The pitchforks are out for bailout-funded Wall Street bonuses, and today’s NPR Morning Report highlights GM’s longstanding perk: free company cars with free gasoline. The Product Evaluation Program entitles 8000 white-collar employees to a new GM vehicle every six months. Drivers are to report problems back to the mother ship ASAP, and currently pay a $250/month administration fee. Current morale at the Tubes likely isn’t all that great, so any benefit is nice. However, it’s now at taxpayer expense, so what’s this fuss all about?
Critics of the program note this further promotes GM’s insular culture, by preventing its high-ranking employees from understanding its customers. Obviously, subsidized new cars prevent program participants from having to deal with problems cropping up in their own cars years down the line, not to mention less exposure to the competition. When gasoline was $4/gallon last summer, one driver complained about having to swipe his company gas card twice to fill up the SUV’s tank, never mind that there was absolutely no pain in his wallet.
The gas bill for 2008 was estimated at almost $12 million last year, which at least will be less painful the next time around. A former GM employee called this “a really highly valued perk” and that “it feels kind of fun.” And product feedback? “No one that I knew took it seriously.”
GM’s defense was that other car companies also have similar plans, although the competition doesn’t pay the fuel bill. And when asked about discontinuing the perk, a GM spokesman said that this would be extremely disruptive. Unfortunately, this is the exact same response that the Wall Street executives have about their staff bonuses.
What would be interesting to know is, how valuablle this perk is for the company, considering the feed-back back to the product line. How many of those 8000 employees actually evaluates their cars, and how many of those suggestions make it to production?
So is it “free” or $250 a month?
If they don’t take the program seriously and report problems that pop up, then the program is worthless and should be revamped or removed. Give those cars to the guys that are assembling them and you can bet that they’d appreciate the privelage, and they’d report problems like they’re supposed to. Not to mention that if the guys drove the cars that they build at their plant, they’d get a better idea of the type of quality (or lack of, if applicable) coming off their lines and how to make them better. Right now who cares what perks would be disruptive to remove? Things need to be shaken up, and some people need a wake up call. They should at least have to pay for their own gas.
So is it “free” or $250 a month?
$250 a month might as well be free. You know they’re not driving Cobalt LS models with crank windows and manual transmissions! That $250 would cover gas and insurance for me and that’s about it, so it sounds like a hell of a deal!
I would strongly prefer to see GM execs driving 9 year old cars. Isn’t that the average age of cars on the road today? It would give them a feel for what how well their product is holding up.
Also, a requirement would be 6 months in a GM car, and then 6 months in the equivalent Toyota or Honda, just to keep them honest.
Wouldn’t do much for morale, I’m guessing, but a taste of reality is typically in short supply in the executive ranks.
Just another reason this company should be bankrupt.
Should this program exist or not?
That’s not a decision that the government should be making.
However, if the government must make the decision, then no. Buy a god damn car you parasite.
And what is so “extremely disruptive” about canceling the program, that some idiot has to go out and actually buy a car?
It’s not like some GM employee will quit because they lose their free car.
Where the hell are they going to go.
If they weren’t able to leave the company and find a better job 5 years ago, when GM was already a money losing failed company, then they sure as hell won’t be able to now.
Just to clarify, if the employees are only paying $250 a month then the car itself is free. $250 is less than gas and insurance.
You know – how in the hell is GM supposed to attract anybody who has even the first clue of what they are doing? The company is on the verge of bankruptcy already. Maybe if they get rid of every possible perk that will help.
This is very standard in the automotive industry. You don’t have to like it, but to take it away, just puts GM at an even bigger disadvantage (not that it really matters at this point).
Chrysler tried to get their executives to drive older cars years ago and they all hated it. Sure enough the program ended almost as quickly as it had begun and the executives went back to their fully loaded brand new $40,000 and up Grand Cherokees/300’s/Durangos etc etc. Gas was no object so very few had a Neon/Sebring unless it was used by their child. Seems that if Chrysler executives don’t like their own used cars nobody else should either.
