Oracle of Delphi

Steps that could persuade skeptics that GM is on the road to recovery By Rick Newman Posted July 15, 2008 These are grim days for a storied company, but General Motors is finally taking some of the radical steps it needs to survive. Up till now, GM has been following a gradual turnaround plan, focusing on recasting its product lineup, securing more favorable terms with its unions, and doubling down on a few breakthrough technologies. Right ideas. Wrong pace. A wheezing economy and the ramifications of $4 gas have simply transformed the auto market far faster than GM foresaw. So with its sales and share price in a free fall—and analysts starting to worry about the company running out of cash in 2009—CEO Rick Wagoner has devised yet another overhaul plan. The company will cut its white-collar workforce, eliminate bonuses, suspend its stock dividend, sell some assets, and take other steps to improve its cash reserves by $10 billion through 2009. The moves reflect adjusted expectations of oil prices staying in the range of $130 to $150 per barrel and depressed annual auto sales of 14 million in 2008 and 2009, about 15 percent below recent trends. Although the markets have cheered the moves, be prepared for yet another big announcement (or two, or three) down the road. Analysts still think GM has a way to go before it gets healthy. Here are some of the steps that would really persuade critics that GM is on the road to recovery: Killing a couple of brands. GM has already said it wants to sell its Hummer franchise (although no buyers have materialized), and it probably needs to divest some other brands, too. GM has eight vehicle brands, and at least half of them—Saab, Saturn, Pontiac, and Buick—are struggling. Saturn, Pontiac, and Buick cars are mostly redundant "badge jobs" with the same underpinnings as Chevrolet, GMC, or Cadillac vehicles, and Saab is a low-volume niche brand that most likely loses money. The problem is that getting rid of a division costs a lot of money, mainly to buy out dealers. In its latest announcement, GM said it's considering the sale of unidentified assets to help raise $4 billion to $7 billion. That could include Saab. Stay tuned. Accepting a smaller market share. Another reason GM won't kill off any of its mainline brands is that it will instantly lose market share, since there's no guarantee a Pontiac or Saturn customer will automatically become a Chevrolet or GMC customer. So GM is effectively sustaining underperforming divisions to keep its market share up, and no company can succeed for long by paying for market share. GM's new plan assumes a U.S. market share of about 21 percent, but even that might be optimistic. If GM fixates on sustaining that number, it will have no choice but to keep offering rebates that cut into margins. Building competitive small cars. GM knows it has to offer small cars just as good as Hondas and Toyotas. Maybe even better, since GM is so far behind its Asian rivals in this segment. GM has greatly improved the quality of its passenger cars, and some new small entries are on the way. Recent plans call for shifting even more resources from trucks and SUVs, which are rapidly falling out of favor, to smaller cars. Honda and Toyota have a huge lead, though, and even with some killer offerings, it will take years for GM to challenge them. Investing even more in breakthrough technology. GM hopes that the plug-in Chevrolet Volt, due in 2010, will be a buzz-mobile that helps it regain industry leadership. While cautious of GM hyperbole, analysts and industry experts are buying it—so far. If GM cuts funding for the Volt or stumbles, it will be a major credibility blow. But if GM delivers—on time—the Volt could signify a resurgence in Detroit. Aggressively waiting. The most agonizing part of GM's recovery—if it happens—is that huge savings from a deal reached last year with the unions won't begin to materialize until 2010. That's when GM will finally start to deal with its mountainous healthcare obligations to retirees. While not exactly saying so, GM leaders seem to have been putting off other big changes while hoping the retiree fixes that are on the way will help solve many of its problems. It's now clear that GM needs a lot of other surgery before then. Link: http://www.usnews.com/articles/business/ec...ent-enough.html

Yadda, Yadda, Yadda, same old swan song. An accountant huh? That explains so much. As for Vauxhall's subsidiary status, the same could be said for GM Hughes - On December 31, 1985 General Motors merged Hughes Aircraft with its Delco Electronics unit to form Hughes Electronics Corporation, an independent subsidiary. The group then consisted of: Delco Electronics Corporation, Hughes Aircraft Company, and Hughes Space and Communications Company. The stock was issued under (GM H), speaking of which, where can I buy Vauxhall stock? and look today, it's no longer part of GM, same could be said for Electronic Data Systems (EDS), Stock was issued under (GM E), where can I buy Vauxhall stock again? Anyway EDS is no longer part of GM, so to hide behind Vauxhall's subsidiary status as being it's saving grace is a foolhardy proposition, as GM could pull the plug tomorrow and replace the name with Opel, and I doubt a tear would be shed over it's demise.

