A Proper Case Against GM

[turbo200]

it's true that some market analysts have taken a strong stance against the bailout. some are in favor, but mostly it is government officials, democrats and barack obama, leading the charge that governmental loans along with some kind of restructuring and a solid plan going forward for market prosperity are the way forward for automakers. for any kind of positive drumbeat going for the automakers getting any money, we have the democrats to thank really. most free market analysts look at GM as a loss. why?

here's one topic that has been touched on but not been scrutinized enough. product acceptance, perception, and the problems GM and Ford have with selling thier cars in America. this all goes back to 2001. After September 11, GM launches the "Keep America Rolling" plan, launches 0% financing, and freely gives away cars, deeply discounting models IN ADDITION to cheap, easyily acceisble financing.

those rebates and financing continued throughout the years. everytime it seemed GM was losing ground in terms of volume, it seemed as though executives were not confident enough to cede the market share projection for the year and turned another 0% plus phenom for the sofa and potato chips crowd. Since GM is the Goliath, Ford and Chrysler always inevitably matched.

REBATES. Product perception. Product quality.

Fundamental issues in how we should look at the GM quandry today. why was product quality sacrificed in the first place? why did GM try to sell an inferior product that felt and looked inferior, and still does to this day in the form of cheaper quality materials in some models, in the form of unfashionable and long in the tooth design, in the form of cheap engines and cheaper still suspensions. cheap cheap cheap was a word easily associated with all things GM.

so you mean to say on top of the fundamental market forces pushing buyers to imports, better resale value, higher quality perception, higher reliability and longevity ratings, even with all that, GM sold products that felt cheaper too. And still do.

they used rebates that stole all thier profits to prop up the product. instead of refocusing, they went discount crazy and didn't solve the actual problem, again. after decades of not getting the actual problem, not solving the bigger issues, GM still looked at the short term solution. keep the factories running at full steam, keep the pension and health care issues, worker wages under your belt, don't solve that issue the correct way. keep going with a non-functioning business model, one that couldn't weather a storm, one that was one snap away from completely breaking.

Should we consider it blind faith or business malpractice?

[Drew Dowdell]

Because if GM even imagined about closing a production line, the UAW would have a fit. Workers displaced by robots got to go to the job bank for nearly full salary. The Camaro can only be built in Canada. GM has to pay for UAW member's "member" medication (viagra).

As such, GM and the others were forced to keep vehicles in production simply to keep revenue flowing to pay people they no longer actually needed.

Simply put, they had to have the volume to support workers that would have been otherwise laid off due to technological advances or other improvements in efficiency.

Think of the big blotches on GM's record. They come, not from skimping, but from GM trying to change and innovate but being raked over the coals when they failed.

Cadillac 8-6-4 : I'm sure this cost GM a TON of money to develop. The idea was a sound one, however the technology wasn't up to the task. The idea failed and Cadillac yanked the engine after just one year on the market.... yet in 2008, I still read CTS reviews that mention this engine.

Vega: was one of the first automobiles that GM produced that made extensive use of robotic welding equipment.

Aztek: was one of the first mid-sized non-truck based crossovers. Again, here was GM trying to innovate. The concept has proven sound yet the product failed due to something as fickle as styling.

Quad-4: Look at this. GM fielding DOHC 4-cylinder engines in 1987. Starting in 1989 output was available up to 180hp. 2008 Honda Accord base engine? 177hp.

Saturn Ion: A compact car that could come with either a 5-speed, 5-speed automatic, or one of those new fangled CVTs. Failed for styling.

I don't want to hear that GM doesn't know how or doesn't want to innovate.

[ZL-1]

it's true that some market analysts have taken a strong stance against the bailout. some are in favor, but mostly it is government officials, democrats and barack obama, leading the charge that governmental loans along with some kind of restructuring and a solid plan going forward for market prosperity are the way forward for automakers. for any kind of positive drumbeat going for the automakers getting any money, we have the democrats to thank really. most free market analysts look at GM as a loss. why?

here's one topic that has been touched on but not been scrutinized enough. product acceptance, perception, and the problems GM and Ford have with selling thier cars in America. this all goes back to 2001. After September 11, GM launches the "Keep America Rolling" plan, launches 0% financing, and freely gives away cars, deeply discounting models IN ADDITION to cheap, easyily acceisble financing.

those rebates and financing continued throughout the years. everytime it seemed GM was losing ground in terms of volume, it seemed as though executives were not confident enough to cede the market share projection for the year and turned another 0% plus phenom for the sofa and potato chips crowd. Since GM is the Goliath, Ford and Chrysler always inevitably matched.

