We’ve just received a press release from GM announcing that it’s “exploring a potential sale” of aftermarket parts maker ACDelco. Apparently, “a sale is expected to promote more rapid growth of ACDelco globally.” The move is painted as a logical outgrowth of “a number of initiatives to bolster [GM’s] liquidity position by approximately $15 billion through year-end 2009, including the sale of assets which are expected to generate approximately $2-4 billion of liquidity.” In other words, we told you we were throwing furniture on the fire, and there you go. Equally unsurprising, GM hasn’t revealed the amount of money it wants for ACDelco. And GM is, once again, paying Merrill Lynch to do the dirty work. You may remember that Merrill arranged GM’s billion dollar payoff to FIAT for NOT buying the Italian automaker, and then bought GM’s abandoned shares for pennies on the dollar. If not, you should.
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Hopefully the sum of parts is more valuable then corporation itself. Perhaps it should be sold out in bits and pieces, then those bits and pieces will start manufacturing something of value.
Good maybe they will stop making junk batteries under new ownership. Had to buy a battery from them since they are the only ones who make this crazy stupid under the back seat battery for our DeVille. Crapped out in 18 months of very little use. Oh yeah and it’s $125 for that lump of acid that sometimes and eats throught the frame right below while spewing wonderful smelling battery acid in the cabin.
In other news, GM is also said to be considering a sale-leaseback of the executive’s free car fleet, monetization of the company’s substantial excess inventory of washroom supplies left over from the days when it needed so many bathrooms, and the GM treasury department’s new strategy of selling covered calls on it’s holdings of company stock. With no buyers in sight for Hummer, “all options are on the table”.
Notably missing from the list of options were the only ones worth considering, chapters eleven and seven.
But in all seriousness, AC-Delco is a joke as an aftermarket parts brand. The aftermarket parts business is a minefield right now and brand names carry very little weight. Once upon a time, AC-Delco parts were known to be high quality, today everyone inside the game knows that they are just another box label slapped on lowest bidder supplies from who-knows-where. Since Delphi was created and thrown into the briar patch there hasn’t even been an AC-Delco factory. They don’t MAKE anything anymore. The last AC-Delco branded spark plugs I saw where clearly stamped NGK on the plug base (luckily, ‘cuz NGK makes good stuff). The AC-Delco battery factory was sold to Johnson Controls years ago. AC-Delco filters are often made by unknown contractors in Mexico and China. AC-Delco, yet another Dead Brand Walking. Worthless.
Well this is news to me, I didn’t realize that GM still had ACDelco. I know about Delphi and I figured Remy was spun off at some point, I guess I thought ACDelco just faded away.
Unless you’ve already done this, a column about the various acquisitions and divestitures by GM in the past 20 years or so would be entertaining. I remember Ross Perot getting a seat on the board, that was some high hilarity there. I think they ended up paying him like a billion dollars to go away.
Anyway, just a thought. Great site.
AC Delco products are generally high quality. In fact, many of the parts I replaced on a long-term Camry I once had for my auctioneering travels (12 years / 239k) used a slew of their components. Their oil filters at the time were nearly as good as the Mobil 1’s for only a third of the price. Batteries, spark plugs, filters… all of them were seen as good within the industry.
I one had a battery for a Deville replaced while on my way from Atlanta to Myrtle Beach. The thing literally quit on me when I pulled at a gas station halfway between the two. A friendly fellow with three kids drove me to the Autozone. We got a new battery, and put it in there. I agree with you that GM made that job a complete bitch.
Funny thing about that Deville. I was going to give it to my mom for her visits to Florida. But she wrecked a Camry a couple weeks before and the Deville was simply too big of a car for her. I ended up selling it to a fellow from the inner city of Tampa who put 22″ rims on the thing. Talk about a broad customer demographic for a vehicle…
Signs of abject desperation. Anybody who knows the business knows that there are only two ways to make money in the car business:
1.) Financing (remember GMAC…)
2.) Parts
The car company I worked for for most of my life made 33% of their profits with cars, 33% with financing, and 33% with parts- that was in a good year. In a bad year, parts and financing kept them afloat.
With dealers, even worse. New cars are loss leaders. If dealers make money, they make money with parts & service, financing and used cars.
If GM sells ACDelco, they probably sell the only money-making part of their business.
Why all the negative comments. Think of the good that GM did for you as well. You have a Deville(GM), you buy the parts. Why? Because they are good quality. You don’t understand that the issue is much greater than you having a bad experience with a part(s). GM has to downsize, as does many companies and ACDelco is like the little brother always sticking around. The people that work there probably don’t perform, therefore it is not cost effective to continue the business. If the people don’t perform, the customers aren’t happy. If the customers aren’t happy, they don’t buy the parts. Believe it or not, many of you that think you are buying other products are really buying ACDelco most of the time. Did you know that at Toyota PDC’s(parts distribution centers), most of the time they are packaging their boxes with their own name on ACDelco parts? Bet you didn’t know that. Bad performance causes low revenue, which we all know. So what does GM have to do about it? Move on and get rid of it. Simple as that.
Ok, here’s my huge, number one, primo question regarding everything GM is doing to stay alive…
WHAT ARE THEY DOING TO FIX THE FUNDAMENTAL PROBLEM?
Seriously. It is painfully clear they have way too many brands and models and its absolutely killing them. They’d be hurting pretty darn bad just like everyone else, but I think they’d be a whole lot better positioned with some mainstream models, some premium models, and a few trucks with some money in marketing.
I see them going through this Chrysler distraction and all this other stuff in attempts to get cash and more cash. However, it seems that all this cash grabbing does nothing but postpone the inevitable. So they don’t go C11 in 2008 or early 09….now they just pushed it back to late 2009 instead. I suspect they’re banking on the market coming back, but even if it does, its not like they weren’t hurting bad 12 to 18 months ago. Why would it be any better? Because they axed Chrysler? That’s not going to give them the extra share they need to keep afloat.
