GM puts US models to work in Europe

[coolcaddy]

GM puts US models to work in Europe
By Jorn Madslien
BBC News Online business reporter at the Paris Motor Show

By displaying an American luxury car at the Paris Motor Show, the world's largest car maker General Motors (GM) has made it clear that it is desperate to gain a foothold in Europe's executive car market.



The hope is that the Cadillac STS will eat into the lucrative market segment which is dominated by the likes of Mercedes E-Class and the BMW 5-series.

"It positions Cadillac in a segment it has not previously competed in," said GM's vice chairman Bob Lutz.

"We've paid extreme attention to detail," Mr Lutz added, insisting that driving the STS is a "silent, refined experience".

The car will come with both a V6 and a V8 engine, but crucially, it will not initially come with a diesel engine which is popular within the segment it is targeting.

This could well hamper its success, though over time Cadillacs with diesel engines are due to arrive.

Squeezing Saab

General Motors has been struggling for a long time in the executive car market in Europe, essentially because its only contender, the Saab 9-5, has failed to make significant inroads.

The arrival of Cadillac suggests that GM is preparing to scale back its ambitions for Saab in Europe.

This would be in sharp contrast to its efforts in the US where Saab is seen as a luxurious European marque.

"Saab appears to be concentrating on the US market after launching two models, the 9-2 and the 9-7, exclusively in the US," observed the industry magazine Automotive News Europe.

"Saab dealers want those models for Europe, but so far Saab has refused."

Uncertain future

Saab's relative unpopularity in Europe has sparked speculation about the future of its Swedish factory.

One suggestion is that GM might move the production of at least one Saab model from Sweden to its Opel factory in Russelsheim, Germany.

"In today's world, if you have the right product you can build it in different places," GM chairman Rick Wagoner told BBC News Online.

GM says it will decide by the end of this year which of its European models should be produced where.

Such talk has raised concerns about the future of GM's European operations, in particularly the Saab factory in Trollhaettan, Sweden.

The Saab 9-3 already shares a platform with the Opel Vectra and the Opel Signum models and as such would be a strong contender for a move, though a reverse shift of Opel models to Sweden could be an alternative way forward.

Either way, significant capacity and job cuts are expected during 2005.

New badge

But GM's efforts to shake up its European operations do not stop there.

Another part of its struggle to bounce back after five year's of losses is a decision to rename Daewoo cars as Chevrolets.

"We're going to focus on one brand, a single brand, across Europe: Chevrolet," declared the man given the responsibility of overseeing the changes, GM Europe's new chairman, Fritz Henderson.

Launching the Chevrolet S3X compact sports utility vehicle at the Paris show, Mr Henderson stressed that the marque's main presence in Europe would be in the segment for small and medium-sized family cars.

The Chevrolet badge should help double sales of GM Daewoo cars, most of which will enter exactly the segment targeted by Opel and its UK cousin Vauxhall, creating unwelcome competition for its sister brands.

Distraction

But GM's problems in Europe stretch beyond its 100% owned subsidiaries.

GM also happens to own a 10% stake in the troubled Italian car maker Fiat Auto.

Lutz: "[The STS] positions Cadillac in a segment it has not previously competed in."

The industrial giant Fiat Group owns the remaining 90%, and in January next year a put option that would allow it to force GM to buy the entire Fiat Auto becomes effective.

The put option was negotiated in 2000, at a time when Fiat Auto seemed attractive.

GM now insists recent restructuring moves of Fiat Auto have rendered the option invalid.

Either party could bring the matter to the courts early next year, but this seems unlikely since both depend heavily on cooperative agreements and on goodwill from consumers and politicians.

But regardless of whether or not a massive fight breaks out between GM and Fiat; the issue is bound to distract Mr Henderson as he struggles to sort out the rest of the company's business in Europe.

source

[tgagneguam]

I've read several articles of late with Lutz shooting off his mouth about GM's powerful productive offensive (or some variation on that theme). Doesn't this man ever do any real work?

I know, wait til we see the 2006's...

[Erunion]

Originally posted by tgagneguam@Sep 30 2004, 05:45 AM
I've read several articles of late with Lutz shooting off his mouth about GM's powerful productive offensive (or some variation on that theme). Doesn't this man ever do any real work?

