Tag Archives: GM

GM & Chrysler

31 May

GM is expected imminently to go bankrupt, and Chrysler’s sale to Fiat, S.p.A. is expected to go be concluded by the end of next week.

While in a perfect world, these companies wouldn’t need government handouts to stay afloat, this isn’t a perfect world, and it’s more desirable to bail them out than it is to throw hundreds of thousands of workers out on the street and let the companies fail. Because it’s not just GM or Chrysler. It’s also parts manufacturers, dealerships, and myriad other allied industries. When the spiral is going downward, you don’t hasten it.

The business model for GM has been an anachronism for decades, and this was

The German plate is no accident

The German plate is no accident

inevitable. GM was too big, too heavily laden with legacy costs, building too many crap cars that could barely compete. This bankruptcy offers GM a chance to slough off unnecessary businesses and marques, and a chance to fundamentally restructure its operations to bring them up to 21st century standards.

GM’s automotive offerings have been improving quite starkly lately, and if they could make plants leaner, more flexible, and improve the speed with which new models come to market, they can actually begin to compete with the likes of foreign marques that seem somehow to be able to build good cars competitively in North America.

Chrysler is a different animal altogether. I just looked at Consumer Reports’ auto guide for 2009, and not one, single Chrysler vehicle is “recommended”. Not one. That’s just an epic failure from a car company that very recently was well-respected and innovative. The design of the Chrysler 300 became legendary, but the interiors remained cheap and the drivetrains remained unrefined. I don’t know why former master Daimler-Benz, which certainly knows better, let that happen, but Chrysler is literally to the point where it needs a complete overhaul of its entire line-up, and needs to return Jeep to its core competencies – Grand Cherokees and Wranglers. I’ve seen renderings and photos of Chrysler’s new auto interiors, and they’re a nice step up from what exists now, but probably a step behind where Honda or Toyota or Volkswagen.

Although Fiat has a bad reputation in the States because it generally sold crappy little cars that broke down a lot, in Europe that’s changed. While they still build the occasional quirky thing like the Multipla, their cars are innovative, well-designed, and well-built.

Could be worse. Could be selling rebadged North Korean cars.

GM & Chrysler Dealers

16 May

There’s no reason why any city or town in this country needs 9 Chevy dealers or 4 Chrysler dealers. Reformation of the way dealers do business, and the number of them, is critical to GM’s and Chrysler’s survival. Mediocre cars + crappy marketing + lame dealership experience = failure.

As the AP explains,

A decision by troubled automaker General Motors to drop 20 percent of its dealers is due in part to an oversized network that created stiff internal competition and gave shoppers too much leverage to talk down sticker prices, hurting chances for future sales.

Seems like a change that should have been made long ago. But like Buffalo, change comes slowly to American carmakers.

GM outlined a plan to cut about 40 percent of its 6,000-dealer network by the end of 2010 in hopes of getting the company back on its feet. Besides the 1,110 dealership cuts, the company will shed about 500 dealerships that market the Saturn, Hummer and Saab brands, which GM plans to phase out or sell.

And when the surviving dealers’ contracts are up in late 2010, GM will cut still more by not offering renewals to about 10 percent of the dealers who are left. Dealers could stay open selling used cars or other brands, but GM and Chrysler cuts will still leave cities across the U.S. with empty buildings, vacant lots and perhaps hundreds of thousands of dollars in lost tax revenues.

FedEx letters bearing the bad news began arriving Friday morning at GM franchises around the country. The letter states that dealers had been judged on sales, customer service scores, location, condition of facilities and other criteria.

While the targeted dealers represent about 20 percent of GM’s total, they make only 7 percent of its sales, the company said.

GM says it would be much easier to shed dealerships if it declared bankruptcy, but it wants to avoid that stigma and restructure without protection. It sounds like any discussion of how onerous regulations, rules, and contracts keep WNY down and can’t really be meaningfully changed, short of declaring bankruptcy, because no one has the political will to do it.

All of this is as overdue as it is necessary.

GM and Chrysler – Last Exit Before Bankruptcy

30 Mar

McClatchy is reporting as follows:

President Barack Obama on Monday will reject requests for almost $22 billion in new taxpayer bailout money for General Motors Corp. and Chrysler, saying the car makers have failed to take steps to ensure their viability.

