP VDS last year.
Look at the pig pile of GM products that comprise HALF of the worst reliability level (worse than 80% below industry average) in CRs latest survey.
Recent enough for you.
They make a few good cars, a lot of mediocre ones and an impressive number that are just plain bad.
Today.
GM will still sell you a vehicle as bad or worse than any other on the market. They have been aware of this problem for 30+ years. I do not think we owe them any slack on quality/reliability isssues at all.
BTW-this applys to anyone trying to grab sympathy for the UAW workers also. They over charged their Martyr Card decades ago. Time to join the real world-Camelot is in flames.
The mainstream journalists have focused only on GMs high scores while ignoring their average and low scores.
Maybe they just don’t look that close, or maybe they are afraid they will join RF in the “no junkets for you” dog house.
Bunter
Bunter- where are you getting your (mis) information?
Looking at JD Power’s overall dependability ratings for 2007 tell me that Buick, Cadillac, Honda and Mercury all earn Power’s highest rating. Ahead of Toyota, Acura, BMW etc.
Please research before blasting away with dramatics (“pig pile”).
Skooter,
1. JDP’s idea of long-term is laughable.
2. Cadillac and Buick make up 10% of GM’s output. Toyota brand is ToMoCo’s bread-and-butter brand. Why isn’t Chevy neck-and-neck with it?
3. Nobody needs “newer” anectdotes. GM drove people away in the ’90’s to save a few pennies and this cost them a lot of dollars in the Zeros and beyond. That was a bad plan.
The irony of #3 is, people really don’t like to change. Which is why some sizeable percentage of the market goes back for GM’s abuse, year after year after year. GM just got to being SO bad that they succeeded in driving people away and then these people learned that Toyotas and Hondas were actually *really* good cars. They never knew how good it could be. They’re going to be *really* hard to win back.
If GM had improved, in the mid-90’s, to “moderately cruddy,” they’d still own many of those customers. If they’d fixed the Dexcool, manifold and gasket issues just a couple years after shipping the first vehicle afflicted with each of these ills, they probably would have retained a sizeable number of customers.
I think that the time has come to acknowledge the blatant double standard that is at work here.
If Toyota made cars with the infamous Dexcool problem, the domestic fans wouldn’t be able to keep quiet about it.
If Honda Pilots had tire blowouts that caused rollover fatalities and injuries, the friends of Bob (Lutz) would be quick to remind us of them.
If the best rated cars produced by Toyota on the JD Power survey were cars that were no longer made, as is the case with the highly ranked but unlamented Buick Century, this point would be made time and time again.
If Consumer Reports reliability surveys handed out black circles to Civics and Corollas, instead of the Cobalt as is the case now, this factoid would be inescapable on threads like these.
Let’s face it, folks — if you take a perfectly objective view, there is no denying that domestic products are generally inferior to the best of the Asian competitors. This has been measured and quantified by many sources, not just one.
There are a few exceptions, and some of those Asian competitors (Kia and Mitsubishi, for example) aren’t so terrific, but the very best of the Japanese beats the direct American competition, time and time again, in virtually every category.
I wish it wasn’t true, but it is. And if it is my money on the line, I’m going to have to factor that in to my purchase decision. It’s my money, and Rick Wagoner isn’t going to do much to help me if my bet proves to be wrong.
Cars are too expensive to make bad choices. If I buy a bad cup of coffee, I can deal with the three bucks and move on, but $30,000+ makes it an entirely different process.
“The costs to make a better small car versus a crappy one ARE high enough to make a difference…the profit margins on smaller cars are razor thin, and even a small difference in costs can mean the difference between a profit (however thin) and a loss.”
Time to recycle. Yay!
From a comment I made to Marginal Revolution on this very same subject, against the same kind of fanboy:
Really, GreatZamfir nailed it – if this strategy was one that even made sense even in the era of big SUVs, the US car companies would be far better off.
Again, the assumption being made is that GM’s making a profit, or at least losing less money, by making really awful small cars – but that’s ridiculous on its head, because even now when people really WANT small cars, they essentially have to be paid to take them off GM’s hands.
You start out with the assumption that Toyonda makes $1K profit per small car sold. Subtract $500 for GM’s health care. Another $500 for their retirement costs. So they break even, right? And they still get the CAFE benefit that allows them to sell the higher-profit vehicles (assuming people still buy those things).
