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Automotive News & Views Can GM make Cadillac the standard of the world Again?
6098 messages, Last post on Aug 14, 2009 at 4:43 PM
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Replying to: sls002 (Sep 28, 2008 10:10 am) The savings GM is likely to see with this offer are substantial. The Center for Automotive Research estimates that by 2011 GM's hourly workforce will be only 8% smaller than current levels - but more than four out 10 of those workers will be new hires being paid a lower wage rate. Here is the full article. Auto giant aims to replace much of U.S. workforce with lower-paid new hires, dangling $140,000 buyouts to UAW members to stem North American losses Of course, this does not mention the bland products they sell and the incentives needed to move non-fleet sales in North America. That's what happens when you are a CAR company and make only trucks during rising inflation of fuel and sales tanks. You can't stay competitive with second class product and highest labor costs. Bad model.  Regards, OW
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Replying to: circlew (Sep 28, 2008 10:52 am) The basic reason that GM is not making a profit is that it costs more to build the vehicles that they can sell, than the price that they can sell them for. The price that GM can charge depends on the market place (or the competition). The cost of building cars depends on a number of things over which GM has limited control. My opinion on the Cadillac prices for the sigma platform vehicles is that they would be worth the price if they had nicer interiors and perhaps if some options were standard. The CTS is selling very well at the price, so I don't think it is too expensive. The STS I think is overpriced with the full range of options, but the interior is not what it should be for the price. |
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Replying to: sls002 (Sep 28, 2008 2:06 pm) No, bad business model is the reason at the end of the day. Competition has good business model. That's why they over price their cars and wind up with deep incentives to move inventory that is pegged to a certain level of projected sales. I assume you forgot to look at sliding market share. The model is not working. GM has limited control why? They did not change when change was needed. Now they are forced to downsize real fast. Remember what Jack Welch said: "Change before you have to." GM was arrogant and did not want to change.  Regards, OW
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Replying to: circlew (Sep 28, 2008 3:51 pm) Now, I'll admit that this year profits have been tough to come by because of high gas prices that have decimated truck and SUV sales. But, as gas prices have stabilized in the last several weeks, the lost truck and SUV sales have plateaued. Most of what GM needs the cash for now is retooling and R&D for the new products that will hopefully bring people back into the showrooms for a looksee (and hopefully a purchase). |
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Replying to: circlew (Sep 28, 2008 3:51 pm) I think GM would be profitable if they were selling 5 to 6 million vehicles per year in the north american market. One problem that the domestic auto makers have not been able to control is the UAW. The auto workers can collaborate with each other, but the auto makers can't get together to offer a uniform contract.
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Replying to: sls002 (Sep 28, 2008 4:25 pm) In other words, when costs force you to make products that "cost more" than your competition, you do not make a profit. Of course the UAW was/is a problem but greed and arrogance of management is also a problem that forces labor costs to rise. I liken GM to the credit mess fostered by greedy financial institutions. Now, they are forced to change. Not too meaningless when market share continues to tank. For more meaning, Gm will run out of cash next year and need a bailout to change the product mix. What else will convince you the model is broken? Bankruptcy? A little too late to turn one of the biggest companies around to the new era in business without terminal results It's called less command-and-control and more flexibility to adapt to faster market deltas in a GLOBAL environment. It's called not having 7 divisions with copy cat models that compete against each other. It's about top dealer service and selling products that are top quality and highly desirable in a new value proposition for customers as market conditions change. It's about competitive design, engineering and manufacturing models that are in a flexible, continuous improvement mode. It's about sharing regional platforms to reduce costs. Logic says that when your cash holdings exceed your entire valuation in the stock market, some Wall Street shark is going to swoop in, snap up the good parts, and toss the rest. Companies with bloated factories and workforces got religion the hard way 20 years ago, in the days of "Neutron Jack" Welch. And with today's more active boards, CEOs who consistently lose ground to the competition usually don't need Donald Trump to tell them they're fired. GM is extremely late to the table. Hence, a broken business model that is very hard to change as fast as market forces dictate. Regards, OW |
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Here is some more meaning of what a bad business model GM has reflected in the past. Forced change is the current reality. Pay particular attention to PRICING. As customers wise up regarding price vs. resale value in their purchase decisions, GM needs to really change pricing strategy. "I really believe, as they refocus their fleets on passenger cars at the right price point, that Americans will start buying more of their cars," Psaros said. An agreement GM reached with its labor unions last year to cut costs will be "transformative," said Psaros, whose firm owns auto suppliers that do business with GM. GM's CEO Wagoner also said on Thursday that the automaker is looking to speed up a $10 billion program of cost cuts and was readying asset sales. GM said last week it would draw down the remaining portion of a $4.5 billion revolving credit line to maintain flexibility for its restructuring. Turnaround specialist Wilbur Ross told the summit on Monday that the move to pump up cash raises red flags for investors. GM's decision to draw down its revolver was a prudent liquidity move, GM spokeswoman Rashid-Merem said. Here is the full article. I don't write 'em. I am a current customer. NYU's Altman sees 50-55 percent chance of GM default Regards, OW |
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So the business model is to make a profit  That is totally meanless, all businesses are trying to make a profit. GM's market share in the north american market is more than their fair share. I think that the major auto makers should expect about 15% of the market - more than that is probably not sustainable in the long run. GM has had a very long run. Its all well and good for YOU to say that GM needs to change its product line. But you don't say what they need to do. I really don't think you know what they should do. I don't know what they should do. I think that GM could get out of the UAW contracts and the dealership franchise problems by going bankrupt and reorganizing as a completely new company with Chevrolet as the basic car line and Cadillac as a luxury line. This would make them similar to Toyota which has the basic line of Toyota's and their luxury line of Lexus. The longer that the current auto market downturn lasts, the more likely that GM will go bankrupt. I don't see GM's market share increasing before it decreases to the 15% level.
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Replying to: sls002 (Sep 29, 2008 7:28 am) MAKE CARS PEOPLE WANT AND THAT THEY ARE WILLING TO BUY. Oh yeah, AND MAKE A PROFIT AT THE SAME TIME! Sound about right? No, you say? You want details? Here is what one of the editors at the Motley Fool had to say: As I see it, GM's biggest problem is a simple one: There's less consumer demand for its products. Toyota and Honda (NYSE: HMC) both have market values far greater than $50 billion. GM and Ford (NYSE: F) are $6 billion and $10 billion, respectively. What's wrong with that picture? Detroit has not only been caught by its foreign rivals -- it's been lapped. Over the past decade, that's nowhere more evident than in the hybrid car space. With its acquisition of Hummer in the late 90s, GM became what The Atlantic termed a "poster child of environmental irresponsibility," producing Hummers, trucks, minivans, and, of course, SUVs. The story is obvious ... now. But because GM didn't focus on more fuel-efficient vehicles, Toyota became king of the hybrid. When GM finally caught on, it was too late. The Chevy Volt could be a lifeline, but the effect it can have on GM's bottom line is both uncertain and years away. "We have to build cars and trucks that people want to buy," CEO Wagoner said recently. According to The Atlantic, GM's "public image got so bad that focus groups liked the company's cars better when the logo was removed." Ouch. That's not a problem that one vehicle (the Volt), one restructuring, or even one great quarter can erase. Of GM's many problems, its biggest may well be that there aren't many of its cars and trucks that people want to buy right now. Regards, OW
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Replying to: circlew (Sep 29, 2008 10:53 am) As all the people I know in the auto industry say, the devil is always in the details as a matter of course, and presenting those detail elements is what separates the shrewd observer from the shrill-voiced harpy of an egotistical critic...
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