Reuss talks Alpha.
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Reuss talks Alpha.
A Flush G.M. to Lavish Cash on New Vehicles
DETROIT — Edward E. Whitacre Jr., the new chief executive of General Motors, has one big advantage as he tries to turn around the automaker — a stockpile of cash to develop new cars and trucks.
During the company’s slide into bankruptcy, it had to suspend some of its investments. But Mr. Whitacre seems eager to play aggressive offense, and has the means to do it.
The cash hoard is as large as G.M. has ever had, including the days when the company was earning big profits on S.U.V. sales early this decade.
And it is bigger than the one at crosstown rival Ford Motor Company, which did not need help from the federal government. It had $23.8 billion in cash reserves at the end of the third quarter.
“Our mission is to design, build and sell the world’s best vehicles,” Mr. Whitacre said to 800 employees last Friday at G.M.’s technical center in Warren, Mich. “Will you all repeat that for me?”
G.M. has managed to hold on to its 20 percent United States market share since coming out of Chapter 11, despite moving to shut down its Pontiac and Saturn brands, and sell Hummer and Saab.
Yet G.M.’s sales incentives still rank among the highest in the industry, and many of its products were not recommended to consumers in a recent survey by Consumer Reports magazine.
The bankruptcy process, which forced the government to step in and lend it a total of $50 billion to survive, removed most of G.M.’s crushing debt load and long-term obligations to its retirees.
Now, Mr. Whitacre and his revamped management team must prove that they can spend taxpayers’ dollars productively on new cars, trucks and crossover vehicles.
“They have to establish themselves as the benchmark for the competition in each segment they’re in, as opposed to following everyone else,” said Joseph Phillippi, a principal in the consulting firm AutoTrends.
With hit products, G.M. could become profitable sooner. Once the company is stabilized, the government will have an opportunity to sell its G.M. shares in a public stock offering.
Some of G.M.’s cash is already spoken for. The company pledged to pay back $8.1 billion in loans from the United States and Canada by next year, and another chunk will go toward downsizing its European operations.
But G.M.’s new board has shown a willingness to spend more money on products to bring them to market faster.
At a meeting last month, directors offered to put another $100 million into the Chevrolet Volt if the company could get the battery-powered sedan into production sooner than its current start date in November, according to people with knowledge of the board’s move.
Dedicating more money for the Volt would not necessarily move up its timetable, said Jon Lauckner, G.M’s vice president for global product planning. But it could allow G.M. to build more vehicles for consumers to test-drive before full manufacturing begins.
“We have already reduced the Volt’s development time by about seven months,” Mr. Lauckner said in a recent interview. “Our date with destiny is November of 2010, but it could be useful for us to have the money to get some vehicles to consumers earlier than that.”
The automaker has also increased its budget for its next generation of full-size pickups and sport utility vehicles, said people involved in the program.
Mr. Whitacre and other new board members are eager to accelerate a number of product programs. One person close to the deliberations said directors had felt that the timetable of vehicles in development was too slow, with many models slated for 2013 and 2014 rather than sooner.
G.M. is also pouring money and resources into products it believes can change the company’s reputation.
One such model is a small, rear-wheel drive luxury car for the Cadillac division, referred to internally as the “BMW fighter” because it will compete head-on with the German carmaker’s 3-series sedan.
Mark Reuss, who was picked by Mr. Whitacre as the new head of G.M.’s North American operations, said the car would prove that a Cadillac can be every bit as exciting as the best that BMW has to offer.
“This car has to speak for itself,” Mr. Reuss said in a recent interview. “Before, it was all about playing defense instead of offense.”
Mr. Reuss, a career engineer who races and rebuilds classic cars, was a surprise pick last week for the top job in North America. But people familiar with Mr. Whitacre’s decision said that Mr. Reuss’s passion for cars was an important consideration in promoting him.
The new Cadillac will also benefit from what Mr. Whitacre hopes is a big change in how G.M. works with its suppliers.
In the past, the engineering team would produce specifications for parts and then turn them over to the purchasing staff to get the lowest price.
Now, the engineering and purchasing executives are meeting together with important suppliers to stress that G.M. will pay top dollar if it gets the most advanced technology before other automakers.
With the BMW fighter, the steering in that vehicle is going to be absolutely critical,” said Mr. Reuss. “In the past we would have gone to the lowest cost source, but not anymore.”
DETROIT — Edward E. Whitacre Jr., the new chief executive of General Motors, has one big advantage as he tries to turn around the automaker — a stockpile of cash to develop new cars and trucks.
During the company’s slide into bankruptcy, it had to suspend some of its investments. But Mr. Whitacre seems eager to play aggressive offense, and has the means to do it.