The government sought the departure of GM chief Rick Wagoner and said the company needed to be widely restructured if it had any hope of survival. It said it would provide the company with 60 days operating capital to give it time to undertake reforms.

The government will grant Chrysler 30 days operating funds, but said it must merge with another carmaker in order to remain viable. Talks with Italian carmaker Fiat are underway.

GM and Chrysler have already received $17+ billion in federal funding to stay afloat, and had a further need for federal bailout money in order to avoid bankruptcy. They had both submitted strategic plans for recovery which have been deemed inadequate.

The problems with GM and Chrysler are so long-standing and fundamentally structural, there’s probably little way they can be fixed without something drastic like bankruptcy. The problem is that the public’s already weak confidence with these automakers will only become weaker when questions about warranty service enter into it. The feds, therefore, have instituted a warranty guarantee program to avoid that problem.

Many are making much of the idea that forcing Wagoner out represents little more than communism. The difference, of course, is that under communism the government expropriates private industry without recourse. Here, the companies came to the federal government begging, hat in hand, for money – and they accepted it under certain conditions.

Chrysler already got bailed out once in the early 80s, and it repaid the government every penny. This is nothing new, and accusations that the government is just trying to run business is intellectually dishonest and silly. The government didn’t ask to bail out GM or Chrysler – the automakers made the plea.

When Chrysler needed that bailout it was in the wake of the 70s era energy crises which saw MPG trump HP in people’s purchasing choices. Honda, Toyota, and Datsun sold fun, fuel-efficient cars while Detroit was still making crappy gas guzzlers. Attempts to compete in the small car arena came too slowly, and more often than not, they were failures. GM’s horrific late-70s diesels still curse passenger car diesel acceptance in the US to this day.

Throughout the earlier part of this decade, GM, Ford, and Chrysler relied on the sales of gas-guzzling pickups and SUVs. People love them, and the companies’ margins were higher when they sold these vehicles. All of a sudden, when gas hit about $4.00/gallon, SUVs and pickups getting 15 MPG were unsellable, and domestic automakers were faced with a small handful of decent, attractive, fuel-efficient cars. It’s no surprise that the company that would put the Aztek to market would soon fail.

GM and Chrysler have made poor decisions, and built mediocre vehicles for many years. They’re also the backbone of American manufacturing. When they came begging for public money, they sacrificed a great deal.

GM & Chrysler Look for $35 bn Combined

17 Feb

I’m not a bank aficionado, so don’t ask me about the bailouts or the Swedish model for nationalization or anything else. I haven’t read the stimulus bill signed into law today, so don’t ask me about that, either.

I do know, however, that GM and Chrysler are in trouble after 3 or 4 decades of making cars and trucks that are/were, for the most part, a bunch of crap. The Dodge Charger I rented in Vegas was nice enough, but it was rough enough around the edges that I’d never consider buying one. The Dodge Caravan I rented in Florida last year was adequate, but seemed to be light-years behind the class-leading Honda Odyssey. GM has gotten better, but not across the board, not for every car.

So, GM needs $30 billion, will eliminate 20,000 jobs by 2012, and will put Saturn to death by 2011 and consider getting rid of Hummer, too.

Chrysler needs $5 billion, and will eliminate a few thousand jobs.

If I was GM, I’d throw out the Saturn name and just import or build Opels, and let the Germans run it. I’d sell Hummer, and I’d re-configure the entire operation to enable it to be quicker to market with new cars, and get plants to be as modern and efficient as those anywhere else in the world. If I was Chrysler, I’d hire some new designers right away and start an entire new line of vehicles across the board. Jeep should have 3 – 4 models, and Chrysler should focus on luxury while Dodge focuses on muscle cars like the Challenger, and mid-range passenger cars. The Fiat deal gives Chrysler access to small, fuel efficient cars, and luxurious stuff like Alfas.

Every SUV should be available with a common-rail diesel engine for economy. Every car should have a diesel or hybrid engine option. GM and Chrysler both need to innovate not just in terms of engine technology, but also with respect to interior design and perceived quality. It doesn’t take much – hell, just copy a new Hyundai and it’d be an improvement over all of what Chrysler shits out and half of what GM bothers to try and sell.

