: People's opinion of GM: Stuck in 1978?



Cadillac Tony
11-25-08, 01:13 PM
Here's a great article by Richard Williamson of scrippsnews.com. It discusses the facts about how Congress and the American public are judging GM based on outdated opinion from the 1970s, all the while ignoring the advantages in MSRP, MPG and Technology that GM has over the supposedly superior foreign cars.




General Motors is on the verge of bankruptcy because it "builds cars that nobody wants to buy."

If you haven't heard that line in the bailout debate, you haven't been listening.

"They're a dinosaur in a sense," Sen. Richard Shelby, R-Ala., said on NBC's Meet the Press. "I hate to see this because I would like to see them become lean and hungry and innovative. And if they did and put out the right products they could survive."

Such facile rhetoric has been in vogue since at least 1978 and is as obsolete as a Chevy Vega.

In 2007, more than 9.3 million "nobodies" bought GM cars and trucks, keeping the brand in a dead heat with Toyota as the world's largest automaker. It was the second-best sales year in GM's 100-year history.

Were buyers just being charitable? Does "nobody" want a Corvette? Do the more than 600,000 potential buyers lining up for the new 2010 Camaro not really want one? Clearly, no one wants to buy the Cadillac CTS, Motor Trend magazine's Car of the Year.

And what about the fact that Chevrolet dealers were screaming for more Malibus this year to satisfy demand? Was that just public relations? What about Malibu's selection as 2008 North American Car of the Year by the fussy Detroit auto show press and the remodeled model's ranking as best mid-size car in initial quality by J.D. Power and Associates?

Chevrolet sales grew more than 4 percent in 2007 to 4.5 million vehicles, with a nearly 34 percent increase in Europe and a 22 percent rise in Asia. There must be a lot of "nobodies" in China, because GM ranks as the best-selling import brand there.

And apologies all around for those nasty old trucks that boosted market share for the Detroit Three in the 1990s. GM sold 3.8 million globally in 2007, an increase of 33,000 or 1 percent.
As someone who has been reviewing cars for nearly two decades, I can think of few GM products I didn't want to buy, though some of the early Luminas and the misbegotten Pontiac Aztek were quite resistible. The problem isn't that "nobody wants" a GM product, it's the fact that in a hyper-competitive world, a company that once dominated is going to see its market share inevitably slip. Thus, every action appears defensive.

The fact is, GM, Ford and Chrysler are still paying for the sins of the '70s and '80s long beyond their expiation(cq) date. Korean car maker Hyundai, meanwhile, is wreathed in laurels for reversing its quality fiascos of the 1980s and is devouring market share from the Detroit Three as well as Japan, Inc.

When I say the domestics are "paying for their sins," I mean that literally. GM products bear consistently lower sticker prices than their Asian and European competitors, despite the fact that they typically offer a richer menu of standard eq uipment and better power options.

Take the Cadillac CTS, for example, which retails for $38,980 and comes with a navigation system and OnStar Service as standard equipment. If you turned to import competitors, you might pay $50,625 for a BMW 5-Series or $45,675 for a Lexus GS350 without the nav system.

But the Detroit Three are not just paying for their past sins, they're also paying for their past successes. The thousands upon thousands of retirees GM still supports were working on the line when factories were running overtime to keep up with demand. The plants they have closed were built for less competitive times.

In 2004, health care cost GM $1,525 per vehicle, compared to Toyota's $201, according to the management consulting firm A.T. Kearney. And health care costs increase with age. Toyota had only 250 retirees in North America in 2004. GM covered about 340,000, including spouses. And those contract provisions were painstakingly negotiated in many a mi dnight mediation over the decades.

It was inevitable that GM, Ford and Chrysler would lose the commanding market share they enjoyed after World War II. Asia and Europe crawled out of the postwar rubble and hit their stride when American industry was growing fat and lazy.