In the current model, though, they’ve cut $2000 in production costs off the vehicle, but are only able to sell it for $3K or $4K less than the Toyonda.
They’re going to make it up on volume, right?
2. Cadillac and Buick make up 10% of GM’s output. Toyota brand is ToMoCo’s bread-and-butter brand. Why isn’t Chevy neck-and-neck with it?
Chevy is actually pretty close to Toyota, in US sales. At least if we go by 2007 sales.
http://www.autoblog.com/2008/01/03/by-the-numbers-2007/
Not that I’m disagreeing with your overall analysis.
Skooter :
April 23rd, 2008 at 2:10 pm
“May I recommend therapy?”
May I recommend some newer anecdotal tales than the mid 90’s?
As has been stated by others (at least someone understood my point), I wasn’t commenting on their current reliability state. I was commenting on the absurd number of times a handful of people close to me have been majorly screwed by GM and their long history of inferior products. Why would they go back? Granted, most have (the owner of the Bonneville has a 2002 Impala LS – powered by the same 3800 Series II V6 with the same possible fire problem; the owner of the 1998 Grand Prix bought a 2001 Grand Prix, then a 2004 Silverado). However, they have lost a sizeable chunk of these people, which is representative of the situation as a whole. My father has owned four Hondas (two CR-Vs, a Civic, and an Accord), a Nissan (Xterra), a Toyota (Camry) and a Chevrolet (a Tracker – designed and manufactured by Suzuki). Out of those, the only one to have any problem outside of routine maintenance is the newer CR-V, a 2006, which had trouble starting due to a bad ignition lock – fixed under warranty by Honda. In fact, the second time it was in for the same problem (they tried replacing the starter first, which didn’t work), Honda offered to trade it straight up, with 12,000 miles on it, for a new-style 2007. My parents disliked the 2007, though, and opted to have them fix the lock cylinder, which worked – that was 20,000 miles ago.
Also, out of all the problems I listed with GM cars, not one was corrected under a warranty or recall. The worst was the Aurora – it’s a V8 and powered by a smaller, detuned Northstar engine. All of the Northstar-based engines (Cadillac’s 4.6L versions, Olds’ 4.0L version, and Olds’ 3.5L V6 version) are affected by this. The problem was recalled on the Cadillac versions, but my mother was handed the $800+ bill for two new crankshaft position sensors for the Olds, and GM has yet to (and probably never will) recall the Oldsmobile engines.
Other problems we’ve paid for with the Aurora:
-clunking/grinding/groaning steering shaft (recalled on 1998+ W-Body cars excluding Intrigue, 1999+ GMT800 trucks, and all Cadillac Northstar-engined vehicles made until 2004, but never recalled on the Aurora) – $1200.
-dimming lights due to faulty factory alternator (recalled on 2000+ W-Bodies, 1997+ U-Body vans, all Northstar-engined Cadillacs, not on Aurora/Intrigue, even though they’re affected): $250.
-worn out front wheel bearings (both – never recalled on any cars, though it’s routine maintenance every 40-50,000 miles on K-Body Cadillac/Buick models and G-Body FWD Olds/Buick/Cadillac/Pontiac models): ~$350/wheel.
I’m still in love with the Aurora, and have seriously considered a used Aurora or Intrigue as a personal car, but these quality issues – which have gone completely ignored by GM despite the fact that they affect nearly every Aurora and Intrigue made – are egregious.
I’ll also throw in a quick shout to the wonderful plastic intake manifold “gaskets” employed on the 3800 since the early 1990s (a design which remained in production right up until the Series III debuted in 2003), the misrouted coolant lines that caused the Bonneville fire (a design which was produced from 1996 to 2004 by GM, despite major fires popping up in low-mileage 3800-powered cars within the first year of production – it has never been recalled and GM claims no fault), and the fact that the clunking/grinding/groaning steering shaft still affects a good 30% of the brand new (i.e. sub-30,000 mile rentals) Impalas, Lucernes, LaCrosses, and Grand Prixs that I drive on a daily basis. Despite the recall, GM is still using the faulty part that’s been in production since the 1999 redesigns of the full-size trucks/SUVs and G-Body Bonneville/LeSabre.
