OK, so R&D investment should be ignored for the purpose of calculating profit? Are there any other costs that you think shouldn't be rolled into this equation? You know, coffee and toilet paper for the executive staff doesn't directly relate to car manufacturing, so maybe we can neglect that.

Go ahead and ignore overhead if you wish, but realize that the rest of the world refers to this practice as an "accounting scandal". Plenty of companies have driven themselves into the ground by insisting that this cost and that cost don't really paint a "true" picture of a company's performance.

Just out of curiousity, what industry do you work in?

 

How about the $4,400,000,000 to Fiat? Does that count? What about the $500,000,000 to advertise the GMS "giveaway"? A billion here, and a billion there, and pretty soon you're talking real money!

 

I am not ignoring overhead. Nor am I saying that GM lost money on cars when it really didn't. Did GM cover its expenses? No. Did it recoupe the money spent on R&D for future products? No. But to make a bold statement that GM lost $1500 bucks on each car is just assinine, because the cars DID make money.

My industry is healthcare. I will be attending chiropractic college within 8 months and will own my own practice within 4 years, I have helped 3 other offices open. I have worked in many different businesses and understand the business side of things more than most. I also understand that statistics can be skued to say anything that you want them to. Sometimes it is best to look at the forest but others it is best to look at the trees.

I know you understand more about the auto industry than I do but still to look at GM's overall losses and to atribute that to losses sustained purely from vehicle sales is assinine, surely you see that.

 

Moot point.

Advertising money would be spent on a different program, or simply general advertising.

Even if the advertising budget went up, theyu usually go up at model year end time anyway.

This is a non-issue.

 

Buickman,

Since you seem to think the problem is with "marketing" (which has been weak in some cases, and great in others, at least in terms of commercials and print ads in the past and present), could you point out some companies who do "get it" in the marketing sense?

Nissan, Toyota, Honda all make good money every year. How do they market differently than GM? What's the big difference?

GM (and all the domestics) have a public perception problem to overcome. Some of that perception was earned in past decades, and it does not reflect the current crop of products available from most domestic makes. It will take continually solid products (now and upcoming) along with the ability to get the message out to convince people that the stale "domestics are junk" argument is lame and wrong in the present.

Are you saying that the perception problem (the main advantage the Japanese have over the domestics) is one that can be totally overcome by proper marketing? And what exactly do you mean by marketing? (Advertising and sponsorships, or a bigger picture look at the whole vehicle building and selling process?) And again, from whatever perspective you are referring to marketing, what is different about the Japanese companies than the GM (and Ford) approaches?

 

I completely agree, unfortunately. The whole point was to get away from the "slash and burn" rebates and hefty discounts, and move the MSRP down to reflect the actual transaction price. Now I see '06 Tahoes on TV with $37k MSRPs for $29k...they're barely on the lots yet!!!!!!!!! Discounting something $8k when its barely out hardly speaks of "Total Value Promise," IMO.

What also kills me is that it seems like GM is doing the work some dealers should be doing. I have 6 G6s coupes on the lot, and they're in several of my new car ads. I have yet to see a G6 coupe on the road (we've sold one so far...all have come in within the past 3 weeks). I go to other Pontiac lots, far larger than mine, and they barely have 1-2 in stock!!! If I can have 5, why aren't some of these mega-dealers pushing the product harder????

What also kills me is the mentality. As maksik7 discovered (I figure I can use his name, as we've talked about it on here before...), a GTP G6 is a "limited production, specialty niche vehicle" that does not deserve to be discounted from MSRP.

Bull****...

So, now GM throws a rebate on the damn thing to make it move because the greedy dealer wants full window. Guess how many dealers will have lots full of GTPs next summer, then cry they can't sell product?? So then, GM will put a ton of cash on the hood to move out "stale inventory," when in reality if the dealer didn't have their head up their a**, the cars would be long gone. If a dealer is doing this with a G6 for crying out loud, imagine a Solstice...

Apparently, even with the lower '06 MSRPs, GM still feels the need to throw a $1k rebate on the hood of every G6 already. We even have a certain amount of dealer cash on sedans as well (not getting into that here...PM me if you actually care ). Its really getting ugly...

 

I would have to say a majority of car buyers dont use gmac... GMAC only gives loans to A+ people... I was talking to the finance guy at my dealership the other day and most of our people that we finance dont use GMAC... rather BOFA or Wells Fargo or some local bank... soo.. i would say that GM is still not making money when at least a majority of the loans that come out of the one of the largest chevrolets in the country are not GMAC...

 

In reply to Joe in post #50,
First of all, marketing encompasses all aspects of the business. Initially it calls for properly identifying exactly who the target market is, and what supply to produce in order to meet anticipated demand. For example, building the 1986 Buick Riviera was a complete disaster. Personally, I went from selling 8-10 per month of the 1985 version, to only three for the entire '86 model year.
Launching a product correctly greatly impacts the overall determination of the merchandise's successful life cycle. Announcing rebates on a vehicle before the brochures are even distributed, or the units arrive, is utter nonsense. Artificially inflating the suggested retail price in anticipation of abnormal levels of retail incentives also flies in the face of rational promotion.
Advertising done in a distressful mode only serves to diminish long term appeal and does irrepairable harm to the product's overall brand image (ie. full page newspaper ads detailing enormous discounts and rebates).
Wal-Mart's claim of "We sell for Less, Always" is a prime example of how to portray an image of concern for the customer without causing harm to the public's perception of the company, or it's offerings. Toyota's past theme of "Oh What a Feeling" and today's "Moving Forward" campaign give prospective clients the "warm and fuzzies" without utilizing price, payment, or rebate. Look at most all import advertising and you will notice their focus on the product, and it's effect on customer lifestyle, vs. GM's reliance on the dollar amounts and monthly payments. Even the current GMS to everyone emphasizes the huge disparity between MSRP and transactional pricing.
Until GM changes their marketing in ways such as these, the company will continue to post market share losses, and income statements full of red ink.
The largest difficulty for General Motors is simply that the executives in charge have no understanding of today's buyers, not one of them has any true retail experience. Making matters worse is the refusal of said execs to listen to someone who does. You can't help a person with their head in the sand, surrounded by a force field of egotism.

 

GM cant run a business anymore... They became dependant on "Proud to be an american" in the 80's....and that is what is causing the downfall, as a result, this is why the products are worse than the competitors, as no money into rd, etc...

Gm just needs to declare bankruptcy, restructure and rebuild with a clean slate. It was good for Chrysler, now they make kickass product, ford wasnt as bad in their business and is slowly turning it around....for GM....just toooo big of a whole. ....and I am a business student, did a case on this last year... people were just laughing here.

 

Chrysler never declared bankruptcy. I do worry about Ford, GM, and Chrysler possibly being in the same financial condition as the airlines within 5 to 10 years.

 

OK.....you're a student..........so now you have some homework to do.

#1. Please enlighten everyone on how much money GM has spent in R & D...and we wish to see the similar numbers for Ford, Honda, and Toyota.

#2. Please provide measurable proof that the products are worse than the competitors. (your opinions or your friends' opinions do not count...) Must be measurable across manufacturers.......using accepted measures such as Strategic Vision or JD Power.

#3. Please provide a detailed account of how GM Declaring Bankruptcy will affect the U.S. Economy.....and further, who will ultimately pay for retiree benefits.

My intent is not to belittle you or be mean, but you made some pretty strong statements in your post....with absolutely no proof.

So..........we'll give you about a week, OK??

 

Maybe you can have the same amount of time to answer how GM will turn a profit?

 

Valid and appropriate questions.