The cash hoard is as large as G.M. has ever had, including the days when the company was earning big profits on S.U.V. sales early this decade.
And it is bigger than the one at crosstown rival Ford Motor Company, which did not need help from the federal government. It had $23.8 billion in cash reserves at the end of the third quarter.
“Our mission is to design, build and sell the world’s best vehicles,” Mr. Whitacre said to 800 employees last Friday at G.M.’s technical center in Warren, Mich. “Will you all repeat that for me?”
G.M. has managed to hold on to its 20 percent United States market share since coming out of Chapter 11, despite moving to shut down its Pontiac and Saturn brands, and sell Hummer and Saab.
Yet G.M.’s sales incentives still rank among the highest in the industry, and many of its products were not recommended to consumers in a recent survey by Consumer Reports magazine.
The bankruptcy process, which forced the government to step in and lend it a total of $50 billion to survive, removed most of G.M.’s crushing debt load and long-term obligations to its retirees.
Now, Mr. Whitacre and his revamped management team must prove that they can spend taxpayers’ dollars productively on new cars, trucks and crossover vehicles.
“They have to establish themselves as the benchmark for the competition in each segment they’re in, as opposed to following everyone else,” said Joseph Phillippi, a principal in the consulting firm AutoTrends.
With hit products, G.M. could become profitable sooner. Once the company is stabilized, the government will have an opportunity to sell its G.M. shares in a public stock offering.
Some of G.M.’s cash is already spoken for. The company pledged to pay back $8.1 billion in loans from the United States and Canada by next year, and another chunk will go toward downsizing its European operations.
But G.M.’s new board has shown a willingness to spend more money on products to bring them to market faster.
At a meeting last month, directors offered to put another $100 million into the Chevrolet Volt if the company could get the battery-powered sedan into production sooner than its current start date in November, according to people with knowledge of the board’s move.
Dedicating more money for the Volt would not necessarily move up its timetable, said Jon Lauckner, G.M’s vice president for global product planning. But it could allow G.M. to build more vehicles for consumers to test-drive before full manufacturing begins.
“We have already reduced the Volt’s development time by about seven months,” Mr. Lauckner said in a recent interview. “Our date with destiny is November of 2010, but it could be useful for us to have the money to get some vehicles to consumers earlier than that.”
The automaker has also increased its budget for its next generation of full-size pickups and sport utility vehicles, said people involved in the program.
Mr. Whitacre and other new board members are eager to accelerate a number of product programs. One person close to the deliberations said directors had felt that the timetable of vehicles in development was too slow, with many models slated for 2013 and 2014 rather than sooner.
G.M. is also pouring money and resources into products it believes can change the company’s reputation.
One such model is a small, rear-wheel drive luxury car for the Cadillac division, referred to internally as the “BMW fighter” because it will compete head-on with the German carmaker’s 3-series sedan.
Mark Reuss, who was picked by Mr. Whitacre as the new head of G.M.’s North American operations, said the car would prove that a Cadillac can be every bit as exciting as the best that BMW has to offer.
“This car has to speak for itself,” Mr. Reuss said in a recent interview. “Before, it was all about playing defense instead of offense.”
Mr. Reuss, a career engineer who races and rebuilds classic cars, was a surprise pick last week for the top job in North America. But people familiar with Mr. Whitacre’s decision said that Mr. Reuss’s passion for cars was an important consideration in promoting him.
The new Cadillac will also benefit from what Mr. Whitacre hopes is a big change in how G.M. works with its suppliers.
In the past, the engineering team would produce specifications for parts and then turn them over to the purchasing staff to get the lowest price.
Now, the engineering and purchasing executives are meeting together with important suppliers to stress that G.M. will pay top dollar if it gets the most advanced technology before other automakers.
With the BMW fighter, the steering in that vehicle is going to be absolutely critical,” said Mr. Reuss. “In the past we would have gone to the lowest cost source, but not anymore.”
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I know Ruess has the brain to do it right ....hopefully , like mentioned it isnt fluff . It is nice to know the correct mindset is there as far as products go .
1 more thing that needs to go . Dont keep calling the alpha a 3 series killer . Build a damn good small sports sedan , and let its merits spealk for itself . Because trust me , its gonna get compared to death to a 3 series anyways . The same thing with everything , everything always has to be reffered to as a american lexus , american toyota , american honda . Just build good cars and let them speak for themselves ....its size , personality , content and price will dictate its natural competitors . IMO thats jus bad marketing .
1 more thing that needs to go . Dont keep calling the alpha a 3 series killer . Build a damn good small sports sedan , and let its merits spealk for itself . Because trust me , its gonna get compared to death to a 3 series anyways . The same thing with everything , everything always has to be reffered to as a american lexus , american toyota , american honda . Just build good cars and let them speak for themselves ....its size , personality , content and price will dictate its natural competitors . IMO thats jus bad marketing .
