GMI Covers GM's "Crisis Mode"

[2002 Caddy]

Originally Posted by wescoent

GUTEN ABEND!

Good point.. except you and I both know that the "car" that saved Posche from the scrap heap of history was this one:


And you and I also both know that Cadillac is all about cars like this:


It is NOT about this:

[wescoent]

Thanks... I just threw up all over my desk. I still can't get over how bloated that Cayenne looks, especially with little wheels.

I still think if Cadillac made an updated version of the '68 Eldorado, festooned it with all the chrome and wood they could find, and sold it in 3rd world markets, they wouldn't be able to make enough of them. One Middle Eastern sheik actually offered GM 30 million for the Sixteen concept.

[Firebird00]

I think decentralizing the brands would be something to look into. When they merged everything under the Chevy umbrella in 1980, things started going down hill very very quickly and have not recovered. I'm not saying every division should start doing their own engines again, but just return some independence to them. Division managers used to be some of the most powerful people in the USA, now they're barely better than those telemarketers that call during dinner. They're just a dummy figure. I think some inner-office competition could bring out some great ideas and they would be less prone to being shot down by Chevrolet which still wields immense control over who does what in fear of being one upped.

[Ultra Magnus]

Originally Posted by windvale

This is 2008, not 1968.

Division overlap is breaking GM's back.

If GM can focus on product/marketing for just two brands (Chevy/Cadillac) they have a chance at survival. Building every flavor of platform to suit every taste is a losing proposition, and the profit numbers for the last decade bear this out.

While that may be true, I like the look of the GMC Sierra more than the Chevy Silverado. To me, its the best looking truck on the market by far. With that said yes you have to be careful in selecting platforms but it can be done for all brands if you dont try to have every brand offer everything. For example why do we have four lambdas and the possiblity of a fifth (Escalade)? There should be a small car platform, a midsize , a large car FWD, mid/large RWD, Corvette/XLR platform just for the cars. Not all dvisions need every flavor.

[PAULSTS1]

Originally Posted by wescoent

Better idea. Corporate re-shuffling.

Establish a GM Asset Management LLC holding company, then sell the GM brands to this new company for $1 each. They will be responsible for product design, product direction, brand management, and advertising.

In turn, they can spin off the various brands into independent or combined ops.

Then, establish Fisher Coachbuild LLC. They design the exterior and interiors for all GM products, and operate as a contract outfit for GM Asset Mgmt. GM Asset Mgmt pays Fisher to design products, but they will also accept bids from other private product design firms.

Then, take the remaining assets of GM, and rename them GM Assembly. Take existing GM stock, and give shareholders one share of GM Asset Mgmt, and Fisher Coachbuild. Then, have GM Assembly declare bankruptcy, and reorganize.

GM Asset Mgmt can then contract out the vehicle design and assembly to the lowest/best bidder for the contract work, allowing them to focus simply on managing the brands.

Monday Salutations Wescoent:

I like your plan, however remember there must be at least 90-180 days (I forgot the actual time requirements) between the holding company set-up and the Chapter 11 filing. Filing sooner than that might cause the Bankruptcy to be denied. This would be catastrophic, as all the creditors would be allowed to come after that unit without remedy, and place it in involuntary bankruptcy, where the company would have no control.

I think your plan could work well, after the GM/Chrysler swap takes place, with the loan dollars for both GM and Chrysler, a new beginning could be realized. You have shown your inventive thinking, Good Job!

[dracleath]

Originally Posted by peterj2706

Sadly true. They just don't seem to have clue as to where to go next. No best seller, because no best in class (ex. the vette). Always a day late, with products that don't quite measure up to the light of day, or are targeted to yesterday's needs.

Well, they can always sell off another plant/division and pay the bills for a few more days. I'd love to see what their 'golden parachutes' look like, somehow I'm sure that they are very well funded.

Vette, G8, CTS are all best in class, they just are best in a relatively small niche. Malibu is competative for best in class (I'd argue that it's probably on par with the accord and camry). Cobalt SS is the best in its class by far. The problem with all these cars is unfortunatly that they get no marketing (aside from the CTS lately for some reason) and they have a label on them that a lot of people don't trust.

That and that we're in the market from hell.

