GM posts $3.3 billion Q1 loss

[mustang84]

More at link: http://www.msnbc.msn.com/id/24383373/

DETROIT - General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major parts supplier and plummeting sales of sport utility vehicles and pickups.

The nation’s biggest automaker also cut its industrywide U.S. sales outlook for the year. The company disclosed earlier this week it was cutting production of some of its slow-selling trucks and SUVs.

GM’s loss reported Wednesday for the January-March period amounted to $5.74 per share and also reflected one-time charges. It compares with a profit of $62 million, or 11 cents per share, in the first quarter of 2007.

The company said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.

In light of the results, GM revised its U.S. sales outlook for the year. The Detroit automaker now expects total U.S. sales in the high 15-million range, down from the low 16-million range at the beginning of this year.

“We want to run our business conservatively. We want to be realistic,” said Ray Young, GM’s executive vice president and chief financial officer.

Young said GM expects the second quarter to be a tough one for the industry. He said GM continues to predict a recovery in the second half of the year, although it will not be as robust as the company believed at the beginning of this year.

GM’s loss included a $1.45 billion charge to reflect a change in the value of GM’s interest in GMAC Financial Services and $731 million to increase GM’s liability in Delphi Corp.’s ongoing bankruptcy.

Excluding the one-time items, GM lost $350 million, or 62 cents per share, beating Wall Street’s expectations. Analysts surveyed by Thomson Financial had expected a loss of $1.60 per share.

GM’s total revenue for the quarter was $42.7 billion, down from $43.4 billion a year ago. GM said revenues were up 20 percent outside North America thanks to strong growth in China, Russia, Brazil and India. Total revenue was hurt by the slowdown in North America and losses at GMAC.

The good news is that most of the loss was due to one-time charges with GMAC and Delphi. GM stock is actually up right now. Automotive operations only lost $350 million.

Edited April 30, 2008 by mustang84

[Intrepidation]

There seems to be a lot of "one-time charges" lately.

[Sixty8panther]

How did Ford make money & GM loose?

Ford is a lame duck!

[EMan]

How did Ford make money & GM loose?

Ford is a lame duck!

Ford also sold a couple of its brands. Could that be it?

[enzl]

Ford also sold a couple of its brands. Could that be it?

Sale of Jag/LR this month, so it'll be a 2Q event.

Problem with GM 1 time write-downs and events is that they've become a regular part of business. GM has also sold off about $10 billion in stuff in the past year (GMAC, Allison), so it's difficult to say where they'd be without those 'events'.

It's going to be an interesting year, to say the least.

[CARBIZ]

Interesting how the stock market has reacted to these losses, though. I guess WallStreet is not expecting any good news this year from very many companies. I read today that Berkshire is on a junk food binge, buying up stocks in Wrigley to go with Mr. Buffett's stakes in Coca Cola, Dairy Queen and Kraft. I guess the richest man in the world is betting that we North Americans are going to stay home in 2008 and get fat.

Hmm, perhaps I should invest in Jenny Craig in anticipation of a diet explosion in 2009?

[Toyota.vs.GM]

GM North America lost $611 million, thats with an $800 million hit to North America from the UAW strike against American Axle , so it looks like North America may have made money IF it wasn't for American Axle and the UAW.

Edited May 1, 2008 by Toyota.vs.GM

[Guest aatbloke]

Regardless of recent accounting entries such as deferred tax write-offs and a number of extraordinary items exacerbating the loss, there still remains a core operating loss. This is very disappointing news, and will hopefully prompt GM to be a good deal more shrewd and proactive in the North American market in particular. The Malibu and Aura are fine cars and importing the Astra was a very wise move considering the quality of the C-segment competition which now exists in the States. However, in the face of soaring fuel prices it needs to get ahead of the game with a range of smaller, fuel-efficient cars for North American punters, otherwise it will continue to be viewed as a retroactive player behind the Japanese.

Edited May 1, 2008 by aatbloke

[gmcbob]

You know, jogging around Memorial Park (in the heart of one of the more affluent parts of town) in Houston tonight, I was actually thinking about GM and what a lot of their problems are. I can't help but wonder - why in the world did they let so much of their business go to their competitors - for so many years - without doing anything about it? It's really quite insane - no matter what industry you follow - whether it be cars - like us - or disc drives, or tv sets, or whatever, GM is truly one of the best case studies of short sightedness and mismanagement I can think of.

Keep in mind, I'm in the 4th largest city in the country, where there's tons of money, and the economy is actually not doing too bad because of how tied we are to the oil industry here, and I hate to break this to everyone - but I hardly see any new GM cars on the streets - most of the new cars on the streets are imports. The only new GM vehicles I see in any respectable numbers are their trucks and SUVs - but I hardly see any new GM cars. I see a fair number of late model Impalas (fleet??), and I see some of the newer Lambda SUV's, but as far as most of their cars go - let's just say I don't hold my breath waiting for one to pop up. I see a new Malibu about once every couple of days - but I see new Accords all over the place, every day. The 2008 CTS - well, I've seen a few (and I test drove one for $h!s and giggles), but I hardly see them at all. But on the flip side, I see newer IS models almost daily - and tons of them. I think this city is indicative of most places outside the Midwest where GM is going to have a lot of problems trying to convince Joe Consumer that their products a are really good now.

If GM is this truly tied to trucks and SUV's for survival, then it'll be real interesting to see how they get themselves out of this mess they worked so hard to create.

