Now what?

[smk4565]

The restructuring was already working. Had the economy NOT tanked, GM and Chrysler would've been fine.

But the economy did tank, and all of 2009 will likely look as bad as November auto sales did. GM can't survive another 12-14 months of sales like that last 2, with their current structure. Toyota is okay despite the economy, GM has to structure itself so that even in a terrible economy it can at least break even.

GM needs to sell unused assets/real estate, cut marketing to near zero on anything but Chevy and Cadillac and sell Saab, Hummer and Saturn for anything they can get, even if it is $1. Right now all that should matter is keeping Chevy and Cadillac alive. They are headed to Chapter 11, if not now, then in March when the Treasury loan (if they get it) runs out. They have to make sure chapter 11, doesn't lead to chapter 7, and the only way to do that is to drastically downsize and get Chevy and Cadillac sales rising and turning profit.

Edited December 13, 2008 by smk4565

[Robert Hall]

Yes, Dick Shelby from AL, the state where you can see dirt poor people having to pay 8% sales tax on their groceries while at the same time the state government gives any foreign corporation any kind of tax incentive/giveaways they can. It has brought some jobs to AL, but not anything that pays all that great.

This little rant about the South from a few years ago is still relevant today, IMHO..

rant

[cletus8269]

wow i know who i can send my thesaurus to. i can understand he is "ranting" in anger but he seems as credible to me as an angry emo kid in a rest stop bathroom carving his lamentations on the stall's wall.

[carman21]

Oh just give GM, Ford, and Chrysler the whole $700 billion already for God's sake....

[fightingbee]

This little rant about the South from a few years ago is still relevant today, IMHO..

rant

Ahem, Yeah I'd say that is a bit much, and I was a born-and-raised in the "North" FWIW.

[network engineer]

Ahem, Yeah I'd say that is a bit much, and I was a born-and-raised in the "North" FWIW.

No kidding. That's not relevant and is also riddled with inaccuracies. The Civil War was not, fought over slavery for instance. It was fought because the south thought they were being unfairly taxed due to their cash crops that drove our economy in those days.

The whole site reeks of elitism and stupidity.

[ellives]

This "throw out everything but the kitchen sink" is not plausible. This behavior is representative in many ways of what got GM in this situation to begin with. They have been in reactionary mode for a long time and like every other business endeavor that gets themselves into this mode, it will fail and put them in continually worsening positions.

First of all, don't you think they've sold off anything of value they have, which is reasonably liquid? Real estate takes a great deal of time and energy to sell and when the overall market is down (an understatement) you're getting pennies on the dollar. Besides, GM does not have the kind of time required to sell real estate and anyone willing and able to buy is going to lowball offers.

I agree, it's time for GM to pare down divisions. The market has known this for years and the products offerings in the "non-core" divisions reflect this. Consumers have a tough time understanding why Pontiac, Buick and Saturn even exist. They understand the concept of "Joe Sixpack brand" and "Luxury brand" but that is pretty much the limit of their attention span. Heck it's amazing how few people even understand Cadillac and Chevy are GM brands. This is a fundamental marketing concept GM doesn't or is unwilling to understand. Either way it's time for changes in their marketing team.

Beyond all this, they have a need to shed a good chunk for their debt (as has been discussed by some of the congressmen such as Corker) in order for them to have a viable business. The number I heard bantered about yesterday was 30 cents on the dollar for bondholders. GM simply can't continue to operate in status quo mode and everyone is going to need to pay a price to make GM viable.

The UAW needs to simply go away. I have said this over and over and most take my arguments as simply anti-union ranting. The reality is, a union has no place in the automotive industry. Toyota, Honda and Nissan have proven this quite clearly. The UAW simply adds to the overhead cost of building automobiles and brings absolutely no value to the business. Sorry Ron but you're out of a job. Hopefully you know how to run an air ratchet.

Interestingly I have a family member looking to relocate his business from the Northeast to the South Carolina area and they were courted by the state business development folks. When the sat down the first time to discuss assistance the state would be willing to provide for the move, the very first question they had was "are you a union shop?" The answer was "no and we never will be" to which the state responded, "good, because if you were, this meeting would be over." They don't want unions down here and they are doing everything they can to make sure they won't be here. As a result, any business operating here will have an immediate cost advantage vs. a union shop elsewhere.