The problem GM is not the cars. The cruze looks like it should be successful to the point of reaching parity or outclassing honda and toyota's models, the volt is very competative with competing platforms, and the zeta and alpha could easilly give GM the best RWD line on the market just by bringing over the park avenue, building a cadillac zeta, and building a chevy and buick alpha. Which would pretty much give GM a competative entry in every major segment of the market by 2010. They could easilly have the best line up on the market by 2011.

The problem with GM is structural. Too many dealers, too much beurocracy, too many bad decisions in the past, too many outstanding liabilities like pensions, not enough cash. The sad fact is no matter how much GM sells or how good their cars are they are still screwed. They could probably increase market share 10-20% and they'd still be screwed. The numbers don't work out.

What they need to do is something drastic to stop the hemorraging, if bankruptcy is it, then bankruptcy is it.

[hercman]

GM is too big. Too many brands selling the same vehicle. Plane and simple. Split the makes into separate companies let them design develop etc with mother GM overseeing it. If the make fails it's it's own fault not GM.

The GM conglamorant needs to change. Toyota sells plenty of vehicles under two makes, Honda sells plenty of vehicles under two makes. Brand loyalty in GM is dead. Otherwise Toyotas and Hondas wouldn't sell.

Break it up One company for every day cars and one for luxury and one for trucks/SUVs.

Does caddillac really need a truck? no does Pontiac need a cross over? no does Buick need an SUV? no.

You want to keep the names? Well you can have a base model Caddy called the Buick line, you can have the high performance models called the Pontiac line, GMC can have all the trucks and SUVs. Just call it what ever trim it is luxury SUV would be the GMC whatever "Caddilac edition" Or you want that new Chevy with the big V8 and go fast goodies you buy the Chevy wondermobile "Pontiac Edition" Then after about 10 years you slowly fade those monikers out and people will have forgotten the past nameplates.

[wescoent]

Originally Posted by PAULSTS1

Monday Salutations Wescoent:

I like you plan, however remember there must be at least 90-180 days (I forgot the actual time requirements) between the holding company set-up and the Chapter 11 filing. Filing sooner than that might cause the Bankruptcy to be denied. This would be catastrophic, as all the creditors would be allowed to come after that unit without remedy, and place it in involuntary bankruptcy, where the company would have no control.

I think your plan could work well, after the GM/Chrysler swap takes place, with the loan dollars for both GM and Chrysler, a new beginning could be realized. You have shown your inventive thinking, Good Job!

Thanks. Like I said.. just an early framework. Gradually realized, and obviously all the i's and t's would be dotted and crossed.

[SierraGS]

Originally Posted by windvale

Just an alternative thought...but this might be a good time for GM to declare bankruptcy. I know bankruptcy has some downsides, but it would allow GM to do the following:
1) negotiate an even more competitive deal with the UAW
2) downsize to just Chevy and Cadillac, and get rid of overlap once and for all
3) get out of franchise agreements w/ Buick/GMC/Pontiac dealers

I know bankruptcy is a bitter pill...but let's be real, without a massive immediate reorganization GM will fail within a year and probably get taken over by the US government.

As far as GM's reputation taking a hit from bankruptcy...get real, GM's reputation is pretty well sh1t in the public's eye anyway.

GM cannot go bankrupt as much as you would like it to, not one of you recommendations will save GM and the second one is the worst suggestion ever presented on GMI. No buyer is going to "invest" $20,000+ in a product that has a 3 year plus warranty from a bankrupt company - sales will go to zero and any "cost savings" will be meaningless.

Cadillac can barely sell the CTS despite media praise and the fact it represents a good buy and actually has an ad campaign, the rest of the car line is either outdated or subpar.

Chevrolet only has the Impala, Malibu and Silverado that are currently market competitive and the Impala is more value then substance and I the new Lacrosse, Regal and Sierra could outsell them. If B-P-G is cut as others have correctly pointed out these customers will never buy a GM product and will make a point to buy a competitive make which will kill GM permanently.

Chyrsler killed itself by cutting dealers that they had just consolidated with a one company a one sales channel strategy that will not work - even Toyota has three and soon a fourth (something few GMI members have picked up on) Toyota is laughing at GM trying to pare itself into oblivian while Toyota adds sales channels and market share.