My sister-in-law works for GM and gets this perk. She’s had some nice vehicles over the years. She had a GTO with a manual transmission that would have been a lot of fun had she not gotten it in the middle of a Michigan winter.
“Extremely disruptive” is when your company runs out of money. This is what happened to GM last year. Without billions of government dollars, there would be no more GM. Saying that taking free cars away from employees of a failed campany is “extremely disruptive” is beyond comprehension.
Speaking of the government and taxes, is this perk a taxable event? Or does paying the $250 a month cancel any potential tax liability?
Boston:
Contrary to what the internet might make us think, the world isn’t flat. Talented people that don’t live in southeast Michigan are NOT going to move there for a free GM. Talented people that already live in southeast Michigan are stuck at GM. They owe $250,000 on a house worth $150,000, and nobody else is hiring.
tced2:
The BS evaluation part may make it part of their job, and not a taxable benefit.
I work in the IT department of a multi-billion dollar grocery chain. There are no perks similar to this for anyone at any level of the company – no free or discounted groceries for anyone, not even the CEO. Does anyone at Best Buy get to take home a free new plasma TV every 6 months? I doubt it! How about a bi-annual home renovation for a room in your house of your choice if you work at Home Hardware? No way! A car is the second most expensive thing any average person buys – yet GM can stand up and try to justify this program with a straight face?
So this is about feedback. How about they monitor the warranty repairs for sold vehicles, or are the members of the public who buy their products too dumb to notice failures?
But GM’s problem isn’t free cars to grunts, it’s Wagoner. Dumping him is job 1.
How GM chooses to compensate their employees is really up to them. For sake of argument, if the “value” of one of these cars is, say, $400 a month — does it matter whether each of the eligible employees “gets” a car or whether they get an extra $400 in their paycheck? I would think from the company perspective, this form of “payment” saves them some cash — so its a good thing.
Considering that GM has, shall we say, some excess inventory these days — this is actually a far better method of compensating these employees than giving them cash.
There is no comparison to Best Buy, say, or a grocery store. GM manufactures this stuff. The others distribute stuff that others manufacture.
MidLifeCelica:
I believe that Best Buy lets employees get a limited amount of stuff “at cost”. At Best Buy that means getting a $500 tv for $200. At GM that would mean getting a $25,000 MSRP car for $26,000.
peteinsonj:
The cars are worth something, giving them to the employees for free is a cost. GM has to pay for the gas and insurance, and after 6 months it has to dump them on the used market.
They could take the cars away and not increase pay at all, nobody would leave.
no free or discounted groceries for anyone, not even the CEO
You obviously don’t work at General Mills.
You want the executives at a company to only use your product. Remember when Juno was an independent company and they made their own mail client? Executives inside the company didn’t use it. That’s how much it sucked and why it never got better.
If cars start breaking in the first six months, this program helps to find those. The executive that finds his new car stalled on the side of the road? Heads will roll.
They can implement this program a lot better, obviously. Executives need to cycle through different ages of cars, for one.
I do not think the NPR article mentioned the fact that by participating in the car program the GM employee spouse must purchase a new vehicle every 4 years. It use to be every 2 years.
@motorcity…Yeah in Canada they changed to the 4yr rule,last year I think.
I don’t begrudge thier use of the car.I thinks its more of the optics,that bothers me.Last summer
gas was 5 dollars a gallon in Canada.Why a Suburban or a Tahoe.Between depreceation and fuel I thought it was out of line.I mentioned just that, in a cost saving sugestion.I suggested taking a production car for 90 days.If it broke take it in for service.Feel the real custumer experience.Drive an Impala or a Cobalt a truck something we are trying to sell.The suggestion wasn’t accepted,however my retirement date moved ahead.
Coincidence?I think not.
The good news, they super discounted the big SUVs to the employees.Up to 45% off MSRP.
I luv articles like this. They keep exposing the “truth” about Detroit. I’ve been on my soapbox before on similar subjects.
These GM employees are flippin’ clueless about their customers, the marketplace or the competition. They live in a town where 99% of the population works for GM, Chrysler, Ford or some auto supplier. They don’t hang onto a car for more than a few months whether the get it “free” or buy one on an employee plan dirt cheap. They never have to pay out of their own wallet to fix anything and are rarely exposed to other brands of cars. In addition, their spouse, relatives and neighbors all work for one of the above companies and gee, do you really think there are any trade secrets around there??