Tell me again about the spectacular quality…
Dynamic88, I meant neck-and-neck in terms of reliability measurements, not sales. The Toyota brand, last I looked, had a significant lead over the Chevrolet brand.
Skooter-Look again, I said the MAJORITY not ALL of their brands.
As I pointed out SOME of GMs cars are good.
Some are among the industries worst.
As a matter of fact the only GM in the top category in CRs ratings is the Vibe. Let me see who engineered that? Hmmmmm…Oh, I remember. Toyota. Over half of their cars are in that category.
Overall GM is below the industry average.
Please read ALL of the words in a sentence before “blasting away”.
Read ALL of the JDP ratings before drawing conclusions from a few high marks.
Sheeeeeeeeeeeeeeeeeeeeeeeeeeesh.
Bunter
Is GM still making cars with Dexcool and if not when did they stop?
GM will only prosper when their cars can go 7 to 10 years without major problems. It still doesn’t look good for GM based on these comments.
“May I recommend some newer anecdotal tales than the mid 90’s?”
2006 Chevy truck that needed a complete transmission rebuild at 60,0000 some miles (alas, under warranty).
Good enough?
Sherman Lin :
April 24th, 2008 at 10:51 am
Is GM still making cars with Dexcool and if not when did they stop?
GM will only prosper when their cars can go 7 to 10 years without major problems. It still doesn’t look good for GM based on these comments.
Every non-Daewoo/Toyota GM I’ve encountered in the past couple of years still uses DexCool.
Impala, G6, Lucerne… All of ’em.
It still doesn’t look good for GM based on these comments.
What?!?!?! But I’ve always believed that blaming the customer and the competition were always effective strategies.
I see, JD Power is laughable when it interferes with your slant. And is Consumer Reports still giving their automatic nod to Toyota? Or was the outcry enough that they might now actually have to grade the Toyo?
I see, JD Power is laughable when it interferes with your slant.
I’m just curious, but did you actually look at any of the detail of the JD Power survey? Because I have, and this is what I found.
On the 2007 Vehicle Dependability survey of three-year old cars, JD Power awarded five star ratings (its top score) for overall dependability to 35 vehicles. I’ve grouped them by manufacturer here:
Buick Century
Buick Rainier
Buick Regal
Cadillac CTS
Chevrolet SSR
GMC Yukon
Oldsmobile Bravada
Oldsmobile Silhouette
Ford Crown Victoria
Ford F-150 Heritage/Lightning
Ford Mustang
Lincoln Town Car
Mercury Monterey
Mercury Sable
Honda Civic
Honda CR-V
Honda S2000
Infiniti I35
Lexus GS Series
Lexus GX 470
Lexus IS Series
Lexus LS 430
Lexus LX 470
Lexus RX 330
Lexus SC 430
Scion xA
Toyota 4Runner
Toyota Corolla
Toyota Land Cruiser
Toyota Prius
Toyota RAV4
Toyota Sequoia
Toyota Solara
Toyota Tacoma
Toyota Tundra
As you can see, 21 of the 35 (60%) are Japanese. 17 of those are Toyotas, which means half of the vehicles on the list are Toyotas.
Of the 8 GM products on the list, 6 are no longer in production.
So if I want to use this list as a guideline to buy a new GM product, where exactly does this list leave me?
And let’s remember that these vehicles weren’t built in the mid-90’s, but in 2004. This is not ancient history, folks.
JBlair: it affected plenty. It put GMs stock in the toilet, where it is currently swirling.
The blame for the UAW mess ultimately lies with GM, they agreed to terms that were not sustainable due to their short sighted vew of the car market (an underlying theme at GM). You may not think assembly line workers deserve to make $75/hr but if the business they are in is profitable enough they do deserve it. Does someone deserve a million dollars a year to play hockey? Not normally, but if he’s playing for a franchise that generates hundreds of millions of dollars, well he shouldn’t be working for minimum wage. Likewise if people stopped watching hockey, does that guy still deserve a million dollars?
“Good enough?”
Yes, so your truck’s tranny failed and GM repaired it for you at no charge. So, what is your complaint? I would wager that Toyota, Honda and the like actually DO perform warranty work. Not at 60,000 miles. For that they charge the consumer. Or if it was GM, they “screw” the customer.