But the economy did tank, and all of 2009 will likely look as bad as November auto sales did. GM can't survive another 12-14 months of sales like that last 2, with their current structure. Toyota is okay despite the economy, GM has to structure itself so that even in a terrible economy it can at least break even.

GM needs to sell unused assets/real estate, cut marketing to near zero on anything but Chevy and Cadillac and sell Saab, Hummer and Saturn for anything they can get, even if it is $1. Right now all that should matter is keeping Chevy and Cadillac alive. They are headed to Chapter 11, if not now, then in March when the Treasury loan (if they get it) runs out. They have to make sure chapter 11, doesn't lead to chapter 7, and the only way to do that is to drastically downsize and get Chevy and Cadillac sales rising and turning profit.

[Z-06]

Good one ellives.

The most important part of your argument is reactionary vs. pro-actionary mindset GM is in and some of the members here are. This is trhe precise mentality which has gripped the current crisis, and it will only worsen if the mentality prevails. People need to think outside the box. As much as many good intentions people here have, kill this-kill that will not help.

[CARBIZ]

But the economy did tank, and all of 2009 will likely look as bad as November auto sales did. GM can't survive another 12-14 months of sales like that last 2, with their current structure. Toyota is okay despite the economy, GM has to structure itself so that even in a terrible economy it can at least break even.

GM needs to sell unused assets/real estate, cut marketing to near zero on anything but Chevy and Cadillac and sell Saab, Hummer and Saturn for anything they can get, even if it is $1. Right now all that should matter is keeping Chevy and Cadillac alive. They are headed to Chapter 11, if not now, then in March when the Treasury loan (if they get it) runs out. They have to make sure chapter 11, doesn't lead to chapter 7, and the only way to do that is to drastically downsize and get Chevy and Cadillac sales rising and turning profit.

You do realize that the U.S. has been in recession for nearly a year already. If true to form (with the most 'severe' recessions of the past), the U.S. economy should emerge from 'recession' by the 2nd quarter of '09. With 5 million less vehicles sold in '08, it looks like the final couple quarters of '09 could have banner sales. It's not like the 5 million people who put off buying in '08 won't ever buy. Potentially, we could be seeing a 20 million sales year for the period June '09 to May '10.

It would be a crime if all that business went to Honda and Toyota.

[haypops]

You do realize that the U.S. has been in recession for nearly a year already. If true to form (with the most 'severe' recessions of the past), the U.S. economy should emerge from 'recession' by the 2nd quarter of '09. With 5 million less vehicles sold in '08, it looks like the final couple quarters of '09 could have banner sales. It's not like the 5 million people who put off buying in '08 won't ever buy. Potentially, we could be seeing a 20 million sales year for the period June '09 to May '10.

It would be a crime if all that business went to Honda and Toyota.

Two absolutely correct concepts. A third that smk hasn't considered is the sizable drop in petroleum costs. This is like a tax cut and stimulus package rolled up in a gift bow.

[wildpaws]

Two absolutely correct concepts. A third that smk hasn't considered is the sizable drop in petroleum costs. This is like a tax cut and stimulus package rolled up in a gift bow.

It could have been like a stimulus package and tax cut rolled into one, unfortunately the price of everything else has gone out of sight, one need only to take a trip to the grocery store to see that.

Clyde

[haypops]

It could have been like a stimulus package and tax cut rolled into one, unfortunately the price of everything else has gone out of sight, one need only to take a trip to the grocery store to see that.

Clyde

The decreased price of petroleum products needs to work through the system for a while and decresed cost of diesel fuel, fertilizer, etc. will show up in lowered food prices in a while. In the mean time "I feel you pain". :-)

[balthazar]

>>"Heck it's amazing how few people even understand Cadillac and Chevy are GM brands. This is a fundamental marketing concept GM doesn't or is unwilling to understand. "<<

I disagree completely : there is no reason to tie the divisions into "GM" via marketing- there is no perception advantage in doing so. The brands need to stand on their own- image diversification, perception autonomy... this way (theoretically) no one brand can pull down any others and the constant misguided harping on 'rebadges' and 'too many brands' boils off. In recent times 'GM' does not have the rosy image it had decades past, plus slapping those 'GM' badges on the doors/fenders is nothing anyone asked for. In recent times it has all been 'corporation, corporation, corporation' and far too little 'Chevy, Pontiac, Buick, Cadillac, GMC', and the only result that has returned is the dilution of brand strength. It MUST reverse...