The B-P-G strategy is working as you will see when the new LaCrosse and Regal are added, now if GM would only drop Saturn and put Opel models where they belong in the U.S. - in Buick dealers. Great products like the Insignia will sell as Buicks and to import buyers, the idea that Buick, Pontiac or GMC cannot attract import buyers is wrong as anyone in SoCal can attest.
I am surrounded by Buick cars and the Enclave has replaced many RX350's and the number 1 truck next to BMW's and Mercedes is a GMC. GM already has an import sales channel - B-P-G, it just has not put the right product in it.

GM needs to restructure its debt from a government loan for $65-100 billion dollars at starting interest rate of 2% increasing to 7% over 10 years, giving GM the liquidity they need today as well as an incentive to payback the loan before the interest rate jumps.

[PAULSTS1]

Originally Posted by SierraGS

GM cannot go bankrupt as much as you would like it to, not one of you recommendations will save GM and the second one is the worst suggestion ever presented on GMI. No buyer is going to "invest" $20,000+ in a product that has a 3 year plus warranty from a bankrupt company - sales will go to zero and any "cost savings" will be meaningless.

This is just wild speculation, I know of no case model, where a company's just filing for re-organization by itself resulted in a catastrophic sales drop. I agree something negative might happen if this were coupled with a major financial downturn in the economy, credit markets, or unemployment (such as we have today).

Originally Posted by SierraGS

GM needs to restructure its debt from a government loan for $65-100 billion dollars at starting interest rate of 2% increasing to 7% over 10 years, giving GM the liquidity they need today as well as an incentive to payback the loan before the interest rate jumps.

Borrowing money has one big drawback, the debt must be serviced even at 2% the interest on a $65-$100 billion dollars loan would be astronomical! There are companies that borrow that kind of money to acquire another thriving business, but in a company with GMs current debt ratio, a crushing additional debt of even the lesser amount with the knowledge that it will be 2014 before replacement vehicles would be ready for sale-- would be fiscal suicide. You might rethink the scenario based on what is available today, and present another rescue plan. Good try, no champagne yet.



:

[vcs2600]

Originally Posted by SierraGS

Chyrsler killed itself by cutting dealers that they had just consolidated with a one company a one sales channel strategy that will not work - even Toyota has three and soon a fourth (something few GMI members have picked up on) Toyota is laughing at GM trying to pare itself into oblivian while Toyota adds sales channels and market share.

Toyota has two sales channels (Toyota/Scion and Lexus) and they recently announced they have no plans to add a third.

The B-P-G strategy is working as you will see when the new LaCrosse and Regal are added, now if GM would only drop Saturn and put Opel models where they belong in the U.S. - in Buick dealers.

Oh wait, you do want to cut sales channels after all, in fact you want to cut GM's best sales channel. Perhaps your entire analysis is just brand fanboyism?

Meanwhile, Buick/Pontiac/GMC sales are basically in freefall, propped up by fleet sales and discount special G6s. And if, as you say, GM can barely sell the Cadillac CTS, there's no reason to think that a new Buick is going to make any substantial difference to the fate of the company.

[ColinOpseth]

Originally Posted by Buick61

It's times like this that GM's brass needs to think, "WWSD." Or, "what would Sloan do?"

Alfred Sloan pulled GM out of a Durant-induced near-collapse at at time when there were literally hundreds of competitors. Now GM has, what, 10 competing companies? And they don't have a single best-seller? And they haven't turned a profit since 2004? And they got billions of loans from the government and they're still delaying products and canceling programs?

End of days, my friends. End of days.

Your sarcasm is so bitter-sweet. You should volunteer your time to head up GM and make the simple decisions to turn around one of the largest companies in America. I'm sure it's as easy as you've made it to be.

[Blair1955]

I have a question about the possible failure of GM, where would this leave the retirees?


thanks, Blair

[Ed Arcuri]

I am given to understand that one of the fiscal reasons for providing GM with loans or other temporary capital infusions (aka Bailout) is that the taxpayer might be on the hook for all or most of the outstanding pension liabilities anyway.
Thus, the reasoning goes, we can apply the FRAM Rule, "Pay me now, or pay me later." It would be better to assist the automakers to remain in business than to pay the inevitable costs, finacially and socially, of a crack-up.
Cheers,
Ed Arcuri

[Tstag]

There is a strand of thinking that say the government will simply act to bail out General Motors. But what would constitute a bail out? It may not be pretty. It may not simply be loans. After all why should shareholders benefit when the tax payer suffers?

No the US government might decide to buy GM and auction it off in bits. A broken up GM could never easily hold the government to ransom again. This could mean the end of General motors.