Now that GM's staring down the barrel of bankruptcy, the artist formerly known as the world’s largest automaker has launched a fresh offensive. Not a product offensive, of course. That would have required forward planning. We’re talking about a PR offensive. Hope for the hopeless. Alternatively, weasel words for the unwary. Here’s the headline, courtesy of unnamed sources, via the Wall Street Journal: a return to profitability by 2010. And here’s the kicker: the target date is “unofficial.” Does it get any more fantastic than that? Yes, it does.
The trick, of course, is for GM to get from here (looming cash-starved bankruptcy) to there (profit). You know: a plan. The only thing is, GM CEO Rick Wagoner has steadfastly refused to publicly declare any details of his “turnaround plan” since the words first passed his lips. Details as in targets. Targets as in accountability. Accountability as in “If I don’t do what I said I was going to do, fire my ass.” You can see the problem with that one.
Instead, GM PR's fed the ailing American automaker's camp followers a steady diet of generalities, dreams and excuses. Back in November ’05, the turnaround plan had four points: health cost reductions, product renaissance, better sales and marketing, and capacity reduction. Obviously, GM’s products were, are and always will be the most important element. If GM had made the right decisions then, they’d be well-positioned now.
“GM North America will continue with its aggressive product assault on all vehicle segments," the '05 press release declared. "To target key growth segments with the right products, GM earlier this year increased capital expenditures, with the vast majority of that increase going toward future car and truck programs…
“Starting in January, GM will begin rolling out more than a dozen all-new versions of its full-size SUVs for Chevrolet, GMC and Cadillac, to be followed in late 2007 with the availability of GM's advanced two-mode hybrid powertrain. In the same year, GM will begin rolling out an entire new lineup of full-size pickups, another segment in which GM is the industry leader.”
Oops. So much for Car Czar “Maximum Bob” Lutz golden touch. Or Rick Wagoner’s leadership. So, what’s the new new plan; the strategy that will rescue GM now that the old new plan is in shambles? According to the Journal’s proverbial “people close to the matter” (i.e. GM PR Spinmeister Steve Harris), The General is “preparing to cut thousands more white-collar jobs and is considering whether it should sell or shutter more of its brands.”
While white collar cuts are no biggie (unless you’re a GM white collar worker), the idea that GM is “considering” slicing dead brands is awe-inspiring. Anyone with a basic grasp of auto industry economics knows that GM's 19 percent U.S. market share mandates brand extinction. Buick, Hummer, GMC, Pontiac Saab and Saturn are all dead brands walking– to the point where no one in their right mind would buy them. At the same time, it’s equally obvious that GM cannot afford to cut the deadwood.
As we’ve pointed-out numerous times, the U.S. franchise system is a patchwork of 50 state laws that all favor franchisee rights. GM can’t just shutter its moribund brands and walk away from thousands of dealers. As long as there is a company to sue, the abandoned store owners will sue it. When GM closed Oldsmobile, the pay offs cost the company a billion dollars (back when a billion dollars was real money). And almost as much again in legal fees. Not to mention lost sales.
GM’s looking to raise $15b by the end of the year. There’s no way they can use the money to pay off six brands. First, it’s not enough. Second, GM needs the money just to keep the lights on. There are only two practicable way to downsize GM’s portfolio. Either GM must starve the brands of product– as it is now doing (not doing?) for HUMMER– or declare bankruptcy and use the court’s protection to git ‘er done.
GM doesn't have enough cash to wait out its dealers, and can’t stomach the nuclear option (C11). Which is why, back in February, Mr. Wagoner dismissed the idea of killing brands as "not a thoughtful discussion." So why, pray tell, is the Journal/GM re-raising the possibility of brand slaughter? Because GM wants that 15 bil and the financial markets have completely lost faith. But not, apparently, GM’s Board of Bystanders.
"[Wagoner] also has support on GM's board. Key directors still believe the management team under Mr. Wagoner is capable of delivering a turnaround and insist ‘we will win or lose together,’ this person said. Despite GM's mounting troubles, the board is anticipating management will soon notch "some victories under our belt," one director said, asking not to be named.’”
The Bystanders will go down with the ship? GM’s going to pull a rabbit out of its hat? At GM, fantasy never goes out of style.
GM's PR machine is in full spin cycle. From Automotive News: A General Motors spokesman today denied the automaker is reviewing any more brands besides Hummer for possible sale. "No other GM brand (besides Hummmer) is under strategic review, GM spokesman Tony Cervone said in an e-mail to Automotive News today.
“Which is why, back in February, Mr. Wagoner dismissed the idea of killing brands as “not a thoughtful discussion.” ”
Auto show season smoke screen.
Ah, good ole GM – the world’s largest producer of press releases and hot air. I’d bet the Glass House gang causes more greenhouse emissions than all the SUVS they sell in one year.
The GM story is full of “if onlys.” If only GM had killed Pontiac and/or Buick at the same time as Oldsmobile when they had the cash to pay the dealers out thus saving all that wasted product development money. If only they hadn’t wasted the money on Saturn. If only they hadn’t let EVERY SINGLE car nameplate wither into irrelevancy while they feasted on truck profits. If only they had secured new credit lines 2 years ago like Ford did. I could go on….
When you say that GM should pare down to Chev and Caddy, but then in the subsequent paragraph say that shuttering Olds cost them sales, how can these two thoughts be reconciled?