I know, wait til we see the 2006's...

Having a bad day?

[powervette]

Originally posted by Erunion+Sep 30 2004, 07:38 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Erunion @ Sep 30 2004, 07:38 AM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-tgagneguam@Sep 30 2004, 05:45 AM
I've read several articles of late with Lutz shooting off his mouth about GM's powerful productive offensive (or some variation on that theme).&nbsp; Doesn't this man ever do any real work?

I know, wait til we see the 2006's...

Having a bad day? [/b][/quote]
After GM's stupid decision to rebadge Daewoo to Chevy,almost every day is bad :lol:

[espo19047]

Originally posted by powervette@Sep 30 2004, 11:13 AM

After GM's stupid decision to rebadge Daewoo to Chevy,almost every day is bad :lol:

Why is it a stupid decision to rebadge Daewoo to Chevrolet? Does Daewoo have credibility in Europe?

[parakleets]

Originally posted by powervette+Sep 30 2004, 06:13 AM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (powervette @ Sep 30 2004, 06:13 AM)</td></tr><tr><td id='QUOTE'>

Having a bad day?

After GM's stupid decision to rebadge Daewoo to Chevy,almost every day is bad :lol: [/b][/quote]
Powervette,

I see your location is given as "the heart of Europe". I was wondering what Europeans think of GM? Are Saab, Vauxhal and Opel considered seperate entities, or are they grouped together, under the GM umbrella, as Americans and Canadians view Chevy/Pontiac/Buick/etc. What's the perception of Cadillac, and the "new" Opel/Vauxhal/Holden Monaro?

[pkd87]

Looks like GM is serius about selling cars in Europe, way to go GM

[AdmiralViscen]

I think they should focus on making gains in the US, before they break into other markets (outside of China).

[tgagneguam]

Originally posted by Erunion@Sep 30 2004, 07:38 AM
Having a bad day?

Perhaps I was having a bad day, but my criticism of Lutz still stands. I'm sick of Lutz's nearly incessant bantering about great new models like the LaCrosse(?!) and CSV's(?!). Notice how you don't hear too much from Fujio Cho; he just focuses on Toyota steamrolling the competition into the ground.

It's no secret that I look forward to Lutz's retirement. Perhaps GM will look outside of the organization and find a talented person to run their operations for once. Thus far, Lutz has been a wasted investment. (Please, no one needs to explain to me how the industry works - save your wisdom for someone else, as if you really know). Did you ever read his [poorly written, macho-driven] book: Guts? It's 220 pages of the same thing: lots of talk, not much to back it up. He writes about 8 laws of business that frankly I don't think work at all, at least the way he implements them. I'd rather have TMS applied to GM any day; then we'd have something to talk about (other than sliding market share, ever-greater incentives, and razor-thin margins).

Watch, September sales results are due out today or tomorrow, and GM will probably be up less than the overall market. And a high-ranking GM executive will put a spin based on one or more of the following: 1) we had difficult year-on-year sales to compare with, 2) the crisis in Florida hit us worse than we expected, 3) the economy continues to struggle, 4) recent interest rate rises have negatively impacted car buying, 5) the Japanese enjoy unfavorable exchange rates, and 6) we're awaiting a rash of new gotta-have products to reach dealerships. I guarantee you at least one of those excuses will be offered. Meanwhile, the Japanese and Chrysler Group will simply post strong sales increases and offer none of these excuses - not a single one. Then, GM will end off by focusing on the positives within their own lineup (and there are actually some).

It's all pretty standard rhetoric, and most of GMIer's know the routine, whether we admit it or not.

[caling7]

Originally posted by tgagneguam@Sep 30 2004, 03:30 PM
Perhaps I was having a bad day, but my criticism of Lutz still stands. I'm sick of Lutz's nearly incessant bantering about great new models like the LaCrosse(?!) and CSV's(?!). Notice how you don't hear too much from Fujio Cho; he just focuses on Toyota steamrolling the competition into the ground.

Hey there, you wrote a pretty intelligent-sounding post, so it's sad that you would let your personal dislike of Lutz cloud your analysis of his effectiveness, or lack thereof. No matter how you spin it, NOTHING that has come from GM in the past three years has been as a result of Lutz doing his thing. NOTHING. Let me say that again, NOTHING.