Since then, the import brands have expanded their fleets to compete in every market segment, complete with U.S. factories. The Detroit Three lost their virtual monopoly in full-size trucks when Toyota got serious about the Tundra, and Nissan rolled out the Titan, both built in Southern U.S. states hostile to unions and offering extravagant economic incentives.

GM has 7,000 dealerships, many of which are protected from closure by antiquated state laws. Toyota has 1,500.

While anyone who covers the industry can come up with any number of blunders by the Detroit Three, building unwanted products is not one of the biggies. Not anymore. That was a completely different era.

In fact , part of their recent trouble came from the fact that they built vehicles that people did want. Until a year ago, they had a hard time supplying enough Yukons and Silverados for a market flush with cash and credit. Toyota and Nissan were fighting hard for a piece of the action. When pump prices spiked, all of the makers were caught with fleets of gas guzzlers that few buyers could afford, even if they wanted them.

But were the automakers to blame for high fuel prices? There's a good argument to be made that the U.S. invasion of Iraq - a government action - and related world instability contributed to the soaring fuel prices that endangered not only the auto industry but the world economy.

That's not to say that GM didn't have plenty of high-quality, fuel-efficient cars. With 20 models that get 30 miles per gallon or more, GM offers more than any other maker. They also offer the most hybrid vehicles, ranging from the Malibu Hybrid to Cadillac Escalade And if you wan t conventional frugality, there's the dutiful little Chevy Aveo, which, at $12,120 costs about $2,000 less than a Toyota Yaris.

If it survives, GM will produce plug-in hybrids within a couple of years that should allow most commuters to go to work and back without running their internal combustion engines at all.

GM still catches a lot of grief for scrapping the electric EV1 in 1999, but the two-seater was believed to have cost GM $80,000 per unit and could only be leased, not sold. It was a costly boondoggle briefly mandated by one state -- California. Nonetheless, GM soldiers on with development of the Volt, a hybrid designed to run primarily on battery power that might enjoy better success but certainly won't save the company.

GM is also playing a key role in the development of so-called "Intelligent Transportation Systems" that will make driving safer and more efficient. In fact, cars that drive themselves are not that far off. Eleven years ago, GM linke d eight Buick LeSabres electronically in a system called "platooning." Drivers at the event known as Demo 97 did not have to touch the accelerator, brake pedal or steering wheel.

GM's sophisticated OnStar communications system is also seen as a bargain basis for future communication between vehicles. The system would also provide 360-degree visibility and would cost much less than the government's proposed $3 billion to $10 network.

GM could be the beneficiary or the victim of government action, but the government has been deeply involved in the automotive business for most of its existence, from catalytic converters to air bags, which, by the way, GM pioneered.

Should the U.S. government lend taxpayer dollars to the Big Three? We're talking about a loan, here, not an outright gift like the hundreds of billions of dollars we have poured into Iraq, including $9 billion in cash that simply disappeared.

Some respected economists argue that bankruptcy ma y be the only way for GM to hack the Gordian knot of contracts, laws, regulations and debts dating back to an era of black-and-white TV. But GM questions whether the world's largest automaker could survive bankruptcy. Who would trust a warranty or parts supplies for a company that might not be around next year?

If you're occupying an ivory tower or a talk-show microphone, you have the luxury of debating economic theory. If you are among the one out of 10 workers who depend on the auto industry for your daily bread, the question is a little more immediate.

At the end of the day, GM may go under, taking much of the world's economy with it. To think that they survived the Great Depression but perished in their 100th year would be a bitter pill to swallow. But let's hope that historians don't blame the demise of the brand on cars that "nobody wanted."

link to story HERE (http://scrippsnews.com/node/38114)

orconn
11-25-08, 01:57 PM
The truth of the matter is American automakers have had as their marketing objective producing the most car for the least money. In the 1970's the Japanese took on the the Europeans (VW) in the US by producing a well equipped well put together small car at a lower price. The cars of both the European and the Japaneese didn't compete with American products when it came to performance and comfort, nor style. But they made up for it with simple design that was well put together and very affordable. The perfect second car for the Mrs. or for a student off to college.