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Now, the engineering and purchasing executives are meeting together with important suppliers to stress that G.M. will pay top dollar if it gets the most advanced technology before other automakers.
With the BMW fighter, the steering in that vehicle is going to be absolutely critical,” said Mr. Reuss. “In the past we would have gone to the lowest cost source, but not anymore.”[/b]
With the BMW fighter, the steering in that vehicle is going to be absolutely critical,” said Mr. Reuss. “In the past we would have gone to the lowest cost source, but not anymore.”[/b]
Heck, the fact that the one example he mentions is the steering rack - that alone gives me a bit of a hopeful feeling.
"Have Faith"?
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From: SoCal
Good article. The most important parts to me is that GM is spending money to get new products out faster. That has always been a weak spot for GM. It will go a long way to keeping their products fresh on the market.
And nobody can stress the importance of working with suppliers instead of beating them up for the lowest cost and in some cases paying even lower once the shipment was received. GM has a notorious legacy of shady purchasing practices. And in the end they get the lowest bid product anyway.
Spending more to get better materials and newer tech is what the competition has been doing so I'm glad GM going in this direction mostly because they can finally afford to.
A friend of mine and long time BMW owner was asked to a auto clinic recently and she said the car being rated was a new small Caddy. She said it was very obvious a Caddy because of the styling. She said it was more aggressive looking than the current models; but still very good looking and modern. She also found the interior very nice and thought it was better than the 3 Series or C-Class on hand for cross reference.
And nobody can stress the importance of working with suppliers instead of beating them up for the lowest cost and in some cases paying even lower once the shipment was received. GM has a notorious legacy of shady purchasing practices. And in the end they get the lowest bid product anyway.
Spending more to get better materials and newer tech is what the competition has been doing so I'm glad GM going in this direction mostly because they can finally afford to.
A friend of mine and long time BMW owner was asked to a auto clinic recently and she said the car being rated was a new small Caddy. She said it was very obvious a Caddy because of the styling. She said it was more aggressive looking than the current models; but still very good looking and modern. She also found the interior very nice and thought it was better than the 3 Series or C-Class on hand for cross reference.
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Posts: 16,176
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Yeah, interesting that steering is even mentioned so specifically. Sounds like they're getting alot of seat time in BMW's to even make that comment. Good for them. It also bodes well that the 6th gen Camaro won't get those same "numb steering" complaints which the 5th gen is getting.
Last edited by Z284ever; Dec 9, 2009 at 09:19 AM.
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From: Oakland, California
Nothing about Chevy and nothing about Camaro. I think its safe to say that initially Alpha will be focus at Cadillac, which is essentially where a "BMW fighter" should reside, not in the budget/economy stable of the Chevrolet brand. 
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Of course. Cadillac will have two or three "Alpha" products either in the showroom or near release before you'd hear anything about a Camaro. Plus Camaro is still new and selling well, no sense talking about things that don't need to be talked about.
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From: The Golden State
Keep in mind that GM is finally using it's ability to bring a car to market in 18 months (it used to take more time getting soimething approved than it took actually developing the thing). Alpha was just taken off the back burner about a year ago, and it's likely to be out late in the 2012 model year (around a shade under 2 years from now). That's with the temporary stalling from bankruptcy court.
I suspect that when GM finally does turn it's attention to the next Camaro, it'll be in showrooms less than 2 years later. FWIW, that's quicker than the concept-to-showroom speed of the current Camaro.
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Lutz has hinted (before GM went bust last summer) that they are looking in the direction of the Alpha to form the basis of the next gen Camaro. Another person mentioned that they would have to take cost out of an Alpha for it to be a Camaro.
Keep in mind that GM is finally using it's ability to bring a car to market in 18 months (it used to take more time getting soimething approved than it took actually developing the thing). Alpha was just taken off the back burner about a year ago, and it's likely to be out late in the 2012 model year (around a shade under 2 years from now). That's with the temporary stalling from bankruptcy court.
I suspect that when GM finally does turn it's attention to the next Camaro, it'll be in showrooms less than 2 years later. FWIW, that's quicker than the concept-to-showroom speed of the current Camaro.
Keep in mind that GM is finally using it's ability to bring a car to market in 18 months (it used to take more time getting soimething approved than it took actually developing the thing). Alpha was just taken off the back burner about a year ago, and it's likely to be out late in the 2012 model year (around a shade under 2 years from now). That's with the temporary stalling from bankruptcy court.
I suspect that when GM finally does turn it's attention to the next Camaro, it'll be in showrooms less than 2 years later. FWIW, that's quicker than the concept-to-showroom speed of the current Camaro.