Isn’t it funny how the 3 in Detroit all tend to operate the same way and offer the same type of product portfolio. Isn’t if funny how they view the future by digging up retro designs and pandering to niche “halo” cars. Detroit once led the biz but has been rotting away for decades. Let’s at least hope one such as Ford ends up surviving and then Ford can focus on the other global brands for competition comparisons.
And you wonder why VWoA chose to basically leave Detroit?
Ahhh…I feel better now….
peteinsonj
I see your point. As a ‘middleman’ kind of business (buy product wholesale from vendors, sell to end users at retail), my company more resembles a car dealership than a car manufacturer, which is quite a different thing. The same goes for my other examples. Not many perks given out at dealerships, I’d imagine.
no_slushbox
At GM that would mean getting a $25,000 MSRP car for $26,000.
Now that’s funny! Still, getting a TV at ‘cost’ is not the same as getting a free TV. There still wouldn’t be a lot of 60″ laser displays leaving the store. I see the Best Buy offer as being similar to the ‘Employee pricing’ promotion for cars.
And you wonder why VWoA chose to basically leave Detroit?
They moved about 600 people to their new NA HQ in New Jersey. There are still 400 people working for VWoA in Auburn Hills. The fact is that for the foreign car brands and foreign owned suppliers, southeastern Michigan is still the global center of the auto industry. Rather than your silly claim that 99% of the people around Detroit work for a domestic automaker or vendor, a significant number of people in Michigan work for foreign owned vendors or automakers. Denso, Bosch, Zeiss, BASF, Yuaza, and others have large research and production facilities here. Toyota has a research lab in Plymouth and spent about $700 million building their North American r&d center in Ann Arbor. The engine plant in Dundee is a JV of Chrysler, Daimler and Hyundai.
I’m trying to understand this. The domestic automakers have crappy products because their managers and executives don’t drive their cars, yet when they have a program like this that exposes GM managers to a wide variety of their vehicles, it’s considered an unwarranted perk.
I’d rather go out and lease anything other than a GM car, for more than $250/month, than be forced to drive their excuses for vehicles.
And you wonder why VWoA chose to basically leave Detroit?
Ahhh…I feel better now….
Are ya from the South?
First, very poor reporting by NPR. motorcity is exactly right – employees in the PEP program are required to buy a car every few years. Further, these PEP cars are sold as basically new after the evaluation period, but at a pretty nice discount (10% or so). 12 months of an administration fee accounts for the difference in the pre-PEP and post-PEP prices for most vehicles. IMO, the gas is pretty much the only issue here. At 12,000 miles a year and $3/gal, a 20 MPG car costs $7200 over a four year period. Over that same period a lease will cost much more ($9600 at $200 a month). So, by requiring that employee buy a vehicle more often than regular consumers probably makes the program profitable. It would be more profitable if they required even more frequent purchases. Whether or not the program is more profitable than requiring employees to purchase on the open market is another question.
Finally, just because some ex-employees think that it’s a stupid program is not sufficient to conclude that the engineers blow-off the feedback. I suspect that this feedback is very important for new vehicle models/designs. These people are making comments about the program in the 90s. Might need to get a few sources with more recent information.
the PEP program is necessary to obtain real world miles on actual production units. rather than a perk, it’s part of the job. also as a driver the individual is required to purchase a new vehicle every three years in addition to the evaluation unit. airplanes I understand, this should be left alone.
the excitement over seeing new stuff on the road is catchy. the people are following test Camaros around here.
Hello Ronnie Schrieber and derm81,
To help answer your questions……
I live in the North but not in Michigan. I had once lived in the Detroit metro for 7 years. My father was a domestic/import car dealer for 17 years in another midwest state. I have been directly employed in one of the 3 OEM’s,the Aftermarket and for OEM suppliers. I’ve bought PEP cars. I’ve sold new and used cars. I’ve been a vendor with an office onsite within VWoA. I have friends who work in the companies you’ve listed in metro Detroit. I’ve called on some of them too.