To me, it doesn’t matter. Its inevitable. Next month or next 12 months, GM is going bankrupt.
Time to take some hard-line tactics or the whole ship is going down.
Oh, they should also sell GM Locomotive and Frigidaire.
:)
Honestly, its kinda cool when I see an old stove or fridge that says “Frigidaire by General Motors” I kinda like that. And its a reminder how at one time this company literally ruled the world. And Ford was #2. Crazy how it is today.
“a sale is expected to promote more rapid growth of ACDelco globally”
In other words, “we’re looking for an overseas buyer, preferably Chinese or Indian since they can produce this junk at a greatly reduced cost and we can buy it from them cheaper than we can make it ourselves”
Jerome10 – Nothing
When guys like Marketing Mark make statements that GM must find ways to make their cars profitable, you know they don’t get it. LaNeve, Wagoner, Lutz, etc should have a plan to do this. That is what their job is, not just to make broad, sweeping statements to the press. When are the GM shareholders going to wake up?
My ’97 Camaro came new with a Delco battery that lasted 7 years (in Pennsylvania!)
I actually tried to buy another to replace it – couldn’t find anybody close by that stocked them (I needed a ride).
Funny how the Volt is being hampered by battery tech, and GM is getting rid of it’s “battery” division.
I’m assuming that the EV-1 was probably powered by state-of-the-art lead-acid batteries… who made them?
Shaker:
The Pb-A batteries for the EV-1 were Delphi batteries from Indiana. An interesting bit of info: for the 1997 Sunrayce they were, by a large margin, the most commonly used battery.
The NIMH batteries were produced by GM-Ovonic.
Shaker and rm:
The original PbA EV1 batteries were Delphi and, from personal experience, they were absolute garbage.
My car had to have its entire pack ripped apart multiple times to get the batteries balanced. This was done by manually measuring the output of dozens of individual modules and assembling a pack of them that were reasonably close to one another. That’s how inconsistent they were. Even after that, one or two of them would tank and bring the whole pack down, necessitating another major EV1 surgery.
For the Gen II EV1 GM ditched their own Delphi lead acid batteries and contracted Panasonic to build the lead packs (Ovonics did the NiMH). The rare Gen II PbA cars were the ones to have: wicked acceleration, great range, low cost, dead reliable, and no thermal issues like the NiMH cars.
I still have a Delphi-branded EV1 battery at home, just for kicks. To this day it amazes me that the largest car company in the world dedicating a billion dollars to a specialized car program with a unique battery assembly facility couldn’t properly manufacture a module made out of some of the oldest electrical storage technology in history. The Japanese had to do it for them. For shame.
Let’s not forget that AC Delco is not a “parts maker”, it is simply a brand of service parts that are sold by GM dealers. Just like a brand new Chevrolet is assembled out of thousands of component parts that are purchased from GM’s suppliers, so too are all of the AC Delco replacement parts that you find on the dealer shelves. Even in cases like oil filters, air filters, spark plugs, etc where the AC brand appears on the product or the product packaging, rest assured that somebody else made it, branded it to AC, and sold it to them. Sometimes Delphi is the supplier, but often times it is somebody else. All of the plants that used to make real, genuine AC parts have long since been sold, vacated, etc. Outsourcing is rampant in the US auto industry these days. Really, the only thing the OEMs don’t buy from somebody else are the body stampings, and the major castings (like the engine block and head).
“My ‘97 Camaro came new with a Delco battery that lasted 7 years (in Pennsylvania!)”
In 1997 AC-Delco still manufactured batteries, and they were generally of very good to excellent quality. Sometime around the time of the Delphi pseudo-spin-off the battery plant was sold. I forget precisely when, but it was post 1997.
The point is: An AC-Delco battery purchased today has absolutely nothing in common with that one from 1997 except the name. Companies count on positive brand name associations persisting even when the underlying product is radically changed. Today, an AC-Delco battery label is just that, a label slapped onto whatever GM got the best wholesale deal on.
The funny thing is, for years unscrupulous bogus parts makers put counterfeit parts into boxes which looked like AC-Delco boxes and sold them to unsuspecting buyers. AC-Delco’s lawyers kept busy trying to track down and shut down these evil doers. Today, the mother ship is doing almost the same thing :(. In the next step it looks like GM may simply sell the branding rights to one of those former enemies.
Check out this post over at turbobuicks for a look inside a “real” and “counterfeit” Delco oil filter:
http://www.turbobuick.com/forums/1905794-post52.html
I bought a new 1995 Buick Riviera years ago and got got rid of it last year. I never saw the battery because it never failed and was located under the rear seat of the car. I never heard of anyone else having a battery last that long. Imagine a battery lasting that long and still going strong at the time I sold the car?
Factory installed underseat AC Delco batteries leak acid from the positive terminal because when they tightened the 10mm bolt down it pulls the casing apart around the positive terminal. Actual separation on the battery case in a circle around the whole positive mount. Acid leaks around it and down onto the terminal contact bolt corroding it where it was under pressure against an internal flat contact.
GM owned AC Delco doesn’t care about your concerns or mine enough to do anything about this even by e-mail, nor do the automotive dealerships care about it. They want your repair dollars at any cost.
Latest move by their Cadillac dealership in my area is to limit the AC Delco 7 yr. warrantee to 50 months and prorate any additional time up to 7 years on the $170 AC Delco replacement battery I bought for the one that leaked the other day in my 2002 Cadillac with 45,000 miles on it.
Both GM and its battery division will ultimately sink down to the bottom where they belong. They can only gouge us with their tactics if we let them.