REBATES. Product perception. Product quality.

Fundamental issues in how we should look at the GM quandry today. why was product quality sacrificed in the first place? why did GM try to sell an inferior product that felt and looked inferior, and still does to this day in the form of cheaper quality materials in some models, in the form of unfashionable and long in the tooth design, in the form of cheap engines and cheaper still suspensions. cheap cheap cheap was a word easily associated with all things GM.

so you mean to say on top of the fundamental market forces pushing buyers to imports, better resale value, higher quality perception, higher reliability and longevity ratings, even with all that, GM sold products that felt cheaper too. And still do.

they used rebates that stole all thier profits to prop up the product. instead of refocusing, they went discount crazy and didn't solve the actual problem, again. after decades of not getting the actual problem, not solving the bigger issues, GM still looked at the short term solution. keep the factories running at full steam, keep the pension and health care issues, worker wages under your belt, don't solve that issue the correct way. keep going with a non-functioning business model, one that couldn't weather a storm, one that was one snap away from completely breaking.

Should we consider it blind faith or business malpractice?

People became complacent because they were market leaders. Detroit executives (and even Union leadership and line workers) were raised to believe their companies were untouchable, that imports would never dominate the marketplace.

[longtooth]

Quad-4: Look at this. GM fielding DOHC 4-cylinder engines in 1987. Starting in 1989 output was available up to 180hp. 2008 Honda Accord base engine? 177hp.

Had a '91 Beretta GTZ. For it's time a screamer of sorts. Acceleration felt as though I was being pushed in the back by something with strength of a fallen angel.

Viva la Quad 4...

[turbo200]

GM needed an effective leader to effectively communicate to Congress, to the Union, that selling cars in America was a losing proposition because of the cost inherently in supporting legions of workers, versus more cost effective import carmakers.

Period. this needed to happen a decade ago, as long as I can recall business analysts complaining GM's business model wasn't built for utmost success. GM needed to get the cost disparity evaporated.

Instead they sacrificed quality and pushed product through rebates over the last decade. first they sold a car that was more costly to make because of outstanding liabilities, on top of that they further eroded profit by pushing discounts because people didn't want to spend the money on cars that didn't live up to the quality the competition had.

So it all goes back to problem one: quality.

The thing I've been railing on for the better part of this decade on this site. the other thing, great design, desirable design, also a big problem with their cars.

so thier obviously shortsighted answer is to try their hardest to keep the plants running, to make the money they needed for retirees, current workers, all the while winding down until the last day the camel could hold the load. instead of fighting this issue out, looking for government assistance, hiring an outside arbitrator to create the business and PR case....they tried thier damndest to keep the clock running.

God knows they have tried. Acadia, Tahoe, Escalade, Malibu, CTS, G8, Solstice/SKY all have some of the best execution of any GM product, ever. Look at that line of product though, the only mass market car is the Malibu, the only one marketed as such. the others are non-primary cars. in another decade this would have been enough of a dramatic shift in the lineup. this decade it has proven too little too late.

my problem with the execution of the line is the shortsightedness of some decision-making and the tardiness of the most important product. Zeta has been out for over a year, and Camaro, a 100k vehicle and image-building dream is still 4 months away. Traverse, the 4th Lambda will flounder, and Cobalt could have used the money spent on marketing and redoing that line on a serious MCE; after all small cars account for over 300k annual sales at Honda and Toyota. Tiger Woods was making more than 10 million a year, barely let go at an irrevelant brand that shouldn't see another dime outside Enclave until thier product mess is cleaned. small cars have been ignored. medium cars have been perpetually lagging in design and quality, when the fundamentals are actually really good. large cars have been seriously outdated for some time. engines and transmissions are finally something that have been changed over to quality and refined designs, after years of being behind the competition.

[regfootball]

wow, i am so bored with these tired threads and topics. is this becoming GMI?

My God, I spilled milk when i was a kid, can we talk about that incessantly too?

GM had to protect share because of their production expenses and legacy expenses.

not only that, the sales jump start after 9/11 actually helped the country's economy.

side note: go see how many JAP anese mfrs donated to helping and rebuidling from 9/11.

GM gambled on a business model they felt they could sustain and got burned. So now, are we all going to cry over spilled milk, or are we going to turn our nation's largest industry (the largest?) and its profts and its market share in the global arena over to foreign countries?