I think they'll be ok, the cars I do see from GM out on the streets do look good, but getting people to even put a new Malibu on their shopping list is going to be insanely tough in places like Houston - where there's few ties to Detroit, and most people's neighbors have given up on GM years ago. But markets like this are important - as are LA, Phoenix, Atlanta, etc, etc...I just don't know how they're going to do it without so much as coming out on TV and doing 80s Lee Iacocoa TV commercials (try our cars now, they're better, honest, don't give your money to foreign companies, etc, etc). Maybe that's extreme, but I don't see any other way short of giving the cars away for half price.

[daves87rs]

I'm starting to hate these one time things....seems like like GM always has one...

[Robert Hall]

I'm starting to hate these one time things....seems like like GM always has one...

Kind of an end-of-quarter tradition.

[thegriffon]

It'll be 2011, 2012 before you see any significant improvement in NA earnings.

[Guest aatbloke]

I'm starting to hate these one time things....seems like like GM always has one...

Companies of this girth almost always have some kind of extraordinary item which is required to be disclosed.

[ZL-1]

Regardless of recent accounting entries such as deferred tax write-offs and a number of extraordinary items exacerbating the loss, there still remains a core operating loss. This is very disappointing news, and will hopefully prompt GM to be a good deal more shrewd and proactive in the North American market in particular.

Disappointing is the word: again GM posts negative operating cash flow (minus $3.6bn), again NA market share is down (21.7% Q1 2008 versus 22.5% Q1 2007), and the only reporting region where GM posts market share gains in Q1 2008 is LAAM.

The way macro factors are working right now, GM needs DeltaII and Gamma (assuming they'll be offered in NA) products to be very successful in NA, or else things can get really ugly.

Edited May 1, 2008 by ZL-1

[VenSeattle]

Sale of Jag/LR this month, so it'll be a 2Q event.

Problem with GM 1 time write-downs and events is that they've become a regular part of business. GM has also sold off about $10 billion in stuff in the past year (GMAC, Allison), so it's difficult to say where they'd be without those 'events'.

It's going to be an interesting year, to say the least.

Feel free to be as pessimistic as you want with this one. I'm not going to disagree.

[The O.C.]

I think they'll be ok, the cars I do see from GM out on the streets do look good, but getting people to even put a new Malibu on their shopping list is going to be insanely tough in places like Houston - where there's few ties to Detroit, and most people's neighbors have given up on GM years ago. But markets like this are important - as are LA, Phoenix, Atlanta, etc, etc...I just don't know how they're going to do it without so much as coming out on TV and doing 80s Lee Iacocoa TV commercials (try our cars now, they're better, honest, don't give your money to foreign companies, etc, etc). Maybe that's extreme, but I don't see any other way short of giving the cars away for half price.

It's a phenomenon that has been discussed many times over on this site (many times by me.) When looking at the fate of the domestic automakers, you really need to look FAR outside of the midwestern states to see the true trends that are defining this industry. The Big3 TRULY is operating within a clueless vacuum.

Southern California is probably the biggest example.....and the east coast cities rival that. But it's really the sweeping changes in consumer preference (towards imports) that is taking place in regions like Houston, Atlanta, Florida, Arizona, Colorado, ANY paciific northwest city.....I could go on-and-on.

Employees of the Big3 living in those midwestern states are strangely clueless to the automobile market revolution taking place around the country. It's scary....and mildy humorous at the same time. Oh they hear in the news about the sales numbers and the market share.....but they still really don't think anything's wrong. There's tons of GM cars in Detroit, Cleveland, and Indianapolis. How could things be bad? ALL those people buying imports are "sheeples." "California" isn't the "real" world, so why pay attention to the auto market there? <UGH>

I'm not saying "you" are a fool for being a "GM fan".....what I'm saying is.....is that the domestic automobile industry is fading into more-and-more irrelevance....and the Big3 are clueless as to how to stop the slide. NOW, it's not JUST product. It's perception, image, and appeal. You can have the best product in the world (CTS? G8? Corvette? GMT-900s? Lambda?)

.....but if you don't fix the perception, image, and appeal problems......you will fail miseably.

[enzl]

It's a phenomenon that has been discussed many times over on this site (many times by me.) When looking at the fate of the domestic automakers, you really need to look FAR outside of the midwestern states to see the true trends that are defining this industry. The Big3 TRULY is operating within a clueless vacuum.

Southern California is probably the biggest example.....and the east coast cities rival that. But it's really the sweeping changes in consumer preference (towards imports) that is taking place in regions like Houston, Atlanta, Florida, Arizona, Colorado, ANY paciific northwest city.....I could go on-and-on.

Employees of the Big3 living in those midwestern states are strangely clueless to the automobile market revolution taking place around the country. It's scary....and mildy humorous at the same time. Oh they hear in the news about the sales numbers and the market share.....but they still really don't think anything's wrong. There's tons of GM cars in Detroit, Cleveland, and Indianapolis. How could things be bad? ALL those people buying imports are "sheeples." "California" isn't the "real" world, so why pay attention to the auto market there? <UGH>

I'm not saying "you" are a fool for being a "GM fan".....what I'm saying is.....is that the domestic automobile industry is fading into more-and-more irrelevance....and the Big3 are clueless as to how to stop the slide. NOW, it's not JUST product. It's perception, image, and appeal. You can have the best product in the world (CTS? G8? Corvette? GMT-900s? Lambda?)

.....but if you don't fix the perception, image, and appeal problems......you will fail miseably.

All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

[A Horse With No Name]

Interesting how the stock market has reacted to these losses, though. I guess WallStreet is not expecting any good news this year from very many companies. I read today that Berkshire is on a junk food binge, buying up stocks in Wrigley to go with Mr. Buffett's stakes in Coca Cola, Dairy Queen and Kraft. I guess the richest man in the world is betting that we North Americans are going to stay home in 2008 and get fat.

