Big problem at GM: Too little bang from too many cars

[Oracle of Delphi]

By SHARON TERLEP and NEAL E. BOUDETTE

The Wall Street Journal

A few months ago, General Motors flooded the prime-time airwaves with commercials introducing the G8, a big, powerful sedan that is supposed to re-energize GM’s Pontiac brand.

But the ad blitz hasn’t had much effect. In August, GM’s 2,712 U.S. Pontiac dealers sold only 1,915 G8s — not even one per dealer.

GM has problems on many fronts, including high gasoline prices, falling truck sales and billions in losses. The G8 illustrates one problem that’s often overlooked: The automaker’s lineup contains many vehicles that deliver barely any bang for the buck.

Consider the Saab 9-5 sedan. GM promotes its Swedish brand’s smaller 9-3 sedan, but the midsize 9-5 gets little exposure and as a result draws little interest from shoppers — or even dealers.

Mark LaNeve, GM’s top marketing executive in North America, said the additional costs of offering slower-selling models are "really very incremental" because most share parts with higher-volume models.

The G8, for instance, is a version of a car that has been a strong seller for GM’s arm in Australia. Yet auto analysts say slow sellers are a bigger drag on profit than GM acknowledges.

Ron Harbour, a partner at the automotive consulting firm Oliver Wyman, said each model, even if only a variation of another vehicle, requires some engineering effort.

Producing models in small numbers lowers manufacturing efficiency. Every vehicle needs its own documentation, manuals and brochures. Dealers have to be trained to service each model and have to spend money to keep them in stock. And each vehicle needs a certain amount of advertising and promotion. "For every model, you’ve got some investment costs, and if you don’t sell enough of them, you might not be able to cover the capital costs," Harbour said.

GM recently said it hopes to cut $10 billion in costs over the next 18 months. Frederick "Fritz" Henderson, GM’s president and chief operating officer, has ruled out closing or selling any of GM’s eight brands besides Hummer, which GM has put up for sale. But he hasn’t ruled out getting rid of some of its slow-selling models.

Ford Motor Co. and Chrysler have made simplifying their model lineups a central part of their turnaround plans.

Ford has sold its Jaguar, Land Rover and Aston Martin lines. People familiar with the matter have said Ford also intends to sell its Volvo division, although the company denies that Volvo is for sale. Volvo offers eight models, all slow sellers. Chrysler dropped four slow sellers last year and has said it plans to eliminate a third or more of its remaining models.

Link: http://www.star-telegram.com/business/story/905984.html

[SAmadei]

By SHARON TERLEP and NEAL E. BOUDETTE

The Wall Street Journal

A few months ago, General Motors flooded the prime-time airwaves with commercials introducing the G8, a big, powerful sedan that is supposed to re-energize GM’s Pontiac brand.

But the ad blitz hasn’t had much effect. In August, GM’s 2,712 U.S. Pontiac dealers sold only 1,915 G8s — not even one per dealer.

WTH? It wasn't but a few months ago, the G8 was the second fastest car off the lot, just behind the Prius. Are they stagnating on the lot or is GM failing to import enough of them? When will they start making them in NA?

Stephen

[endeavorc]

Or could it be that GM will not build vehicles that people want. Been there, done that, with the whole truck/SUV thing, I much prefer a nice sporty wagon for my needs. I would go out right now and buy a G8 if it came in a WAGON version. Name one sport wagon that GM makes not including the 9-3 or 9-5.

[Robert Hall]

WTH? It wasn't but a few months ago, the G8 was the second fastest car off the lot, just behind the Prius. Are they stagnating on the lot or is GM failing to import enough of them?

Stephen

Well, gas prices and recession happened.

When will they start making them in NA?

Never? I suspect Pontiac will re-focus and concentrate on FWD rental cars, which has been their niche in recent years.

[FUTURE_OF_GM]

Isn't this a re-post from the GM August sales thread?

HERE: http://www.cheersandgears.com/forums/index...25386&st=20

I guess this is the new propaganda mantra that's being passed around to try and get GM to kill itself a little more? Or maybe the authors just felt like kicking sand on the centennial of the company (tomorrow)

Edited September 15, 2008 by FUTURE_OF_GM

[gm4life]

I thought 2K sales a month is pretty good. That is 25,000 cars a year. Just wait for the economy to get better I think it will sell a little better. But I have been pretty happy with sales of the G8. Sounds like Pontiac is going away after-all...

