Blog Opinion: Forget the balance sheets - Save GM with 4 wheel iPods

[Ming]

Yes, this is just "some guy's blog post", but it's an opinion I thought worth posting since it comes from outside the industry / fandom, and has some merit. -Ming

Forget the balance sheets - save GM with 4 wheel iPods
August 7, 2008 by Richard / ritgrad83
ritgrad83.wordpress.com

Just watched this special program on CNBC titled “Saving General Motors” which puts a positive spin on an otherwise dismal outlook based on recent financial troubles in the US. The program opened with GM looking very upbeat and successful with hot new models from Buick and Chevrolet flying off the dealer lots in an unlikely place - China.

Buick has built and sold more cars in China than in the US and many of them are basically the same as the US models.

The first half of the program focused on GM’s successful strategy to invest in China by building plants and establishing dealer networks long before even the local Chinese automakers were able to establish their brands. This strategy was put in place before Rick Waggoner, GM’s current CEO became the top executive while it was heavily criticized both inside and outside corporate circles. Yet the gamble paid off as China’s economy took off and many ordinary working class residents were able to afford what was once considered a luxury only a few could afford.

It is not clear to me why the program was titled - “Saving General Motors” when it appeared to be doing very well in China and other parts of Asia as well as Europe despite its gloomy outlook in the US with a reported a $13 billion 2nd quarter loss. GM’s balance sheet is still good - over $25 billion after expenses - and the 2nd losses are actually reflection of drastic measures the company is taking to restructure itself in a changing market where other automakers like Toyota, Nissan and Honda have successfully grabbed a larger share.

GM stock eroded from a high of $43.00 per share in 2003 to its current price of $12.74 per share. Many argue that excessively high labor costs and too much focus on trying to sell high mileage trucks and SUVs rather than hybrids or smaller low mileage vehicles are to blame.

GM is is many ways like Apple Computer was before the iPods and iPhone. It has a successful brand name - and it did have good products like the hugely successful Tahoe and Yukon SUVs which have goe through many evolutions - each one much better than the past. Yet those products are no longer hot as gas prices have in some cases exceeded the monthly lease payments.

GM can be saved and its stock value can be reversed if it comes out with hot - I mean really hot and cool products. Not Toyota or Honda-like quality or carbon-neutral-copies of hybrids and methanol/alternate fuel vehicles. GM can build quality like the best of them and it already has with its successful pickups and SUVs. Hybids and alternate fuel vehicles have limited potential as its benefits depend largely on the type of driving the vehicle does mostly (city vs highway).

A cool looking electric car with a battery that can last several hours or at least 100 miles or more between charges with an average highway speed of 70 mph and costs about $25,000 in todays dollars would definitely make people notice. The Toyota Prius is nice - but not attractive enough to boost stock prices. The concept Chevy Volt would classify as hot - with sleek styling and energy efficiency - a rare combination.

Full Blog Post HERE

Also See: CNBC/ saving GM series premiers Aug 6

[Ming]

Flashback 2007:

The Volt is GM’s iPod
May 29th, 2007 | Posted in: General, Latest News
GM-Volt.com

A very thoughtful discussion on the birth of the Volt appeared in today’s Wall Street Journal. The story goes that GM has been feeling the heat and threat from Toyota, a company now known for its green-ness due to the Prius. Seeing the risk of being known as a company that turns out gas guzzlers (i.e. Maximum Bob and his Viper), GM realized that now was the critical turning point in history to re-invent itself. Larry Burns was noted as saying that GM had to come out with it’s equivalent of Apple’s iPod. And so the Toyota Prius-crushing Volt concept was born.

Now that the horse is out of the barn, and treading on the public relations disaster that the EV-1 was, GM is betting the farm on the Volt. Although early estimates are that the car will not be a high volume vehicle, and that the profit margin could be slim to none, GM must get the car on the road. The Volt will allow GM to become known as the leader of the green revolution, and that indeed this new image will be their only hope of survival in the upcoming brave new world of carbon taxes, peak oil, and renewable energy usage. Indeed GM is committing considerable resources developing all the other parts of the car, even though the heart of the car, the final form of the Li-ion battery does not exist.