Edited December 1, 2008 by regfootball

[Camino LS6]

The sweeping generalities and assumption behind the premise presented in the original post leave this "case against GM" wholly suspect at best.

[longtooth]

Let this dinosaur called GM fail as market forces intend it to.. Build quality or GTFO of the game, this is 2008 not 1978. You can't fool the masses anymore with low quality, illiterate union labor built crap.

The Government bulked up the Financial sector with assistance. The Market was dictating rioting in the streets along the lines of 'The Great Depression Meets The Road Warrior'.

Maybe still. You never know.

[ocnblu]

dx398, do you own a car? If so, what do you drive?

[A Horse With No Name]

Quad-4: Look at this. GM fielding DOHC 4-cylinder engines in 1987. Starting in 1989 output was available up to 180hp. 2008 Honda Accord base engine? 177hp.

I don't want to hear that GM doesn't know how or doesn't want to innovate.

(Warning, slightly off topic rant)

As a fanboi of small cars, I wish the Quad 4 had worked out better, without the head gasket issues and other issues. An Olds Calais with a Quad 4...now THAT was my kind of Oldsmobile!

My old across the street neighbor had a very low production Beretta (GTZ maybe???) with the quad 4 and a 5 speed. That car suprised a LOT of ricers...it was kind of a Q ship of sorts as it was black and kind of a "low" profile car in traffic. But it drove just awesome...I had a chance to buy it from him and sadly didn't...and I know I'm rambling...but I've seen Qud 4 motors do amazing things at autocrosses and in SCCA style racing. I've talked here before about the Quad 4 Calais that was the Terror of the SCCA ITS class at Mid Ohio for a few years.

GM has done some things really, really right in their own way.

(end of off topic rant.)

Chris/66

[A Horse With No Name]

Let this dinosaur called GM fail as market forces intend it to.. Build quality or GTFO of the game, this is 2008 not 1978. You can't fool the masses anymore with low quality, illiterate union labor built crap.

Which is why nearly every carmaker builds damned good stuff now. Go randomly buy any car from Kia, Hyundai, Benz, Mazda, GM, Ford, or whoever...and it will run 100,000 miles plus probably, and probably 200,000 miles plus.

You can't survive in the car buisiness today as a dumbass...but you can make all kinds of internet posts as a dumbass.

(enter sarcasm mode)

GM is sooo stupid...which is why they've managed to stay in buisiness through two world wars, a depression, the 70's, the 80's, the 90's, etc.

(exit sarcasm mode)

Chris/66

[Drew Dowdell]

Let this dinosaur called GM fail as market forces intend it to.. Build quality or GTFO of the game, this is 2008 not 1978. You can't fool the masses anymore with low quality, illiterate union labor built crap.

Which market forces? The ones in Japan preventing the sale of imported goods? Or the market forces that gave massive *read complete* tax breaks to the foreign companies to build factories here. Maybe it's the market force of socialized medicine in Japan...how nice of a force it must be for Toyota to have it's healthcare tab picked up by the Emperor.

[balthazar]

Far too many want to be able to 'explain' the sitation of GM, and the industry at large, by pointing to 1 or maybe 2 'causes', when the reality of the situation is nearly infinitely more complicated than that. Doesn't mean there's not a point made, just that that's far from the whole picture.

And pointing to a non-production audi showcar as the 'reason' GM as a corporation 'fails' needs a winky emoticon after it...

Edited December 2, 2008 by balthazar

[turbo200]

And pointing to a non-production audi showcar as the 'reason' GM as a corporation 'fails' needs a winky emoticon after it...

the A1 sportback concept points to the future production A1 set to arrive here possibly next year [though it doesn't seem set in stone it will come here.] we can only guess as to how closely Audi will follow it, but the whole things looks entirely doable. certainly i can point to it and say Pontiac should be producing a car like this. this leads in to my overall point that GM doens't understand the market or reaching the poeple in thier individual intrests in cars.

I don't think anyone can or does lessen the overall idea that GM has had a mixture of issues leading to its collaps, chief among them poor product, poor decision-making, and some bad luck. however, i've pointed to a few immediate failures that have been talked about extensively here over the last decade. the point behind my first post is to say rebates and decision-making like the thought behind the rebates have helped lead the company to its current demise. that is what i've felt has not been communicated effectively enough on certain media sources.

