Talk about your diminished expectations… Post-Black Tuesday, GM CEO Rick Wagoner's told the world [via The Financial Times] that his employer has enough cash to make it through '08. And while you're filing that under "methinks he doth protest too much," Wagoner defends GM's (and the rest of the 2.8's) reliance on big trucks and full sized SUVs by… pointing a finger at Toyota. By his way of thinking, you can't blame Detroit (i.e. him) for missing the SUV and pickup truck exodus because Toyota got caught building a new truck factory at the wrong time. Huh? Toyota added a full-sized truck to its product portfolio to compete vigorously in one of the few segments of the market where they were weak. (Lest we forget, they built the Prius in record numbers at the same time.) Sure it turns out that Toyota's Tundra timing was off, but they aren't at risk of closing up shop because of it. Bottom line: ToMoCo books more profit in one year than GM's entire net worth. Comparing GM's management decisions to Toyota's is patently absurd. Will no one rid us of this troublesome man?
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Good question: when DO we get rid of Mr. Mealy Mouth?
Blaming Toyota for GM’s problems is quite a stretch. I’m sure Mr. Wantanabe is having a good laugh with this one.
Toyota’s and GM’s decisions are not even comparable.
While they were both wrong, Toyota’s was not a bet-the-farm decision (1 plant, two models). GM, on the other hand bet big time on trucks by proliferating them to a half-dozen or so plants, and dozens of models, while simultaneously neglecting their cars.
Well, at least he didn’t suggest that hybrids were a flash in the pan. So, you know, it could be worse.
To me GM’s biggest bright spot is the impending demise of the Crown Vic…just think of all those police departments, taxi companies and utilities that will need to switch to the Impala. (I wouldn’t count on the Charger being around if I were them.)
“Under any scenario we see, we’re good until the end of the year”
So now I guess they won’t make it till the end of the year. He’s been wrong on everything else. If they go CH 11 then will he be fired?
So does this mean I should pickup some GM stock? That’s a pretty reassuring statement from a CEO. Wow…
When gas prices started to get uncomfortable, I believe GM told us they would come back down and everything would be fine. I DO remember in 2004 when Billy Ford told us that the days of cheap gasoline are gone.
John
“Will no one rid us of this troublesome man?”
I’m not one to criticize another man’s theology, but who’s the Thomas Beckett here?
Just a thought for a moment, but has anyone considered where GM would have been by now if they hadn’t bet the farm on the 900’s? GM knew the new Tundra, F-150 and Ram were coming and had to get their cash cow as good as possible as quickly as possible. In the end Ford delayed the F-150 rightly at the time to fix issues with the product. Would they have done so if they could forsee the crash in the suv market, would toyota have invested so much in a failing market segment too?
Always thought GM could get through this year as long as there were no more UAW/supplier dramatics. Spring was going to be the interesting time in Detroit for me.
Toyota did not “create” the Tundra right then, it was merely an update to an existing model. And the update was needed, the previous Tundra was outdated and not-quite-good-enough as GM, Ford, etc. were always quick to point out.
The Texas factory is another matter, but still I guarantee that Toyo will not let that capacity sit there idle. They will add other options (already have, Sequoia) and shift other production around to make use of their capacity. They won’t be shuttering the Texas plant anytime soon. It’s called planning ahead, Rick.
We all know the story about the truck/suv craze. GM and Ford made a lot of money from it, right or wrong. But Toyota just completed making a huge investment and jumped on the band wagon in the last year of this story. They gotta be lookin’ around and saying…”wh-what happened?”
To me, though I would not hesitate to buy a Toyota if I needed a small reliable car, Toyota is nothing more than an American Idol contestant. They may be able to perform the song better than the original artist but without the original artist, they got nothing.
You win some, you lose some… Toyota didn’t bet the farm, just extended their portfolio in weak places. GM burns a billion dollars every month. Toyota have a profit on top of revenue in the excess of five billion dollars. Every month. Has anyone read Sun-Tzu? Or played poker? Then you all know what will happen…
Who was the original artist for the Prius and the RAV4?
Indeed, Mr. Horner. Toyota diversified their lineup (and continues to do so) while GM put all their eggs in one basket. Toyota was prepared with different types of competent vehicles at varying sizes and price ranges.
Well said, Mr. Karesh.
After reading the WSJ article again that covered the GM stockholders meeting, I think Wagoner’s days may be numbered. Wagoner got a pretty good going over, and some of his blood was splattered on the bystanders. When the “Sisters” get it that the GM rulers don’t get it, it’s pretty hard to defend the guy or even themselves for letting him continue.
While Toyota might or might not wish they’d timed things differently with their San Antonio plant, they’re in a strong position to take advantage of serious weakening, even collapse, of any of the 2.8. Toyota has established the new Tundra as a legit player in the large truck segment. GM’s announced shutdown of their truck plants said 2010 ‘or before’ as I remember. Now Ricky is hoping to keep the lights on for 6 more months, and with the financial and oil price news out this morning, I think the operative phrase might be ‘or before’. And he conditioned his keep the lights on prediction based on his ability to see the future; not reassuring from recent and not so recent experience with the demonstrated lack of prescience from Mr. Rick.
The failure of the Tundra. hmmm…. a truck that even its its biggest down month (May) was still commanding 10% of the truck market, which is pretty much double what the old Tundra was getting. As others have pointed out, the Tundra was an update. Did anyone criticize GM for updating their trucks just a few months prior to the Tundra launch? No, in fact they were lauded for the coup of beating the Tundra out the gate. The Tundra sorely needed the update, and there is no way that Toyota was going to move the units they needed to make it profitable, if they didnt expand plant capacity. When the truck market rebounds, Toyota will be comfortably positioned to continue to get a solid 10% of it. Then they can ramp up production of more versions-diesels, HDs, update the base V6s and 4.7L V8s, to get themselves to 15-20%. If they were still building the last gen out of one plant in Indiana, this would be impossible.