Thus, this may help you understand that as any of us can share our input or opinion, I have no qualms about sharing what I’ve learned about Detroit and the once Big 3. Trust me, I’ll go to my grave with plenty of stories related to this biz, that city and those 3 OEMs.
In summary, I stand by my view that most Detroiters are clueless how most US citizens deal with car ownership and what cars really cost.
Trust me, I’ll go to my grave with plenty of stories related to this biz, that city and those 3 OEMs.
Again, are you talking about the City of Detroit? Are you talking about SE Michigan? Are you talking about Metro DEtroit? Be more specific.
In summary, I stand by my view that most Detroiters are clueless how most US citizens deal with car ownership and what cars really cost.
When you say Detroiters, you are referring to the people LIVING in the CITY of Detroit. A person in Warren or Utica isnt a Detroiter..
So yes, you may be correct….most Detroiters have no clue since the 60% of the population hs a sub-5th grade reading level. Something like 80% do not have random access to the net either.
So we don’t want GM employees using their own products to discover why potential customers won’t buy them…
How about we just go back to focus groups?
Maybe GM should just stop spending money on anything.
quasimondo
I’ve edited out the flame. But let’s be clear here.
1. This is a perk. Companies hurting for cash– never mind ones sucking on Uncle Sam’s tit– need to cut perks BEFORE they start cutting capital costs.
2. These cars are specially selected, prepped and maintained. They are churned before the car even hits middle age. They do NOT represent the “average” GM product. Nor does the ownership experience represent the average GM owner’s experience. THEY LEARN NOTHING.
3. Once again, still, GM’s employees need to drive the competition’s products. This Detroit myopia is deadly. As we’ve seen.
4. Maybe U.S. taxpayers should stop spending money on GM. That money they’re spending? It doesn’t belong to them. And they’re doing a piss-poor job of spending it (e.g. the Volt and a Cadillac station wagon and an imported Australian sedan and an imported Belgian economy car and and and).
RF:
No. You are incorrect. On all counts. Again.
1. It is an evaluation program. The evaluations are mandatory. The data is collected and summarized. It is available to anyone in the company. It is one of many sources of data used to monitor and improve quality. GM company car drivers take this responsibility seriously.
2. These cars are not even given the standard dealer preparation, the clocks often aren’t set and in some cases drivers have to take the plastic off the seats. They come directly from the car haulers.
3. All car companies maintain fleets of competitive vehicles for evaluation and comparison against their own entries. Although they are not generally distributed, it isn’t hard to get hold of one if it is needed.
Please stop talking when you know nothing of which you speak.
The only myopic person here is the NPR reporter that failed to do research beyond his headline grabbing garbage.
Not only are the evaluations mandatory, but you have no idea what you’ll be getting when you turn in the previous PEP car (at least that’s the way it was in the past). The only cars you get to choose are the cars you intend to buy.
Perks or not, they just made significant cuts to salaried workers. The cuts are happening, so who gives a crap if a meaningless portion of the workforce gets part of their salary via cars and gas. And, related to my previous post, it’s not clear that they are losing money on this since turnover is significantly faster than the average consumer.
And, if they go and drive the competition, they will learn less than you think. Just take a look at JD Power ratings for vehicles coming out of the NUMMI plant. They’re often the same damn vehicles with different nameplates, but are often rated differently in areas related to fit and finish, wind noise, and other structural factors. Objectively, they are the same damn car. This can only be attributable to a lagging consumer bias, or that different people buy Toyotas. I’m pretty sure that GM employees fall into neither category.
Captain Tungsten
1. It is a perk. If GM wants product evaluations, they have PLENTY of customers. And warranty information. And focus groups. They need “insider” info in addition to all this? A “data point”? I don’t buy it. Actually, I will. $50 for 10 (different) evaluations sheets. Let’s see exactly what kind of information we’re talking about (robertfarago1@gmail.com).
2. I have it on good authority that the cars are cherry-picked. (If I could reveal my sources, I would.) Suffice it to say, just because they came straight from the factory doesn’t preclude the possibility that the cars were given the once-over.