It kind of depends on if the transmission failure was a freak thing or if their lifespan is little more than 60,000 miles and will fail a second time 60,000 miles later, 20,000 miles out of warranty. GM attitude seems to be that a truck is supposed to fall apart once the warranty runs out, that’s how we sell you another one.
Aw cmon Skooter- Are you just going to pretend that you didn’t misread me and move on? Take a shot and then run when you missed?
Funny how you take one person to task on dissing JDP when it suits them, and in the next sentence you do the same to CR (by the way they did pull the automatic assumption of good reliability on new Toyota’s, it always was earned, not given. Happy?).
Repeat, GMs AVERAGE vehicle is below industry average in both JDP VDS and CR. Toyotas average vehicle is well above average in both. Your still ignoring this.
BTW, I have owned 3 GMs and 1 Toy. None of either currently.
Look at True Delta also. They are early in the game and their samples are small but the trends are very similar.
Are all three completely wrong? How do three different groups using different methods all get similar trends for each company?
I am not saying ALL Toyotas are good and ALL GMs are bad. But the overall reliability of Toyotas (and Hondas for that matter) products remains well ahead of GMs (Ford is making great progress however). And GMs worst are as bad as ANY in the industry.
BTW-VDS includes NVH and safety data that strengthens the composite number for brands that are large/luxury oriented (see the text in the 2004? VDS press release). This is not a criticism of VDS, just noting why you can’t use it to compare vehicle brands outside their segement (Luxury vs mainstream vs small car). Or for that matter compare their data to CRs.
You are bailing in a boat with no bottom buddy.
Bunter
“GM attitude seems to be that a truck is supposed to fall apart once the warranty runs out, that’s how we sell you another one.”
Yes. I am SURE that is GM’s attitude. Unbelievable!
As evidenced by the recent truck instrument display, out of warranty, out of luck. What do you use to determine milage for warranty purposes? Oh that’s right, the faulty display. Good one GM, keep the laughs a comin’.
Dear Bunter-
I am not going to change your negative attitude toward GM. Any data presented will be countered by your own collected (selective?)data. Keep on hatin’
Skooter :
April 24th, 2008 at 4:08 pm
“Good enough?”
Yes, so your truck’s tranny failed and GM repaired it for you at no charge. So, what is your complaint? I would wager that Toyota, Honda and the like actually DO perform warranty work. Not at 60,000 miles. For that they charge the consumer. Or if it was GM, they “screw” the customer.
I see you feel that GM treats consumers just as well as Honda and Toyota.
I’ve got news: they don’t.
As I’ve already stated, every repair so far on the Aurora has been paid for by us. On a car that had just over 20,000 miles on it (though the warranty had run its course due to time – a matter of months).
On the other hand, consider our family friend who had a 2002 CR-V. At just over 110,000 miles, the a/c compressor blew. Honda replaced it for free. The car was two years out of warranty.
Here are some results from the 2007 Vehicle Dependability Survey from JD Power. The VDS surveys three-year old vehicles, so these are 2004 models, not exactly ancient history.
There were 35 vehicles that received the top 5-star rating:
Buick: Century, Rainier, Regal
Cadillac: CTS
Chevrolet: SSR
GMC: Yukon
Oldsmobile: Bravada, Silhouette
Ford: Crown Victoria, F-150 Heritage/Lightning, Mustang
Lincoln: Town Car
Mercury: Monterey, Sable
Honda: Civic, CR-V, S2000
Infiniti: I35
Lexus: GS Series, GX 470, IS Series, LS 430, LX 470, RX 330, SC 430
Scion: xA
Toyota: 4Runner, Corolla, Land Cruiser, Prius, RAV4, Sequoia, Solara, Tacoma, Tundra
Notice the results:
-60% of the list (21 out of 35) are Japanese imports or transplants
-50% of the list (17 out of 35) is comprised of Toyota company products. JD Power counts Toyota as having 24 entries, which means that almost 3/4ths of Toyota’s lineup received a five-star offering.
-8 of the vehicles are GM products. 47 out of 55 GM vehicles received something less than the top ranking, which means that fewer than one of six GM vehicles received a top ranking, compared to Toyota’s 3/4th’s tally. (The GM figures exclude Saab and Isuzu; including them would have made things worse.)
-Of the eight GM products earning five stars, six are out of production.
-No Toyota products received the lowest two-star rating; GM had nine.
So please explain to me how this list gives glowing marks to General Motors.