I read this today in WSJ and wondered aloud how the street will react to news that profitability is 8 quarters away. No one wants to wait that long or trust these guys with their money for 2 years. Here comes the giant sucking sound of equity flight.
The chart accompanying the article showed market share for GM brands and it was sad. Chevy is the main leader at 13% or so followed by GMC (same thing really)@ 2.5% and pontiac was a third @ 2.1%. Saab, Saturn, Buick, Caddy didn’t even have 5% together. I think more Honda Civics are sold every day than those last 4 put together.
86er:
When you say that GM should pare down to Chev and Caddy, but then in the subsequent paragraph say that shuttering Olds cost them sales, how can these two thoughts be reconciled?
Everything is costing GM sales at the moment. ALL of the brands are losing U.S. market share.
GM needs to re-group and refocus its remaining capital– before it doesn’t have any capital to focus. So yes, GM will lose hundreds of thousands of sales by closing all its brands but Chevy and Cadillac (you could even make a case for killing Caddy).
The question is, do you want a quick cauterization and the hope for a brighter day unencumbered by the past? Or do you want to watch GM bleed out? And by you I mean you, because it’s clear what GM’s management wants.
Amazing, “Red Ink” Rick took a vague turnaround plan and made it…..vaguer!
Joking aside, GM is in a real bind here. GM needs sales in a market where even Toyota, Honda and Nissan are ready to slice each other’s throat, GM needs liquidity when banks and private equity groups are scaling back and GM need customer faith when that particular well was tapped out a LOOOOOOOOOOONNNNNNNGGGGG time ago!
GM has lost its “World’s Largest car maker” moniker a long time ago (2006 Toyota won that title, it’s just GM cheated (i.e declaring the Wu-ling/SAIC joint venture as their own sales, when it was (and still is) majority owned by SAIC)).
GM is becoming (very quickly) a shadow of its former self. Even if GM do come back from Chapter 11, I reckon the market will have changed so much (i.e Hyundai in a stronger position and Indian & Chinese makers coming into the frame) that they will still be 2 steps behind.
The problem from the beginning was their management. “Red Ink” Rick, “Maximum” Bob Lutz and “On the” Fritz Henderson have been ultimately responsible for GM’s shoddy cars, mismanagement of money and terrible market strategy (i.e focusing on SUV’s and trucks without diversifying their portfolio). I know I bleat on about how GM needs to make quality cars at a reasonable price, but if management don’t greenlight the project which will bear GM those cars, then, whose fault can it be?
Someone made a very interesting point the other day which concludes this post:
“FIAT funded their turnaround with the $2 billion GM gave them. Why couldn’t GM do that turnaround with FIAT with the same $2 billion? The. Management. Sucks.”
White collar jobs being cut?Nearly 36yrs of punching the clock, and I ain’t seen it happen yet.
When I see high paid salary guys going out the door,I might start believing that GM really is in trouble.
Chances are the smart,hard working ones will get axed.We will be left with the yes men and the ass kissers.
you’d think by now the Board and shareholders would realize the trouble isn’t fuel prices, raw material costs, health care, pensions, number of franchisees, the weather, trade policies, or even the competition. it’s the absolute lack of accountability combined with incompetence at the top. go back ten years and inmagine a prediction of losing Olds, selling off assets like there’s no tomorrow, spinning GMAC, and facing bankruptcy. combine this with a Board that continues to support the management under which this occurred and no reasonable person would believe it possible. yet Red Ink Rick is still there calling the shots as GM goes under.
Chances are the smart,hard working ones will get axed.We will be left with the yes men and the ass kissers.
Smart one leave before the axe falls anyway.
What I don’t understand is, why can’t GM let the brands concentrate on their core values instead of shutting them down?
When I think of Buick, I think of Roadmaster and Riviera. Big, black, portholes. The boattail. Stealth luxury, they could be where Lexus is today. Buick could, in effect, be a two model brand, based on one single platform.
All GM:s dealerships could be renamed to “GM Cars” and sell every single model available in the GM portfolio. GM doesn’t have to scrap Buick as a brand, just let Buick concentrate on what Buick is good at, and sell the cars in the combined dealership franchise. And I repeat, no overlaps in the model line-up.
Why the need to shut down brands? Why not just scrap every single model that isn’t unique to the brand, and sell those together with every other GM brand thas has unique models?
RF, I see that you already corrected the phrase “git ‘er done” in the article.
As for cutting brands, you have to remember that the reason it was Olds was because Olds had the fewest standalone dealerships of any of GM’s brands, less than a 100 I believe. And it still cost them huge $. Now that the majority of GMC, Pontiac, and Buick stores are under one roof, they could use an alternative strategy. Each of the tri-brands could sell a limited number of non-overlapping models so that taken together the three = one full-line brand. You could argue about how to divy up the vehicles among the three (GMC is pretty obvious though). This is NOT as good as getting rid of one or more brands and the dealers that go with them but it’s better than nothing. Short of filing C11, I don’t see how GM could afford to shutter a brand.
C’mon, people. The GM product turnaround is going to take some time, at least until the second generation of the vehicles that are being introduced now. In troubled economic times, people make conservative monetary choices (here, either the cheapest cars around — Hyundai and Kia — or the tried-and-tested perception-leading Japanese, or better yet no car purchase at all).
