ShareThisGeneral Motors is on the verge of bankruptcy because it "builds cars that nobody wants to buy." If you haven't heard that line in the bailout debate, you haven't been listening. "They're a dinosaur in a sense," Sen. Richard Shelby, R-Ala., said on NBC's Meet the Press. "I hate to see this because I would like to see them become lean and hungry and innovative. And if they did and put out the right products they could survive." Such facile rhetoric has been in vogue since at least 1978 and is as obsolete as a Chevy Vega. In 2007, more than 9.3 million "nobodies" bought GM cars and trucks, keeping the brand in a dead heat with Toyota as the world's largest automaker. It was the second-best sales year in GM's 100-year history.Were buyers just being charitable? Does "nobody" want a Corvette? Do the more than 600,000 potential buyers lining up for the new 2010 Camaro not really want one? Clearly, no one wants to buy the Cadillac CTS, Motor Trend magazine's Car of the Year. And what about the fact that Chevrolet dealers were screaming for more Malibus this year to satisfy demand? Was that just public relations? What about Malibu's selection as 2008 North American Car of the Year by the fussy Detroit auto show press and the remodeled model's ranking as best mid-size car in initial quality by J.D. Power and Associates?Chevrolet sales grew more than 4 percent in 2007 to 4.5 million vehicles, with a nearly 34 percent increase in Europe and a 22 percent rise in Asia. There must be a lot of "nobodies" in China, because GM ranks as the best-selling import brand there. And apologies all around for those nasty old trucks that boosted market share for the Detroit Three in the 1990s. GM sold 3.8 million globally in 2007, an increase of 33,000 or 1 percent.As someone who has been reviewing cars for nearly two decades, I can think of few GM products I didn't want to buy, though some of the early Luminas and the misbegotten Pontiac Aztek were quite resistible. The problem isn't that "nobody wants" a GM product, it's the fact that in a hyper-competitive world, a company that once dominated is going to see its market share inevitably slip. Thus, every action appears defensive. The fact is, GM, Ford and Chrysler are still paying for the sins of the '70s and '80s long beyond their expiation(cq) date. Korean car maker Hyundai, meanwhile, is wreathed in laurels for reversing its quality fiascos of the 1980s and is devouring market share from the Detroit Three as well as Japan, Inc. When I say the domestics are "paying for their sins," I mean that literally. GM products bear consistently lower sticker prices than their Asian and European competitors, despite the fact that they typically offer a richer menu of standard equipment and better power options.Take the Cadillac CTS, for example, which retails for $38,980 and comes with a navigation system and OnStar Service as standard equipment. If you turned to import competitors, you might pay $50,625 for a BMW 5-Series or $45,675 for a Lexus GS350 without the nav system.But the Detroit Three are not just paying for their past sins, they're also paying for their past successes. The thousands upon thousands of retirees GM still supports were working on the line when factories were running overtime to keep up with demand. The plants they have closed were built for less competitive times. In 2004, health care cost GM $1,525 per vehicle, compared to Toyota's $201, according to the management consulting firm A.T. Kearney. And health care costs increase with age. Toyota had only 250 retirees in North America in 2004. GM covered about 340,000, including spouses. And those contract provisions were painstakingly negotiated in many a midnight mediation over the decades. It was inevitable that GM, Ford and Chrysler would lose the commanding market share they enjoyed after World War II. Asia and Europe crawled out of the postwar rubble and hit their stride when American industry was growing fat and lazy.Since then, the import brands have expanded their fleets to compete in every market segment, complete with U.S. factories. The Detroit Three lost their virtual monopoly in full-size trucks when Toyota got serious about the Tundra, and Nissan rolled out the Titan, both built in Southern U.S. states hostile to unions and offering extravagant economic incentives. GM has 7,000 dealerships, many of which are protected from closure by antiquated state laws. Toyota has 1,500. While anyone who covers the industry can come up with any number of blunders by the Detroit Three, building unwanted products is not one of the biggies. Not anymore. That was a completely different era. In fact, part of their recent trouble came from the fact that they built vehicles that people did want. Until a year ago, they had a hard time supplying enough Yukons and Silverados for a market flush with cash and credit. Toyota and Nissan were fighting hard for a piece of the action. When pump prices spiked, all of the makers were caught with fleets of gas guzzlers that few buyers could afford, even if they wanted them. But were the automakers to blame for high fuel prices? There's a good argument to be made that the U.S. invasion of Iraq - a government action - and related world instability contributed to the soaring fuel prices that endangered not only the auto industry but the world economy. That's not to say that GM didn't have plenty of high-quality, fuel-efficient cars. With 20 models that get 30 miles per gallon or more, GM offers more than any other maker. They also offer the most hybrid vehicles, ranging from the Malibu Hybrid to Cadillac