Hmm, perhaps I should invest in Jenny Craig in anticipation of a diet explosion in 2009?

People are too lazy for the Jenny Craig thing. Let's face it, the human race isn't making much progress, not moral progress, not progrss on alternative fuels, not progress on North Americans loosing wieght, not progress on the population problem.

Seems like we are really out to screw ourselves.

Chris

[A Horse With No Name]

All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

We are very domestic here in Columbus Ohio, but I used to live in Atlanta. I would regularly go through like 10 stoplights without seeing a domestic car (domestic trucks, yes, butnot domestic cars).

Chris

[gmcbob]

Yeah, it's really amazing how many import cars vs. domestic cars I see here. It's almost as if the Big 3 don't even sell vehicles in the United States (outside of SUV's and trucks of course) when I drive around Houston - especially the real affluent neighborhoods. Granted, I do see a sprinkling of newer Big 3 cars, but compared to the Japanese, it's not even funny. I probably see 5 Avalons to every Lucerne, maybe 10. I see a Camry pretty much every time I take a breath. I see way more 3 Series and IS350's than I do CTS's. The one car I do see a lot of from GM though is the newer Impalas. I don't know why really. Perhaps because they're sold to so many different fleets? I don't know. I actually like the IMpala, and would personally choose it over a Camry because I think it's better looking.

I get it though - I really do. So many Joe Consumers who don't follow the auto industry just want (what they think or perceive or was told) is good reliable transportation. The Camry does deliver on that - and let's face reality people, Honda and Toyota do build pretty solid cars, it's hard to argue that. It's that (finally) GM does too (after many years of just focusing on trucks) and they have to figure out a way to get people's asses in those seats. Cars are expensive - and I think before someone takes out a huge loan on a Malibu, they need to know that thing is going to give them a smile every time they get behind the wheel. I think for Joe Consumer, the Accord and Camry do it, and they do it pretty well, so the next time they go to buy, all they remember or think about is "well, I like my Toyota, I remember my Dad bitching about his 94 Bonneville all the time, yeah, f@#k it, I'll get another Toyota". or something like that.

I will say that I'm seeing more and more new Ford products - like the Escape and the Fusion - which is actually kind of surprising. For some reason, I think Ford may have a better reputation than Chevy for their cars.

My friend from Seattle just bought a new Escape - love it - didn't think he would get another Ford, but he did. And this guy fits a demographic that would probably not consider a Big 3 product normally (IT manager). Well, actually, a lot of my IT friends drive American. Who knows?

I think we're all just freaking out right now because the economy is tanking. Let's see what happens later this year. All those Tahoe and Silverado drivers that are happy may just be convinced that a small GM car or SUV is the way to go the next time they buy (and gas is $4.50 a gallon).

Edited May 2, 2008 by gmcbob

[daves87rs]

It's a phenomenon that has been discussed many times over on this site (many times by me.) When looking at the fate of the domestic automakers, you really need to look FAR outside of the midwestern states to see the true trends that are defining this industry. The Big3 TRULY is operating within a clueless vacuum.

Southern California is probably the biggest example.....and the east coast cities rival that. But it's really the sweeping changes in consumer preference (towards imports) that is taking place in regions like Houston, Atlanta, Florida, Arizona, Colorado, ANY paciific northwest city.....I could go on-and-on.

Employees of the Big3 living in those midwestern states are strangely clueless to the automobile market revolution taking place around the country. It's scary....and mildy humorous at the same time. Oh they hear in the news about the sales numbers and the market share.....but they still really don't think anything's wrong. There's tons of GM cars in Detroit, Cleveland, and Indianapolis. How could things be bad? ALL those people buying imports are "sheeples." "California" isn't the "real" world, so why pay attention to the auto market there? <UGH>

I'm not saying "you" are a fool for being a "GM fan".....what I'm saying is.....is that the domestic automobile industry is fading into more-and-more irrelevance....and the Big3 are clueless as to how to stop the slide. NOW, it's not JUST product. It's perception, image, and appeal. You can have the best product in the world (CTS? G8? Corvette? GMT-900s? Lambda?)

.....but if you don't fix the perception, image, and appeal problems......you will fail miseably.

Detroit is already become quickly crushed by the imports....I see this more and more every day.

The three Toyota dealerships around me sell more cars more than half the GM dealerships in the Metro Detroit area....

My local Chevy dealerships sells maybe 10-20 cars a week....My local Toyota dealership can push almost 20 Corollas A DAY. Even after seeing the sales stats....I didn't really believe it until I saw the number of 09 Rolla's around here...I see as many of them as I do the Ford Focus...

I watch TV- the Honda and Toyota Dealerships have twice the number of ads the big 3 have...

They are undercutting (and maybe losing a few bucks) everyone here...199 a month for a Camry? 169 a month for a Corolla? And these are not huge downpayment deals either.....

It's happening-sooner than you think....

[daves87rs]

How did Ford make money & GM loose?

Ford is a lame duck!

Ford also remembers how to market a product.....

[daves87rs]

All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

Kinda true.

It's also about the money.....

[CARBIZ]

I had a chat with a broker yesterday when he dropped by. This gentleman moves about 35 vehicles a month. He figures about 75% of his sales are Honda and Toyota. His comments, however, were quite illuminating: "I don't make any money selling the imports." A direct quote. He could offer no explanation, other than to say he is 'forced' to move Toyotas (and Hondas in particular) for $400-$450 'gross.' He said he prefers selling GM because at least he can make some money.