I have said this to anyone who will listen for the past few years. Do not count GM and Ford out (but do count Chrysler out). When the chips are down, both companies are going to take risks that they would not have taken 10 years ago. 2010 will tell all. Will North America embrace the next-gen Focus, Fusion, Taurus, Cobalt, Lacrosse, Aura, Astra, etc. — or will the U.S. consumer go with the “safe” choices?
detroit1701: 2010 will tell all. Will North America embrace the next-gen Focus, Fusion, Taurus, Cobalt, Lacrosse, Aura, Astra, etc. — or will the U.S. consumer go with the “safe” choices? 1. Detroit doesn't have enough cash to make it to 2010. By Wagoner's own admission, GM can only finish the year without finding $15b down the back of someone's couch. Chrysler's owners won't want to throw money down a bottomless pit. And Ford's cash flow's looking decidedly unhealthy as well. 2. U.S. consumers ALWAYS go with the safe choice.
What I don’t understand is, why can’t GM let the brands concentrate on their core values instead of shutting them down?
Ingvar; the problem with that idea is that the bulk of what separated the brands in Sloan’s (and by that history all of GM’s) hierarchy was price and level of opulence. The brands have no real values inherent beyond were they sit within the hierarchy.
Robert Farago
“2. U.S consumers ALWAYS go with the safe choice”
Alfa Romeo might as well abandon its plans for a return to the United States, eh……?
detroit1701 asks:
Will North America embrace the next-gen Focus, Fusion, Taurus, Cobalt, Lacrosse, Aura, Astra, etc. — or will the U.S. consumer go with the “safe” choices?
The “safe” choice, of course. Toyota, Honda and Nissan. No one, except those who have been loyal to the Dom2.8 (and that number is shrinking every month), will take a chance on the next generation anything the dom2.8 come out with. The next generation Toyhonsan will have plenty of people buying them. If it was not the case, their numbers would not be increasing while the dom2.8 numbers (market share and total sales) are decreasing.
If you’ve ever wondered who Rick Wagoner’s alter ego was at the Battle of Waterloo, it wasn’t Napoleon and it wasn’t Wellington.
Nor was it the Prussian Blücher, whose cunning maneuvering brought his forces back on to the battlefield at just the right moment.
Napoleon had sent a large detachment of his army in pursuit of Blücher, under the command of Marshal Grouchy. Well aware that Grouchy wouldn’t know the meaning of initiative if he was walking on a path of glowing coals, Napoleon had issued him with detailed orders.
Grouchy set off behind the Prussians, and was tricked when Blücher detached a portion of his army, sending them marching away from Waterloo, while he took his main section around and back.
On the morning of the 18th of June, 1815, the battle began. When the French guns opened up as the day was nearing noon, Grouchy’s commanders realized the battle had begun – and wanted Grouchy to turn his forces towards the sound of the guns.
But Grouchy had his orders – just as Wagoner had his mission to create a brand called GM that made a whole bunch of identical looking cars with nametags slapped across their hoods.
And Grouchy stood his ground, or actually deafened his ears to the roar of the cannons and muskets being fired. This was no little skirmish – this was it.
“My orders are to pursue the Prussians!” shouted Grouchy, as his commanders were close to mutiny.
“My orders are to pursue the Eldorado margins of humongous cars,” repeated Rick, as his commanders applauded him. (Well, they’re not carbon copies.)
Meanwhile, Napoleon was convinced that Grouchy had turned his forces. He’d sent couriers off – and when soldiers appeared in the northeast, Napoleon was confident it was Grouchy – forgetting that the man was incapable of initiative.
It was Blücher, who appeared just as Wellington was about to recognize defeat – turning the battle in the Allies’ favor.
Rick Wagoner and his men had their orders, build hugely impractical gas guzzlers that have been superspec’d, in order to realize the greatest possible margins, no matter what.
That press release from November 2005 comes in reaction to the sharp downturn in SUV-sales following Katrina, and is why he mentions hybrid drivetrains. “Have my orders, can’t let anything interfere with those.”
c. eloi marx:“…the problem with that idea is that the bulk of what separated the brands in Sloan’s (and by that history all of GM’s) hierarchy was price and level of opulence. The brands have no real values inherent beyond were they sit within the hierarchy.”
Well, I think that you are wrong. The only difference is that today there is a huge overlap between the brands, and that they sell at different dealers. GM does not need four different franchices to sell four different versions of the same platform. They need one dealer that sells four different versions, differing in price and opulence. They could, in effect, use the different brands as distinction between different trim levels and price. The point is that they need to get rid of the gargantuan overlap and the mass of superflous dealership franchises.
And concentrate on core values within the different brands. What is Pontiac? Pontiac is not “car”. Pontiac is the thought of the original GTO, Trans am and for that sake, G8. What is Buick? Buick is not the Rendez-Vous. Buick is the true meaning of stealth luxury. Buick is for those that want the best, without the Cadillac Bling-Bling. When better cars are built, Buick will build them. And when is that? Buick could scrap its entire line-up and re-invent itself as the true stealth luxury brand within GM. And there is a core value in every single GM brand. The problem is that beancounters runnig havoc with GM doesn’t know what a core value is even if it was pissing on their head. Saab 9-7X? puhlease…
KatiePuckrik :
Robert Farago
“2. U.S consumers ALWAYS go with the safe choice”
Alfa Romeo might as well abandon its plans for a return to the United States, eh……?