When the car market is in a slide, the most innovative and economical cars are going to do well. GM and Chrysler don’t have too many of those, but Honda is going to sell a $19,000 4-door Insight that gets close to 60 MPG. Honda’s sales may be down, but it doesn’t have its hand out. During the SUV boom, it chose to innovate with the Pilot and Ridgeline while still investing in the Insight and Civic hybrids. Toyota built 4Runners and Highlanders, but it also built Echos, Yarises, and Priuses.

GM? It built Silverados, Cobalts, and a decade’s worth of awful Trailblazers. Chrysler built fugly Sebrings and $40,000 Grand Cherokees with rental-car interiors. No wonder they’re in trouble.

Their paths to salvation don’t lie in staff reduction or bailouts or plant closings. They must innovate and build cars that can compete with the Germans, the Japanese, and most pathetically, the Koreans – the country that gave us a joke called a “Hyundai” in 1985, and now builds the Genesis, which puts most of GM’s cars to shame.

Ford & GM

3 Feb

From Business First:

Ford Motor Co. and General Motors Corp. said sales last month plunged more than 40 percent to put the industry on track for the worst month in 27 years.

The Bush malaise will finally help erase Carter as the go-to example for shitty Presidential leadership.

This is Not Your Father’s Saturn

11 Dec

The bailout plans show that GM will be focusing on brands that don’t include Saturn, so there is lots of expectation and consternation that GM might kill off Saturn. So much so that a grassroots movement has sprung up to save the brand.

It would cost GM $3 million per dealership to kill Saturn off – just when its cars were getting interesting, too. So, I propose this. A makeover and name change for Saturn that would preserve its current stable of cars and eliminate one GM brand by simply incorporating another, existing one.

West-Herr Opel? Opel of Clarence? Why the hell not. This new sedan – the Opel Insignia, which is the next Saturn Aura – kicks serious ass:

And the “sports tourer” station wagon looks a lot like the Audi Q7 from the rear:

That sort of interior and exterior design enables GM to compete with the best that Japan, Korea, or Europe have to offer. Killing off Saturn as a brand may make sense – not building cars like this Stateside doesn’t.

There’s a White Chevy Cruze in Town

4 Dec

When I see a small Chevy that resembles a Honda Civic driving around at night in the rain, and catch only a glimpse – enough to recognize the make, but not the model, and it has a European plate frame on the front, but no front plate, it had to be a Chevy Cruze. And it was on Sheridan near North Forest a couple of nights ago.

Well, I’m 99.9% sure that it’s a Chevy Cruze, and if anyone has any information about who’s got it, I’d love to take a look at it and possibly a spin. I think the Cruze is a huge part of GM’s future, and may be a first step for a domestic automaker to realize that small cars don’t have to be entry-level tinboxes, but can have great design, great interiors, and great performance as well as class-leading fuel economy.

Shame on the Gulfstream Class

19 Nov

This sticks in my craw, and should stick in yours, too:

The CEOs of the big three automakers flew to the nation’s capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee.

While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company’s dire financial straits.

“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”

Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

When you come begging me for my tax money, fly commercial, asshole. I don’t care if you’re so important that you need to fly first class, but fly commercial. Sell the G4. $20,000 to fly from Detroit to DC is shameful for a company that’s supposedly hemorrhaging cash. Ford still operates a fleet of eight corporate jets for its kings of fail.

Bail Out Some Company that At Least Tried

12 Nov

Honda builds almost all of its domestically sold vehicles in Canada and the US.

Toyota builds almost all of its domestically sold vehicles in Canada and the US.

They are innovative, have good mileage, have sometimes-cool, sometimes-bland design, and sport class-leading interiors that have high perceived quality. They have been doing this for at least a decade.

What’s Detroit’s excuse, exactly? The big competitor to the Accord and Camry is the Malibu? The pre-Fusion Contour? (The Fusion is better, but still light-years away from being a Camry or Accord, interior design & feature-wise). For waaaay too long, Detroit practically ignored passenger car R&D and design in favor of bigger and thirstier trucks and SUVs. Until very, very recently, GM’s Saturn sold cars with such shitty design, inside and out, that they could easily be substituted for Ipecac.