[Camino LS6]

Actually, not all that many have even gotten here yet. About 10k have been sold and only about 12K have been imported to the US. That includes both the 2008 and the 2009. Some dealers are just now getting their first G8.

Not bad for a nearly unadvertised new model introduced into the toughest market in years.

To base any assessment of Pontiac (or GM for that matter) on G8 sales to date is just foolish.

[FUTURE_OF_GM]

Actually, not all that many have even gotten here yet. About 10k have been sold and only about 12K have been imported to the US. That includes both the 2008 and the 2009. Some dealers are just now getting their first G8.

Not bad for a nearly unadvertised new model introduced into the toughest market in years.

To base any assessment of Pontiac (or GM for that matter) on G8 sales to date is just foolish.

See, the problem with the media (hopefully not the execs at GM) is that they're too ignorant to be up-to-date with the times.

Just as they still don't believe that Detroit makes reliable cars, the seem to still WANT to think that every GM division is chasing 'Chevrolet-style' volume.

Last I heard, Pontiac is no longer a volume division and neither is Buick for that matter. Hell, Saab and Hummer were NEVER supposed to be. Yet we read this constant rhetoric based on assumptions.

Edited September 15, 2008 by FUTURE_OF_GM

[siegen]

Not bad for a nearly unadvertised new model introduced into the toughest market in years.

The G8 seemed to be advertised quite a bit. I saw plenty of those 5-series comparison ads, for example.

Last I heard, Pontiac is no longer a volume division and neither is Buick for that matter. Hell, Saab and Hummer were NEVER supposed to be. Yet we read this constant rhetoric based on assumptions.

There's a difference between a volume model and selling enough to pay for the costs. 2000/month of a rebadge should be fine, I think, to pay for all the costs of that vehicle. I don't think the G8 has any problems in terms of demand, just supply. Not sure why the article is picking on the G8. There has only been one or two, consistently, at a local buick-pontiac-gmc dealer. Reminds me of the Fit supply.

[Paolino]

Unfortunately, I still have yet to see a G8.

[A Horse With No Name]

Ohmygosh...I am not a fan of bigger cars but this thing is really cool.

It has a lot of syle and presence. If GM can make money selling 25,000-50,000 a year and keep it here, more power to them.

IMHO this is the kind of car GM needs to be building.

Chris

[Paolino]

Ohmygosh...I am not a fan of bigger cars but this thing is really cool.

It has a lot of syle and presence. If GM can make money selling 25,000-50,000 a year and keep it here, more power to them.

IMHO this is the kind of car GM needs to be building.

Chris

It looks nice in pictures. Actually, I haven't seen a lot of new Pontiacs... never seen a G8, never seen a G5, and I've only seen 1 Torrent.

[siegen]

It looks nice in pictures. Actually, I haven't seen a lot of new Pontiacs... never seen a G8, never seen a G5, and I've only seen 1 Torrent.

I wouldn't see them unless I drive by the BPG dealer so often. I have maybe seen one G8 outside of the dealer so far, and just a few G5's.

[A Horse With No Name]

It looks nice in pictures. Actually, I haven't seen a lot of new Pontiacs... never seen a G8, never seen a G5, and I've only seen 1 Torrent.

G8 slightly used ought to be about 22-25k in a year or two, about $425-445 per mo if you finance it, Pauli. Probably a bit more than you want to spend, but it would make a very nice car for you.

Although there is a little of Sixty-Eight in me and somehow I always picture you driving an Italian Car, like an Alfa Milano or an old GTV.

Chris

[Paolino]

G8 slightly used ought to be about 22-25k in a year or two, about $425-445 per mo if you finance it, Pauli. Probably a bit more than you want to spend, but it would make a very nice car for you.

Although there is a little of Sixty-Eight in me and somehow I always picture you driving an Italian Car, like an Alfa Milano or an old GTV.

Chris

Uffa... I would love to have an Alfa! The kids have no idea what it is... would love to take them outside and show them a beautiful, new red Alfa--it'd be considered a "cultural" experience :AH-HA_wink:

Of course it'd have to be a manual, black leather. I'd just have to figure out which model I want.