Depends what those plans entail. If Alfa thinks they’re going to find mainstream success in a few years, then yes, abandon ship!
An Italian car– any Italian car– is going to be a niche product in this country for at least the first product cycle, probably three. Lest we forget, the U.S. is the world’s most competitive car market. And given that the market has contracted, violently, Alfa would have to take customers some well-established, deeply-entrenched, top-of-their-game players.
Nothing’s impossible. But that $4b FIAT got from GM (not $2b) would disappear in no time at all. Get big or go home? Not in these parts…
And don’t forget that Alfa, bless them for their folly, are actually considering putting together an SUV … sigh!
Perhaps this is incredibly naive, but…
GM’s problem is that they spend too much resources badge-engineering every vehicle they have. So why not just do what Chrysler did with the Dodge and Plymouth Neon, where “badge engineering” literally meant that the differences were in the badges?
It would mess up their dealer relationships, but since they desperately need to cut down the number of dealers… is there any other reason not to do this?
Anyone else think the big news is that GM is finally willing to consider splitting up the company in GMNA and everything else?
If you carve out the moribund NA business, the rest of the company is going to look pretty good to investors, lenders, and even PE types. Something like 80% of future global growth is concentrated in a few foreign markets–all of which GM has a pretty solid presence.
As long as they combine the infusion of capital with a reasonable plan to ‘manage down’ in NA (read: don’t blow the money, please), it seems that they will finally have a game plan worth playing.
This is not related to this deathwatch, except that the picture made me think of monster managers.
It’s just whimsical thinking on my part, but I thought I’d toss it out there for you all.
If I were a CEO, board member, or high level HR person in my company (or any large company), I’d probably have a mental blacklist against every member of GM, Ford, and Chrysler upper level management, board members, etc.
I wouldn’t hire any of them for sure. Furthermore (assuming that I had the authority, say-so, or veto power), I’d make sure that my upper level managers not only wouldn’t hire them, that my managers would have the clear understanding that their own careers would get a nasty stain if they even considered any of the 2.8 incompetents for employment.
The current batch of GM, Ford, and Chrysler bosses may walk away with a big payday from all this, and there’s not much that can be done about that. But if they become unemployable, then maybe the misery they have caused will mercifully stop.
It just occurred to me that maybe I’m advocating a form of “survival of the fittest”…
Robert Farago:
Everything is costing GM sales at the moment. ALL of the brands are losing U.S. market share.
GM needs to re-group and refocus its remaining capital– before it doesn’t have any capital to focus. So yes, GM will lose hundreds of thousands of sales by closing all its brands but Chevy and Cadillac (you could even make a case for killing Caddy).
The question is, do you want a quick cauterization and the hope for a brighter day unencumbered by the past? Or do you want to watch GM bleed out? And by you I mean you, because it’s clear what GM’s management wants.
Call me sentimental, but Buick and other brands is all the “capital” that GM has left. While I know what you mean when you say “unencumbered by the past”, i.e. debts, union obligations, and other bad decisions, if GM doesn’t embrace its product past, and soon, it might as well close the doors tomorrow.
(No, I don’t mean the Cimmaron past, I’m thinking more the Bel Air past).
Ingvar:
And concentrate on core values within the different brands. What is Pontiac? Pontiac is not “car”. Pontiac is the thought of the original GTO, Trans am and for that sake, G8. What is Buick? Buick is not the Rendez-Vous. Buick is the true meaning of stealth luxury. Buick is for those that want the best, without the Cadillac Bling-Bling. When better cars are built, Buick will build them. And when is that? Buick could scrap its entire line-up and re-invent itself as the true stealth luxury brand within GM. And there is a core value in every single GM brand.
Quite frankly, at this point, apparently facing bankruptcy, I don’t see why GM wouldn’t go for a full-out roll of the dice. They have the product, it’s just scattered too wide and too thin to make a difference.
Is it possible to be so blind or so stupid or so proud or so incompetent or so arrogant in this information age? I find it hard to believe that GM’s leadership and board are to a man, guilty of all of the above. I makes no sense to me at all. I am rapidly coming to the conclusion that they are sytematically destroying GMNA on purpose! Someone tell me what else could explain it?
So, motownr, do you have it on good authority that GM is planning to hive off the non-North American operations?
I’ve been saying for ages – watch for that particular event and you’ll “know” pretty well, that GMNA is just about ready for a roll of the bankruptcy dice.
Because, correct me if I’m wrong, but a bankruptcy judge, upon being “asked” to allow GMNA to go Chapter 11, could simply look at the books and declare the company to be Chapter 7.
That’s the end. Finis. Kaput. GM would BE nothing more than GMDaewoo, Holden, Opel and part-owner of GM-SAIC in China.
The irony is that the resulting non-US company “might” have a fighting chance of not only surviving, but thriving.