We at gm-volt.com commend GM for this most honorable effort, and are here to see this car to production.

http://gm-volt.com/2007/05/29/the-volt-is-gms-ipod/

[Ming]

I'm not sure I agree that a (projected) $40,000 car can be a volume seller like an iPod that can be had for a couple hundred dollars, though I'm sure GM would love for that to happen (even if it meant painful shortages of product to sell as the Volt ramps up).

But his blog post also reminded me a bit of a post I made a few days back...one that goes beyond one product (Volt) and into a whole way of advertising that attempts to break with Blue Collar & Cowboys at Chevrolet, and strikes at the heart of Toyohondassan with a trendy, high-tech, Apple/iPod strategy in marketing and the cars offered.

All new GM cars would have built-in Apple/iPod technology similar to Ford's Sync deal with Microsoft.

And great attention would be paid to making all existing Chevrolet cars more appealing to younger customers, to capture the next generation of buyers.

Crossovers, Trucks and SUVs could continue direct mailers (please stop sending them to ME) to people who've expressed interest or have bought large GM vehicles in the past, but what you'd see on TV would be trendy, trendy, trendy.

Non stop. No 3-months "release and abandon" type of advertising anymore for new cars.

It would be Cold Play and Chevrolet all Day, Every day.

I still like my "wired geek" idea:

$11: GM Stock Falls Hard At Market Open On Goldman Downgrade

Or a Steve Jobs like messiah who can make GM hip overnight in the eyes of people who today would never consider buying Chevy, or even Cadillac.

Think of it, the equivalent of a hysteria inducing iPod or iPhone at Chevrolet (or some other big volume GM brand) dealers, instead of catering to the traditional GM customer.

[roteague]

Originally Posted by Ming

All new GM cars would have built-in Apple/iPod technology similar to Ford's Sync deal with Microsoft.

GM would be better off getting the same Ford Sync technology. That way people who don't have iPod's (like me) can connect our devices.

[kodos78]

The original iPod sold for $399/$499 (5GB/10GB) and was hardly a volume seller (in fact, with a Firewire only interface, it left out most PCs, and was pretty much a Mac-centric device). However, it was very cool and could hold more songs that many players in its day. And the Firewire interface meant that you could upload your entire music library in minutes rather than hours through USB 1.1 like most MP3 players.

It was not the volume seller the current generation is (see: Wikipedia for this chart).

Originally Posted by Ming

I'm not sure I agree that a (projected) $40,000 car can be a volume seller like an iPod that can be had for a couple hundred dollars, though I'm sure GM would love for that to happen (even if it meant painful shortages of product to sell as the Volt ramps up).

But his blog post also reminded me a bit of a post I made a few days back...one that goes beyond one product (Volt) and into a whole way of advertising that attempts to break with Blue Collar & Cowboys at Chevrolet, and strikes at the heart of Toyohondassan with a trendy, high-tech, Apple/iPod strategy in marketing and the cars offered.

All new GM cars would have built-in Apple/iPod technology similar to Ford's Sync deal with Microsoft.

And great attention would be paid to making all existing Chevrolet cars more appealing to younger customers, to capture the next generation of buyers.

Crossovers, Trucks and SUVs could continue direct mailers (please stop sending them to ME) to people who've expressed interest or have bought large GM vehicles in the past, but what you'd see on TV would be trendy, trendy, trendy.

Non stop. No 3-months "release and abandon" type of advertising anymore for new cars.

It would be Cold Play and Chevrolet all Day, Every day.

[Saturn69]

Originally Posted by roteague

GM would be better off getting the same Ford Sync technology. That way people who don't have iPod's (like me) can connect our devices.

What about those of us that do have iPods? Can we connect to Sync?

[zabolots]

Originally Posted by Saturn69

What about those of us that do have iPods? Can we connect to Sync?

Yes, Sync supports both iPods and Microsoft's device protocols (Zune, Creative, Sandisk).

