GM Slow to Cross Over; Encore Performace of 2005?

[importedtuna]

Motley Fool
GM Slow to Cross Over
Friday January 13, 11:43 am ET
By Jennifer Schonberger

Detroit's houses of steel are strutting their stuff down the runway of the Detroit Auto Show this week with a multitude of unique designs. While Ford and DaimlerChrysler are moving in the right direction, adapting to a changing market in order to boost sales, General Motors may not be so fortunate.

.....

GM doesn't seem to have learned its lesson. After suffering consecutive monthly losses this past fall, an accumulation of approximately $4 billion in losses in 2005, and a junk bond rating, the company continues to bet on large sport utility vehicles. The firm doesn't plan to change its product offering until 2007, when GM will roll out a crossover "bandwagon" called the Buick Enclave. In the near term, GM is making a risky bet that gas prices will deflate and American consumers, who have become fair-weather friends to the SUV, will resume their outsized lifestyles.

At first glance, it's perplexing that GM would come out with large sport utility vehicles, since the gas prices that figured so prominently in the company's major losses are projected to remain high in 2006. GM seems to be setting itself up for an encore performance of 2005; it will probably have to reinstate discounts to move inventory again. That doesn't bode well for the company's bottom line, nor for its shareholders.

Why is GM making such a bet on falling gas prices? Since the company didn't foresee the impact of high gas costs on its products, it didn't begin planning new models until last year. It takes two years to get a car from design to production, which means that newer, more fuel-efficient GM models won't roll out until 2007. As a result, it's likely that the company will suffer at least another year of lackluster performance.

While GM faces more of the same, Ford seems to be tentatively getting its act together by adapting to the market. DaimlerChrysler, however, should continue to lead the domestic automakers, given its unique designs and spot-on timing. I were betting on auto fashion in 2006, I'd put my money on Chrysler.

Entire article --- http://biz.yahoo.com/fool/060113/113717061016.html?.v=1

[SeanCasey]

So funny how the same media bashing GM was redoing their SUV's are the same people who bashed them for being behind (especially interiors)....

It is almost like telling a hungry kid to eat a burger and then punishing him for eating it. Just doesn't make sense. I'm sure when then Hybrid fullsizers come out they will say "yeah but the Prius...."

[paul8488]

Vibe, Equinox/Torrent, Vue, SRX, HHR, Rendezvous, Aztek, Malibu Maxx... yeah, GM's really behind the game there. They make it sound like they won't have any sort of crossover-class vehicle until the Enclave. Load of garbage. Some of these may not be class-topping (or still exist), but GM didn't ignore this category. Also, the SUVs and trucks were getting quite stale, and the market hasn't disappeared yet. In 4 years will everyone be griping that Ford or Dodge are redoing their tired trucks?

EDIT:

The more I think about this the more it angers me. 'Crossovers' aren't well defined, but I see Chrysler with the PT Cruiser, Magnum, Liberty, Caliber, and Pacifica. GM more or less has a counterpart for each. GM even tried with the CSV's, which I'll admit aren't on the mark, but shows that GM wasn't ignoring the category. Ford has the Escape, Freestyle, and Focus wagon/hatch. Seems to me like all three domestics are well on their way on this front, and that Mrs. Journalist needs a kick in the @ss.

[monkeylizard]

Yeah, Chylser is all over the "cross-over" bandwagon. Isn't the Pacifica just flying off the lots? And let's see, other than the Rav4, exactly how many "Crossovers" is Toyota going to have in its fleet this year? The Highlander is a small SUV, not a crossover. And how are those Ford Freelander's selling, I haven't exactly heard abou them having capacity problems meeting demand. Do these people actually think before they write this garbage? And while I'm ranting, is it not well know that Toyota is about to start rolling out a full-size truck. Oh no, GM brought out new SUV's... bad, bad, bad, they are going to backrupt, but Toyota entering investing in a new line off full size trucks in a brand new plant..... rah, rah, rah, they can do now wrong. By the way, what's the fuel economy ratings on that new Toyota pickup,..... hhhhhhmmmmm, let's see, less than a Chevy?

[mjd1001]

The problem I have with this article is the author doesn't give enough attention to the time frame GM's decisions are made in.

Were gas prices rising and the trend away from large SUV's underway when GM decided to make a big push on those redesigns? Yes...BUT...it's not like this decision was made 2 months ago. Gas prices were well below Hurricane Katrina levels, and large SUV's were still selling well. Whether or not large SUV sales slowed...They were still going to be a large part of GM's portfolio...and were going to have to get redesigned in the near future.

If the author's main point was that GM needs to be faster with updates or redesigns of their small and crossover vehicles...fine. But you can't put the blame on them redesigning the large SUV's. They needed to be redesigned anyway.

[CarShark]

Originally Posted by monkeylizard

The Highlander is a small SUV, not a crossover.

No it isn't. It's based on the Camry's platform, not the Sequoia's. The 4Runner is the SUV you're probably thinking of.

[asim]

Ugh! Why do people post this stuff?

[63GrandSport001]

GM is looking to sell some 800,000 cross overs anually

And even if big SUV sales fall they are still going to be highly profitable vehicles to sell.

[Cortazzo]

First of all, the Enclave is the LAST crossover GM will bring to market. Acadia and Outlook come out first. Stupid media...

[gmfan3]

blah, blah, blah....typical gloom and doom. I'm sick of seeing these types of posts.

[Bravada]

God, it's getting ever worse. First, the SUV ate the beautiful, large American sedans, wagons and even coupes. Now even the, arguably handsome, SUVs are getting eaten by some pregnant-flea-lookalike "crossovers". What's next? A Pontiac Aztek revival?

[Buick61]

Don't the VUE, Equinox, Torrent, Rendezvous and SRX count as crossovers? The hell?

[Whirling_Dervish]

Originally Posted by paul8488

Vibe, Equinox/Torrent, Vue, SRX, HHR, Rendezvous, Aztek, Malibu Maxx... yeah, GM's really behind the game there. They make it sound like they won't have any sort of crossover-class vehicle until the Enclave. Load of garbage. Some of these may not be class-topping (or still exist), but GM didn't ignore this category. Also, the SUVs and trucks were getting quite stale, and the market hasn't disappeared yet. In 4 years will everyone be griping that Ford or Dodge are redoing their tired trucks?

EDIT:

The more I think about this the more it angers me. 'Crossovers' aren't well defined, but I see Chrysler with the PT Cruiser, Magnum, Liberty, Caliber, and Pacifica. GM more or less has a counterpart for each. GM even tried with the CSV's, which I'll admit aren't on the mark, but shows that GM wasn't ignoring the category. Ford has the Escape, Freestyle, and Focus wagon/hatch. Seems to me like all three domestics are well on their way on this front, and that Mrs. Journalist needs a kick in the @ss.

If you ever want to make a solid point about good things.....

...never mention the Aztek, never mention the CSVs.


Otherwise, I agree.

[runningshoes]

which would be better for GM - coming out with the line of full-sized SUVs that they heavily invested in developing, or ditching them just as they are about to hatch because the market may have changed (but not to teh extent that nobody's buying full-sized SUVs)

[PeterPuck]

Too bad GM won't market the Rendezvous - it's almost as if they're embarrassed of it because it slightly resembles the Aztek.

And yet it still sells very well, and yearly sales are going up and up. It's almost as if people are saying that they want the Rendezvous, but GM is saying, "No you don't really want that; buy something else."

I think the Rendezvous could have become quite a hit with a little more effort on the part of GM.