Living in Michigan, and having gotten to know many Big Three engineers throughout my lifetime, most (most) are not a complacent or lazy bunch (while Robert may be very correct in his assessment of the upper management). What is going to fuel any Detroit comeback is letting the mid-level engineers (you know, the ones with ideas and technical know-how), combined with young, talented designers (you know, the ones who know what younger generations like to drive) do their jobs without crushing top-down mandates. This has always been the biggest complaint from these engineers — that their hands have been tied. I remember talking to one of the guys who worked on the original Fiero project. He told me that the Fiero that they had engineered was a phenomenal and revolutionary vehicle, only to be killed by cost-cutting and design revisions by management.
The Chevy Volt is a quintessientially American-style project. We don’t do “incremental improvement” and/or 7-year product cycles. Americans leapfrog. Whenever the U.S. faced a technological gap in the 20th century, we leapfrogged. From the Monitor and Merrimack to the space program, the U.S. did not necessarily improve competitor’s technology, it introduced brand-new technology.
I am all for giving substantial tax breaks for adopters of EV cars, regardless of the manufacturer. The oil spike is a grave national problem that threatens to take our entire economy down with it, and not simply a personal economic one.
you’d think by now the Board and shareholders would realize the trouble isn’t fuel prices, raw material costs, health care, pensions, number of franchisees, the weather, trade policies, or even the competition. it’s the absolute lack of accountability combined with incompetence at the top.
No, because that would mean that they’ve been wrong for some time. One of the more amusing aspects of American (and German!) corporate culture is that you cannot, ever, be wrong. If you’re wrong once, your judgment is therefore suspect, and you could be wrong (or worse, wrong a **liable**) about something else. At that point, your career is effectively finished.
This is why it’s safe to blame external factors, because you cannot be responsible (and thusly wrong) about them, despite the fact that good strategic leadership demands that you prepare for externalities. It’s also why the board will not indict Wagoner et al, because it would mean that they were at fault to.
Blamestorming. It’s an awful way to manage, but it doesn’t show when you’re making money. It works, sort of, for middle-management paeons where there’s little strategic thought or initiative, but it’s a cancer when your leadership thinks this way.
If you’ve ever watched a Toyota executive talk about their recent quality issues, you’ll see something interesting: they’ll admit to mistakes. By GM’s standards, Toyota’s margins would allow them kill kittens as part of the Camry’s manufacturing without having to apologize. But Toyota does, and this is reflected in the way the whole company works: you can screw up, but you can fix it; just don’t make a habit of it.
Interestingly, this means that Toyota’s management will take risks because while there’s always a penalty for failure, it every failure is not career-ending. At GM, the risk is too great: any blame you accumulate is lethal, so there’s no incentive to change until all other avenues are closed. It’s a subtle difference, but an important one.
GM would be a hard company to manage. Tight legal chains bind them, massive debts weigh them down, and the company itself has been whispering “But we’re GM dammit, we’re too big to fail” to themselves for decades. And they had the SUV profits to cover all this up.
Getting anything productive done in that environment has to be like herding cats through quicksand.
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Menno:
The ‘good GM/bad GM’ speculation is just that. It’s in some of the recent analyst reports.
Personally, it’s more of a financing approach than a prelude to chapter of either variety. GM needs to access the capital markets, and the foreign assets have more value if the liability in NA is carved out.
If chapter in NA ever does become a real possibility, the guy to watch is Penske, IMO. He’s Wall Street’s guy in the car industry, has been a GM insider for decades, etc. Again, my $.02, but any real reorg in NA would likely be a pre-packaged deal where Penske steps in to run the company.
Ingvar, I will argue that Pontiac is “car”; “car” above Chevy and below Buick. To say that they represent muscle is silly, GM sold muscle from all their brands (and so did Ford and Chrysler). To say Pontiac’s brand is something that they may or may not have been for 7 years, 40 years ago is folly.
GM may say that Pontiac builds excitement but who really buys it, GM seemingly doesn’t or Pontiac would have always been a brand focused on that trait, rather then building Chevy clones (with subtly different engines) for their entire existence. To put it another way Citroen doesn’t say that they build avant-garde cars, they build them; you can’t just say you’re the brand, you must be the brand.
As an aside, I have no clue how a brand that has made so many portholed, landau roofed, chrome laden monstrosities can be called stealth anything.
Marx, you seem to be missing Ingvar’s point.
The fact that GM did not keep their brands to their core identities is the problem. By giving several GM brands their own muscle car (on the same platform with almost the same sheet metal), their own pick up (on the same platform with almost the same sheet metal), their own mid-size car (on the same platform with almost the same sheet metal, and their own SUV (on the same platform with almost the same sheet metal) has resulted in some of us looking at GM as just a big mess.
I am further amused by the silly GM advertising which pretends there are still core values to each of the GM brand names.
It appears that the franchise system (every dealer wants every new fad) of selling cars will be a major reason for the undoing of the older (in the US) car companies. Can the newer (to our shores) car manufacturers avoid the franchise system problems? Is there a better way to sell cars? Why don’t manufacturers own their own stores? We need some help from you lawyers and historians to help us understand these things.
@motownr,
I agree wholeheartedly with your speculation, “The Captain” would be the man to watch.
If the stuff hits the fan, I’m hoping this is the man I’m betting on to clean up the mess…
Time will tell…
Regarding Alfas prospects in the US, I think it’s useful to look at another Italian company, Ducati. Back in the early 1990s, Ducatis exhibited all the negative characteristics for which European brands have at one time been famous: high price, lower performance than the competition, wierd styling and poor quality. Yet look at Ducati now. They’ve managed to infuse their lineup with what are essentially bargain two-wheeled Ferarris. Yes, a Ducati costs more than a Honda. But it’s not *that* much more and considering the quality and performance, there’s little price to be paid for owning a gorgeous piece of Italian machinery. And, make no mistake, nothing is as mechanically sexy as metals worked in Italy.