[Ming]

I just assumed that Sync was a Ford exclusive deal. If Ford can part with it, or if GM can get its hands on it, then Sync should be in every GM car, from the Aveo up. One might say - especially in the Aveo, even though the traditional Detroit view has been to treat small cars like stripped down rental specials.

[slowinthefastlane]

Originally Posted by Ming

Non stop. No 3-months "release and abandon" type of advertising anymore for new cars.

It would be Cold Play and Chevrolet all Day, Every day.

Apple really only has 3 product lines to market: Macintosh, iPod/iTunes, and iPhone. Also, the Mac doesn't compete with the other two lines. This makes it really easy to carpet bomb the public with non-stop advertising. In contrast, GM has 8 domestic brands and god knows how many models. There's only so much advertising money to go around. Cut the number of models and GM can focus more of their marketing efforts and money on them.

The other difference between GM and Apple is that Apple isn't afraid of alienating its current customers to go after new ones. They've abandoned entire product lines in the past. For instance:

1. Apple II to Macintosh (1984)
2. 68k to PowerPC Macintosh (1994)
3. Mac OS 9 to Mac OS X (2001)
4. PowerPC Macintosh to Intel Macintosh (2006)

All of these transitions either caused current software/hardware to be incompatible right away or after a few iterations of the new product. Each time the transition was made, Apple upset and lost current customers. If GM wants to be more like Apple, it can't worry about losing current customers in product transitions. It needs to do what is right for the company long-term. When the cars are class-leading, the lost customers will come back - just as many of Apple's customers came back to the company.

[Jesda]

Coldplay sucks!

[camaro_freak]

Originally Posted by Ming

I'm not sure I agree that a (projected) $40,000 car can be a volume seller like an iPod that can be had for a couple hundred dollars, though I'm sure GM would love for that to happen (even if it meant painful shortages of product to sell as the Volt ramps up).

But his blog post also reminded me a bit of a post I made a few days back...one that goes beyond one product (Volt) and into a whole way of advertising that attempts to break with Blue Collar & Cowboys at Chevrolet, and strikes at the heart of Toyohondassan with a trendy, high-tech, Apple/iPod strategy in marketing and the cars offered.

All new GM cars would have built-in Apple/iPod technology similar to Ford's Sync deal with Microsoft.

And great attention would be paid to making all existing Chevrolet cars more appealing to younger customers, to capture the next generation of buyers.

exactly... I'm been preaching that tidbit for years now. If GM was smart they'd be fighting to make new younger customers instead of beating the older ones to buy new ones over and over.

[ronald mcretard]

Originally Posted by Jesda

Coldplay sucks!

Amen!

I agree that a hip, gimmicky product is what GM needs to appeal to younger people (who don't necessarily have the ingrained "Detroit cars suck" attitude that their parents do).

[uvaeeman]

Originally Posted by Ming

what you'd see on TV would be trendy, trendy, trendy.
Non stop.

This would (help) solve the problem of too many brands/models to advertise them all. Skip products that people know about or are falling in popularity (I keep seeing commercials in NC for trucks). Constantly have a major marketing blitz on cars that are really friggin cool, really profitable, and/or high volume. Focus on one or two cars from each brand. By focusing on advertising a group of kick-ass cars it may have a halo effect on the other vehicles from each brand.

Of course GM needs to change certain vehicles from each brand into gotta-have-it cars!

No 3-months "release and abandon" type of advertising anymore for new cars.

G8 commercials are already mostly gone here.

[roteague]

Originally Posted by Saturn69

What about those of us that do have iPods? Can we connect to Sync?

Yes, of course it does.

The iPod holds the vast majority of the market; to ignore it would be plain stupid. However, there have been about 2 million Zune's sold in the past year or so, while that is a fraction of the iPod's sold, it isn't a number to ignore. I love my Zune 80 and would love to use it in my next car - with the built in navigation functions, of course.

[roteague]

Originally Posted by Ming

I just assumed that Sync was a Ford exclusive deal.

It is, until 2009. However, the functionality could be duplicated by any good software development shop, using existing the Windows Mobile platform.