Don't get me started on how much I'd love to take them outside and show them my new Quattroporte!

[The O.C.]

The G8 seemed to be advertised quite a bit. I saw plenty of those 5-series comparison ads, for example.

There's a difference between a volume model and selling enough to pay for the costs. 2000/month of a rebadge should be fine, I think, to pay for all the costs of that vehicle. I don't think the G8 has any problems in terms of demand, just supply. Not sure why the article is picking on the G8. There has only been one or two, consistently, at a local buick-pontiac-gmc dealer. Reminds me of the Fit supply.

There are what appears to be a whole crap-load of G8s at the local Pontiac store just right up the street from me here in Vegas.....but I have seen exactly one (1) G8 on the road.....

It doesn't appear to be selling......

I don't know why......seems to be a competitively-priced car that's been designed quite nicely.....no real known flaws to pick on......hmmmm.....

[Oracle of Delphi]

Although there is a little of Sixty-Eight in me

Kill it before it grows!

[Robert Hall]

There are what appears to be a whole crap-load of G8s at the local Pontiac store just right up the street from me here in Vegas.....but I have seen exactly one (1) G8 on the road.....

It doesn't appear to be selling......

I don't know why......seems to be a competitively-priced car that's been designed quite nicely.....no real known flaws to pick on......hmmmm.....

Perhaps it's the brand that is hurting it? The target consumers aren't considering a Pontiac? Pontiac isn't exactly known for modern RWD, V8 sports sedans...

Edited September 16, 2008 by moltar

[z28luvr01]

Unfortunately, I still have yet to see a G8.

Drive out east a bit. I see a couple of G8s regularly when I drive/ride. Interestingly, despite the gas price situation not one of them is a V6.

What I don't see are GM ads that advertise the car and not the deal of the minute.

[Chazman]

Chicago must love G8's. I see at least one or two every day.

[Paolino]

Drive out east a bit. I see a couple of G8s regularly when I drive/ride. Interestingly, despite the gas price situation not one of them is a V6.

What I don't see are GM ads that advertise the car and not the deal of the minute.

How much further east are you talking about? I'm already about 20 minutes from the end of the LIE :AH-HA_wink:

[smk4565]

I knew in January the G8 wouldn't sell. The interior is too cheap for the price range, the car is too large to be a performance car, and they didn't change anything from the Australian version to tailor it to the American market. The repeated every mistake of the GTO, but in a 4-door sedan this time.

It isn't gas prices or economy either, because BMW sold 5,000 5-series in August. Maybe the G8 isn't 5-series performance at half the price after all.

[Oracle of Delphi]

How much further east are you talking about? I'm already about 20 minutes from the end of the LIE :AH-HA_wink:

Mid-East perhaps, they love them (AKA: Chevy) there. But gasoline is cheap there.

[z28luvr01]

How much further east are you talking about? I'm already about 20 minutes from the end of the LIE :AH-HA_wink:

OK then go west, like to exit 64-ish. While on my bike once I gawked at one parked in a driveway in Ridge. Good thing noone was home

[Camino LS6]

I knew in January the G8 wouldn't sell. The interior is too cheap for the price range, the car is too large to be a performance car, and they didn't change anything from the Australian version to tailor it to the American market. The repeated every mistake of the GTO, but in a 4-door sedan this time.

It isn't gas prices or economy either, because BMW sold 5,000 5-series in August. Maybe the G8 isn't 5-series performance at half the price after all.

Not selling?

Can't you read?

When 10 out of twelve thousand have sold, your statement really makes you look like a fool.

Anyway, no ads around here but plenty on the road. The BPG dealer had a whole line of G8s about a month ago and when I went by a day or so ago there was only one on the lot.

Interestingly, there were two used GTOs out front that weren't there before.

[smk4565]

I can read fine...

"But the ad blitz hasn’t had much effect. In August, GM’s 2,712 U.S. Pontiac dealers sold only 1,915 G8s — not even one per dealer.

GM has problems on many fronts, including high gasoline prices, falling truck sales and billions in losses. The G8 illustrates one problem that’s often overlooked: The automaker’s lineup contains many vehicles that deliver barely any bang for the buck."