If Alfa can walk that same line, they have a real chance.
c eloi marx: If the original GTO is not the quintessential Pontiac, then what is Pontiac? Really? What does the brand say to You?
In fact, I want to see this question as a TTAC Question of The Day: What is Pontiac? Or for that matter, what is Buick? Or what does any GM brand have for reason to exist? What core value do they have? What meaning in life to they fulfill? What’s their reason for being here at all? Because, GM does seem to live in oblivion on this matter. If TTAC:s best and brightest can not answer these questions, then GM is fucked for eternity…
I’m with oboylepr here — the only way I can accept that the board is not on serious drugs (and I’m talking IV-drip, perpetual-coma narcotics) is that running the corporation into the ground IS the plan.
c eloi marx: “As an aside, I have no clue how a brand that has made so many portholed, landau roofed, chrome laden monstrosities can be called stealth anything.”
I am not an american, so perhaps I have missed something in the history of Buicks recent past. But Buick once had a place in the ladder in a segment one could call “near luxury” nowadays. The spot that the Toyota Avalon and Volkswagen Phaeton holds today. Buick was the choise for those that didn’t want to show off their money like the Cadillac-crowd did. It was a true car for the bourgeoisie, the lawyers, the doctors. Not unlike Mercedes back in time when Daimler-Benz built cars that lasted a life time.
The point is, I still think there’s room for a Buick of tomorrow with the same catchet. Or no one would by a Toyota Avalon. That is where Buick could be. But more beautiful and refined. Perhaps with a design language of their own, L-Finesse style. Like an early fifties Roadmaster.
Has Detroit leapfrogged anything in the past 20 years? Let’s see if anything marks true:
– EVs went bust.
– Fuel cells and all the Hy Wire hype has been abandoned.
– Hybrids were mocked and ridiculed as “experiments” for 5 years – now GM has the half assed belt driven hybrids which leapfrogs nothing. And $10k premium 2 mode hybrid drivetrains that cost 4x more than Honda or Toyotas.
– Hummer’s became reskinned Denalis and Colorados.
– Aveo?…as 1980’s Korean as you can get today!
– Malibu or Aura?…takes GM 30 years to finally get a car that is competitive to the Fusion / Accord / Camry / Altima / Mazda6 / Sonata (that’s fighting for a small piece of a very competitive market).
In GM I’ve seen little to nothing in terms of leapfrogging any of its competition – even Chrysler or Ford or Yugo!
Here is what GM has actually leapfrogged:
– CEO salary for a company that loses billions of $s in the past 3 years
– highest level of market share loss in the last 8 years
– largest market cap loss in history in the last 5 years
– lowest stock price since 1954
If you ever watch Football you’ll learn that teams who live by trick plays and hail marys never win in the long run – it’s the steady defense and offense that wins the championships (or cheating).
Ingvar and folkdancer:
My point is that other then fleeting moment in history (DeLorean era Pontiac, for example) none of GM’s brands had any real identity of their own. The identities of GM’s brands were wholly dependent on what price strata they existed in, becase GM itself is the brand (that brand being “We’re GM, an automobile manufacturer”).
GM’s brand problems date back to the 50’s when the price strata began to collapse; Caddy reached down and Chevy reached up, pushing the other brands out. This wasn’t a problem at the time as the era saw the death of much of the America’s car manufacturers and very little foreign competition.
What does Pontiac say to me? Nothing.
In their glory days I’d say: Pontiac = Firebird;
Buick = Electra.
Talk about antibling, my uncle worked in the public schools so rather than buying an Caddy coupe he bought a Toronado. “It wouldn’t look right for a school teacher to have a Caddy.”
c. eloi marx has a point. I think these were the Cimmeron days. My folks looking to replace their Rover thought about one really because they liked the size, their friend said you can get the same basic car but it’s a chevy. Chevy was advertising that car (I can’t think if it was cavalier?) and the tag for the commercial was: “You might not want to go any higher.”
From Ed Wood to William Butler Yeats: what a web site!
Ingmar says he’s not an American but he sure knows about GM’s part in our automotive history. I suspect some of the other folks’ comments come from people who grew up after GM started its long decline in the 70’s.
I like to say GM lost its way. It forgot what a Chevy should be; what a Buick should mean; how a Pontiac or Olds should be distinctive. Sloan’s hierarchy of brands recognized there must be substantive (size, engine, transmission, style, performance) as well as psychic (thriftiness, technological leadership, prestige) differences.
Under Roger Smith the brands’ decline into nondescript mediocrity accelerated. Worse yet, product quality went downhill. One began to wonder if anyone at GM gave a damn.
My fear is that GM has reached the tipping point. It apparently can’t fund development of modern versions of Chevy II’s, GTOs and Roadmasters. And even if the money can be found, it may be too late to change buyer perceptions.
I agree, in theory, that GM could infuse at least a few of it’s brands with some traditional meaning.
However, they have not done this in about 30 to 40 years, so what makes us think they’re going to do it now?