Escalade And if you want conventional frugality, there's the dutiful little Chevy Aveo, which, at $12,120 costs about $2,000 less than a Toyota Yaris. If it survives, GM will produce plug-in hybrids within a couple of years that should allow most commuters to go to work and back without running their internal combustion engines at all. GM still catches a lot of grief for scrapping the electric EV1 in 1999, but the two-seater was believed to have cost GM $80,000 per unit and could only be leased, not sold. It was a costly boondoggle briefly mandated by one state -- California. Nonetheless, GM soldiers on with development of the Volt, a hybrid designed to run primarily on battery power that might enjoy better success but certainly won't save the company. GM is also playing a key role in the development of so-called "Intelligent Transportation Systems" that will make driving safer and more efficient. In fact, cars that drive themselves are not that far off. Eleven years ago, GM linked eight Buick LeSabres electronically in a system called "platooning." Drivers at the event known as Demo 97 did not have to touch the accelerator, brake pedal or steering wheel. GM's sophisticated OnStar communications system is also seen as a bargain basis for future communication between vehicles. The system would also provide 360-degree visibility and would cost much less than the government's proposed $3 billion to $10 network. GM could be the beneficiary or the victim of government action, but the government has been deeply involved in the automotive business for most of its existence, from catalytic converters to air bags, which, by the way, GM pioneered. Should the U.S. government lend taxpayer dollars to the Big Three? We're talking about a loan, here, not an outright gift like the hundreds of billions of dollars we have poured into Iraq, including $9 billion in cash that simply disappeared. Some respected economists argue that bankruptcy may be the only way for GM to hack the Gordian knot of contracts, laws, regulations and debts dating back to an era of black-and-white TV. But GM questions whether the world's largest automaker could survive bankruptcy. Who would trust a warranty or parts supplies for a company that might not be around next year? If you're occupying an ivory tower or a talk-show microphone, you have the luxury of debating economic theory. If you are among the one out of 10 workers who depend on the auto industry for your daily bread, the question is a little more immediate. At the end of the day, GM may go under, taking much of the world's economy with it. To think that they survived the Great Depression but perished in their 100th year would be a bitter pill to swallow. But let's hope that historians don't blame the demise of the brand on cars that "nobody wanted." (E-mail Richard Williamson at motorfriend(at)sbcglobal.net)
General Motors: venerable, but vulnerable
Submitted by SHNS on Thu, 11/20/2008 - 15:58
Paying taxes unites us. It also divides us. People can pay five and even six times more in state and local taxes than other folks in similar circumstances making similar incomes.
Who's got your number?
In one of the fastest-growing forms of identity theft, crooks are stealing tax refunds by swiping personal information and using it to trick the Internal Revenue Service.
Electric cars would cost the
Electric cars would cost the equilalent of 60 cents a gallon to charge and drive. The electricity could be generated from solar or wind sources.Fossil fuels are finite. We are using oil at twice the rate we are discovering new oil. We need to get on about the business of becoming energy independent and using alternative sources of fuel. The high cost of gas this past year seriously damaged our economy and society. While we are doing the happy dance around the lower prices at the pumps OPEC is planning further production cuts to drive prices back up. We have the knowledge, we have the technology, what America lacks is a plan. Jeff Wilson has a new book out that is beyond awesome. The Manhattan Project of 2009 Energy Independence NOW. He walks you through every aspect of oil, what it is used for besides gas, our depletion of it. The worlds increased need ie 3rd world countries becoming more modernized and consuming more. He explains EVERY alternative energy source and what role they can play to replace oil. His research is backed up with hard data and even includes a time frame and proposed legislative agendas to wean America off oil. www.themanhattanprojectof2009.com
Luckily, there is a solution
Luckily, there is a solution to the outrageous price of gasoline, an electric car conversion; it is possible to convert a regular gasoline car to an electric car. By converting your carparts to electric, you will be changing your car into a more cost efficient vehicle, and you also be helping the environment by using a "clean" fuel.
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You make it sound like GM
You make it sound like GM hasn't done anything wrong?
Were has all there money gone? After years of loosing cash year after year, you would think your not doing something right and make a change?
ok GM pays $1525 per car for health care, but still on a 40k car, that still leaves a good 38.5k! I don't think that cause GM pays a extra $1300 more per car is the reason that Toyota isnt going under and GM is about to close the doors for good!
Why didn't the CEO take a $1 wage in return for a 25 billion loan? Oh thats right cause his company is loosing money day after day, yet he still took 15 million home last year! very nice pay packet.
