Well you kinda knew GM was pulling the plug on its cap ex (capital expenditure) when they announced the Chevrolet Cruze would be delayed a year (to 2013). The Cruze was supposed to be The General’s next big small thing. The great wheeled hope. The economy car that would put GM back in the non-SUV game. Fuhgeddaboutit. Or, as the Brits would say, GM’s dropped the other shoe. Automotive News [sub] reports that the cash-strapped American automaker is postponing “nearly all of its spending on product development in 2009 and 2010.” According to an unnamed source, “The 2009 stuff that’s too late to cancel is coming out, then everything else gets pushed out anywhere between three months and up to a year. It’s not just capital budget; it’s also engineering, design… everything that would cause money to flow out in 2009.” Except, of course, executive salaries. So what else is spared? The Camaro, the Hail Mary-shaped plug-in electric – gas Chevrolet Volt, the “restyled” Buick LaCrosse (whew!) and, maybe, just maybe, the Cadillac CTS Wagon (thank God!). And here’s the really scary part. “General Motors is taking drastic action to avoid running out of money sometime next year. With its product delays, GM hopes to save as much as $1.5 billion, said the source.” Just $1.5b? That’s only a month-and-a-half’s worth of GM’s current cash burn. Desperate days.
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And so it goes – even if (I’m still believing there’s a chance the bailout brigade won’t come to Detroit) GM limps along, they’ll be “behind” when it comes to product development, and won’t have cars people want to bu- I mean people won’t want the cars that GM has to sell. Haven’t we heard this somewhere before?
I feel like there’s this massive historical echo calling to GM’s epic narcissism. A Greek mythology-flavored Deathwatch topic perhaps?
And if things go truly south during the 2009 summer from HELL, and sales plummet 30% per month, month on month, and tank (as they did in 1932) at 1/4 of the prior “normal” (i.e. total US auto sales of about 4 million on an annual basis at the low point – whenever that would be) – what about GMChrysler or GM, then?
We all know the answer. The gummint can throw money into a furnace, faster and let it burn. Big notes, too.
At some point, GM will be history.
Heckuva job Ricky!
At least PR must be hiring, although working in a coal mine has got to be less exhausting, and more intellectually satisfying.
It absolutely sickens me that a majority of the actions being taken are window dressing, rather than efforts to address the crisis. Only a few execs benefit in the longer term, workers may benefit short term, but at the expense of a stable future.
This is difficult to watch.
This is the most depressing story yet. I remember the last time they did this, in the early 1990s. It took over a decade to get product development back on track. In the interim all of their products were a half-generation behind the competition.
Remember the 1995 Aurora? That was supposed to be a 1993. Same for everything else in the 1990s.
They said it would never happen again.
One very confusing bit: aren’t the federal loans supposed to be for new product development? If everything is stopped, where is that money going?
One thing I always gave Lutz credit for was maintaining Chrysler’s product development spending through the early 1990s, when they were last on the brink. Not this time, apparently.
“It absolutely sickens me that a majority of the actions being taken are window dressing, rather than efforts to address the crisis.”
Huh? Closing plants to reduce capacity, especially trucks, laying off and offering retirement programs, delaying all these programs, whatever they did to take $9B out of their Struc Cost a couple years ago, the renegotiated labor contract, the Malibu/CTS/Lambda launches, even the Cruze/Volt…
I think we could debate whether these things were ineffective, too little, too late, or all of the above, but they are not the trivialities that the term “window dressing” would suggest.
How is canceling your future products better than a bankruptcy?
If you are drowning in your basement because a pipe burst, you don’t call a Joe the plumber then cancel because he charges for a service call.
GM still refuses to address the fact that their corporate culture is all reaction and spin, not planning for the future. As Karesh said, they were a half generation behind in the 90’s, with the new Prius, they are now 2 generations behind the global leader. You can’t catch up in a marathon when you are stopping to take a dump every 5 minutes.
Surely the way to address the gaping holes in your product lineup that has led you to this very situation is to …..wait longer to build those products?
I’m going to say it again but I called this happening a month ago. GM has reached the point of no return now, death is eminent for them if they have reached this situation in their cash pile. Even the governments help wont save them now, they will have inferior and uncompetitive products for more than a decade if they even survive the next 12 months. Talk about cutting off their nose to spite their face.
Lets cut off development of the products we so desperately need to get out of our situation and continue to produce what isn’t selling for a few years longer. Good plan isn’t it saves us some money right now to get by and the executives don’t have to take pay cuts or get rid of the cooperate jet. Sounds like a plan to me.
What a bunch of idiots. How is it that these executive sh*theads stay in power?
Remind me, aren’t car companies supposed to sell cars? If they don’t design cars in 2009, how are they going to sell cars in 2011?
Not to mention that: why is GM getting money to retool its plants if it will not have any new products? I though that $25b was supposed to help the D3 come up with more fuel-efficient cars!
@ Michael J
Look he has taken action to fix GM, but they ALL failed, that is the issue. He doesn’t know what he is doing and yet he has job security along with a HUGE salary.
Chevy sells 2009 Malibu with discounts, all LAMBDAS have discounts on them as well. G8, Astra, Sky,Solstice all failures. As people shift to more efficient SUV GM will lose even more because Equinox is not competitive with RAV 4 or CR-V.
Anyone with wagoners record would have been fired looooong ago, not only he has job security, 17 mil a year salary he will probably get a golden parachute as well.
Well you kinda knew GM was pulling the plug on its cap ex (capital expenditure) when they announced the Chevrolet Cruze would be delayed a year (to 2013).
Is that a typo? I thought the Cruze was only (only!) being delayed until 2011, which is bad enough. Of course, any speculation or product planning beyond next year is hypothetical anyway.
So what exactly are all of their engineers going to do if not developing products?
GM is being run like a beater: just make the necessary repairs that make it go and stop safely, but don’t put any more time or money into it than necessary. One day something major is going to fail, like the transmission, and you can feel good knowing that it didn’t owe you anything when you condemned it to the scrap yard.
Everybody and their brother will have new models coming out in that most magical year of years, 2010, and GM will still be trying to sell yesterday’s warmed over meatloaf.
General Motors- An American Devolution.
So what else is spared? The Camaro
Oh for f***’s sake. Every single penny they spend on this is a waste of money. Call it a day already.
‘The times have changed and as much as we’d like to acknowledge out heritage and provide the buying public with this exciting design, the current market conditions dictate that we focus on designs with a broader appeal.’
There GM, I even wrote your damned press release for you.
At the very least, if GM is not spending money on product development then they should be spending some on getting their house in order, like eliminating Saturn, Pontiac & GMC for starts as well as the related dealer network, end-dating Hummer and finding a buyer for Saab.
These are necessary basics if GM ever has a hope of getting their house in order again and they will cost $$$ to implement. Of course these basics will ultimately be for naught if there is no new product to sell.
As for the Camaro, I agree they should continue with it. It will be helpful if it can be sold in volume numbers like the Mustang. I do agree however with NickR that GM will ultimately need vehicles with broader appeal.
The biggest unknown will be Chrysler which is so moronic a link-up that it is hard to discuss with a straight face. It looks like the product plan there will be to slap some lipstick on Jeep (the Hope Diamond of automobiles) and then deep-six Chrysler & Dodge in the Detroit river.
turbosaab :
October 29th, 2008 at 11:51 am
“So what exactly are all of their engineers going to do if not developing products?”
They are going to either be laid off or work on decontenting existing products.
You all need to quit complaining. Just drink the Kool-aid. Try it! It’s really good.