(I tried posting this before, so if it shows up here in two different forms, I apologize.)
“I’ve got news: they don’t.”
And I have a family friend who owns a 2002 Grand Am. The wiper motor failed at 65,000 miles. The dealer replaced at no charge. 2 years and 29,000 miles out of warranty. A Pontic dealer.
So please explain to me how this list gives glowing marks to General Motors-
I think GM did pretty well in light of the obstacles placed in front of them. Left leaning anti US sentiment in the press for example.
Left leaning anti US sentiment in the press for example.
It’s a dependability survey. Are you trying to claim that it was the New York Times that put the Dexcool in the radiators?
Things would certainly be different today if corporate management had started hopping with their new found sense of urgency, say, ten years ago. Or twenty. Or thirty.
GM came within a whisker of bankruptcy in 1991. They apparently didn’t learn a thing from that episode about reevaluating their culture of arrogance, letting bean-counters dominate product design and myopic focus on short-term profits.
Sometimes an organization is so Bone-Stupid that it can’t be fixed.
Skooter :
April 24th, 2008 at 5:15 pm
“I’ve got news: they don’t.”
And I have a family friend who owns a 2002 Grand Am. The wiper motor failed at 65,000 miles. The dealer replaced at no charge. 2 years and 29,000 miles out of warranty. A Pontic dealer.
Great comparison.
Too bad it was the dealer who fixed the Grand Am (on the other hand, Honda Corporate instructed the dealer to repair the CR-V’s A/C system).
Also, I have a hard time believing the $50 wiper motor in a Grand Am is comparable to the $2400 Honda ate during the CR-V fix.
But, hey, if it resulted in them buying another Grand Am, the trick worked.
Unfortunately for GM, your story is the exception instead of the rule. Not so much for Honda and Toyota.
Skooter: “I see, JD Power is laughable when it interferes with your slant.”
Over the past 2 to 3 years, I’ve bought 3 used cars at that were 5, 6 and 7 years old when I buoght them. And I got rid of my older cars, keeping one that I had bought new in 2001. This cut the average age of my fleet in HALF.
THAT is why I think JDPs VDS is laughable.
Skooter: “And is Consumer Reports still giving their automatic nod to Toyota?”
Didn’t they just stop automatically approving the V6 Camry? They still like Toyota. Consistency counts for a lot. That’s one of the things I figured out in SixSigma school.
One way or another, I’d rather trust an entirely new model from Toyota than take a chance on a GM. From the git-go, the Prius, which must have a significantly higher part count than any similar size car, much of which was entirely new in automotive use, has been one of the most reliable cars in ANY survey. Did you know the Prius pumps the coolant out of the engine at shutdown and puts it into an insulated reservoir to keep it warm until the next time the car is used? How many parts is that – which are in no other car on the road? Somebody at Toyota knows something about introducing new cars that work.
When someone is shown evidence that they’re wrong, they can do one of two things: submit and change their views in the face of evidence to the contrary, or actually reinforce their (incorrect) view so as to avoid embarrassment.
Skooter is stuck, here. He’s already vigorously defended GM against all naysayers, despite the vast mound of accumulated experiences of his friends, family, and everyone in the United States that shows that most GM vehicles are shitty and break down all the time.
So, he can’t just change his opinion, right? Because that would mean admitting to everyone that he’s wrong. You can change your opinion, Skooter. Try it sometime.
Skoot- It’s not hate GM. I hope they succeed.
This is a weak FUD defense. Essentially it says “I have no rational counter argument so I will rely on a charater attack.” IIRC in the logic biz this is called an “ad hominem” fallacy.
The data indicates they are not doing what they need to to do win.
Giving a kid a higher grade to make him (and yourself) feel better will not help him when it comes time to get a job. Buying a substandard product only tells the maker they don’t need to improve and INCREASES the likelyhood that they will fail.
I am the one looking at ALL the data, you are selecting the high points and ignoring the rest.
Well, this is a waste of time.
See ‘ya ‘bye,
Bunter
If this is the way you guys treat Skooter, then it’s no wonder why Bob Lutz steers clear of this place.
Why Quasimondo? Is reliability not a legitimate topic of automotive discussion? The question is are GM cars as reliable as their competition.
Durability and long term reliability is what many in the car buying public seek. If Skooter is right and GM cars are every bit as good as their competition then why does that not show up in the studies?