I did live in Houston at one time, near Westheimer & Dairy Ashford, zip was 77077. I loved Houston when I was there. However I grew up in Plano, Tx, which is North of Dallas. And yes I have a Texas accent when I let my guard down, but I work hard at masking that accent most of the time. :AH-HA_wink:

I am on vacation and in the Southland heading for my home in Texas to see my mother, then after that on to California. We have stopped for the night. GM will let you know what it plans to do as far as cost cutting goes within the corporation, this will happen at 8:30 AM tomorrow. Expect to see many engineers assigned to frozen projects let go, I will let you speculate on which products they are but be aware there will be a shake-up of GM's product portfolio. Most of the cuts will come from GMNA, GM's home market, some engineers have been reassigned to small-car projects, however GM will be a smaller company with a thinner product line so there could be thousands let go. GME will be relatively untouched, mainly because they make money. I will be on vacation until mid August, after which I will return to Switzerland, the months ahead should be interesting to say the least. See ya when I see ya. :AH-HA_wink:

QUOTE(Sixty8panther @ Jul 14 2008, 03:43 AM) [snapback]411611[/snapback]1. All of Europe is the size of New England... not exactly a huge continent I don't think so! New England - 70,054.3756 Sq. Miles (181,440 Sq. km). Europe - 3,837,000 Sq. Miles (9,938,000 Sq. km)

EBAY!

The truth is out there!

You know gmcbob, when I 1st came to C&G we didn't agree on much, but I think over time a mutual respect has grown between us. Of course I could be wrong, I was once before. :AH-HA_wink:

Hmmmm, does it matter that I predicted the death of Zeta, which is happening as we speak, 4 dollar plus gas prices, the rise of FWD models again, and that brands would have to close (lets see the board meets in August on that), notice I didn't say sell, I said close? You just have to have faith, I know that's not a concept that warms your heart, but hang in there the show has just begun, more coming very soon, so grab your popcorn.

Sell your body to housewives with pent up passion. :AH-HA_wink:

Wot u on about Governor?

I miss you when you're not around. :AH-HA_wink:

Anti British hardly, just anti-aatbloke! There's a big difference.

Reuss, please, when is the last time you heard of a Managing Director of Holden moving that high up? The last one works for CPF in Russia. Besides many people above him on the ladder to the top, CPF being one of them, in the top 10. Check out the GM Career Step Ladder, your boy Reuss has a way to go yet: http://www.gm.com/corporate/investor_infor...ers_content.jsp

Not true at all, I belong to an online UK gaming clan. I'm in game with my UK friends about 10% of my free time, and when we are in game together, we use a software program to speak to each other while we are in game together, I am helping them learn American. I also will be in Scotland in September for a wedding, and have been in the UK many times, even have been to Wales. Hate all things British you say? Once again you are incorrect. :AH-HA_wink:

That was then, and this is now. GM will save $$$$ by having one Opel brand in Europe. As Rick Wagoner has stated, all things are on the table. You might want to buy a Vauxhall T shirt, so you have something to remember the Vauxhall name!

CPF was never slated to be CEO, he will however take Lutz' job in late 2010, or early 2011.

I didn't say that the plant would close, just the name "Vauxhall". Let's face it, every car they sell is just a badge engineered Opel oh yeah and the one Holden Zeta they sell.