I've heard these comments before. A 3 year salesguy at a dealer I used to work at went to sell Honda. He hated it. Firstly, he thought the product would sell itself, but he quickly found that the people drawn to those products quibbled over everything. Secondly, as a result, there were no 'grosses' in the product. Thirdly, the amount of bashing of the domestics at that dealer made him sick, so he quit and went back to another GM store.

So, Honda's sales are up 30% YTD over 2007 in Canada. It makes me wonder how they are acheiving those sales. The strike is certainly hurting us. There are no Silverados around, but more significantly, because there are no Silverados around, GM is not pushing them. Right now, a Ford or Dodge pickup is about $9k cheaper than a comparable Silverado. It is easy to say the Silverado is a better truck (which it is), but even as a die-hard GM guy, I am finding it hard to justify $9k. I am lamely quoting a customer today on a Silvy. I doubt I will get the deal. The customer has already declared Ford dropped $9k off the price without hesitation. I can't even come close.

The Cobalt/G5 are now outselling the Mazda 3 in Canada. Great. Too bad there aren't any around. I suspect this is more the dealers fault around here, but it is great to have a hotselling product (like the Cobalt and Malibu), but not so great if we can't get them.

The declining market share of trucks is going to hurt GM, to be sure. Ford, too. Personally, it won't affect the market I sell in. Trailblazers, Tahoes, Silverados don't sell in Toronto. It's the small cars. I am more excited about the revamped Aveo than I am by the Traverse.

[Guest aatbloke]

"I had a chat with a broker yesterday when he dropped by. This gentleman moves about 35 vehicles a month. He figures about 75% of his sales are Honda and Toyota. His comments, however, were quite illuminating: "I don't make any money selling the imports." A direct quote. He could offer no explanation, other than to say he is 'forced' to move Toyotas (and Hondas in particular) for $400-$450 'gross.' He said he prefers selling GM because at least he can make some money.

I've heard these comments before. A 3 year salesguy at a dealer I used to work at went to sell Honda. He hated it. Firstly, he thought the product would sell itself, but he quickly found that the people drawn to those products quibbled over everything. Secondly, as a result, there were no 'grosses' in the product. Thirdly, the amount of bashing of the domestics at that dealer made him sick, so he quit and went back to another GM store."

GM as a manufacturer still made an operating loss for the quarter, and it isn't the first either. If dealers are still making decent money selling their products, then either there are excessive subsidies to dealers to fund sales incentives which are causing the problem for the manufacturer, or the dealer itself is making an abnormally high overall mark-up on particular vehicles, or the salesman is simply pretty clever with his patter. The "offering no explanation" immediately draws me to suspect it's the latter.

Edited May 2, 2008 by aatbloke

[enzl]

Here's an explanation for low grosses at toyota or honda stores...

The buyers are simply more informed (and smarter and richer, if you believe the marketing research), they've researched the snot out of the product they are buying and simply cannot be bamboozled 'in the box.'

I'm certainly not saying all Det3 buyers are dolts, just as an overall group some imports have a better informed clientele.

And 'Biz...your credibility is weakened by your Aveo comments--well screwed together? Absolutely. As good as it's competition? No way. It's not efficient & not fun--so it is trumped by an equally mediocre Yaris and the Fit runs circles around it. I'd sooner buy used.

[Guest aatbloke]

While in the States I bought an Aveo for my daily commute into Cleveland, the idea being it would keep daily wear and tear resulting from appalling Ohio roads off the other cars. It's basically a Daewoo Kalos but with a 1.6 litre engine. It was cheap to buy, reasonably well-built, and very reliable, but the technology was very 1980's and 1990's - not surprising since the platform was derived from the Lanos, which itself used many underpinnings from the 1984 Astra/Kadett. For example, fuel economy was average for a small car in the mid 90's, but behind modern superminis. The build quality and chassis dynamics were definitely of budget supermini status, and not in the same league as say a Fiesta, Corsa, Polo, Yaris, Jazz or 207. Its worst aspect was the handling, which was pretty vague. However, like I said it was exceptional value, very nippy around town and handled motorways with ease thanks to its 1.6. After I'd ripped out the standard stereo and replaced it with a nice Alpine unit coupled with Sirius S50 satellite radio, it provided me with a very enjoyable and thrifty commute to the office.

The revised Aveo is a big step forward, the biggest improvement being a range of up-to-date engines. However, the chassis dynamics are still behind the times.

Edited May 2, 2008 by aatbloke

[IfICouldWouldYou?]

Here's an explanation for low grosses at toyota or honda stores...

The buyers are simply more informed (and smarter and richer, if you believe the marketing research), they've researched the snot out of the product they are buying and simply cannot be bamboozled 'in the box.'

I'm certainly not saying all Det3 buyers are dolts, just as an overall group some imports have a better informed clientele.

And 'Biz...your credibility is weakened by your Aveo comments--well screwed together? Absolutely. As good as it's competition? No way. It's not efficient & not fun--so it is trumped by an equally mediocre Yaris and the Fit runs circles around it. I'd sooner buy used.

Or could this be simply a matter of customers trying to beat down the price of the import to match the domestics? If I am convinced the Civic or Corolla are better drives but I really can only afford a Cobalt, perhaps I can just beat the dealer into giving me a price I can afford? Could that be the perception out there?

[Guest aatbloke]

When I lived in Ohio I recall driving one of the first batch of latest-generation Civics to make it onto dealer forecourts. I was very impressed with the car despite its overly space-age dashboard. Without doubt it had the most precise manual gearbox of any C-segment car I've ever driven. A terrific car.