Why is it that when PCH analyzed the JD powers report touted by Skooter the exact opposite is revealed.
Remember we don’t work for GM we are simply customers and if GM wants us back they have to be able to answer these questions or go out of business. GM made money when we (former GM owners) use to buy GM products and now that we are not they are losing money.
Like it or not, GM has to be able address our concerns to our satisfaction or they will never get us back and then GM is toast.
If quality and durability are even important to GM then why are they still using dexcool after all the problems associated with its use?
Why is it that when PCH analyzed the JD powers report touted by Skooter the exact opposite is revealed.
JD Power contributes to the confusion in the way that they report their data.
I’m frankly not sure how to explain the disparity, but it’s worth taking a look at it. Above, you saw the list of the top cars in the Vehicle Dependability Survey, and got a feel for how individual models perform. It’s pretty obvious from that list that Toyota and Lexus totally dominate it, without question.
Yet if you look at the brand-level list that supposedly summarizes the results, here are the five-star brands:
-Buick
-Cadillac
-Honda
-Lexus
-Mercury
This is quite confusing to me. Take Cadillac — only one of its cars gets a five star rating. Dig deeper, and you can see that one of its cars (XLR) got a bottom-of-the-list two-star ranking, while the rest get 3- and 4-star rankings.
What is hard to follow is how a brand whose individual products end up averaging at about 3 1/2 stars ends up with a five-star rating. On the surface, it just doesn’t make any sense. I can only assume that the CTS is extremely reliable, so much so that it can statistically pull up the averages of everything else to the point that the brand gets the top rating.
At the end of the day, though, we park individual nameplates in our driveways. In this case, the CTS’ reliability doesn’t do anything to help the reliability of an XLR, which sits at the opposite end of the scale.
It’s a matter of statistical dispersion. Some brands perform better than others, and some brands are more consistent than others. Toyota is clearly very consistent. GM, not so much. Look at the data, it cannot be denied.
Why Quasimondo? Is reliability not a legitimate topic of automotive discussion? The question is are GM cars as reliable as their competition.
Oh, I’m sure it is legitimate, but it seems irrelevant to the topic at hand of….well after 10 pages of this GM vs Toyota pissing match, I can’t even remember what the article was about to begin with. I certainly don’t think it started off talking about Dexcool and intake manifolds.
Quasi- On the other hand, why should someone (anyone) expect the right to babble nonsense, misquote others, mis-use statistics very selectively and for some reason be immune to criticism.
The person in question was inaccurate and went to personal attacks (accusing hatred in my case)when they could not defend with logic.
Why are you defending them?
I think our personal treatment of them was notably superior to that which we received in return.
If they seemed to be a sympathetic victim it may be due to the weakness of their ability to defend their position.
I don’t enjoy slamming others but I do not appreciate being attacked by people who will not admit they have misrepresented what I said and seem incapable of even the simplest apologies.
Yours truely,
Bunter
If he used personal attacks, then he should’ve been reported to RF or FW since personal attacks are against TTAC policy.
It still make me question the tendency to pull the reliability skeletons (out of all the other bones) out of the closet at the first opportunity, even when it has nothing to do with the topic.
Perhaps the rating system is weighted for vehicles produced and sold? I would say the average Cadillac dealer sells 40 to 50 CTS for every 1 XLR sold.
“…despite the vast mound of accumulated experiences of his friends, family, and everyone in the United States that shows that most GM vehicles are shitty and break down all the time.”
And this passes for reliable data?
PS Sorry Bunter
It still make me question the tendency to pull the reliability skeletons (out of all the other bones) out of the closet at the first opportunity, even when it has nothing to do with the topic.
The reason that it was raised was because the readership is debating why GM is losing money.
You seem to have three basic schools of thought here:
-The unions suck
-The customers suck
-The products suck
Those who take the second position, and some who take the first, argue and imply that the products themselves are great. Several comments along those lines were made early on during the thread.
This is obviously an issue to those of us in the last camp, who know that most of the products do suck and can prove it.
Here’s the difference: I have evidence that many of the products suck, which supports the argument that GM sales are falling for some good reasons.