All the products were already approved, engineered, designed, and ready to be spit out to the public. All Lutz could do was make MINOR, superficial changes to products that were already 98% completed when he arrived at GM, such as the LaCrosse, CSVs, STS, G6, etc. None of those are his personal work. Even the GTO is nothing more than an imported, pre-existing, bland Australian product that performs pretty well, and could add some MUCH needed excitement to Pontiac's lineup.

Fujio Cho is in a position where he doesn't need to stump around the world, because his company has been run effectively and consistently for the past, I don't know, four decades. Everyone knows Toyota makes good cars already. But Lutz came into a totally foreign environment, a company that almost went bankrupt 12 years ago, made poor quality vehicles for a long time, and was very inefficient. Most of that has changed, mostly due to other talented managers and engineers in the company, but the world is still stuck on the old GM. Someone has to try to change the public's perception so that they'll try all these new and improved products (though still not perfect) and Lutz is just the most recognizeable face and name that GM can put out there. He's doing a lot for the company, even if you can't appreciate it.

[Mikkoo]

I'm an american living in Finland, so I can give my two cents worth
on how GM cars are percieved in Scandinavia.

First off, Saab does well in Sweden, but here in Finland it is not too
popular. Volvos on the other hand are quite prevelant and have
a good reputation as a great winter car that is durable.

Opel has fallen on hard times here. They are way overpriced for the
segment they serve. Believe it or not, French cars are quite a bit
cheaper, but less reliable. However they are very popular. Opel
used to command the leadership spot here, but those days are
over. Finns are big on rally car driving, and many of the most
popular Finnish rally drivers drive french cars. It's almost like
the slogan " Race on Sunday, sell on Monday".

Chevrolet has a small presence here. They offer mostly SUV offerings,
and Finns are fuel conscience, so there offerings don't fit this market Corvettes are well over 100,000 euro's, only the filthy rich can afford,
so you don't see many here. I'm not in favor of re-badging Daewoo's
for the European market. I feel it will cheapen Chevrolets image. Why
sell the prestigious Corvette, and have re-badged Daewoo's that have
a poor reliability record in the same showroom?

Cadillac has been selling the CTS in extremely small numbers. They
must still overcome there image of producing vehicles for the
geriatric set, and the CTS is very pricey at 50,000 euros
I am surprised to see a few 300C's running around, and at 70,000 euro's
for the hemi V8 model, that is in the same price range as big BMW and
Mercedes models here. ( footnote: the euro is around 23% stonger than
the dollar. )

[jro4566]

Finally, Europe sees the STS up-close!

[tgagneguam]

Originally posted by caling7@Sep 30 2004, 04:44 PM
Hey there, you wrote a pretty intelligent-sounding post, so it's sad that you would let your personal dislike of Lutz cloud your analysis of his effectiveness, or lack thereof. No matter how you spin it, NOTHING that has come from GM in the past three years has been as a result of Lutz doing his thing. NOTHING. Let me say that again, NOTHING....

Hmmm, interesting counterpoint. I have witnessed one hyped executive after another, and my frustration stems from the fact. So your claims that my dislike for Lutz specifically - I don't know the guy personally - is really an ill-informed interpretation. I have read about his work, and I continue to read about GM's fate, including in GM's annual report to shareholders, which Lutz plays a role in developing. My guess is that you are not as extensively read.

Remember when Stemple [sic] was put in the top spot? Everyone cheered: finally, an engineer is at the top of GM. That didn't work out so well, since Smale and Company ousted him in favor of Jack Smith. Stemple underperformed.

Remember Lopez, who was supposed to modernize GM's global parts purchasing into one centralized behemoth? That, too, worked out well, didn't it? Before he jumped ship - along with countless confidential documents - to VW, he managed to piss of suppliers more so than ever before. Great insight there.

Oh, and then you gotta love the decision to bring on Bausch & Lomb's marketing guru, Zarella. Remember how he was trumpeted as the next hero of GM? Manage each car like a commodity, he blathered on. Seems like he's not around anymore either. And his management decisions have been unraveled.

I predict Lutz will suffer the same fate. All hype, not much action. Nope, a great 20,000 unit/year niche vehicle like the Solstice is not enough from a man in his position at a company the size of GM. One day, the Board will enforce a premature, albeit costly, forced retirement of another GM executive.