[Drew Dowdell]

All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

Malibu

Acadia

Vue

CTS

G8

Enclave

Traverse(soon)

What would really help GM right now would be a new Colorado/Canyon with a bunch of the fuel saving measures that the Cobalt and Malibu got.

[IfICouldWouldYou?]

No, instead GM is giving us a V8 in the Colorado/Canyon because that is what the 'enthusiasts' have been pining for. Not very good timing, IMO.

[CARBIZ]

Here's an explanation for low grosses at toyota or honda stores...

The buyers are simply more informed (and smarter and richer, if you believe the marketing research), they've researched the snot out of the product they are buying and simply cannot be bamboozled 'in the box.'

I'm certainly not saying all Det3 buyers are dolts, just as an overall group some imports have a better informed clientele.

And 'Biz...your credibility is weakened by your Aveo comments--well screwed together? Absolutely. As good as it's competition? No way. It's not efficient & not fun--so it is trumped by an equally mediocre Yaris and the Fit runs circles around it. I'd sooner buy used.

Of course it is as 'good' as the competition. Is it class leading (whatever that means!)? No it is not. However, considering the Yaris, Fit and Versa all came out AFTER the Aveo, then I should hope those vehicles were at least as good as the Aveo, if not superior. The '09 changes should help to address my pet peeve about the Aveo, and that is the disappointing fuel mileage. I wouldn't expect the Aveo to live up to your expectations, Enzl - that's the trouble. Car critics get out of their BMW and drive an Aveo for a day, then think they are experts. The last 3 months I was at my old job, I had a lot of fun driving all the vehicles they were dumping on us, from Minis to Lexus, and I have to say that my impressions of the imports neither got better or worse. I wouldn't drive an Aveo or a Fit, but they are both pretty decent for what they are. I do know, however, that if I had to drive one of them, I would rather drive the Aveo because it is 'cheaper.' If I wanted to throw money away, it would be on something nicer than either of them.

As we know, the goalposts keep moving. GM is fighting for market share on 80 different fronts, which is another issue to be sure. I give credit to Wagoner & Co. for investing in Daewoo and at least getting their feet wet in this small car market. With some of the shake up in the GM over in Asia, I would expect big things for the replacement small cars, but then I would expect Honda and Toyota to come out with something even better after that. How could we expect otherwise?

Not sure whether to agree or disagree with the idea of customer's being 'bamboozled.' Very few people 'lay down' any more. Almost all of them are a challenge to be separated from their wallets. As I said earlier, I know salespeople who have gone over to the imports, thinking it will be the Promised Land and road to riches, only to discover that in many ways those customers are even more demanding.

[enzl]

Or could this be simply a matter of customers trying to beat down the price of the import to match the domestics? If I am convinced the Civic or Corolla are better drives but I really can only afford a Cobalt, perhaps I can just beat the dealer into giving me a price I can afford? Could that be the perception out there?

Without revealing to much, the statistics support my POV, but your explanation has some merit. If you check the Avg. Transaction price/unit, you'll see that consumers are (gladly) forking over $1250-3000 more for B & C segment cars that are popular--but that's simple Adam Smith economics at play. Honda & Toyota both squeeze franchises tighly on margins, spiffs and stair-step stuff--adding in educated consumers and that most good import stores must do volume to survive & you've got a full picture.

The harsh truth is that in the switch to cars, GM simply has few default choices. The 'Bu, Aura & Astra are the only GM car products (other than CTS/G8--which is a different category) that I could wholeheartedly recommend--and how many happy Toyota, Nissan or Honda buyers are their to tell Sam & Suzie SUV how great their cars are, regardless? It's an uphill climb for the Det3.

Edited May 2, 2008 by enzl

[Robert Hall]

All sadly true.

April's sales figures lead me to the conclusion that they're losing the battle in Indy, Detroit and Cleveland too.

There's simply no GM car product that is a default choice for those abandoning Trucks.

Well, I could see them moving down to GM's crossovers and midsize sedans. Obviously, people that need full size trucks and SUVs (the 5% that are commercial users or have boats, trailers, etc) will keep driving them, but over time that vast majority that don't need those bloat beasts can trade down to something more rational...too bad GM is getting out of the minivan market, though...a lot of family types would probably be better off with a minivan than a Tahoe, for example.

[Guest aatbloke]

Of course it is as 'good' as the competition. Is it class leading (whatever that means!)? No it is not. However, considering the Yaris, Fit and Versa all came out AFTER the Aveo, then I should hope those vehicles were at least as good as the Aveo, if not superior.

Incorrect.

Of this bunch, Honda's Jazz/Fit is the oldest design and product, having been around since the spring of 2001. The Daewoo Kalos (Chevrolet Aveo) debuted at the beginning of 2002. Both were sold internationally long before they were introduced to North America.

However, in terms of engineering the Kalos/Aveo is the oldest, with some of its underpinnings harking back to the 1984 Opel Kadett/Vauxhall Astra.

Nissan's Tiida/Versa was introduced towards the end of 2004, followed shortly afterwards by Toyota's current, second-generation Yaris.

Technically the Aveo doesn't really compete well with modern superminis, as it was designed originally to be a budget alternative to the mainstreams in most markets. To keep development costs down it was developed from a revised version of the former Daewoo Lanos' floorpan. GM's up-to-date B-segment machine (with which it competes against the likes of the Jazz/Fit and Yaris) is the Corsa. Dynamically, the Aveo falls a good way short of the likes of the Corsa, Fiesta, 207, Jazz/Fit, Polo, Punto and Yaris.

