Lutz: Market threatens to kill one of Big Three

[nadepalma]

SOURCE: http://www.detnews.com/apps/pbcs.dll...03070363/1148/

Originally Posted by Detroit News

Lutz: Market threatens to kill one of Big Three
GM exec says automaker in best position to survive
Christine Tierney and Bill Vlasic / The Detroit News

GENEVA -- Intense competition and growing overcapacity could threaten the existence of one of Detroit's Big Three automakers, General Motors Corp. Vice Chairman Bob Lutz said Tuesday.

While Lutz dodged questions about GM's interest in buying the Chrysler Group, he said market conditions are conspiring to eliminate one Detroit automaker down the road.

"If you project out present trends, you can only come to the conclusion that it's going to be an extremely difficult environment," Lutz said in an interview at the Geneva auto show.

But Lutz made it clear that GM, in his opinion, is more likely to survive than Chrysler or Ford Motor Co. "Right now, we're in the best position," he said. "We're approaching the end of the beginning of the transformation of GM."

Analyst Bradley Rubin of BMP Paribas in New York agreed a shakeout is likely. "It's true. It is confusing. There are a lot of products out there," he said.

After losing $10.6 billion in 2005, GM embarked on a sweeping turnaround plan that included cutting 30,000 jobs, selling off assets to raise cash and launching a blitz of new products. Ford and Chrysler are undergoing major restructurings as well.

But making money consistently in their home market remains an elusive goal for GM, Ford and Chrysler.

"We cannot, as an American auto industry, survive long-term with the legacy cost burden that we've gotten," Lutz said. The rising cost of pensions and health care for employees and retirees is a "burden" that could sink one of the traditional Big Three, he said.

"In today's fiercely competitive environment, where every bit of value in the car counts, you cannot prevail in this business if you have a $2,000 cost disadvantage versus your closest competitors."

Lutz declined Tuesday to discuss one of the hottest topics in the industry -- the proposed sale of Chrysler by DaimlerChrysler AG.

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[Randle2I]

More candid talk from the one man in the auto industry that I'd expect it from. What he says could easily come true in the future if Ford & Chrysler don't get their collective acts together. GM too needs to keep its eyes on the prize, otherwise they'll start to lose their way again so quickly after finding it.

[dindak]

Scary but true. Americans don't seem to care though, just keep on buying foreign cars.

[momolos]

Originally Posted by dindak

Scary but true. Americans don't seem to care though, just keep on buying foreign cars.

It's not that the Americans don't care and that is why they are buying foreign cars. I hate to say this but the BIG 3 just now maybe tops the last 4 or 5 years have they started to make nice longer lasting cars. I mean first thing all three had the worst interiors in the market by far. Everybody that I know who went to purchase a new car always looked at the interior as the final piece that swayed them one way or another. I hate to admit this but that is how people think. They work their A** off and they want to purchase the best that they can for their money. And until now the big 3 were not up to snuff.
But thankfully now they are competing way better (well dodge and Chrysler make the worst intriors still) and it will just take a little bit for the people to come back. But they will.
I hope so I have been a fan of GM for a while.

[SuperSS27]

Why, when talking about GM, do journalists always have to bring up the fact that GM lost 10.6 bil in 2005...almost 2 years ago...its getting very old.

I hope Chrysler and Dodge are the company that goes bye bye. They really have nothing going for them.

[saturnsteve]

It will be the Chrysler group. They should have died off years ago.

[BigAls87Z28]

After losing $10.6 billion in 2005, GM embarked on a sweeping turnaround plan that included cutting 30,000 jobs, selling off assets to raise cash and launching a blitz of new products.

just HAD to slip that in there. 2 years ago, but eh what the hell, lets make sure that we cant go one news articles without mentioning ohhhhh btw GM lost 11 billion dollars and send 30k people packing, showing that despite how good they are doing now, that not to long ago, they were down ********************'s creek without a pattle.

