Is GM finished?

[Disbelief]

Just to add some thoughts on a few points ...




It seems everybody is on this "upscale" bandwagon. Nothing is entry level anymore. (OK, there are some models, but overall?) Take any given model and watch what happened over time. Anyone recall the BMW 2002? Great car ... a tad expensive, but not like the new ones which can't be touched for under $30K. Or the VW Beetle. Or the Audi Fox. Or early Subaru's; (remember their slogan? Inexpensive and built to stay that way. You don't hear that said anymore!). Cars that were built and marketed as inexpensive, fun to drive and got very good mpg. And it's not just cars. Who builds entry level homes anymore? Everything going up is a McMansion. Could this have been part of the housing bubble's burst?

There's a difference between taking a vehicle upmarket as opposed to an entire brand that supposedly had a purpose. Further complicate this by making it compete with another one of your own brands, instead of making it better at what it does.

Or killed the Pontiac Fiero? That could have been a great car to compete with the then Toyota MR2, which did get nice improvements in time. Not so with the Fiero.

They did bring out the Solstice, which is a nice little Roadster. How about just a better focus on the brand?

There's something to be said regarding Toyota, Honda and some European car manufacturers that got a good footing in the US market back in the mid 1970's to 80's. They basically always made good fuel efficient cars ... yes, smaller than US cars, but almost always better mpg. Now, that's a feature that is always in demand. In good times with low fuel costs there are always those who want less expensive cars to buy and maintain, so they have that market. But in hard times, they become even more in demand, as more and more folks simply can't afford gas hogs. So their market goes from good, to better, to back to good ... and on and on. So, how does the US make a similar dent into that market? Well, one way I don't think they do it is by making a product that nobody would want during hard times ... yet, that's exactly what happened.

The worst part is, that GM and Ford have the knowledge for building fuel efficient cars. They have competed in Europe for a long time and have adapted to the trends over there (hence the use of Opels for Saturn and bringing the Fiesta over the pond). GM also owns Daewoo, who has substantially improved there position in Korea and brings that knowledge.

 

[Just thinking]

Many Cadillac's have the battery in the trunk. It provides for better weight distribution and more room in the engine compartment. Unfortunately it means a costly repair if it needs to be replaced. If you find yourself dead on the highway, having the battery in the trunk can be a life saver. Instead of tricky maneuvering the booster car backwards down the shoulder of a busy road to get the cars nose to nose, you simply pull up behind and boost the battery.

Unless it's another Cadillac.

 

[Just thinking]

There's a difference between taking a vehicle upmarket as opposed to an entire brand that supposedly had a purpose. Further complicate this by making it compete with another one of your own brands, instead of making it better at what it does.

That is a problem. It seems Detroit can't keep a model beyond a set number of years before retiring it. They can learn from Honda and Toyota.

They did bring out the Solstice, which is a nice little Roadster. How about just a better focus on the brand?

Yes ... nice idea and I hope it succeeds (see previous comment above). But look at the number of years between the Fiero and Solstice. That's just too long of a learning curve.

Also, there were a number of years in the US when the only convertables available were imports. And US car dealers no longer supplied HP figures, even for cars like the Mustang or Camaro. One actually told me in no uncertain terms ... "You want horsepower? ... buy an import."

The worst part is, that GM and Ford have the knowledge for building fuel efficient cars. They have competed in Europe for a long time and have adapted to the trends over there (hence the use of Opels for Saturn and bringing the Fiesta over the pond). GM also owns Daewoo, who has substantially improved there position in Korea and brings that knowledge.

Well, as I mentioned much earlier in this thread, I recently rented a GM Cobalt, and the thing got under 20 mpg with combined city/highway. It ran just fine and had only 3500 miles on it; there was no indication of it being defective in any way. And no, it was not the high HP model.

 

[Drewbot]

A couple things:

The automakers need to get to 2010. They have a new union contract going into effect and can hire workers starting at 14.00/hour.

The automakers are each paying 2Billion/quarter into a UAW health fund, which when done next year will mean Auto companies are no longer going to be taking the health care loss every quarter. All health care will be provided by UAW fund.

In 2010, there will be pent-up demand for new cars.

Chrysler- No new products in pipeline, look for them to be purchased by a Chinese or Korean company, or possibly Renault. Mostly for the intact dealer network and Jeep, possibly the minivan. Look for everything else to be converted to that companies products, or sold. Has approx. 11B in cash.

Ford- New products in pipeline, world car included. Profitable everywhere but N. America.
Still has 19B in cash.

GM- New products in pipeline. Will need to merge or be bought by a European or Japanese company. Probably will sell assets and keep a few profitable lines. No idea on cash reserves.

 

[Furcifer]

One thing though, since everyone here seems to give the foreign makers a pass, is that they jumped on the truck/SUV bandwagon as fast as they could and they did not see the dramatic drop coming. If so, do you think Toyota would have opened up a new truck plant in San Antonio and increased capacity at the truck plant in IN?

Exactly, business stategy was based on capitalizng the markets they already had and expanding into the ones that have become dominated by the imports. Toyota did the exact same thing and may in fact have made a worse decision to move into currently shrinking market.

 

[Disbelief]

That is a problem. It seems Detroit can't keep a model beyond a set number of years before retiring it. They can learn from Honda and Toyota.

The problem is that the Big 3 destroyed so many model names by bringing out crappy cars. Would you really want to buy a Beretta, Catera or Chevette? All these names have stigmas attached to them, so they have to come up with new ones.

Yes ... nice idea and I hope it succeeds (see previous comment above). But look at the number of years between the Fiero and Solstice. That's just too long of a learning curve.

They were looking at the market and the fact that it was not huge. More disposable income made it more of a good bet, along with the fact that they could make the Saturn Sky from the same platform.

Also, there were a number of years in the US when the only convertables available were imports. And US car dealers no longer supplied HP figures, even for cars like the Mustang or Camaro. One actually told me in no uncertain terms ... "You want horsepower? ... buy an import."

To be fair, there were really not a whole lot of convertibles by anyone for a number of years, and the ones available tended to be more upscale. Also, any dealer who told you to look to imports for HP is a fool. One of the things that the Big 3 repeatedly got banged on was the HP increase and having bad gas mileage. However, if you were lookin at mid-sized sedans, the foreign makes did go through a bit of an HP was when the last Maxima came out.

Well, as I mentioned much earlier in this thread, I recently rented a GM Cobalt, and the thing got under 20 mpg with combined city/highway. It ran just fine and had only 3500 miles on it; there was no indication of it being defective in any way. And no, it was not the high HP model.

There was clearly something wrong, whether with your calculation or the vehicle. City driving on the Cobalt is +20mpg, so there had to be a mix up. Also, there was a change in the EPA calculation for mpg in 2007 (I believe) that was meant to better simulate real world driving, so the sticker should give a pretty fair estimate.

 

[Just thinking]

They were looking at the market and the fact that it was not huge. More disposable income made it more of a good bet, along with the fact that they could make the Saturn Sky from the same platform.

The word I herd was not that the Fiero wasn't profitable (it was), it just wasn't profitable enough. Meaning it more than earned it's keep, but not enough to satisfy the need for greed.

To be fair, there were really not a whole lot of convertibles by anyone for a number of years, and the ones available tended to be more upscale.

But they were imports none-the-less ... and if you liked that style of car and had the $$$$, just where else could you go? Plus, when I bought my 2-seater in 1985 the only US car that was a 2-seater was a Corvette, which I could not afford. So it was go import.

Also, any dealer who told you to look to imports for HP is a fool. One of the things that the Big 3 repeatedly got banged on was the HP increase and having bad gas mileage. However, if you were lookin at mid-sized sedans, the foreign makes did go through a bit of an HP was when the last Maxima came out.

I was speaking of HP numbers, not HP in general. You simply couldn't know just what the Mustang was putting out, as Ford was not putting out those numbers to the dealers. It wasn't on the sales brochures either.

There was clearly something wrong, whether with your calculation or the vehicle. City driving on the Cobalt is +20mpg, so there had to be a mix up. Also, there was a change in the EPA calculation for mpg in 2007 (I believe) that was meant to better simulate real world driving, so the sticker should give a pretty fair estimate.

I used miles driven against fuel used (gallons) to re-fill the tank. It's pretty straightforward. Besides, the fuel gauge agreed pretty much in how many gallons I bought. Plus, whatever the EPA sates is somewhat meaningless, as my MPG was what it was regardless.

 

[NewtonTrino]

Wow if I'm the only person on the forum who actually likes and buys GM products they are screwed! Nobody else except someone that works for them will defend them?

 

[Disbelief]

Wow if I'm the only person on the forum who actually likes and buys GM products they are screwed! Nobody else except someone that works for them will defend them?

Did you miss 3body's and my defense? Just because I think they deserve a shot, does not mean I agree with all their decisions. As an employee, do you really think taking Saturn upmarket was smart? Do you think it was wise to put so much into trucks/SUVs even after what happened in the 70s? Can you tell me that the marketing has been good?

 

[Just thinking]

Wow if I'm the only person on the forum who actually likes and buys GM products they are screwed! Nobody else except someone that works for them will defend them?

It depends on who/what you think is being defended.

I gave praise to several models while at the same time criticizing some marketing decisions. It takes more than a good product to do well. It takes marketing, improvements and overall acceptance that not every model will be a blockbuster in $$$$. Understanding that last bit can be critical in that it allows models that aren't very hot at present to stay on top production and form so that when situations change they can be ahead of whatever the competition is trying to catch up with.

 

[Furcifer]

Look like the OP will be answered in the next few minutes...

or not

 

[Furcifer]

So they have arrived at a compromised deal on the $25 Billion Energy package, to be converted to a bridge loan. Big deal, basically instead of a $75 Billion loss because of CAFE we have a $100 Billion loss. This is a band aid until they get a piece of the TARP.

 

[Prometheus]

So they have arrived at a compromised deal on the $25 Billion Energy package, to be converted to a bridge loan. Big deal, basically instead of a $75 Billion loss because of CAFE we have a $100 Billion loss. This is a band aid until they get a piece of the TARP.

I'm a bit confused as to why you're blaming CAFE for these losses. According to NHTSA, no domestic manufacturer has ever paid a penalty under CAFE.

 

[Furcifer]

I'm a bit confused as to why you're blaming CAFE for these losses. According to NHTSA, no domestic manufacturer has ever paid a penalty under CAFE.

The cost of meeting these regulations over the years. It was a mandate after all.

 

[Disbelief]

I'm a bit confused as to why you're blaming CAFE for these losses. According to NHTSA, no domestic manufacturer has ever paid a penalty under CAFE.

Because it forced the automakers to build small cars here when it was hard (impossible) for them to do so for any profit. CAFE has been crap, as you are forcing manufacturers to make vehicles that people did not really want. The better way to do it would have been to follow the European model and slowly raise gas taxes, but that would have been political suicide. Give the consumers the incentive to change and this would have changed the model mix.

 

[Almo]

My anecdote is simple. We bought a 2003 Dodge Neon, and we're happy with it.

About the bailout, I agree with the moral hazard part of the argument. But I do worry about the impact letting Ford and GM go down would have on the economy.

 

[davefoc]

Because it forced the automakers to build small cars here when it was hard (impossible) for them to do so for any profit. CAFE has been crap, as you are forcing manufacturers to make vehicles that people did not really want. The better way to do it would have been to follow the European model and slowly raise gas taxes, but that would have been political suicide. Give the consumers the incentive to change and this would have changed the model mix.

CAFE may have hurt the automakers, because it forced them to manufacturer smaller cars in the US at a loss. Didn't it also encourage them to make SUV's and trucks so that they could skirt the intent of CAFE? On top of that the US congress put in place tax rules to encourage the purchase of trucks and SUV's.

Did the government regualations that encouraged the use of large vehicles make the American manufacturers even more unstable? When the price of gasoline rose and most of the truck/SUV subsidies had been removed a large part of the infrastructure that the manufacturers had put in place to build those vehicles was suddenly worthless.

On the issue of whether the government should regulate mileage
Although there are legitimate free market arguments against national fuel economy standards, is there a national interest argument for effective legislation to require improved fuel economy that is more important than the free market arguments against it? When the bulk of US workers depend on gasoline to get to work the entire US economy can be threatened by minor fuel disruptions and those disruptions are almost certain when much of the source of that gasoline is from unstable parts of the world.

Although Republicans have made strong national defense part of their standard campaign rhetoric it looked to me like they were willing to ignore the security of the US by not only fighting effective fuel economy standards but by actually encouraging the use of gasoline by their truck and SUV subsidies. My own cynical view of this is that the Republicans put the interest of the oil companies above the national interest.

 

[Prometheus]

Because it forced the automakers to build small cars here when it was hard (impossible) for them to do so for any profit. CAFE has been crap, as you are forcing manufacturers to make vehicles that people did not really want. The better way to do it would have been to follow the European model and slowly raise gas taxes, but that would have been political suicide. Give the consumers the incentive to change and this would have changed the model mix.

Except that CAFE didn't actually force the Big 3 to produce these smaller cars that people didn't want. They could easily have done what European manufactures did: keep building gas-guzzlers, pay the CAFE fines, and jack up the price of the cars to cover the fines. If consumers really wanted bigger, less efficient cars, they'd be willing to pay the added price for them. Had they done that, while also doing the advance R&D that foreign companies did on hybrids, instead of rushing to market with a bunch of under-powered already obsolete crap-mobiles just to avoid the fines, then they'd be sitting pretty right now.

 

[Furcifer]

When the bulk of US workers depend on gasoline to get to work the entire US economy can be threatened by minor fuel disruptions and those disruptions are almost certain when much of the source of that gasoline is from unstable parts of the world.

False. I can't believe people perpetuate this myth. It takes a second to Google this information and still people refuse to do so.

 

[Furcifer]

Except that CAFE didn't actually force the Big 3 to produce these smaller cars that people didn't want. They could easily have done what European manufactures did: keep building gas-guzzlers, pay the CAFE fines, and jack up the price of the cars to cover the fines. If consumers really wanted bigger, less efficient cars, they'd be willing to pay the added price for them. Had they done that, while also doing the advance R&D that foreign companies did on hybrids, instead of rushing to market with a bunch of under-powered already obsolete crap-mobiles just to avoid the fines, then they'd be sitting pretty right now.

This is all wrong on so many levels. This is a quaint notion that the Japanese had the technology before us, or theirs was any better. There was as issue of marketability in the US and implementing it while maintaining profit margins to satisfy shareholders. Plus the feasability in the NA market where commute times are much longer than other countries that are the primarary markets of the Japanese.

This doesn't even account for how weird people are about gasoline. Gas goes up 5 cents per liter and they will wait in line for an hour to save 2 bucks. They love to bitch and whine and fixate on it, it's like the weather.