On the other hand, there really is no quantitative data to support the opposite position. The only way to claim that the products are equal is to resort to anecdotes. So if the presentation appears to be a bit stilted, it’s only because the pro-domestic camp has no actual facts to present in their favor. Since there is no survey that shows otherwise, it’s pretty obvious what a reliability survey is going to conclude before you even read it.
Perhaps the rating system is weighted for vehicles produced and sold? I would say the average Cadillac dealer sells 40 to 50 CTS for every 1 XLR sold.
Fair thought, but I don’t believe so. I say that because GM sells a lot of Escalades, and the majority of those sold got a three-star rating. (The EXT version got a four-star rating, but those sell in low volumes compared to the rest.) If it was based upon comparative sales volumes, there is no way that Cadillac could have earned a five-star rating.
M1EK: From a comment I made to Marginal Revolution on this very same subject, against the same kind of fanboy:
Obviously you haven’t read my other posts, because I’m not a GM fanboy. You may want to do more reading before trying to pigeonhole another poster.
M1EK: Again, the assumption being made is that GM’s making a profit, or at least losing less money, by making really awful small cars – but that’s ridiculous on its head, because even now when people really WANT small cars, they essentially have to be paid to take them off GM’s hands.
That’s not what I’m saying. If you’re going to recycle your posts, it would help to make sure that said post address the point raised, as opposed to completely missing the point.
I’m not saying that GM’s strategy is to make money by making cheap, awful small cars.
GM has historically LOST money on small cars produced in this country. The main reason it kept production of the Cobalt (and before that, the J-Cars) based here was because of CAFE.
Under CAFE, if the small cars were not produced here, they could not be counted against domestically made trucks (until now, the real money makers for the Big Three) when determining corporate average fuel economy.
GM’s higher cost structure has prevented it from putting more money into small cars, which is partially responsible for the production of inferior small cars.
M1EK: You start out with the assumption that Toyonda makes $1K profit per small car sold. Subtract $500 for GM’s health care. Another $500 for their retirement costs. So they break even, right? And they still get the CAFE benefit that allows them to sell the higher-profit vehicles (assuming people still buy those things).
You’re starting with the assumption that retirement costs and health care costs are the only competitive handicaps faced by GM.
This is incorrect.
Work rules and job classifications – ironically, originally created by management, and now defended by the union – have also placed GM at a competitive disadvantage.
Over the past 18 months, the UAW has quietly agreed to competitive operating agreements (COAs) in the Big Three’s plants. The union would not have agreed to these COAs if the Big Three did not need the cost relief.
Mr. Gettelfinger does not care what Wall Street or union-bashers think. He has put his union behind this effort because he knows that the cost disadvantage faced by the Big Three is real, and that they must become competitive in the production of vehicles besides, trucks, SUVs, Corvettes and Cadillacs if they are to survive.
Also note that the Big Three’s factories have been overstaffed when compared with those of the transplant operations.
On page 221 of her book, The End of Detroit, Micheline Maynard quotes a former GM executive now working for Toyota:
“…because of the GM contract ith the UAW, he (the executive quoted for the book) would have to have three workers on a GM assembly line to everyone at Toyota.”
That sounds like a pretty serious cost handicap for GM.
You’ve also never refuted the quote from UAW chief Ron Gettelfinger, who noted that Ford would not make money on the upcoming Fiesta if it were built in the U.S.. Ford will make money on it by producing it Mexico, given the engineering and features that the car needs to be competitive (with the Fit and Yaris), weighed against the typical transaction price in that segment.
M1EK: In the current model, though, they’ve cut $2000 in production costs off the vehicle, but are only able to sell it for $3K or $4K less than the Toyonda.
Given industry lead times, the current model was developed and engineered before the more competitive UAW agreement was negotiated last fall.
Also note that the savings from that agreement do not take effect immediately.
So all of those savings that you are attempting to apply to the current Cobalt and G5 do not yet exist.
Under CAFE, if the small cars were not produced here, they could not be counted against domestically made trucks (until now, the real money makers for the Big Three) when determining corporate average fuel economy.…
Correct me if I am wrong, but until now didn’t the cars get tallied separately than the trucks as far as mileage considerations? That is why PT Cruisers were modified to fit into the classification of trucks so they could game the system and get away with selling more full size trucks without mileage penalties. Subaru did the same thing with the Outback,too. More proof that business will do whatever they can to circumvent the spirit/intent of the rules to feather their own nest…