GM just burned through 4 BILLION dollars with Fiat (2 bil in losses & 2 bil to get out). DaimlerChrysler is valued at more than GM. GM is clearing less money than Ford & earning less money than (gasp!) Chrysler. Toyota is or is about to be the world's largest auto company. GM's stock is barely above "junk" status. Their best selling cars are essentially rebodied versions of vehicles introduced 20 or so years ago. Even worst still, despite a host of new people in new positions, a new discovery that they also sell cars, and a new willingness to invest in them, GM's market share has fallen to 24% at last count.

Perfect time to go over the things that baffle me about General Motors.



1.Overdependence on Trucks & SUVs:
GM closed at least 1 profitable car plant & diverted what seems to be most all available resources to trucks, SUVs, and so-called crossovers. This group under the "truck" classification is less regulated than cars, and has larger profit margins. GM was content to let their cars flounder and become uncompetitive (save Cadillac & Corvette). This held GM (and Ford and to a lesser extent Chrysler) hostage to low fuel prices. However, unlike Ford, GM pulled both profitable large cars and it's affordable performance cars. Unlike Chrysler, GM wasn't planing to bring out any new head turning volume car designs, and seemingly content to make "appliences".

2.GM is STILL taking far too long to get cars to market!
It takes just as long for GM to get a car to market today as it did back in the "slide-rule" 1960s. Sure, there's more regulations, and sure today's cars have to be relatively "Lawsuit Proof", but the same standards apply to everyone. The Japanese makers seem to have a 2 1/2 to 3 year development cycle. Ford seems to now be in the 3 year range, and dropping. Chrysler has actually increased their times from their 24 month level of about 10 years ago. GM, on the other hand, seems to be stuck at the 4 year plus mark. It seems only if something is actually almost litterally rammed through the approval system, it might make it to the streets in just under 4 years.

Both the Solstice and Ford GT debuted in concept form at the same Auto Show. The Ford GT has been out for over a year, and the Solstice will be out just in time for the Ford GT's likely last year of production. Both vehicles were pushed through their respective companies as quick as possible with high powered help.

3.Factory Production:
GM's had a policy the past few years of keeping factories going, regardless of sales or logic. The idea behind "Keep them working" was that GM's assets were being used to create something of value that could be sold. However, the question was never answered as to what happens when the supply of these vehicles reach astronomical levels.

We're now seeing the results of this in the large number of factory slowdowns or temporary shutdowns, and jaw dropping supplys of most models.

4.A Runaway Incentive Policy:
To move all these vehicles GM was producing, there seems to be a liberal policy towards incentives. These initially started as a way to keep the economy moving after 9/11. Then it morphed into a way GM could run their competetors into the ground, now it's being used to prop up a factory production policy that in itself is wasteful. Incentives cut into profit margins.

Another thing about incentives is after a certain level, it begins to cheapen the brand or company that sells it. Instead of buying a car because it desireable, it's bought because the price is right. Sort of like shopping. People who want a good price go to WalMart or K Mart. People who want desireable clothes go to Marcus Neuman or even The Gap..

5.Unrealistic marketing of "Niche" vehicles:
*The Chevy SSR had high hopes & a high price to match. There's now a 200+ day supply (that's 7 months!).
*The GTO was treated as the ultimate gotta have car, and GM stood by as dealers marked them into the stratosphere and refused to deal, while across the street top drawer blown Cobras often stickered at $8-10K less.

*Cadillac is selling a plastic bodied, Corvette sourced XLR for over $75,000! The C6 Corvette is making a very good profit at $42,000 msrp (GM cold even afford to make it cheaper than it's predecessor!). My wild guess is that the XLR has perhaps $10K worth of extra stuff and selling at an extra $35K. Combine that with a free chassis and cheap to mold plastic skin, and... you get the picture.

*The Solstice is projected as a 20K unit per year car. Why?! Corvette is moving between 25 & 30, and it's price is more than double!

*And does Saturn really need the Sky? Go to your Saturn showroom. Look at what's on the floor. These are the same cars that Sky is going to be parked next to. Sky isn't going to help sell one single current Saturn, as per the idea behind it. It's simply going to attract alot of people intent on buying the Sky. There's an attractive sedan coming, but that's still way over a year (most likely 2) years away.