Edited May 3, 2008 by aatbloke

[CARBIZ]

Since we are talking about the North American market, I will stand by my remarks. By the time GM invested in Daewoo, the current version of the Aveo was already well under way. GM had some influence, but not an awful lot. For example, OnStar wasn't able to be retrofited, although I am told the software and hardware are ready to go for '09. Honda, Toyota and the others had more lead time to decide what to do with the North American market. For whatever reasons, the Echo was not well-received, although I don't see how the Yaris is all that much better. It strikes me as odd that Toyota would abandon a name - that isn't like them to do so, unlike GM and Ford who like to throw names around like confetti.

Toyota and Honda have more experience with the small cars, so I would have been stunned if the Fit and Yaris weren't formidable when they entered this market. It is to GM's detriment that they have taken so long to engage their world-wide experience. I think Detroit is finally getting it that the North American market need not be so far removed from the Rest of the World.

Unlike a lot of people, I am not in panic mode over GM's loss of market share here. I view it as inevitable. It is quite remarkable that Ford and GM enjoyed the 40 year reign that they did. As I have said before, there is no shame in a 20% share of the world's largest market. In fact, if NAFTA continues to bind us together, the North American market will continue to be the largest for quite some time. Detroit just has to learn to capitalize on the expertise they already have, and not think so much that it is the center of the universe.

But that doesn't negate the fact that 2008 is going to be ugly, or even exclude the possibility that one or more of the Big 2.5 will eventually implode. As they say, we are living in interesting times. Suddenly, it is 1954 all over again.

[enzl]

Of course it is as 'good' as the competition. Is it class leading (whatever that means!)? No it is not. However, considering the Yaris, Fit and Versa all came out AFTER the Aveo, then I should hope those vehicles were at least as good as the Aveo, if not superior. The '09 changes should help to address my pet peeve about the Aveo, and that is the disappointing fuel mileage. I wouldn't expect the Aveo to live up to your expectations, Enzl - that's the trouble. Car critics get out of their BMW and drive an Aveo for a day, then think they are experts. The last 3 months I was at my old job, I had a lot of fun driving all the vehicles they were dumping on us, from Minis to Lexus, and I have to say that my impressions of the imports neither got better or worse. I wouldn't drive an Aveo or a Fit, but they are both pretty decent for what they are. I do know, however, that if I had to drive one of them, I would rather drive the Aveo because it is 'cheaper.' If I wanted to throw money away, it would be on something nicer than either of them.

As we know, the goalposts keep moving. GM is fighting for market share on 80 different fronts, which is another issue to be sure. I give credit to Wagoner & Co. for investing in Daewoo and at least getting their feet wet in this small car market. With some of the shake up in the GM over in Asia, I would expect big things for the replacement small cars, but then I would expect Honda and Toyota to come out with something even better after that. How could we expect otherwise?

Not sure whether to agree or disagree with the idea of customer's being 'bamboozled.' Very few people 'lay down' any more. Almost all of them are a challenge to be separated from their wallets. As I said earlier, I know salespeople who have gone over to the imports, thinking it will be the Promised Land and road to riches, only to discover that in many ways those customers are even more demanding.

The Aveo is on par with the Kia/Hyundai entries--maybe. Is that what billions invested in Daewoo gets?

I'm in a Corolla right now---supplied & paid for by my workplace--and as with the dozens of vehicles I drive each year, I could care less what car I'm seen in, as it's not mine. Period. I do, however, know a good car/truck when I see it. The Aveo ain't close--not even arguable, I'm afraid.

The Fit is so far ahead in fuel economy, residual value, quality, design & utility that it's not even a debate. A Fit will be worth something in 3 years---the Aveo will be lucky to be worth 40%--so any initial savings are completely wiped away.

I give RW NO credit for anything--GM's near fatal case of ADD can be found in many of their foreign entanglements, most of which have faired poorly. For each Daewoo, there's a Fiat, Subaru, or Saab travesty to remind me that RW got lucky--period. Until Daewoo produces something competitive of merit in any category, they're just a dime-store Kia imitation---and leaning on them for any small vehicle when the Corsa has been competitive for years in Europe is the height of needless duplication.

GM is capable of leapfrogging Toyota or Honda or anyone else in ANY category--their problem is that things are SO dysfunctional at the Tubes, they're unable to do so. That's what needs to change, ASAP.

[Guest aatbloke]

Since we are talking about the North American market, I will stand by my remarks. By the time GM invested in Daewoo, the current version of the Aveo was already well under way.

Stand by them all you like! They're incorrect. Both the Kalos/Aveo and Jazz/Fit took a long time to reach the North American market, as have many other cars - the LR Freelander, Lotus Elise, and and original Volvo S40 are three that immediately spring to mind. Your rationale that the Jazz/Fit should be better than the Aveo because it debuted later in the US market is flawed, since the car was brought to market internationally before the Kalos. Neither car received any kind of substantial re-engineering for the North American market.

The Kalos/Aveo forms part of what we here in Europe refer to as the budget B-segment, and these are primarily Korean and Malaysian in origin. The Hyundai Getz and Proton Savvy are of similar ilk; they look the part, they're well-built, but they've been produced on a budget, and there are usually dynamics deficiences with these cars compared to the western European (207, Polo, Fiesta, C2, Corsa, Punto) and Japanese (Mazda 2, Swift, Yaris, Micra, Jazz/Fit) mainstream B-segment superminis. GM's mainstream state-of-the-art B-segment car is the Corsa, not the Kalos/Aveo.

Work on the T200 (Kalos) project indeed began before Daewoo's demise, and was completed by GM-DAT. However, the platform was merely a development of the T100 used in the Lanos as I said earlier, and underpinnings from that were derived from the Vauxhall Astra B of 1984. Its elderly mechanicals and architecture make the Kalos/Aveo less dynamically competent than its segment rivals.

