GM's recovery depends on winning over car buyers

[tgagneguam]

"The reason we made no money on small cars is because — hello — nobody wanted them," Lutz said. "At $1.75 and $2.25 (per gallon), everybody was happy with full-size utilities with V-8 engines. Now that's shifting, so the profitability is going to go down on trucks and the profitability on cars is going up."

Nope. GM didn't make them because GM wasn't interested in making them. It's fine to say that, Lutz. The Corolla and Civic-despite the alleged lack of popularity of small cars-have done well in sales for quite some time; they have been regular top ten sales performers. There's no reason why GM couldn't invest in small cars and duplicate Honda's and Toyota's efforts.

I hope GM works one day to have a consistently strong product-line built in flexible plants. In that way it won't have to play catch up in a big way like it's doing as we speak; it will simply have to adjust production to meet whatever products are in demand. It's possible, but I don't get a sense that GM's really moved by what Honda and Toyota are already capable of. That's a shame, and it's a huge missed opportunity.

[airglow]

Originally Posted by prototype66

"One product launch does not a success make," Henderson said
I wish people would stop saying that stupid line. It is SOOOOO over used!I tell ya , I love the 59-72 era cars but today I would buy a Cruze or even one of the Triplets but not bringing them here kills that idea! A Malibu would be great but after it sheds a few hundred Lbs (or just gets better MPG)
I guess I'll get a scooter until Volt gets here.

Last time I checked the 4 cylinder Malibu had BEST IN CLASS MPG!!!

So why do you want a Malibu that "just gets better MPG"??

2009 Malibu/Aura/G6 2.4L/6 auto = 22/33 city/highway

That is better than every other gasoline powered midsize car. Only the Camry and Malibu/Aura hybrids are better in this class.

[airglow]

Originally Posted by roteague

Well, that is just you. Most people wanted big trucks and SUVs, and that is what the Big3 and Toyota gave them. It is called "give the customer what they want". The market shifted so quickly that everyone was caught off guard, but if the price of oil drops again, the market will shift again.

Personally, I'm thinking about getting a Chrysler Pacifica while I can - the ones I have driven get around 19mpg combined, which is fine with me. I don't want a small car (I used to own an Accord).

I've averaged 21-22 in the winter and 23-23.5 in the summer in my company 2007 Pacifica. My driving is about 25k per year of mostly rural and highway. The old Chrysler 4 speed auto is terrible.

[44 mpg by 2010]

Originally Posted by 1487

Did you not r(e?)ad the part about Euro pricing? GM and Ford build better small cars in Europe because they can charge more. ...
GM sells a European small car in the US. Its called the Astra and its not selling well.

Question: What would the Astra sales be in the US ... IF instead of the 27 mpg(US) combined average for the 1.8 liter machine, it was available as:

1) 32 mpg(US) combined average (comparable FE to the Ford FWD Hybrid Escape/Mariner at about $28k)
http://www.vcacarfueldata.org.uk/sea...s.asp?id=20268

2) 38.6/46.3 mpg(US/Imperial) combined average 1.4i 16v 5 Door Hatchback (approaching the FE of the hybrid Civic)
http://www.vcacarfueldata.org.uk/sea...s.asp?id=20257

3) 47/56.5 mpg(US/Imperial) combined average 1.7CDTi 16v turbo diesel 5 Door Hatchback for about $21,000 (better FE than the Prius)
http://www.vcacarfueldata.org.uk/sea...s.asp?id=20267

Would any of these three configurations be noticed? At least they would have something to make them EASY to advertise.

Would consumers buy? If so which options would they take?

I think many would go for options 2 and 3.

By the way don't get hung up on the EU cost .... you are trying to compare exchange rates. The Astra sells for about USD$ 33k in the UK ... and under $18k in the US (I think it is Belgian built).

Ooooh ... and IF the Astra was built in the US there would be potential of a $15k profit margin .... you think?

Just some things to think about ....

[ChevroletRevived]

Originally Posted by tgagneguam

Nope. GM didn't make them because GM wasn't interested in making them. It's fine to say that, Lutz. The Corolla and Civic-despite the alleged lack of popularity of small cars-have done well in sales for quite some time; they have been regular top ten sales performers. There's no reason why GM couldn't invest in small cars and duplicate Honda's and Toyota's efforts.

I hope GM works one day to have a consistently strong product-line built in flexible plants. In that way it won't have to play catch up in a big way like it's doing as we speak; it will simply have to adjust production to meet whatever products are in demand. It's possible, but I don't get a sense that GM's really moved by what Honda and Toyota are already capable of. That's a shame, and it's a huge missed opportunity.

GM didn't make them because they couldn't make any money on them....

[mobyss]

Originally Posted by neshapop

http://news.yahoo.com/s/ap/20080717/...ge/gm_survival


History bears that out. Wolkonowicz says the Chevrolet Suburban SUV cost about the same as a Caprice sedan in 1985, when demand for SUVs was low, but the Suburban's list price is now more than double that of the Chevrolet Impala sedan. And just a few years ago, Toyota Motor Corp. was offering incentives on its money-losing Prius hybrid, but now it can't keep up with demand, said Global Insight analyst Rebecca Lindland.