[CARBIZ]

I'll throw this one out, then hide: why did America 'lose' the Vietnam War? Answer: it was the first war fought in the living rooms of America and the military did a bad job of marketing the war.

Detroit is in our back yard. Each and every one of its fumbles and mistakes are plastered across the front pages of every newspaper and blogger site in the nation(s). Japan, by contrast, is a much more closed market and culture. Frankly, they are a complete mystery to most of us. Are there millions of Americans living in Japan, influencing and trying to understand the Japanese culture? No. Are there millions of Japanese living in America, influencing and trying to understand American culture? Yes, indeed.

The fact that Vietnam was a noble concept that failed is beside the point. The fact that GM and Ford build quality vehicles for Americans is beside the point. Detroit lost the war because they lost the confidence of the media. That is something that the Japanese have simply done better in the past couple decades.

We can go all the way back to the Vega and 8-6-4, but nobody wants to go back to Toyopet and Datsun.

[BuddyP]

Had a '91 Beretta GTZ. For it's time a screamer of sorts. Acceleration felt as though I was being pushed in the back by something with strength of a fallen angel.

Viva la Quad 4...

I remember those, I liked the color coded wheels.

252k miles on our '00 Alero quad 4

[longtooth]

Detroit is in our back yard. Each and every one of its fumbles and mistakes are plastered across the front pages of every newspaper and blogger site in the nation(s). Japan, by contrast, is a much more closed market and culture. Frankly, they are a complete mystery to most of us. Are there millions of Americans living in Japan, influencing and trying to understand the Japanese culture? No. Are there millions of Japanese living in America, influencing and trying to understand American culture? Yes, indeed.

I for one resent the transparency of the UAW-GM 'relationship'. Of course I have derived my income from this symbiosis over the span of 33 years. I'm not ashamed of that.

It's the airing of dirty laundry ad nauseum that cloys and causes my revulsion.

I for one also think that a great, good scare and a scaling back of things would do wonders as to putting things in a truer perspective. Both sides get to experience diminution and being taken down a peg or two or three. Especially against the humbling backdrop of Economic Armageddon.

[ZL-1]

GM had to protect share because of their production expenses and legacy expenses.

The issue of attempting to protect market share at all costs is exactly why GM and the other 2 are in trouble, and it goes back way further than 9/11. GM should have thought about cash flow generation and that is about not discounting products to the point where defending share strangles a company. It is about brand focus, about restructuring aggressively, and it is about investing serious money in product development instead of spending it on incentives...

[Drew Dowdell]

The issue of attempting to protect market share at all costs is exactly why GM and the other 2 are in trouble, and it goes back way further than 9/11. GM should have thought about cash flow generation and that is about not discounting products to the point where defending share strangles a company. It is about brand focus, about restructuring aggressively, and it is about investing serious money in product development instead of spending it on incentives...

A large reason they needed to protect market share so vigorously was because the unions hog tied them. I believe in the Sigma plant not a human hand touches the car until the end of the line, yet I am SURE GM had to keep people in the jobs bank despite this new higher level of automation. The union, preventing workforce flexibility, is what started the market share snowball.

Whoever came up with that Jobs bank idea should be tied to the back of Wagoneer's Malibu Hybrid and dragged to DC. Whoever agreed to it should be tied to the front bumper.

[ZL-1]

A large reason they needed to protect market share so vigorously was because the unions hog tied them. I believe in the Sigma plant not a human hand touches the car until the end of the line, yet I am SURE GM had to keep people in the jobs bank despite this new higher level of automation. The union, preventing workforce flexibility, is what started the market share snowball.

Whoever came up with that Jobs bank idea should be tied to the back of Wagoneer's Malibu Hybrid and dragged to DC. Whoever agreed to it should be tied to the front bumper.

I agree that the CEO that agreed to the jobs bank (IDK if it's true or not, but I read about people in the jobs bank being paid while spending the whole day playing checkers) should get an ass kicking, as it is a CEO's responsibility to defend the company against such things! Funny thing is I don't even put much blame on the UAW, except for displaying a complete lack of vision: the end result of their success in bargaining is everyone's job being on the line...

Edited December 2, 2008 by ZL-1

[CMG]

this leads in to my overall point that GM doens't understand the market or reaching the poeple in thier individual intrests in cars.

I'm not sure that's a great point.

I drive down my street and see dozens of GM vehicles.

Not one Audi on my street.

There are alot of reasons GM (and Ford/Chrysler) are having financial difficulties right now, but "understanding the market" and "reaching the people in their individual interest in cars" aren't two issues I would place high on a sensible list of causes of that current trouble.