Toronto Star David Olive Business Columnist As recently as 1980, when General Motors Corp. commanded about half of the North American market, it was unthinkable that the century-old company might someday face the prospect of bankruptcy. Yet it's the complacency that came with GM's sustained market dominance through most of the 20th century that accounts for the automaker's perilous condition today. Last Monday, the Wall Street Journal shook up the auto world with a front-page report on GM's woes, and the radical steps the firm is contemplating to ensure its survival. Little in the report was new. Wall Street long ago factored into GM's share price its litany of woes: The billions of dollars in losses GM has accumulated in recent years, and the continuing losses so far this year; the firm's effective negative net value in balance-sheet terms; GM's steady loss in market share, to a lowly 23 per cent or so; the desperate cash position of a firm that burns through some $3 billion (U.S.) each quarter and must raise at least $10 billion in a hostile stock market to make it through to 2010. And looming cuts in GM's white-collar workforce, after the company threw tens of thousands of workers on the street with plant closures including four announced last month alone, in Oshawa, the U.S. and Mexico. That's why GM stock is trading at about $10, a 54-year low. And why its shareholder value is a pitiful $5.73 billion, which makes what was the world's biggest automaker less valuable than the larger video-game makers. For investors in GM bonds and stock, the big shocker last week was a Merrill Lynch analyst's report asserting the possibility of a GM bankruptcy could no longer be dismissed. GM critics have long argued that the firm is on a glide path to insolvency and a bankruptcy-court administered breakup. The Journal shocker, more internal to the industry, was that GM insiders were talking to the paper along nearly the same lines. The GM officials in the Journal piece were quoted anonymously, but for the first time were going outside the company to admit that the idea of selling or killing most of GM's eight brands was at least "on the table." Which means some of the global industry's most venerable brands – conspicuously Buick and Pontiac, and the younger Saturn – could soon join Oldsmobile, closed down by GM a few years ago with few tears shed even if the legacy of Ransom Olds was Olds' status as the world's oldest auto brand. The Journal article was a crack in the united front at GM, which has maintained it resolutely stands behind all of its flagship brands. It scared suppliers like Magna International Inc. of Aurora, Ont., the auto supplier whose largest single customer is Detroit, with GM ranking among its top five clients. More worried still were the thousands of GM dealers across the continent, many of them the largest businesses in the small towns in which they're located, which suddenly learned they might have nothing to sell. Thus GM's top North American sales executive quickly fired off a memo this week to the dealers assuring them the Journal piece had no substance. And CEO Rick Wagoner himself informed GM employees the firm was not skating toward insolvency. But the media reports and Wall Street's assessment come closer to the truth. Some realities are difficult to hide. North American auto sales are down 10 per cent so far this year. GM's are down 16 per cent. And GM sales of the only vehicles it makes money from – large trucks and sport utilities – are down 25 per cent. GM has little credibility with Wall Street, having failed with a succession of promised turnarounds over the past decade and a half. "Wait until next year" has been its executive-suite refrain for too long. Wagoner's current fix-it plan was advertised as the mother of all turnaround efforts in GM history. And now even GM insiders are conceding it's too little, too late. Wagoner himself might not survive GM's board meeting early next month. In fairness to Wagoner, he has cut labour costs as rapidly as possible over the past year. The veteran new-model guru he recruited, Bob Lutz, has come through with vehicles that actually have curb appeal, a novelty for GM since the mid-1980s. Lutz has even arrested the decades-long decline of Cadillac, long ago given up for dead against rivals Lexus, Mercedes-Benz and BMW. (Although, to be sure, Cadillac and its Detroit rival, Ford Motor Co.'s Lincoln brand, remain also-rans in the luxury sweeps.) And Wagoner's unstinting investments in new-product development, despite a dwindling GM cash position, has yielded at least one potential industry game-changer, the all-electric Chevrolet Volt, due in showrooms in 2010. For all the "halo" effect of Toyota's Prius, which has cast an eco-friendly glow over the entire company (even though Toyota makes its share of gas-guzzling large cars, trucks and SUVs), Prius remains a niche product even after several years on the market. Its anticipated 2008 sales are a mere 100,000 vehicles. And the Prius is a hybrid, using both electric power and conventional gasoline. Not only is the Volt's all-electric technology revolutionary – the biggest industry advance since automatic transmission and perhaps even the perfection of the internal-combustion engine in Germany in the 19th century – but GM alone has the sprawling dealer network to make the Volt readily available to curious tire-kickers. Wagoner's dilemma is that he launched his deep cost-cutting far too late. That also applies to the breakthrough deal he forged last year with the United Auto Workers to shift the enormous burden of employee health-care costs to a new trust to be administered by the UAW with a one-time mega-contribution from GM. Wagoner has been especially late in addressing GM's notoriously bloated white-collar workforce, whose natural bureaucratic tendencies are to block innovation. And he has been slow to remove even those top executives culpable in GM's biggest blunders. GM should have foreseen the spectacular increase in pump prices, one could very persuasively argue. But the entire industry was blindsided by the 70 per cent jump in crude prices between last fall and this spring, as were the airlines and