As it turns out, perception of quality and reliability won out in the market place. The Japanese still turn out a generic family car with great features and to a good standard of quality. In the 1980's American makers went for rehashed tasteless designs haphazardly put together and left "quality perception" to be had by the foreign makes.
In the nineties American makers pretty much gave up on passenger cars, there were a few exceptions like the Seville, and put there money on gussied up trucks for those needing space or those for whom "big" was safety. Today GM has some good and quality competitve products, but is at a great disadvantage to compete in the domestic market due to non-car related production costs. It will be hard for Detroit to re-establish themselves as the producers of superior automotive products as long as their price competitiveness is curtailed by their high cost of overhead as compared to foreign domestic auto producers. If the American automaker is to survive something must be done to bring their cost more in line with the foreign domestic producers; if this cannot be accomplished then the American automaker is doomed to extinction. Perhaps we are looking at a situation where the current "Big Three" American automakers will disappear to be be replaced by smaller volume "boutique" American car builders who will be free from the overheads that are making American domestic producers uncompetitive today.

hueterm
11-25-08, 02:00 PM
People buy airline tickets worth thousands of dollars on airlines that go in and out of bankruptcy like people go in and out of line at Wal-Mart.

The only way to equalize cost structures w/the Japanese mfg's and get rid of these legacy costs is to have a prepackaged bankruptcy. If GM does it, then they'll all have to do it, because the holdouts would never be able to compete at that point. Let the government take responsibility for it in the end if it helps push it through -- but giving a few more billion isn't going to help anything.

I~LUV~Caddys8792
11-25-08, 02:06 PM
Man, I wish we were stuck in 1978....I could jump in my brand new Eldorado Biarritz or Mark V Continental, and cruise around all night while listening to Billy Joel's "The Stranger" or Fleetwood Mac's "Rumours" or The Rolling Stones' "Some Girls"....but Breakfast In America would have to wait...that wouldn't be out until '79. :(

LS1Mike
11-25-08, 02:14 PM
Great article, I have always tried to say the same thing, usually you get crapped on for it. Like I have always said, numbers don't lie, people want their cars. The Media and some folks want you to believe that they don't them.

Lord Cadillac
11-25-08, 02:48 PM
When all is said and done, all I want is for the legacy costs to be aligned with what the foreign companies are paying. Whatever it takes for that to happen is what has to happen. I don't think a bailout or loan is going to make that happen - which means that in the end, we'll be back to the same point again - GM needing a loan.

If I sell a car and make $5000.00 profit every time - and GM sells a car and makes $3000.00 profit every time, I'm eventually going to buy GM for some extra pocket change.


Today GM has some good and quality competitve products, but is at a great disadvantage to compete in the domestic market due to non-car related production costs. It will be hard for Detroit to re-establish themselves as the producers of superior automotive products as long as their price competitiveness is curtailed by their high cost of overhead as compared to foreign domestic auto producers. If the American automaker is to survive something must be done to bring their cost more in line with the foreign domestic producers; if this cannot be accomplished then the American automaker is doomed to extinction. Perhaps we are looking at a situation where the current "Big Three" American automakers will disappear to be be replaced by smaller volume "boutique" American car builders who will be free from the overheads that are making American domestic producers uncompetitive today.

Cadillac Tony
11-25-08, 04:25 PM
I'd like to see Congress use their power to make the deal contingent on the UAW renegotiating their contract to a competitive level. Congressional authority can break the current agreement, then bring Gettlefinger to Washington and explain to him that if he won't agree to the industry standard pay plan, they'll let GM out of the contract completely and go find new workers that will accept a fair pay plan.

Given the choice between lower (fair) pay or no job at all, I think most Union workers would opt for the former.

C&C
11-25-08, 04:26 PM
Bravo, those observations seem to be spot on.

Lord Cadillac
11-25-08, 04:32 PM
I'd like to see Congress use their power to make the deal contingent on the UAW renegotiating their contract to a competitive level. Congressional authority can break the current agreement, then bring Gettlefinger to Washington and explain to him that if he won't agree to the industry standard pay plan, they'll let GM out of the contract completely and go find new workers that will accept a fair pay plan.

Given the choice between lower (fair) pay or no job at all, I think most Union workers would opt for the former.
That would be almost beyond perfect. :) I just have a feeling a bankruptcy with new contracts is more likely to happen...

hueterm
11-25-08, 06:16 PM
I'd like to see Congress use their power to make the deal contingent on the UAW renegotiating their contract to a competitive level. Congressional authority can break the current agreement, then bring Gettlefinger to Washington and explain to him that if he won't agree to the industry standard pay plan, they'll let GM out of the contract completely and go find new workers that will accept a fair pay plan.

Given the choice between lower (fair) pay or no job at all, I think most Union workers would opt for the former.


W/the Dems running Congress? Wake up little Suzie....wake up...

MauiV
11-25-08, 08:18 PM
As a Union member currently at odds with the Federal Government I cant say that I am in favor of just sweeping the UAW contracts under the rug. Whoever genius at GM, Ford and Chrysler that signed these things in the first place is whos head should roll first and formost. I live in a community that has a lot of people that work for Ford and various suppliers for all companies I wish there was an easy answer.

I have been on both sides of the Union fence and I see both sides pretty clearly. I hate to say it but it looks like retiree benefits (my mother recieves those) are where the most fat needs to be trimmed. These companies offer 401K and very good retirements to begin with so I personally dont think those folks are above having to pay a $20 deductable and some prescription charges out of their own pockets like the vast majority of the rest of us have too.

Ranger
11-25-08, 09:58 PM
This is just another in a long line of ongoing threads about this. I can't help but notice that the majority seem to be against GM, take a hard line and would almost seem to relish in their demise. I find it rather ironic that it is on a GM "Enthusiast" site from people who all drive GM products, "that nobody wants".

Yesterday I heard on the news that the government is going to inject another 20 BILLION into Citi Group, and that is on top of the 25 BILLION that it already got and yet not one anti bank or anti Citi Group thread has been started. Not one complaint uttered. I can't help but feel somewhat like a spectator in a Roman Colosseum watching Christians fight lions and everyone is cheering for the lions (or watching the Sands of Iwo Jima and everyone rooting for the Japanese). Am I alone here?

Now I'm not saying that the big 3 are guilt free, have not made mistakes, but I think that article says it all and much better than I could.

Just an observation from the peanut gallery.

LS1Mike
11-25-08, 10:14 PM
This is just another in a long line of ongoing threads about this. I can't help but notice that the majority seem to be against GM, take a hard line and would almost seem to relish in their demise. I find it rather ironic that it is on a GM "Enthusiast" site from people who all drive GM products, "that nobody wants".

Yesterday I heard on the news that the government is going to inject another 20 BILLION into Citi Group, and that is on top of the 25 BILLION that it already got and yet not one anti bank or anti Citi Group thread has been started. Not one complaint uttered. I can't help but feel somewhat like a spectator in a Roman Colosseum watching Christians fight lions and everyone is cheering for the lions (or watching the Sands of Iwo Jima and everyone rooting for the Japanese). Am I alone here?

Now I'm not saying that the big 3 are guilt free, have not made mistakes, but I think that article says it all and much better than I could.

Just an observation from the peanut gallery.

Ranger it is mostly the same people who speak in those treads, not sure if it is the majority with 79,000 registered user, a lot who might actually like GM. I usually get yelled at if I defend GM if is dosen't match a small fews approval. I mean at this point what is the point if the guys who post the crap pretty much tell you you are stupid for backing GM up? What were they posting for everyone to roll over and agree? Not going to happen here.

Jesda
11-25-08, 10:34 PM
We've discussed the bank bailout in the political discussion section.