Edited May 3, 2008 by aatbloke

[Guest aatbloke]

For whatever reasons, the Echo was not well-received, although I don't see how the Yaris is all that much better. It strikes me as odd that Toyota would abandon a name - that isn't like them to do so, unlike GM and Ford who like to throw names around like confetti.

The Echo name was dumped in North America and in Australasia.

The 1999 Vitz hatchback was called Vitz in Japan, Echo in Australasia and North America, and Yaris everywhere else. The 2005 model was badged Yaris globally with the exception of Japan which retained the Vitz name.

The 1999 Platz sedan, based on the Vitz, was called Platz in Japan, Echo in Australasia and North America, and Yaris everywhere else apart from some regional Asian variations. The 2005 sedan was renamed Belta for its home market, and Yaris in most other markets.

Both generation Yaris models have been a big success in Europe, and indeed Toyota from the very start made a huge deal about the car being designed in Europe and being French-built. It's always been a strong seller in the UK.

You shouldn't read too much into abandoning a nameplate - Toyota dropped the Corolla name in Europe in favour of Auris for its hatchback version, and Corolla is one of the most successful nameplates of all time.

[Guest aatbloke]

Toyota and Honda have more experience with the small cars, so I would have been stunned if the Fit and Yaris weren't formidable when they entered this market.

You're clutching at straws. GM have been selling small cars in many worldwide markets for as long as Honda and Toyota.

[The O.C.]

You're clutching at straws. GM have been selling small cars in many worldwide markets for as long as Honda and Toyota.

I'll echo (no Toyota pun intended) 'bloke's and Enzl's comments on here.

To me, the Aveo seems like a couple generations' removed from a Fit, Yaris, or I'll go one step further, maybe a single generation behind even a new Rio/Accent. The exterior styling on the sedan is attractive, but the small wheels/tires and the narrow track add a lend of "economy car" cheapness to what is really a rather attractive four-door sedan.

The interior, while improved over the original Aveo, also seems styled to fit the economy-car mold with hints of cheapness about it that don't seem to be present in the competition.

Here's the crux of my point.

GM has an EXCELLENT mini over in Europe in the Corsa. Almost every review I read from the British mags is favorable (many of them very much so) and the British have never been known to be "easy" on a GM product in their reviews.

GM should have had the foresight many, many years ago (edit: this is one of their main problems, isn't it?) to realize the huge benefit of offering the Corsa over here (in place of the cheap-feeling Aveo) and should have engineered the current version to meet U.S. standards so that Chevy stores would have been selling much-higher-quality Corsas over here the last few years instead of the bargain-basement Aveo. Done properly ahead of time, it could even have been competitively-priced. AND IT WOULD HAVE BEATEN FORD AND CHRYSLER TO THE PUNCH...!

(Astra also took WAY too long to get over here....They should have figured out LONG ago how to build Corsas and Astras over here.)

Edited May 3, 2008 by The O.C.

[FUTURE_OF_GM]

Consumer taste changed.

The media saw their opportunity and launched a war to "pile on"

And now CAFE is the political silver bullet (definitely planned) to keep the automakers from getting up off of the mat.

Ford will kill Mercury and fade into irrelevance, Chrysler will be whored out to the Chinese and GM will continue to build cars no one wants (with the help of GME) until they are kicked to death by consumers and the media.

[Guest aatbloke]

GM has an EXCELLENT mini over in Europe in the Corsa. Almost every review I read from the British mags is favorable (many of them very much so) and the British have never been known to be "easy" on a GM product in their reviews.

I've always been a huge fan of the Corsa. Aside from the boxy first-gen Corsa/Nova, all three subsequent generations have been terrific lookers. I had a 1993 second-gen Corsa many years ago and while its ride was excellent for a car in its class back then, the handling was dull (despite a Lotus-developed suspension) and the driving position designed for people far shorter than 5 feet 11. But those problems were soon addressed and the current model outclasses even the Peugeot 207 in my opinion, which is still one of the segment's best but has become heavier and with no more power than the 206.

Apparently the next, fifth-generation Corsa due in 2011 will make it to the States as a Saturn. I agree, GM shouldn't delay as they did with the current Astra.

[The O.C.]

Consumer taste changed.

The media saw their opportunity and launched a war to "pile on"

Bull crap FOG.....

Consumer tastes migrated towards more european and japanese design and engineering (in smaller cars) a LONG time ago.....GM refused to see it and is only NOW reacting....I've been saying for the last 10 years OR MORE that GM should bring over/build here cars like the Corsa and Astra.....and we only now get the Astra.....and instead of the sharp little Corsa, we have the Aveo....??

Ford perhaps saw it best when they sold the original Focus over here....and it was a big success. (Why they didn't follow that up with the next gen Focus' is a whole 'nuther issue....) Ford is bringing over the Fiesta....and even that took way too long to bring to fruition.

If the Hondas and Toyotas of the world could foresee the increasing popularity of B-segment cars, why couldn't our own GM?

Edited May 4, 2008 by The O.C.

[CARBIZ]

I'll echo (no Toyota pun intended) 'bloke's and Enzl's comments on here.

To me, the Aveo seems like a couple generations' removed from a Fit, Yaris, or I'll go one step further, maybe a single generation behind even a new Rio/Accent. The exterior styling on the sedan is attractive, but the small wheels/tires and the narrow track add a lend of "economy car" cheapness to what is really a rather attractive four-door sedan.

The interior, while improved over the original Aveo, also seems styled to fit the economy-car mold with hints of cheapness about it that don't seem to be present in the competition.