government forecasters worldwide. GM's problem, shared with Ford Motor Co. and Chrysler LLC, is that its product mix is skewed to the large trucks and SUVs that North Americans are no longer buying – especially in the aftermath of a collapsed U.S. housing bubble that has erased an estimated $8 trillion (U.S.) in residential real estate value and accounts for the current 16-year low in consumer confidence. Today's weak economy follows several years of robust total North American vehicle sales, so motorists are less inclined to trade in their relatively new vehicles. Meanwhile, on the horizon potential buyers see the Volt and other innovative products and are postponing new-vehicle purchases until they can check out the ultra-fuel-efficient vehicles on offer in 2010-2011. Wagoner has been a staunch defender of an eight-division GM, but ultimately it's not his decision to make. It's the call of an increasingly restless GM board that has a fiduciary duty, if nothing else, to curb the cash burn and preserve as much of GM's value as possible on behalf of shareholders. Wagoner's credibility is undermined by his failed attempt to revive Saturn with a slew of costly new models that are showroom dust-collectors. The hard reality for Wagoner is that he has had his kick at the can, having run GM since early this decade. There's a precedent for sacking CEOs set by Robert Stempel's ouster by the GM board in the early 1990s. And there's a promising replacement on deck in Frederick "Fritz" Henderson, the former GM chief financial officer recently promoted to president and head of auto operations, a post he took over from Wagoner. Henderson turned around GM's troubled European and Asian operations, now regarded as among the few crown jewels GM can use as collateral in its urgent recapitalization effort. No sooner had Henderson stepped into his new job than GM hung a for-sale sign on Hummer, a brand which, like Saab, commands a negligible North American market share of 0.2 per cent. It's difficult to see a future for GM except after being stripped down to Chevrolet, which accounts for well more than half of GM's total business, and a reviving Cadillac that could serve the same purpose that Lexus and Infinity do for Toyota and Nissan Motor Co., respectively. It probably will take a wrenching bankruptcy to achieve that transformation, since buyers for most of GM's assets are non-existent. Buick and Pontiac long ago lost their value as brands. And foreigners have twice been burned purchasing North American automaking assets – Renault SA with its acquisition of an ailing American Motors Corp., RIP; and the more recent Daimler-Benz AG disaster over nine years in trying to fix Chrysler, which served only to cut parent Daimler-Benz's market value in half. To pull itself back from the brink, GM needs to wholly commit itself to the costly task of replicating the Volt and becoming the undisputed leader in the small, fuel-efficient vehicles of a 21st-century market. It is a market in which vehicle sales will fall to a permanently lower level as climate change, energy security and urban traffic congestion compel more and more motorists to forsake their vehicles – or their current extensive use of them – in favour of cycling to jobs closer to home and making more use of public transit. There is no silver bullet for GM and its Detroit rivals, which soon will face still more competition from cheap Chinese and Indian "microcars." (Likely price: $5,000 to $7,000) One sure measure of an enterprise's worth is the answer to the question: if it didn't exist, would you launch this business today? The answer in GM's case is that the world would function perfectly well without it. You could not have said that when GM was providing half the automobiles in North America. But today GM lacks not only direction but also a raison d'être, which in all probability will be determined by a bankruptcy-court judge. HOW GM COMPARES IN MARKET SHARE — THEN AND NOW Of General Motors Corp.'s eight divisions, only two, Cadillac and Chevrolet, are considered untouchable by GM's management. At next month's board meeting, the automaker's six remaining brands are all under review for sale or closing. Here's how GM products stack up in market share from 2000 to 2008: Chevrolet 2000: 15 per cent 2008: 12.9 per cent GMC 2000: 2.9 per cent 2008: 2.5 per cent Pontiac 2000: 3.5 per cent 2008: 2.1 per cent Saturn 2000: 1.6 per cent 2008: 1.4 per cent Cadillac 2000: 1.1 per cent 2008: 1.2 per cent Buick 2000: 2.3 per cent 2008: 1.0 per cent Hummer 2000: 0.0 per cent 2008: 0.2 per cent Saab 2000: 0.2 per cent 2008: 0.2 per cent Note: 2008 figures are year to date. Sources: Ward's Auto, Autodata Corp. Link: http://www.thestar.com/Business/article/459290

There will be no Alpha G6 or any other Alpha for Pontiac. Only Cadillac, Buick and Chevy will get one, so I'm told.

Don't worry CARBIZ, he won't be so smug when GME closes Vauxhall down and changes every assembly plant, car dearler and car name back to Opel in the UK, as it should be. Because it is under discussion as we speak. Muuuhahahahahaha!

Another reason Europeans won't buy it, is because it's American. Most Europeans unlike Americans are very nationalistic when it comes to buying cars, they buy their home team's vehicles (either their country's or at the very least an EU made car) the majority of the time. A lesson Americans should have learned and put into practice in North America. Most North Americans are perfectly happy to whore out their buying dollars to Japan or Korea, while the North American governments sit on their collective asses and do nothing about it. What you're seeing is the largest transfer of wealth, leaving North America and going to Asia, in the history of the world.

Who's panties are in a knot? I asked a simple question. Edit: The reason I asked the question was because you posted no text, so I was unsure if you liked or disliked the vehicle. Not a problem HE, I won't post in your threads anymore.

I'm confused by your fascination with this vehicle.

Please don't confuse me with FOG, we are not at all similar. However I am half German, so I don't mind fighting on two or more fronts at the same time. :AH-HA_wink: