I agree with you, but just keep in mind the reason buickman is complaining is because there is no profit in the vehicle...

it is shown that GM lost what 1200$ a vehcile in first half of the year? that shows profit right there, but with all the factories working overtime, how much will it cost to build these cars?

The General is looking down a dead end, watching the hungry Toyota gaurd dog chasing close behind...

The value promise needs to be executed more effectively... and needs to make a large impression on all automotive consumers...

The comercials need to give value to all GM vehicles not just say the have value... GM needs to sell their cars anyway they can. the GMS is a great way to get new clientel, but we need more, we need to take the market by storm and walk away a clear victory...

 

I think we all need to hope that taking a small step backwards immedeately is the best way to get way ahead in the end.

 

You are naive and dreaming. The third quarter will again see billions lost, keep hoping all the way to Chapter 11.

 

I'm not naive and I hope I'm not dreaming. I'll also state right now I 'm not a business major BUT have an intrest in it.

Without sounding callous to dealerships and salespeople, I think this was a good move on GM, not just to move metal, but to get people into cars and dealerships. The fact that sales rose so sharply I think is a clear indication that GM cars are (considered) very competative when they can be priced with the competition.

Now that GM has the market's attention, if they can wrestle some cooperation out of the unions can get concessions they (and everyone else) needs, in a few years this summer could be marked as GM's clandestine turn around, when they're able to keep this year's new customer's in GM cars AND have an labor agreement that allows them profitability and few, more differentiated models.

If they had done this the otherway around, we wouldn't see lower, competative prices for a few more years, and who know's how far GM's reputation, ability, and overall situation may sink to.

 

I would most sincerely like to agree with you, but do not. In fact, I feel strongly that GMS was, and is, a disaster. It broke the levee. The wall of traditional pricing structures may never be rebuilt and "value pricing" will never hold. Time will tell if I'm right or wrong. My prediction is that by the end of this year, GM will be lucky to cling to 20% share. Blaming the unions is passe. They earned and negotiated what they have. New hires are a different story. Dealers are entitled to determine their own profit margin. GM doesn't understand the market, or care about their retail partners or employees. The leadership is self-centered, incompetent, and certainly responsible for the decades of decline. From robotics to Fiat, management needs to admit their failure and accept appropriate accountability. Don't hold your breath.

 

See here is where the problem is. GM really didn't loose $1200 per car. Ever hear of GMAC, that is right GM owns it. I would say the majority of buyers opt to use GMAC to finance their vehicles, so GM is making profit in the long run, money dealers don't see. Also where did they gather the data to say $1200? I would assume they are going by the old invoice pricing structure and taking the cost of the vehicle from the assumed cost. A quarter's loss isn't all about car sales. If you look at a company the size of GM with all its diverse actions you will see they spend a lot of money in design, repair, advertising, vehicle production, taxes, and overhead.

At a dealership it is pretty simple to determine what your profit or loss is.

Total revenue-employee salaries-advertising-parts costs for repairs-employee commissions and bonuses-inventory cost-site maintainance-insurance=profit or losss.

In GM Corpates case you have WAY more to determine. Maybe part of the reason they lost money is the preparation for GMT900, the updates on new cars, from the Malibu's new front end (remember it wasn't after 5 years on the market), the 2006 Impala went into production and I can assure you all the last minute engineering details cost money. Also MANY of GMs plants worldwide are being outfitted to allow them to build different vehicles at the same time. GM also has a lot of overhead in plants that are WAY under capacity.

To be frank I doubt that GM actually lost $1200 in the direct sale of each car. The books might make it look that way but the $90,000 Escalade Platinum didn't cost GM $91,200 to build, ship to dealer, advertise, engineer, and sell. If you belive that GM didn't make money hand over fist on that truck then you are as stupid as Forest Gump.

 

So in your opinion GMS was a disaster because it broke the control that a dealer had over his price?

Just want to be clear on this.

 

This really isn't genius-level math. The company lost a couple of billion dollars in the first half of 2005, and built a couple of million vehicles in the same amount of time.

Add in GMAC's numbers, and things still look really pathetic (and quite far into the red). All of these numbers are right out in the open.

 

The dealer, as an independant business person, deserves to be able to determine what price the inventory transacts at. Again, the other problem is the distress merchandising effect on brand image. The clarity of the program was a plus, but that same advantage would have been possbile under Reutrn to Greatness.

 

You knew it was coming sooner or later.

 

My question is when will the negative numbers stop? It is great and all that GM sold a bunch of cars with the employee pricing, but they did not turn a profit doing so. I do not see anything in their future lineup that would help them generate the losses they are incurring now. It is not like GM can up the prices of their vehicles to offset the losses. They need discount pricing just to move the current vehicles. It looks like serious union re-structuring of the contracts is the only way GM will survive? Unions tend to be hard headed and I do not know if GM can accomplish this. I just can't see them making it on new vehicle lineup alone. Market share numbers do little if they are in the red doing so. What other ways is GM thinking to overcome this huge loss per vehicle??

 

Sorry Eric I don't buy it being so simple. The cars made money but not enough to cover the companies losses and capital spending, I do understand that. I would suggest that people don't over simplify this because money was spend on things for the future.

 

It's going to get worse. The third quarter will be a bloodbath. Management has no clue and therefore had to resort to a huge "giveaway". The long term effect will be worse than most realize. GM is relegated to distress discounting. Customers are hooked on huge sales. Dealers are alienated, salespeople are disgruntled. Losses are monumental. Profit is a thing of the past.
Leaders of countries and companies must listen or be replaced.

 

Oh ya, and the sky is falling too. Tomorrow.

 

Are you implying that Pres. Bush is also at fault?

If you are not happy doing GMS, Don't! It is optional.