The problem with cutting brands is this – why do we think the remaining ones would suddenly have some sort of identity? What does Chevy stand for? What does Caddy stand for?
Chevy sure doesn’t stand for reliability. It doesn’t stand for cutting edge tech. It doesn’t stand for lowest price. So even if GM cuts brands ’till Chevy is all that’s left, they still wont have a brand that means anything.
The photo needs a caption: “Would you buy a new car from this man?”
Like communism, having multiple marques is in theory a good idea, in practice too difficult and too expensive. Inevitably, the temptation for badge engineering becomes irresistable. A car company should have 1 or 2 marques, no more (Toyota starting Scion was probably a mistake).
Verbal said, “The photo [of Tor Johnson] needs a caption: ‘Would you buy a new car from this man?\'”
Hey, if a 400 pound professional wrestler won’t take no for an answer, I’ll buy whatever he’s selling.
Will North America embrace the next-gen Focus, Fusion, Taurus, Cobalt, Lacrosse, Aura, Astra, etc. — or will the U.S. consumer go with the “safe” choices?
Well, they might, if it weren’t for the new Camry, Prius, Civic, Fit, Yaris, Versa, Sentra, ES350, tC, RX350/400h, Altima, RAV4, and two mystery Honda hybrids due between now and then.
The “safe” choices aren’t standing still, either.
It’ll be sad to see the General go down. Maybe my “29” market share GM pin will be worth something on eBay.
“Now that GM’s staring down the barrel of bankruptcy”
Actually, GM is staring down two barrels: The first barrel has got a #11 choke — that one will go first. The second has got a #7 choke — when that goes off, they are a dead duck.
Again, see you all at GM Death Watch 200.
Slicing brands yields nothing. it is the same principle of inability to compete, and if you can`t build a competetive Buick or Pontiac, what makes you think that Chevy is going to be competetive? Slicing brands is a symptom, and the same symptoms apply to other inside brands. Chevy is more selling because of one thing- it has immense korean engineering contents being simulated as American chevrolet. Ditto the caddies that have german opel input.And it doesn`t matter if we talk of the legendary Z06 with squeeking targa roofs or beancounters korean flea size econobox. The same rules of GM mathematics apply there. cutting expenditures and their own throat. What has changes since euthanizing Oldsmobile? has the patient revalesced? No ,the comma goes on with beeping lights warning for lack ox oxygen in product and quality segment. i would really believe in Lutz or Wagoneer being the only jerks if there were other successful Amrican car companies, bet there ain`t a single one. even the chic tiny niche Fiskers player or Tesla look like going belly up than building real hardware. American car building has become more of a mouthpiece show than sweat a product job. Mouthpieces come and go with Duesenberg revival etc, while japanese stay and eat your lunch while you recline in a sofa and vedge on a reality show peeking at your 70inch Sony LCD.
Of course Gm has improved quality , but GM, not the quality matters but where is your quality compared to competition, and japanese always care just to stay a little ahead of Detroit. of course 86` Mitsu is far worse than 2008 Malibu, but is the same malibu good enough for 2008 ACCord? Taht is the real answer to your lunch money. japanese have to offer higher quality products in europe than what they can afford to sell in USa. Even audi could afford to sell SOHC engines in states, while in Europe it had switched all engines to DOHC.But who cares, while those SOHC are better than OHV domestic pterodactilus, they get sold.
Us companies are lacking higly skilled engineers and they are trying to fill the void by H1b visas allowing immigrants to march the parade. ironically they march with mixed attitudes and priorities while japanese sing in unison new 4 wheel Vivaldis.Gm has to realize that PROFITS ARE PLEASANT SIDEFFECTS OF COMPETETIVE PRODUCT BUILDING NOT VICE VERSA.If you build competetive products ,profits come themselves.Then it is your duty to share them wisely. Isn`t that ironical that 10 years ago selling crappy yet pure domestic Saturns you could sell them a lot more than today selling good quality german Opels being faked as american Saturns? So there is this God cachet or trigger or fuse that that always blows the truth.Believ me you could even try selling Aston martins or Ferraris under chevy brand and it would fail.people always pick sides- either homerun, or the best.there is no between, there is no 2 in one.
Here is the catch 22 GM is in with discontinuing brands. To those who did buy Buicks, Hummers, Saabs, and Pontiacs assuming all go by by, where will they go next? Will they go to Chevy and Caddy because their fathers and grandfathers always bought GM cars? Or will they say that’s the last bad resale car I will ever own. (these would be a doubly bad resale cars, a. it is from GM b. it is no longer made) Cars like people who buy them need a heritage. (a hallowed heritage preferably). To say I remember my uncle’s 1955 Roadmaster Buick with a straight eight, dynaflow tranny, toothy grill, unique body style etc. is to have no relationship to a new Buick what is it now Park Avenue or no, Lucerne. Just as the names are now generic, the last one has a European (Swiss) flavor to it, the car it’s hooked to does not. A lucerne is now a clone of a DTS cadillac, which unfortunately is a clone that sells poorly and is badly in need of updating. The four speed automatics are ten years out of currency and the hoary V6 for reasons probably of weight can no longer push the car along with any quietness or economy. The toyota Avalon has a modern V6 with a six speed auto just as much room (perhaps the only flat back floor in a full sized car) a boulevard ride and 29mpg with the new tougher EPA guidelines. Owe, and I forgot the Avalon has resale value. Finally, the similarly priced Avalon offers no financial incentives from Toyota.