Selling .7 cars per dealer is not a success. The G8 interior isn't good enough, the Hyundia Genesis has a better one and a more powerful V6 and a more powerful V8 (and more fuel efficient). But I think the main problem is the Pontiac brand is too damaged and people are just not likely to spend $30k or more on anything with a Pontaic badge on it.

[SAmadei]

Well, gas prices and recession happened.

We've had high gas prices for over two years! And only a blind fool would have not seen the housing bubble popping and the resultant recession.

The G8 V8 is not so bad in the MPG range. 24mpg versus the 28mpg Camry? For 362 hp! I'll that the 4mpg hit any day. I'm putting up with 19mpg to enjoy the relatively fast 260hp and full-size comfort of my Caprice wagon.

As far as price goes, _every_ decent car is over 28K now. With the recession and inflation, the Yaris is going to cost 30K soon...

Someone else in the thread noted that the G8 is too large to be a sports car. I disagree. I feel the Aussie ideal of short, wide cars does not necessarily translate to the US market... I feel the G8 needs an additional foot of length.

[thegriffon]

It's as big as the Accord and longer than the 5-Series. Aside from the 300 and Charger, which can be had for several thousands of dollars less if you are willing to give up any performance, there are few longer cars that are more popular. Don't forget alos that dealers were charging a $3000 premium when it first went on sale.

[enzl]

The G8 is selling just fine...they're probably losing money on each sale anyway, so why rush importing more?

Pontiac's current problem is the rest of its lineup--the G5 & G6 are jokes, the Solstice wilting and the Torrent playing out the string as it awaits the ax.

If more product were like the G8 (exciting, interesting, unique, good value), Pontiac would be fine.

[FUTURE_OF_GM]

Not sure why the article is picking on the G8.

Because it's an easy target...

The car is "old school V8" for "rednecks"

The agenda for the media is to kill Pontiac and embattle the class that buys cars like the G8.

Only luxury seeking YUPPIES should be allowed such a car, I guess.

(FWIW, *IF* the Camaro slips, it'll be treated the same way. However, if it were BMW introducing the car and sales weren't great, we wouldn't read a word about it.)

[FUTURE_OF_GM]

The G8 is selling just fine...they're probably losing money on each sale anyway, so why rush importing more?

Pontiac's current problem is the rest of its lineup--the G5 & G6 are jokes, the Solstice wilting and the Torrent playing out the string as it awaits the ax.

If more product were like the G8 (exciting, interesting, unique, good value), Pontiac would be fine.

+1

And thats why I'm cautiously optimistic about the future Pontiacs. GM has the option to finally put differentation and identity into the meat of the market for Pontiac. This is because the consumer has NO OTHER CHOICE but to PAY ATTENTION because of high gas prices.

CAFE and high gas prices, like it or not (I don't) have CHANGED the game and GM has a REAL opportunity to gain customers and 'right' some damaged brands. (If they take the opportunity) There aren't that many interesting or exciting Delta and Epsilon sized cars on the market.

So, FWD, shared Chevy architecture or not, GM could still make things right if it's management hasn't been blinded by corporate politics.

[FUTURE_OF_GM]

I can read fine...

"But the ad blitz hasn’t had much effect. In August, GM’s 2,712 U.S. Pontiac dealers sold only 1,915 G8s — not even one per dealer.

GM has problems on many fronts, including high gasoline prices, falling truck sales and billions in losses. The G8 illustrates one problem that’s often overlooked: The automaker’s lineup contains many vehicles that deliver barely any bang for the buck."

Selling .7 cars per dealer is not a success. The G8 interior isn't good enough, the Hyundia Genesis has a better one and a more powerful V6 and a more powerful V8 (and more fuel efficient). But I think the main problem is the Pontiac brand is too damaged and people are just not likely to spend $30k or more on anything with a Pontaic badge on it.

It is for a halo model....

The G8 was never supposed to be a true GP replacement in that volume was never an issue (from what I understand) It took GM all of $5 to bolt a Pontiac nose on an already engineered Holden.

G6 was supposed to pull the volume for the Pontiac division.

So, if the Pontiac division is so damaged, then use them as an entry level position for the P/GMC/B channel (As was planned) and produce one or two models (or trim designations) for us enthusiasts that are willing to pay more.