[ellives]

I agree that the CEO that agreed to the jobs bank (IDK if it's true or not, but I read about people in the jobs bank being paid while spending the whole day playing checkers) should get an ass kicking, as it is a CEO's responsibility to defend the company against such things! Funny thing is I don't even put much blame on the UAW, except for displaying a complete lack of vision: the end result of their success in bargaining is everyone's job being on the line...

The CEO you're referring to is the one who wanted to avoid a crippling strike at any cost. The UAW is completely to blame. Make no mistake about it. Why do you think the transplants work so hard at preventing union infiltration?

[Sixty8panther]

side note: go see how many JAP anese mfrs donated to helping and rebuidling from 9/11.

In most cases, Toyota included, that would be ZERO, as in $0.0000.

My manager at Bill deLuca Chevy gave me a printout of the breakdown

in donations from all the car brands sold in the USA, the Big Three

were very generous, even "German owned" Chrysler, but almost all Jap.

automakers gave us (our country, the USA) a shrug of the shoulders.

I photocopied the list and took about 50 copies and spread them around

over the course of a few days. Friends & co-workers and such.

I also placed one under every single windshield wiper of a Toyota at the

local Toyota dealership. Maybe, just maybe, at least ONE person read it

and "saw the light"...

[The O.C.]

There are alot of reasons GM (and Ford/Chrysler) are having financial difficulties right now, but "understanding the market" and "reaching the people in their individual interest in cars" aren't two issues I would place high on a sensible list of causes of that current trouble.

Ah but I think it totally is high on the list.

Walking around the (admittedly small) Las Vegas Auto Show on Sunday, I was embarrased, and frankly, quite annoyed at the mostly lackadaisical showing in product from the Big 3.

Take individual preference out of the equation, and I was amazed at how the import companies STILL are designing and executing vehicles in the vast majority of market segments that simply outclass GM entries in too many areas. Even Hyundai was a major surprise....my god how they've improved even their more basic products in such a short time.

GM has seen this situation coming for more than 25 years....probably longer than that. And to sit by and not make the drastic changes needed to keep itself at the head of the table is just damn embarassing.

CTS. Malibu. Corvette. Lambdas. Trucks. When you really scrutinize the product, that's just about it for GM products that are executed at any sort of level comparable to the competition. Even Solstice/SKY is severing lacking (if you really scrutinze those, then go spend time in a Miata....no comparison.)

(Realize I say these harsh words taking my enthusiasm for GM out of the equation. Would I buy an Elantra over a Cobalt? HELL NO. But there's no denying that the Elantras I saw at the Hyundai stand seemed to be executed to a level far above what I saw in the Cobalt.)

That being said.....something needs to be done to insure GM's survival.....government loans....bankruptcy....whatever. They need to survive.

I just hope that one of these decades, they actually decide to take the bull by the horns and do what needs to be done, no matter how drastic, so that people will once again have a much easier time justifying shopping a local GM dealership.

[Sixty8panther]

dx398, do you own a car? If so, what do you drive?

Let me attempt to answer that.

He probably drives a Corolla, his third one in twelve years.

(this time he felt real bold & saucy and talked the wife into

letting him get a red-metallic "S", a real sport-sedan, esp.

s compared to the base model in beige he traded in.)

[biff]

I wonder how many people that are against the big 3 loan will go out an buy their next Toyota or Honda with a loan from a bank that got an even bigger bailout.

[enzl]

I wonder how many people that are against the big 3 loan will go out an buy their next Toyota or Honda with a loan from a bank that got an even bigger bailout.

Many.

Americans love hypocrisy.

[regfootball]

In most cases, Toyota included, that would be ZERO, as in $0.0000.

My manager at Bill deLuca Chevy gave me a printout of the breakdown

in donations from all the car brands sold in the USA, the Big Three

were very generous, even "German owned" Chrysler, but almost all Jap.

automakers gave us (our country, the USA) a shrug of the shoulders.

I photocopied the list and took about 50 copies and spread them around

over the course of a few days. Friends & co-workers and such.

I also placed one under every single windshield wiper of a Toyota at the

local Toyota dealership. Maybe, just maybe, at least ONE person read it

and "saw the light"...

print some brochures documenting all the money senator alabama gave to his 3 transplant mfrs, the new kia borrego the georgia gov was given by kia, and how many hundred millions that town in TN is trying to give VW now