And they deserve a bailout?

Detroit’s Chickens Coming Home To Roost

13 Oct

The domestic auto industry is getting its own bailout to the tune of $25 billion. Remember George W. Bush’s bleating 8 years ago about tax dollars being the people’s money? The people’s money is going to subsidize and prop up a lot of businesses that have made trillions taking the taxpayer, flipping him/her over, and doing very bad things to him/her.

I’m not banker or Wall Street whiz, so what little I know about what’s going on over there hardly makes me qualified to go into any detail about it.

But the auto industry – the domestic auto industry, to be specific – has been operating under a 60s mindset over the last decade. Build it big with lots of mostly-needless “features”, without regard to gas mileage. While Honda and Toyota were busy developing hybrid powertrains – even when gas was $1.50/gallon – GM, Ford, and Chrysler did nothing of the sort. They made their money off Silverados, Tahoes, Explorers, F-150s, Rams, and Grand Cherokees. Those vehicles are lucky, each of them, to pull in 15 MPG in combined city/highway mileage.

The use of petroleum products is a national economic and security issue, at this point, and the federal government since the 70s gas crises has mandated that the corporate average fuel economy (CAFE) of passenger cars sold in the United States meet some median MPG figure. Until very recently, the CAFE rules exempted most pickups and SUVs from the calculus, so the big three were happy and free to build idiotic gas guzzling megatrucks with impunity, and relegated passenger car design and sales to almost exclusively rental fleet sales. Anyone out there own a mid-90s era Chevy Malibu or Ford Contour? How about a Dodge Stratus? While Honda’s Accord and Civic, and Toyota’s Prius and Camry became the state of the art of passenger cars, Detroit concentrated on trucks and SUVs, foisting on us the craptastic Chevy Cobalt, the made-with-Matchbox-car-plastic Dodge Caliber and the now decade-old Ford Focus in order to meet CAFE standards.

The trucks and SUVs were cheap to build, used identical chassis and powertrains, and made the big three a whole lot of money. Domestically, anyway.

Until 2007, CAFE required cars to get 27.5 MPG, and light trucks 20.7 MPG. In the meantime, average fuel economy in other parts of the world is pretty routinely 30% higher due to the use of clean diesel and other smaller-engine technologies. In 2007, the US government passed a law requiring entire fleets – including light trucks – to meet 35 MPG on average by 2020.

When you consider that the domestic market reached its peak fuel economy in 1987 at 26.2 MPG, and by 2006 had fallen to 24.6 MPG, you have to ask yourself why the hell Detroit deserves a bailout of any kind.

It strains credulity and boggles the mind that the auto industry, which so opposed tightened CAFE standards for many years is now coming to the US taxpayer, hat in hand. The biggest slap in the face is the fact none of the big three have any excuse whatsoever to be in the position they’re in. Like a broken record, I will direct you to the websites for Ford UK, Opel/Vauxhall (GM Europe), and Daimler-Benz, (which until recently owned Chrysler). All three domestic automakers are quite capable of making modern, fuel-efficient, low-CO2 producing motor vehicles. The problem is they kept them away from the US market and sold them in countries where fuel is more expensive and regulations are more stringent on mileage and emissions.

The last time a US automaker came to Uncle Sam begging for a handout, it was Chrysler in the early 80s, facing bankruptcy and astonishingly turning itself around with the craptastic K-Car. Then, as now, it was a domestic automaker that kept on making shitty, gas-guzzling vehicles during a gas crisis, and found itself with cars that no one wanted. One might have thought that the lesson had been learned. Now, all three are in big trouble, as evidenced by the stock prices for Ford and GM, which are at historic lows not seen since the 1950s.

You can now buy one share of Ford stock for about 60% of the price of a gallon of gasoline:

There is talk of Ford merging with Chrysler. All I know is that the domestic automakers are caught in a disaster of their own making, and it’s beyond offensive for taxpayers to bail them out of their own dumb and short-sighted decisions in a country where, e.g., working people go bankrupt trying to pay medical bills.