[FUTURE_OF_GM]

.

It isn't gas prices or economy either, because BMW sold 5,000 5-series in August. Maybe the G8 isn't 5-series performance at half the price after all.

Not a valid comparison...

5 Series money isn't G8 money.

Eventhough the G8 competes with the 5 on a performance basis, you'll not see many BMW buyers (Higher income clientele) coming into a Pontiac showroom. Cadillac CTS? Maybe. Pontiac G8? No.

A Better target would be the Charger and 300. And with that market deteriorating like it is, I'd say GM hit the volume target right on the nose.

[FUTURE_OF_GM]

Perhaps it's the brand that is hurting it? The target consumers aren't considering a Pontiac? Pontiac isn't exactly known for modern RWD, V8 sports sedans...

That's so very true...

GM has failed to inform the consumer of what Pontiac and the G8 have to offer.

It'd be interesting to see, if Pontiac came out with a modern RWD V8 sports coupe and called it Firebird or Trans Am, what would happen... Give the sedan to Chevrolet as a limited volume Impala.

[SAmadei]

That's so very true...

GM has failed to inform the consumer of what Pontiac and the G8 have to offer.

It'd be interesting to see, if Pontiac came out with a modern RWD V8 sports coupe and called it Firebird or Trans Am, what would happen... Give the sedan to Chevrolet as a limited volume Impala.

I actually agree with this to a degree... give it a Malibu-like front end and Camaro taillights (or better yet, go back to the two sets of three rounds like the old school Imps) and build it in NA. Still sell a Pontiac version here in the states, as well... but at least now we don't have to pay higher Aussie wages, shipping across the globe and Chevy/Pontiac can brag "Made in the USA!"... and we have some economy of scale.

[The O.C.]

Perhaps it's the brand that is hurting it? The target consumers aren't considering a Pontiac? Pontiac isn't exactly known for modern RWD, V8 sports sedans...

Hate to say it, but that's most likely a big problem with the car......

[BigPontiac]

I only saw one 2008 G8 at my local dealer over the weekend, and several 2009s. The 2008 is a black GT with no sunroof and all season tires -- both of the reasons I think it's still there. I noticed all the 2009s had the sunroof and several had the two-tone seats.

I'll still attribute the lack of an available manual trans is hurting the car as all the leftover GTOs were all autos. The $5k mark-up I saw at another dealer also isn't helping the car sell.

[longtooth]

Pontiac's flag-ship hot rod was a Trans Am/WS6/Firehawk until not that long ago. For me that sinister flared-nostril 'Hawk or WS6 spelled doom for anything with 4 or 6 cylinders (and some V8 Mustangs) plying the streets. I had an '02 black WS6 and an '02 black Firehawk (last black 'Hawk on the East Coast I was told) purchased from Peruzzi Pontiac/GMC/Buick. I had my fun with 'em and then moved on to something else. Now I am waiting for my SS Camaro, but still lament that at least for the time being, that there'll be no Trans Am for Pontiac.

We Build Excitement: Pontiac.

As an added incentive, now there are f*ckin' Hyundai Genesis' to shame. Hyundai, can you believe that sh*t?

[Oracle of Delphi]

Ahhhh, the Trans Am a true Pontiac!

On a side note longtooth, is the 2nd shift working at the Wilmington Plant this week? I need to speak to a supervisor there and no one answers the phone on the plant floor.

Edited September 18, 2008 by Pontiac Custom-S

[longtooth]

Yes 'Pontiac Custom-S'. Likely they've gone home if you tried calling after 10:50 pm edst. We were down for the week leading into the Labor Day holiday here. (week of 08-27-08) The hard-top Solstice is a sweet-looking car.

[Oracle of Delphi]

Yes I know, I sat in one they had on the 3rd floor when I was home in Delaware a few weeks back. That reminds me, I have a few pics to post from my Delaware visit home, I have a few sweet pics of cars I saw there.

Thanks for the info.

[longtooth]

Yes, "S" she's a looker. I'm too tall to fit at 6'7". I had two Fiero GT's '85 and '86. No problem. Camaros and Trans Ams no problem. I'll just have to love her from a distance.