Wow, I didn't realize that Suburbans were so reasonably priced in the mid 80's, as compared to Impala/Caprices.

So what this possibly means is that the excessive $10k profit on Suburbans and Tahoes will be going away, and MSRPs will shrink significantly as the profit falls more into line with other GM products. A $24,000 base Suburban in MY2010 (by then all with E85, DOD, and 6-speeds) is worth waiting for.

[johnnyl321]

Originally Posted by throwback

"The reason we made no money on small cars is because — hello — nobody wanted them," Lutz said. "At $1.75 and $2.25 (per gallon), everybody was happy with full-size utilities with V-8 engines. Now that's shifting, so the profitability is going to go down on trucks and the profitability on cars is going up."

This is a lie! How is it Honda has made record profits year over year for 10 straight years mostly selling cars? The reason GM made no money was because they choose to build the cheapest small cars they could. Then they decided not to update the cars (Cavalier I am talking about you) for like 8 years. Why would anyone buy a Cavalier over a Corolla or a Civic during that period? Hey Bob, Americans will buy the best product available, if we had the Corsa instead of the Aveo GM would make money on small cars. Build it in Mexico to keep the price down. Ohh that's right, in your infinite wisdom GM's small cars don't meet US standards because gas prices where never supposed to go up. I'm tired of the excuses leaders are supposed to have vision, are there no visionaries in GM?

Honda didn't have the legacy costs that GM has. There are over half a million GM retirees still collecting pension and health benefits. Lot of these folks have been retired since late 80s/early 90s. Honda has no American retirees and Toyota has about 100. Those costs do eat up an awful lot of money. Look how much an open heart surgery costs, figure that maybe half of 1% of the half million retirees have had to get it. And lets say that heartjob costs a quarter of a million....that would be $625,000,000 for those bills alone!!

[kenman923]

They need to focus on fuel efficient cars in order to win over customers. That's why Honda is selling so many Civics, Accords and Fits while their Ridgeline sales are suffering.

[doh]

Originally Posted by ChevroletRevived

GM didn't make them because they couldn't make any money on them....

Not 100% accurate.

GM ignored them becase they didn't make as much money on them. Instead of making them profitable, or even longed for if they were not profitable, they focsed on the money makers.

Even the 1995 J Car remake could have been a so much better car, with even better rear strut mounts.

My Senario

Lets look for my "First New Car", "well Dad always drove GM" "I'll buy a Cavilier" 2 years later it won't start, Yo take it into the dealership, a anti theft modal is replaced under warranty.

Another year and it sounds like you are driving in a Hay Wagon, you take it in to the dealership, it needs "Rear Strut Mounts" "Sorry Out of Warranty" $400 please.

3 months later your pride and joy will not start again! Pay to tow it in, service dept says "$800 for a new Fuel Pump" You pay, driving away you think "Maybe it is time to look for a new Car" Are you only going to a GM dealer this time?

"I can get a Civic for $249/ month on a lease" GM's answer make the J car $239/ month by placing $$$'s on the hood or inflating the residual values. Instead of putting $$$ into Enginering or giving the $$$ to thier suppliers.

"I want to lease this time because my Cavilier started to cost me $$$ after 3 years" "Well for $10/ month I will try a Civic" 4 Years later the only thing you brought the Honda in for was so called "Normal Maintance" Your next car lease or buy? Will you even look at GM?

Honda wins because people want to buy a 4 year old Honda, they still work well and don't usually break even after 4 years, because of the suppliers not because of the $$$ on the hood.

[PAULSTS1]

I disagree with the premise that : "GM Recovery depends on winning over car buyers."

GM's recovery depends on how in changes internally and what it does to meet the needs and requirements of buyers. The job is never one-dimensional, this is why GM is in trouble: myopia.

Buyers in the USA, DON'T WANT SMALL CARS. We want Escalades that get 40 MPG, we want Cadillacs with 500 HP and big grills that also get 40 MPG. We want an Impala, that can get 45 MPG, and a Tahoe that gets over 35 MPG. We want a Cobalt SS with 260 HP an 50 MPG.

If GM can make that: They will get the business! If they sit drink coffee, and do the usual they need to prepare for Chapter 11 liquidation. There won't be a government bailout at GM, too much debt.

[TRWRacing]

Originally Posted by ScottS

Well, I bought a new G6 to be a daily driver at the 72 hour sale and I'm taking it in for warranty work Friday morning with under 500 miles. It was delivered with a small rip in the leather, the passenger door or dash rattles on anything but the smoothest road and I hear a squeak in the rear suspension on less than ideal roads.

You're not winning me over.

I would say you are going to have to live with the door rattles as I am sure dealer will not be able to replicate them. Inflate your tire pressure high to make it more pronounced when you take it in... Just my .02. My 06 Monte Carlo still rattles and the dealer did nothing. I turn the radio up.