[A Horse With No Name]

I agree balthazar. Back in the 50's and 60's, creative competition with corporate support worked really well for GM. Once they tried to homogonize themselves, they lost part of theiur identity and things went wouth from there.

Chris

[balthazar]

GM dominated so utterly in the past due to brand autonomy- even tho by -say- '65: Pontiac, Buick & Olds only really had 2 cars each (intermediate & full-size), and Chevy had these also, in addition to the Corvair. Corvette & Chevy II. 'Overlap city', some might say. 'How could that possibly have worked, it's doesn't work now?' those same folk will naively wonder.

IMO, the first misstep was the discontinuance of proprietory engines- those were the core & soul of each division, and that soul was ripped out. Adding "GM" badges to the sides of every GM model ranks right up there with the worst decisions made, tho by the time this was done, the 'perception bed' was already made, and long ago. Consider those badges the mint on the pillow of that bed.

[Satty]

A little write-up from Electoral-vote this morning:

Car Bailout Pits North vs. South

A striking pattern has emerged in the fight over bailing out the big three automobile companies. Senators from the north are for it and senators from the south are against it. Why? It turns out there are assembly plants in both the North and the South. The ones in the North are owned by American companies and are highly unionized; the ones in the South are owned by foreign (mostly Japanese) companies) and are not unionized. Hourly pay in northern and southern ones is comparable but benefits are much better in the North. Southern senators who oppose the bailout don't really object to the government interfering with private industry and don't really even mind a government-appointed car czar running the companies. The sticking point is that they want to break the unions and force union members to take cuts in pay and benefits to bring them down to the level that the workers in the South get. In this way, workers will see that unionization has no value and won't be inclined to join unions in the South, which will greatly please the foreign auto companies and keep them firmly attached to the South. So what may look at first like a noble principle (keep the government's nose out of the private sector), is really a parochial interest (keep unions out of plants in their states so foreign companies will continue to invest there). Some observers say that in the deep South, there is no much difference between union and Union Army.

Republicans from the North think differently. Sen. George Voinovich (R-OH), for example, supports the bailout because there are many unionized big three auto plants in Ohio. He says Republicans from the South are using the bailout as a weapon to break the unions (which strongly support the Democrats). Chris Bowers points out that 18 of the senators who opposed the $14 billion bailout of the big three automobile companies voted for the $700 billion bailout of the banks. In other words, they have no ideological problem with the government interfering with private industry. Their problem is that the proposed bailout didn't break the power of the United Auto Workers. If that had been included, another $14 billion on top of the $700 billion they already voted for would not have been a dealbreaker.

Linkypoo

[Intrepidation]

So much for Republicans putting "country first", at least in the South.

[haypops]

Between Canada and Sweden, almost $7 billion dollars have been promised. If SC and AL win out on this bailout/bridge loan debate, our GM cars will come Mexico, Canada, or Sweden. Does that mean GM's core brands will be Chevy and Saab?

[cletus8269]

hmm SC you say. Only Foreign maker we got is BMW that i was aware of. they are hurting just as badly as the big 3. a lady that was at jury duty with me said so, she works at the spartanburg plant. i thought Germany was helping them out... why would we vote against it.

[haypops]

I read somewhere(sorry no link) that BMW was indeed feeling the pinch. I mentioned SC based on "Senatorial" statements and votes.

Edited December 14, 2008 by haypops

[cletus8269]

i believe you read that here somewhere because thats how i knew what she was talking about. as for the SC thing i was just asking cause i havent gotten a chance to see how we... er... they voted. i emailed them my opinion about the loan and got a generic response about taking all the things into account and blah blah blah.

[haypops]

. i emailed them my opinion about the loan and got a generic response about taking all the things into account and blah blah blah.

We do what we can and hope for the best.

[smk4565]

I read somewhere(sorry no link) that BMW was indeed feeling the pinch. I mentioned SC based on "Senatorial" statements and votes.

They are feeling it, but on the bright side M division car sales are up 52% this year. Refreshed 3-series, new Z4, and 7-series for 2009, new 5-series in 2010, they have fresh product, they'll weather the storm and be fine when things turn a little. Mini is doing well, so that should help them a little. It will just be a hard 08 and 09 for them.

[haypops]

, they have fresh product, they'll weather the storm and be fine when things turn a little.

Usually fresh product is the answer, but in todays economy its all about how much money any given manufacturer has saved up.