Here's the crux of my point.

GM has an EXCELLENT mini over in Europe in the Corsa. Almost every review I read from the British mags is favorable (many of them very much so) and the British have never been known to be "easy" on a GM product in their reviews.

GM should have had the foresight many, many years ago (edit: this is one of their main problems, isn't it?) to realize the huge benefit of offering the Corsa over here (in place of the cheap-feeling Aveo) and should have engineered the current version to meet U.S. standards so that Chevy stores would have been selling much-higher-quality Corsas over here the last few years instead of the bargain-basement Aveo. Done properly ahead of time, it could even have been competitively-priced. AND IT WOULD HAVE BEATEN FORD AND CHRYSLER TO THE PUNCH...!

(Astra also took WAY too long to get over here....They should have figured out LONG ago how to build Corsas and Astras over here.)

One word: cost. Now that the U.S. dollar is in free-fall, the economics have changed, but I doubt the Corsa could have been sold here as a $10k entry level vehicle. Bringing the Corsa over as a 'premium' compact is a clever idea whose time has come. Five or six years ago (when GM-DAT came into being), all that was being thought of was future cheap.

I've driven the Corsa in Brazil, and unless the European version is tons better, it is no better than the Aveo. As I have said all along, the weakest point of the Aveo is the crappy (non GM) transmission. I've driven many Aveos over the past few years. The crash ratings and dynamics of the vehicle are fine. Is it a Mini? No, but then it is less than half the price of a Mini. I can't wait to try the upgraded 1.6 that we should be getting in a couple months - that will help to address the other weakness: lackluster fuel mileage.

Let's see what GM does with the next round of Aveos. Now that you guys are paying $4 a gallon, everyone is taking this market more seriously. Five years ago, that was not the case. By moving truck production to Brazil and capitalizing on Korean, GM is going to be in a good position once gas hits $5 and $6 here.

[The O.C.]

One word: cost. Now that the U.S. dollar is in free-fall, the economics have changed, but I doubt the Corsa could have been sold here as a $10k entry level vehicle. Bringing the Corsa over as a 'premium' compact is a clever idea whose time has come. Five or six years ago (when GM-DAT came into being), all that was being thought of was future cheap.

I've driven the Corsa in Brazil, and unless the European version is tons better, it is no better than the Aveo. As I have said all along, the weakest point of the Aveo is the crappy (non GM) transmission. I've driven many Aveos over the past few years. The crash ratings and dynamics of the vehicle are fine. Is it a Mini? No, but then it is less than half the price of a Mini. I can't wait to try the upgraded 1.6 that we should be getting in a couple months - that will help to address the other weakness: lackluster fuel mileage.

Let's see what GM does with the next round of Aveos. Now that you guys are paying $4 a gallon, everyone is taking this market more seriously. Five years ago, that was not the case. By moving truck production to Brazil and capitalizing on Korean, GM is going to be in a good position once gas hits $5 and $6 here.

With enough advance planning (and foresight) GM could have brought the Corsa over here (or better, built it somewhere here) and for a competitive price.

They are just now importing the Astra, and even though they don't build it here, it is priced pretty reasonably for it's segment......there's no reason the same couldn't have happened with the Corsa. Nothing's saying it would have to be a "premium" subcompact.....

[CARBIZ]

But where was the Euro 5 years ago? The Astra is only looking attractive now because of the recent decline in the $US. I doubt Wallstreet forsaw the rapid depreciation of the dollar, although they should have, so one cannot blame Detroit for not being ready for it. GM-DAT was an example of an opportunity that GM saw and pounced on.

The Aveo is not 'class leading,' but neither is it embarassing (unlike the Uplander). Considering what the Metro was and considering how little respect small cars got 5 years ago (Cavalier, anyone?), the Aveo is a marvel. Is it enough? No. But I am happy to have it and we can't keep them in stock, BTW.

I'll tell you what: (Enzl, are you listening?) if the Aveo replacement (which we are hearing is in the works for '10) is not 'class leading,' then you will have been proven right. In the meantime, since we all know where the market was 5 years ago (Tahoe, Trailblazer), I am prepared to give Lutz & Co. the next generation to cover the lost ground. If they do what they did to the Tracker, which was class leading in '99 but was allowed to rot on the vine, then I may have to put my purse down and get ugly.

I will be man enough to admit I am wrong but woman enough to argue about it.

[Guest aatbloke]

"I've driven the Corsa in Brazil, and unless the European version is tons better, it is no better than the Aveo."

The Aveo - in terms of driving dynamics - is akin to the 1993-2001 Corsa B, although the Aveo's handling is more vague than the Corsa B. The Aveo's driving position is better though. Brazil still gets Corsa-based models from the Corsa B (1993-2001) and Corsa C (2001-2007) but it doesn't get the latest model.

The Aveo is far from a bad car, but it's no match for a modern supermini, such as the Corsa, Clio, 207, Polo, Punto, Yaris, Jazz or Fiesta on virtually any level, from chassis dynamics to safety.

[ZL-1]

The Aveo is far from a bad car, but it's no match for a modern supermini, such as the Corsa, Clio, 207, Polo, Punto, Yaris, Jazz or Fiesta on virtually any level, from chassis dynamics to safety.

Was it ever retested after this EuroNCAP result? I can't seem to find anything else at the EuroNCAP website other than those 2006 Aveo results...

[avro206]

Frustrates me GM continues to bleed.

Its products are the best they have ever been! And among domestics--their product line up is so far ahead of Ford and Chrysler.

Who buys a Taurus or Sebring? YUCK

I just don't get it

Edited May 5, 2008 by avro206