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The problem is not that nobody wants a GM product, it's the fact that in a hyper-competitive world, a company that once dominated is going to see its market share inevitably slip. Chevrolet dealers were screaming for more Malibus this year to satisfy demand.
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Thanks
Thanks you Richard Williamson for some real facts in the face of all the ignorant verbal assaults on the automotive industry.
Thanks for the well-written
Thanks for the well-written counterpoint to all the exhaustive GM-bashing rhetoric that has been spreading through the media. While it is easy to re-use old steroetypes about some failed products in the past, most informed automotive experts do recognize all the strides GM has made.
It is very disheartening to hear how many non-automotive experts still rely on outdated information and folklore to form an opinion of our company. The discussion over profit-margin and legacy costs is spot-on. In a hypercompetitive environment, a percentage point of advantage really DOES make or break a business. Auto companies that have the advantage of a semi-protected home market with government healthcare systems DO hold quite an egde. And the edge adds up over time.
For years, GM has understood this disadvantage and we have tried to exploit our strengths, which include strong design, and frankly offering great value vehicles at reduced profits to us.
As expressed in this article, millions of customers agree that our products are the best value for the money.
Hopefully, more people will free themselves from the strong anti-GM sentiment and will give our products a look.
I decided to take a design position at GM because I felt it was the automotive company with the best opportunity for design creativity. I stand by my decision and our products. I truly hope more Americans will be more fair and open-minded about our company.
The one thing everyone keeps
The one thing everyone keeps overlooking when talking about electric cars is this; the electric grid will not support very many cars being charged up at the same time. At present, 98% of all electricity generated in America is being used, there is no reserve capicity to use for charging car batteries. Solar and wind are still a long ways off. Nuclear is on the back burner and would take 8 to 10 years for the first plants to come on line.
The bottom line is that by forcing the use of electric vehicles that are required to be plugged in to charge, while at the same time limiting the building of new power generation facilities to only coal and/or gas fired units, we are merely transfering the use oil from the Auto to the Power Plant.
If government regulation can force the transfer of the use of oil from the Auto to the Corporation, then the great OZ (government) can then blame those "evil" corporations for the high price of fuel, leaving the elected officials to blame the Auto companies and the oil producers for all the doom and gloom while promising the American Voters that they will fight the 'evil' corporation for them if they can just get elected.
Without New Nuclear, Wind, and Solar generation facilities, the efforts to convert to electric powered vehicles to save oil is useless.
We have to convert to some type of new fuel, but lets not blame GM or the Oil Companies for our short sighted visions. It will take time and effort to change, but in the end, GM will survive, Oil is usefull in a lot of other products, and we can have clean energy, if we work together and quit depending on OZ (government) to do it for us.
This is a hackneyed old
This is a hackneyed old argument that is simply not supported by the facts. The US has surplus power generating capacity when you look at power consumption over all. We may be close to capacity during PEAK consumption hours, but consumption is slack otherwise. An incentive program to encourage EV owners to charge their vehicles overnight (when demand is low) will actually help utilities balance loads on the grid and operate their plants more efficiently. The American Power Institute has estimated that 80% of current domestic passenger vehicle use could be supported with EVs charged on our existing power plant capacity if overnight charging were the norm.
And people DO respond to those incentives. From 1998-2003, Pacific Gas and Electric offered time-of-use metering to homeowners who leased EVs from GM, Honda, and Toyota with substantial discounts for charging between midnight and 7 am. Home charging stations were equipped with timers, so you just plugged your car in when you got home and left in the morning with a full battery.
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I wrote a piece that looks at this argument and all others
I was getting tired of all the Detroit bashing and instead of constantly retyping my arguments, I wrote an article here in a long article that addresses arguments point by point…
http://uh2l.blogs.com/things_ive_noticed/2008/11/weve-heard-a-lot-of-news-from-the-press-lately-about-the–dire-situation-the-american-automobile-industry-is-in-in-pa.html
It’s not about who’s to blame; it’s about what should we do now for the good of the country.
UH2L
Best plan I've heard on this
The best plan I've heard for really long term survival of Detriot is to get them in the "rural sourcing" business. Not that it's rural, but the idea that you have a pool of skilled workers that could ( and should ) move to a new industry.
Certainly the idea of sons following in their father's footsteps and working for the auto makers isn't viable anymore.
==
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Tears from my eyes .gENEAL
Tears from my eyes .gENEAL mOTOR bankrupt soon.
The company says that while
The company says that while this exact technology will not be in any cars in the near future, some of the features will start to be rolled into upcoming models. What this likely means is the transparent phosphor windshield will be placed in cars and used to display other HUD information, like speed, gas and other indicators.
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