I’m no Detroit insider but I cut my teeth on Chevy’s and have always rooted for the cars I loved in the 50’s and 60’s to recover their standing as America’s favorite car. The debate over brand segmentation is, to me, a pointless exercise. I honestly think that anyone under 40 has no clue about brand positioning and were brought up on Japanese brands and most of us over 40 have been victims of the crapification of GM products and avoid them all like the plague. In my mind, the tipping point was the first energy crisis and the imposition of safety standards (energy absorbing bumpers, better passenger restraint systems, etc). I believe that this was when GM (and FoMoCO and ChryCo) really had to look hard at cost reduction to offset the addition of safety equipment that had no obvious value to the consumer, and it became ingrained in the culture. The results were cost driven vehicles that were unappealing to look at, poorly engineered and assembled and grossly underpowered. Go to any car enthusiast show and you see SEXY looking cars. You rarely see anything built after 1973. Why? Because most US vehicles built after that are faceless appliances, not cars. There’s more sex appeal in my coffee maker than what I see in US cars these days.
I feel aggravated ie. angry when I’m engaged in dealing with all the fucking BS in advertising/marketing/news/world. God fertilizer! (Holy shit!) is the world engulfed in nutrition for growth (composition!). Just I do no like ie. I feel uncomfortable ie. pain in so much fertilizer. I guess I better use this opportunity to grow and overcome. Pain is mandatory. I feel fucking angry.
Robert
Now I ask you…where are the Ed Woods of today?
He not only directed & produced Plan 9 but he also rented some of the “set” i.e. ’53 Ford & hubcaps used as flying saucers, etc. What a guy!
One dealer (GM Corporate) and put all the GM products together on the lots. People will buy the good ones and let the others whither. Or quit making the duplicates TODAY.
I read in another TTAC where someone mentioned the Avenger. I found myself surprised – I had no idea – and I’m a car guy – that Chrysler was currently selling the Avenger! Or where did the Neon go? Wasn’t that a car they were selling until recently? My grandfather had the same comments about 3 years ago when we showed up in our then 9 year old VW. He said he didn’t even know VW was still in business. Walked around back and wanted to see the engine…
How many normal American consumers don’t know about all the North American GM products or brands? I’ll bet a good number don’t know much about anything Saturn sells these days or much about the Pontiacs either.
GM is too thinly spread out. They need some commercials or ads or something that list all of the GM products at one time. Maybe a long line of red GM products while the camera views from above.
I have long wondered if GM was going down the tubes quietly and with intent. Would shed alot of garbage and possibly come back a contender…
Busbodger:
GM is too thinly spread out. They need some commercials or ads or something that list all of the GM products at one time. Maybe a long line of red GM products while the camera views from above.
Dude, as a marketing guy I have to tell you that no amount of commercials, print ads or media coverage will dig GM out of the hole they’re in this time.
You know what would save GM? Me. Or you. A normal, everyday car guy at the helm, with no political allegiances, no office politics to do him in, and no sacred cows. Hell, if I was on the Board, I’d hire Farago to come in and fix it. And I bet he could. Any normal person can see what’s wrong with GM – but up there in the rare air at RenCen, there are no normal people.
showbizkid- where would you get 200k hard and meticulously working labour force and smart-assed bunch of engineers and beancounter killers? It is the AMERICAN culure itself with shining dollars in their eyes that blurs any long term objectives away. The problem is not that if you could or if you did, the problem is that noone would keep you accountable, if you didn`t.
jurisb says: “US companies are lacking highly skilled engineers”
I disagree, there are plenty of outstanding engineers out there, its that US corporate culture does not value engineers or engineering. The computer industry is where the H1b visas immigrants are going, not to manufacturing. Once you are a part of the US cubical world, you discover that engineers are among the lowest perches on the pole, and its rare for any form of engineering career track to exist. Within 10 years of starting, most US automotive engineers either leave the field altogether, or get an MBA and leave hands on engineering behind. What sane person would stay in engineering when an MBA adds an instant 30K to your salary and makes you eligible for the business side company promotions…the only path to big pay and golden parachutes…
Shiney-IT is one of the biggest waste of labour force in human history. Us pioneeered computer technologies in car designing and promised that now on cars would have perfect finishes, time and money would be saved. Ditto the aviation and space programmes. With all CADs and 3d software they have gone nowhere, the same rebagde, long overhaul cycles and rattling plastics.Of course computers have made immense advance in all fields and are very usable, but they also have opened the door for bubble economy and huge bureaucracy adding nonsense positions in any government branch. And for example IBm doesn`t make computers any more. Right, because they are too expensive to be assembled in USa, so they do software. wait a minute, ain`t software expensive to be made in USA? Right, at least it doesn`t have moving parts and mechanisms.How come, if all Us manufacturing companies are being shuttered because of cheaper labour in Asia or whatever, how come IT positioned companies don`t go bust? Are IT specialists that low paid in Usa, that they can compete with smart-asses of India?
i have one question, what are those damn programmers doing?( Latvia is teeming with them) Accounting programms? Soon there will be no manufacturing companies left just trillions of software solutions from zillion of companies.