It's no secret that I am not enamored with Lutz as many of you are. And that's not becasue of clouded judgment. I see it purely as another poor business decision at GM. He has underperformed, plain and simple. You and many others are willing to wait another 5 years before more STS-type,/C6-type vehicles are produced in a consistent fashion at GM. I, along with shareholders and customers, am not. You cannot argue with fact: GM's share continues to slide, and Lutz has played no part in efforts to change that.

I'm not so sure why everyone seems so focused on product. Lutz's influence extends well beyond product development, and there aint much happening there, either.

Again, name just one thing that he has done. That's all. And if you cannot do so, then GM has wasted over $10,000,000 on his compensation for nothing.

He's 72, and it's time to move on.

Interestingly, I'm sure I will be bamboozled with the next hyped GM executive, just like most other people. I'll probably end up criticizing him/her, too. It really isn't personal, though.

Incidentally, why do people write in caps? People will emote without having to do so.

[cincygoblue]

Originally posted by AdmiralViscen@Sep 30 2004, 08:32 AM
I think they should focus on making gains in the US, before they break into other markets (outside of China).

I think it is better to plan on succeeding on a global basis now, rather than waiting until all of your platforms are complete. If the vehicle will be successful in another country, go for it. That's why there are executives and Sales and Marketing departments in those countries. If it'll ruin a brand's reputation, don't do it for short term gains.

I think Cadillac has picked a good time to try Europe. The products are competitive and are getting good press in Europe. Time to make a push. Product sales can be done in parallel, not just series. Why focus only on China outside of the US?

[caling7]

Originally posted by tgagneguam@Sep 30 2004, 06:30 PM
My guess is that you are not as extensively read.

Remember when Stemple [sic] was put in the top spot? Rember Lopez, who was supposed to modernize GM's global parts purchasing into one centralized behemoth? Great insight there. Oh, and then you gotta love the decision to bring on Bausch & Lomb's marketing guru, Zarella.

It's no secret that I am not enamored with Lutz as many of you are. And that's not becasue of clouded judgment. You cannot argue with fact: GM's share continues to slide, and Lutz has played no part in efforts to change that. I'm not so sure why everyone seems so focused on product. Lutz's influence extends well beyond product development, and there aint much happening there, either. Again, name just one thing that he has done.

Good guess. Must be true since my opinion disagrees with yours. Anything over five sentences hurts my head. Still, nice of you to condescend and answer a post from one of the simple and misinformed. Cheers!!

As for the executives you mentioned, I had no "insight" and made no remarks as to their performance. You're absolutely right, though. They were hyped and then their results let us all down. We're both saying judge them based on their results, but we disagree on what results Lutz is responsible for so far.

You said you're not sure why we're so focused on product, but then you want to justify your opinion of Lutz's ineffectiveness by GM's shrinking market share. As far as I know the only, or the major factor that affects market share is product, not monetary policy or labor union relations. Lutz's effect on market share will only become evident once the products that he's designed, or heavily influenced, or approved start hitting the dealerships. So far that's a slightly tweaked pre-existing Australian coupe, a slightly tweaked LaCrosse that was virtually already done by the time Lutz saw it, a slightly tweaked almost completed STS, and apparently he had some say over some of the details on the G6 and Cobalt. None of those products have had a year, or even a month on sale (except the GTO) to prove themselves, so how can you already judge Lutz's effectiveness? Even more than that, we should wait, yes wait, until the vehicles designed under his leadership from the ground up start to appear, not just these tweaked products, before we truly make up our minds.

As far as Lutz's responsibilities, I believe it's limited to areas involved in product development, but please correct me if I'm wrong. As far as that goes, I know he designed and implemented the "9-3-1" system for product design, where designers produce 9 concepts for one vehicle, management chooses three that they like, and then the do customer clinics on those until the final product wins out. That should be an improvement over the management and engineer-driven process GM used previously. He was also instrumental in the decision to use Zeta accross their multiple brands, creating the possibility of more interesting products in the future, though not assuring it, I know. I'm sure there's more, but I'm just not as well-read as you, and I'm getting lite-headed from typing all these words.