Michael K:
First, let me say I find your reviews and comments here always worth a read, inciteful, and concise.
As to your question about the Prius and Rav 4…
The concept of mating an electric powertrain to an ICE is attributed to Toyota because of the Prius. That’s all the Prius contributes. If gas was still $1.00/gal would they NOT have made it. But it’s not and, lets face it, the business case for it is the gas situation and that is all, in terms of desireability it brings to the table. Right appliance for the right climate by a company, because of it’s roots, were in a much better position to make a marketing case for it.
As for the Rav 4, at this point, Toyota began life in Japan where smaller was necessary, not necessarily desired. Fast forward, the market here played into their hands. Which is fine. That’s the way the cards were cut. Sure, GM missed the boat. Sure, Rick is the devil incarnate for what has happened under his watch. And they should have seen this coming and better prepared for it. And, to be sure, all the American companies had an opportunity to embrace the manufacturing knowledge to produce the kind of quality product Toyota produces and passed. However, the small SUV is not a Toyota concept (original Bronco or Jeep maybe?). But a small SUV was the ONLY SUV Toyota could make and sell in it’s home market. Fast forward to today and you can see the market played in to it’s hand, and away from the American dream. To ignore the history and the background of the two companies is not fair, and paints an incomplete picture.
Ralph, in my opinion you’re conveniently ignoring that the RAV was a *car-based* small SUV, utilizing Toyota’s experience with excellent overhead-cam 4cyl engines and the Celica’s AWD system. This is what set the RAV apart, not that it was a small SUV.
Toyota did the same when they “invented” the car-based SUV (now known as the CUV) in the Highlander. Same deal with the car-based luxury SUV/CUV in the Lexus RX.
They created, and I’d say most would agree, kept a lead in compact pickups as well.
And, of course, the Toyota Hybrid System is what may very well keep them above water in an era of expensive energy.
None of these were developed as a holy-shit scramble to frantically adjust to market conditions. They were done in a methodical way to cover all their bases while growing their market share, all without any significant debt, and while preparing for the future. At the same time, they never abandoned what gave them a start in the first place: basic small cars.
Because of this method, Toyota can now give away every Tundra it ever built for free, close down the new factory, and still be on a steady path for growth. That’s what matters, everything else is just bickering over GM’s chemotherapy.
Edit: The Prius was indeed conceptualized and developed in an era of $1.00 gasoline; the project started in 1993.
“To ignore the history and the background of the two companies is not fair, and paints an incomplete picture”.
Well put. But your conclusion is wrong. Toyotas history (and long term interest) made them competable in todays market. But the big 2.8 had THIRTY YEARS to catch up, from the latest oil crisis in 1979. But they didn’t. Or they didn’t give a shit. It is not the history of Toyotas success that made the failure of the big 2.8. It is their own inability to make the right decisions in the right time that made them fail. You can’t blame the incompetence of Detroit on Japanese makers being smart.
imagine a guy who holds the shareholder meeting 600 miles from Detroit on the first Mon of June each year (note that usually makes it the morning after Memorial Day). he secludes the media upstairs to view remotely. he forbids the passing out of information between shareholders. he cuts the meeting short with people waiting to speak, who have filled out a card and have time remaining under the rules. he holds a press conference for reporters and leaves them sequestered to write their stories without speaking to the stockholders themselves. it’s a very well coordinated campaign to strictly limit interaction and influence media coverage.
btw he also turns off the webcast immediately following his initial welcoming speech.
get the drift of this guy?
Q. What is the difference between General Motors and the Titanic?
A. The Titanic had an orchestra.
Maybe it’s just me but …
If the CEO of Wal-Mart, Exxon or HP stood up and said we can “make it through the end of the year” he would make the front page and be beset by people asking “And then what happens?”
But it seems that Rick is like Bush. His time is over, his credibility is shot and nobody listens or cares any more.
The trouble is they can still both do us all a lot of damage. But at least we know when Bush is going.
This is it: the end of GM. For Wagoner to admit that there’s a looming liquidity crisis is tantamount to throwing in the towel. The stock market is catching on. There’s nowhere to go from here but C11.
Full Death Watch on Monday.
You are spot on, Robert. Even if they have enough cash to make it through the end of 08, does anybody think they have a chance of being profitable by the end of the year? Ford is in better shape, and they are not expecting to be profitable until 2010 (assuming they make it).
If GM (or Ford or Chrysler do go down and out), Toyota will be in a good position to pick up some volume with its Tundra. As has been pointed out Toyota doesn’t depend on its trucks for profits – Camry and Collola do fine. The incentives Toyota put on the all-new Tundra probably hurt GM, Ford and Chrysler more than Toyota by gutting any profits they had in those models as they had to match Toyota to maintain volume. The dependency of GM, Ford and Chrysler on their trucks is the noose around their next and Toyota has handing them the rope in trucks.
“The incentives Toyota put on the all-new Tundra probably hurt GM, Ford and Chrysler more than Toyota by gutting any profits they had in those models as they had to match Toyota to maintain volume.”
Very true. Toyota can afford to sell Tundras at break-even without feeling much pain; putting the hurt on the 2.8 big time by kicking the only profitable Detroit tent pole out at the base. Not that mighty Toyota would ever play hardball like that ….
They can afford to sell Tundras at a loss without feeling any pain (eg, 1st Generation Prius).