[TRWRacing]

Originally Posted by doh

Not 100% accurate.

My Senario

Lets look for my "First New Car", "well Dad always drove GM" "I'll buy a Cavilier" 2 years later it won't start, Yo take it into the dealership, a anti theft modal is replaced under warranty.

Another year and it sounds like you are driving in a Hay Wagon, you take it in to the dealership, it needs "Rear Strut Mounts" "Sorry Out of Warranty" $400 please.

3 months later your pride and joy will not start again! Pay to tow it in, service dept says "$800 for a new Fuel Pump" You pay, driving away you think "Maybe it is time to look for a new Car" Are you only going to a GM dealer this time?

"I can get a Civic for $249/ month on a lease" GM's answer make the J car $239/ month by placing $$$'s on the hood or inflating the residual values. Instead of putting $$$ into Enginering or giving the $$$ to thier suppliers.

"I want to lease this time because my Cavilier started to cost me $$$ after 3 years" "Well for $10/ month I will try a Civic" 4 Years later the only thing you brought the Honda in for was so called "Normal Maintance" Your next car lease or buy? Will you even look at GM?

Honda wins because people want to buy a 4 year old Honda, they still work well and don't usually break even after 4 years, because of the suppliers not because of the $$$ on the hood.

The premise: GM You pay for quality. Cheap on head gaskets and bushings that fail. I think they have researchers that study how long the first owner keeps a car and just builds it with materials that make it to the 3 year/36 mile mark and how that the 2nd owner has the car by then and is stuck paying for the repairs.

[TRWRacing]

Originally Posted by mobyss

Wow, I didn't realize that Suburbans were so reasonably priced in the mid 80's, as compared to Impala/Caprices.

So what this possibly means is that the excessive $10k profit on Suburbans and Tahoes will be going away, and MSRPs will shrink significantly as the profit falls more into line with other GM products. A $24,000 base Suburban in MY2010 (by then all with E85, DOD, and 6-speeds) is worth waiting for.

Suburbans were made cheap in the 1980s. Trucks used to cost considerably less than cars in the 80s. High gas then as well.

[t-rex]

Originally Posted by Jkujo

You know if GM can make cars as good as the big SUVs the past 15 years... They might just be on to something. I totally agree that the price of a car is going to go up and the price of an SUV will start to decline or stay the same. That's economics 101, but I had no idea that the average price for a small car in Europe is equivalent to $37k in the US. That is just astounding.

The main factor that makes cars in Europe look so expensive is the massive disparity in exchange rate. If the dollar and euro traded 1 to 1, European prices would seem lower to us.

Also, one must remember that the Golf/Astra class is the standard-bearer in Europe. It's the "family car" class much like Malibucamcord is in America. C-class cars aren't budget items in Europe, and drivers there typically opt for the more expensive highly-equipped models. Even the smaller B-class models come equipped much more lavishly, and are more technically sophisticated, than Americans are accustomed to. Europeans buy "budget" by brand (Chevrolet, Koreans, Skoda, etc.) rather than by size.

Factor in other things like substantially higher sales tax (upwards of 33% in France), which, unlike here, is included in the list price. In some countries like Italy, typically the list price is chiavi en mano, or "keys in hand", with all taxes, licencing and registration costs in the list price. There's little of the nickel-and-dime add-on costs that we have here in America.

In some Asian countries, where they too pay $35k-$40k for a Corolla-class car, the list price can often include goodies such a year's insurance thrown in with the list price, and in Singapore, the high costs also include the massively expensive COE (certificate of entitlement), which can reach in the tens of thousands of dollars if bidding gets very high (in Singapore, there are a finite number of cars allowed to be registered per month, and you place a bid, like an auction, to buy a car title, and at their peak a few years ago, COE bids were as high as $30,000 (almost $20,000 US); typically dealers snap up the bulk of the COE's and include it in the car's selling price).

We really have it good in America. Australia/New Zealand and Japan are probably the only places on Earth where new cars can be bought so cheaply.

[t-rex]

Originally Posted by TRWRacing

The premise: GM You pay for quality. Cheap on head gaskets and bushings that fail. I think they have researchers that study how long the first owner keeps a car and just builds it with materials that make it to the 3 year/36 mile mark and how that the 2nd owner has the car by then and is stuck paying for the repairs.

Good point. Penny-pinching killed the Neon's reputation.

Neons were famous for blown head gaskets. A situtation caused because beancounters saved something like $3 per vehicle (can't remember the exact figure but it was something absurdly cheap) by installing rotgut head gaskets.

The Neon was an awesome-driving little sedan that could have carved a niche for itself as a small sports sedan, sort of the way the Mazda3 has a "cut above" status today, but its poor reliability alone was enough to kill its image and relegate it to cheapie status.

While I think things will be different this time around, I'm saddened that it took Detroit until now to treat its small cars properly, rather than redheaded stepchildren.