[SUPERBADD75]

Originally Posted by saturnsteve

It will be the Chrysler group. They should have died off years ago.

i totally agree. they've nearly gone under at least 2 other times that i can think of, why are so many people so interested in trying to keep them around? just let them slip away like so many other U.S. auto companies have. GM is getting healthier as every day goes by, and hopefully Ford will pull out of their tailspin and start selling some cars. i just don't see how Chrysler can survive.

[dlr]

Originally Posted by BigAls87Z28

just HAD to slip that in there. 2 years ago, but eh what the hell, lets make sure that we cant go one news articles without mentioning ohhhhh btw GM lost 11 billion dollars and send 30k people packing, showing that despite how good they are doing now, that not to long ago, they were down ********************'s creek without a pattle.

It's funny that currently the media does not mention how Ford lost over $12.5 billion last year and they are 2/3 the market share of GM. How come no one is talking about Ford filing for bankrupsty?

[DuSpinnst]

Chrysler can survive, but it won't be American anymore and it will have to be gutted.

Regardless of who owns Chrysler it will be cut up and gutted. I'd prefer DCX to do it versus some yahoo.

[CrunkedRL]

Originally Posted by dindak

Scary but true. Americans don't seem to care though, just keep on buying foreign cars.

Yeah because in the American psyche foreign is better. My lil' brother has already jumped on the band wagon and he's only 18. I can't say the big 3 didn't do it to themselves especially GM and Ford concentrating solely on their trucks and SUVs over the past 10yrs. as opposed to producing an appealing more fuel efficient car. But I think they finally see the light and are producing cars that are highly competitive. However I think it's going to take some time for consumers to react to the change after years of seeing inferior products being cranked out by the domestics. If the domestics let a product fall by the wayside as GM, Ford, DCX did in the past it will surely be their undoing as the market is way too competitive and very few people are forming an alliance with just one automaker anymore. Just keeping with the status quo is no longer an option, domestic carmakers are going to have to be better than their foreign competition in looks personality, versatility, and performance. Then only then IMHO will we see a resurgence in domestic car sales over foreign.

[komododave]

Originally Posted by DuSpinnst

Chrysler can survive, but it won't be American anymore and it will have to be gutted.

Regardless of who owns Chrysler it will be cut up and gutted. I'd prefer DCX to do it versus some yahoo.

I completely agree, but I hope not. The worst would be if Magna buys them. It's the company that just wants the factories and the workers to build car parts rather than cars total. They would disband all car building and pirate everything to become the dominant parts manufacturer.

[smk4565]

He is right, and the US makers can't pay the unions and all those legacy costs. The poor management of the 80s and unions are burying the US them. There are a lot of models, hopefully someone like Mitsubishi goes under first.

GM is in a decent position, in time I think they'll be in better shape with the legacy costs, and they have a lot of good models, but they also have junk like the G5, LaCrosse and the fleet special Impala.

[ponchoman49]

The only way for the big 3 to survive is to drastically trim the huge legacy costs per car. The government of course needs to come up with more ways to reduce health care costs and reduce our dependance on foreign oil. It is getting increasingly difficult to run a business of any kind in these glutiness states. The current crop of vehicles from the big 3 are fairly competitive, except for Chryslers interiors, and that is with this handicap still in place. Imagine if that handicap could be reduced by say $1000.00 per vehicle. That would be enough for GM to offer the 3.6 and 6 speed automatic on more vehicles, for Chrysler to improve the interiors and for Ford to restyle the 500/Taurus to look more impressive and less bland and maybe even to update the old Fox platform sometime soon. Sad to say but it looks like Chrysler will be the one taking the nose dive in the end.

[Norseman]

For the American consumer to buy foreign vehicles and watch their countrymen take buyouts or lose their jobs and observe a major segment of North America’s (US & Canada) economy erode will attest to the weakness of his or her character. Then again, it doesn't matter till it's you. For example, my neighbor is a programmer and he recently lost his job to outsourcing to India. Well, he was whining about it to me the other day and all I could do was point to his garage full of Japanesecrap autos and then ask him, “Why should anyone care about your plight when you quite obviously didn’t think twice about whose job you outsourced when you bought those things?” I know, brutal but true and people really need to start thinking about these things.