3. To say a competitive vehicle is on offer “if it’s needed” shows just how warped GM’s corporate culture was/is. It IS needed. It is ALWAYS needed.
As part of my job, I am constantly reading Autoblog, Jalopnik. Edmunds, Car Domain, GM Inside News, Automotive News, Google, everyone and anyone to see where TTAC stands in relation to our competition.
As a reviewer, I drive as many cars as I possibly can. How can I evaluate a car without knowing something about the products that compete for the same consumer?
If GM employees can’t compare a car to its competitor’s, what use is their evaluation? Again, if you’re doing the insular thing, you might as well sample REAL consumers. People who don’t have to play GM CYA for a living.
Yeah, this is a perk that probably should go away. The intriguing question is: Can an employee NOT take this car perk and instead get additional cash compensation. I mean, could an engineer going thru a mid-life crisis get some help for his Cayman S?
I know a lot of talented people out there who would hardly consider driving a GM product, even at discount with free fuel, a benefit.
At Chrysler, every employee grade band 95 or higher is eligible to receive a Product Evaluation PE Vehicle. They do not pay for the vehicle but the monthly cost is added to the paycheck as imputed income. They are known as gold stars since PE vehicles have gold pentastar decals in the lower corners of the front windshield. The employee gets to order the vehicle as they like down to the color and options. The vast majority of vehicles are loaded Grand Cherokees, Aspens, 300C’s and Town & Countries. It is rare to see a Caliber, Avenger, Sebring, or Compass PE car. If the goal is to truly evaluate vehicles, than the entire lineup of vehicles would be randomly assigned rather than allow ordering. They also have gas pumps and a wash rack at the tech center where the PE cars are gassed and washed. When I worked there, on Friday afternoons there would be a long lineup of PE vehicles waiting for gas and a wash.
I don’t really see what the big deal is. At least the program encourages their employees to use and promote their own products.
If you’re the government, you either need to trust that management knows what’s best for the company, or you don’t invest in them, period. Getting bogged down in day-to-day operations and employee benefits is counter-productive.
Company perks have been around for generations. When my niece was the office manager for a local Pontiac/Cadillac dealer she was routinely given cars to drive for months at a time.
In the late 40’s my mom worked at a “five and dime.” I was 5 or 6 years old. They sold, among all the other stuff, comic magazines, everything that was popular at the time. At the end of each month when new comic magazines came out the old issues were removed and had the top of the front cover torn off. The older comic books were then made free to the employees as a “perk.” I got to take home dozens every month. I learned how to read from them, of course all my words were Pow! Shazam! Kerpow! Up Up and away! and the like.
old-peevish-armed: The issue is not perks, per se, but perks at a company that has not made a profit in years and is now taking my money against my will. You’re damned right I’m outraged.
If the company is looking for “feedback”, they should shift the program to off-lease vehicles with ~ 40K on the clock. …and make them shedule their service and warranty claims through a dealership.
I have no problem with providing vehicles as a benefit. But expecting employees to provide a thorough, candid evaluation, particularly in a culture like this one where criticism is not welcomed, is unrealistic.
We can all see that GM has a defensive culture. A critical employee is not going to be appreciated. Those who would tend to be highly critical are either committing career suicide and dooming themselves to be sidelined, or else are going to become frustrated and look for another employer.
My bet is that most of the folks who are high enough up in the food chain to get a car got to that position after years of having proven their devotion. They aren’t that critical in the first place, since those critical thinking skills aren’t good for climbing the GM ladder. The few independent thinkers who see the problems but like their paychecks would know better than to say much, so most of them will mute their criticism in order to fit in.
If my priority was putting food on the table and climbing the ladder, I would shut up and make complimentary remarks. I would no sooner make a harsh comment with my name attached to it than I would tell my significant other that she really does look fat in that dress.
In corporate life, you learn to choose your battles. If critiquing your employer’s work harshly is a ticket to corporate Siberia, you shut up, smile a lot, and say that everything is great when asked. After a while, you might even start to believe it.