I'm avoiding throwing mud at GM. Also, with the assets GM has and the amount of divisions they can sell, GM isn't at bankruptcy...yet. But GM can't continue as it has in the past or as it is now.

GM needs to balence out their model portfolio with cars as well as crossovers and trucks, none should be sacraficed for the other. The amount of time it takes GM to get a new car to market today compared to other companies is inexcusable. If GM had NO recalls, ever, then I might see the wisdom. But GM is no better (and no worse) than quicker automakers.

GM needs to accept that incentives are no subsitute for new products or realistic pricing. GM needs to fire and replace the people making some of these sales projections used to set factory production levels. Keeping factories running and throwing in big incentives on their vehicles to sell them is like me making alot of knick knacks and selling them at break even just so I can keep myself making more.

Finally, learn how to market "Niche" vehicles. Niche vehicles aren't supposed to be priced at high levels, niche vehicles are affordable vehicles that have limited appeal, but draws in traffic. Solstice & Sky for instance. PT Cruiser is a niche vehicle. A $35-40,000 GTO sat on lots. A $28-30,000 GTO is selling at predicted levels and then some. If you are going to sell something for $75,000, it should at least be worth 75 large, but then again, GM shouldn't be selling anything worth that close to 100 grand unless it's a unique structure, not one shared with a car just over half it's price.

 

Do we really need one of these threads every other week?

(I didn't even read the whole thing).

I will say that ALL of the Big 3 are overdependent on truck. And I'm not sure what vehicles are rebodied versions of cars introduced 20 years ago...

I'm not saying you don't have some valid points (just by skimming the 'headlines' in your post), but we've sort of been through this, haven't we? *shrug*

 

GM depends on trucks? Rebodied 20 year old cars?

 

GM who was once a horsepower leader in just about every segment is now at the end of the pack and seem to be affraid of offering affordable performance. G6 should have had a 250HP+ V6 a launch and it should have stickered for the current price. Interiors suck in pre-2004 GM vehicles. GMT360 should have received all new interiors for '05, GMT800 trucks should have got them in '04. Interiors have become a big focal point in cars, GM's cars and trucks should get a new interior every 3 years to stay fresh and current, and a new exterior every 5-6 years. GM doesn't seem to want to seriously compete in the interior game. The rainbow fabric option in the Colorados is proof of that. They need to hire some cutting edge modern designers.

The 2006 Impala is the exception I think they did a real good job with this car. 300HP from day one and 18"s is a smart move. They can't afford to wait a few years for the high end model. I just hope you can get the SS with out leather. Chevrolet leather seats are Wal-Mart quality (unlike the GTO )

 

Lean.

 

GM needs a Chrysler 300 of their own; something that seemily came out of nowhere to win over buyers and get a lot of positive press. The Solstice is a nice change, but it's taking a while to arrive and a roadster isn't something everyone can work into their daily commute.

As an enthusiast, it is disappointing when you are shopping for a car and can't find anything to suit your needs from the home team. At best, someone settles for one of their products because of an incentive. The products appear to be improving, but at a typical GM pace.

GM had better shift from a lot of late-to-the-party also-rans to come up with some legitimate, trend-setting home runs on the car side.

 

If GM is to ever compete and gain back their lost market share, it will require a complete and utter shakeup of their managment. I also believe the entire way a vehicle is developed will have to change too. By the time GM introduces a new vechile, it is almost or just as good the current competition. The competition then introduce a new vehicle a year or two later and completely leapfrog GM's product, which still has 4 or 5 years on its ridiculusly long 7 year product cycle. I've heard Lutz say 7 year product cycles are a thing of the past, I sure hope he is right.

 

You're preaching to the choir,Guion. I can't argue with any of your assessments. I wish I could.

 

Count me as another member of the choir.

I'm amazed that GM can't even THINK as big as it did 20 years ago.

1984
Consider the Fiero--purpose-built unique chassis, new manufacturing processes (mill and drill), under $10K mid-engined sports car that sold 100K the first year.

Today
Still waiting on the Solstice and Sky, shared-chassis with conventional manufacturing processes, about the same $ when adjusted for inflation, projected to sell 20K a year?

Is it because they're scared of the new Miata? Or is it simple stupidity?

Solstice/Sky could have been given a 300-325HP V8, from GM's exceptional stable of V8s. It could have been priced very similarly to where it is going to be with the 4. Compare a $25K Solstice/Sky with a V8 against a Miata. No contest. Duh. You'd have to be a complete idiot to buy the Miata.

But no. Be safe. Be stupid. GM could have had a world-crusher, instead it has a Miata competitor.

 

yup. I generally agree with you. I really think that #2 is a huge problem in GM. Seriously is hurting them a lot.

 

All I have to say is EXACTLY

well maybe not all I have to say. The other point I would make is that even though the C6 and Z06 are wonderfull cars they are even late to the party. they will sell all they want for sure but they really would have made a bigger splash for the 50th anniversary to go head to head with the Viper and GT.

 

I'm not sure how the C6 is late, when it realistically has no competition. The Viper is not a competitor (they sell, what, 1500 a year?). The GT is not a competitor ($150 grand?). I can see that it would have been cool to have the new one out for the 50th anniversary, but in terms of competing, it makes no difference. The closest competitor for the Vette is the stupid-overpriced 911...

As for a small block powered Solstice, that would have kicked serious ***. Except, that, suddenly, the Vette WOULD have a competitor. I sure as heck wouldn't pay 50 grand for a Vette droptop if I could pay 25 grand for a Solstice with a small block.

I think the up-level Solstice is going to impress some people, both in power output, and in some of the technology used in the engine (since everyone says GM is so far behind the competition in this area...).

 

The C6 has no competition NOW. All it takes is a pressurized 350Z (or a V8-powered Z) for $35K and the Vette is in for hurting in the marketplace. Considering the base 350Z is still under $27K, this could happen.

A pressurized Solstice is nice, but it's nothing that Mazda can't do. Compare the two, and the nutbags will say, "I want the import. American cars suck." A Solstice with a V8--no contest. No question. EZ sell.

GM needs to think, "What can ONLY GM do?" And do it.

 

As someone that works for GM, I will say that GM shows it's playing hand too fast. In other words, I don't want to see a new car that is going to be built for 3 years until I can get one. 1 year is all the lead time it need other wise it gets boring too fast. Anybody else sick of the Soltice yet?

GM may have learned that lesson have you seen a GMT 900 yet? Nobody but us at the factory has seen one. It will be out next spring.

And to answer to #3 too much factory production is like being a Tuesday morning quater back. GM benchmarked and pushed all of it's factories to become more efficient. With all the gains they made you are going to get a surplus of cars or trucks. Just do the math before you make a statement.....

Lets say plant X and Y make car M.

Plant X makes 1000 Ms a day in 20 hours of build time. GM wants plant x to get faster and leaner, it's good for the stock holders! Plant X came up with the ability to build 10 more Ms and hour with 70 less people so the is now 1200 Ms a day! This will look good to Ron Harbour! and it beats the Toyota bench mark!

So plant x went from 4000 Ms a week (they only work 2 shifts of 10 hours) to 4,800 Ms a week! Wall Street and Ron Harbour will eat this up! In 47 weeks of production it went from 4000 x 47 weeks (188000 Ms) to 4800 x 47 weeks to 225600 WHat a gain for Mr Harbour and Wall Street! Now we get 225600-188000= 37,600 Extra Ms with 70 less people and we wont even start the money savings less people math.

NOW FOR THE DOWN SIDE:

Plant Y did the same thing We now have 37,600 extra Ms X 2 plants....75,200 extra Ms a year

How do you sell them, do you keep cranking them out?

I live this math problem everyday and we have 3 plants that made more gains than my simple math story. That explains most of the downtime!

Roger D

 

the RWD zeta cars should have been out by now,will it be too little to late in 2007??.Imagine what a 4 door V-8 powered performance car would do for GM.Competition for lexus and infiniti,without the sticker shock.I remember when I would not even consider anything but a GM car.