US: Financial issues are GM's biggest challenge - Lutz

[kmacleod]

EXCLUSIVE: US: Financial issues are GM's biggest challenge - Lutz

12 Jan 2006
Source: just-auto.com editorial team

Financial issues will continue to hold back General Motors from regaining the ground it has lost to foreign imports in its North American home market – but it is fighting its corner according to product chief Bob Lutz.

“We are increasing our spend on research and development while our build quality meets or exceeds world best standards,” he told just-auto.

“But we are a 98-year-old company with massive legacy costs and it’s going to take time to fix these. We can’t walk away from our pension or healthcare obligations, we just have to make them more bearable.

Full Article here: (just-auto.com)

http://www.just-auto.com/news_detail...t=50530&dm=yes


Ken

[FoMoCo Fan]

This is why I keep saying GM is in worse shape than Ford, the legacy costs are FAR more daunting than those Ford faces, even if Ford's sales are dropping as fast or faster than GMs are.

[Cortazzo]

But I keep hearing about Ford's almost medieval management structure with the fiefdoms and whatnot. That kind of attitude will be a hinderance to progress. I think GM has done a lot of great things, and we just have to wait for more of the products designed under liberated GM to hit the streets. Hopefully then they can make money nad put these media murmurings to rest.

[GMFAN85]

You're right about the Legacy costs. But Ford is worse off in terms of N.A. product then GM is. All the company needs is more new vehicles in this market. Two high volume vehicles (Edge and Fusion) aren't going to fix Ford's woes overnight. They need more product that reach every section of the market. GM is in the right direction already with Chevy.. although the quality of the products and the design of the vehicles still leaves a lot to be desired.

The Malibu should've been as stylish as the Fusion and the Cobalt could've been a lot better if it aimed higher.

[mbukukanyau]

I have always wondered. Why will GM not invest in Malibu, Cobalt and G6.. to match imports. It makes no sense to keep their vehicles sub-par.
In my opinion Impala is better than some imports.. But Malibu needs to step up. There is no good reason why Nissan should be selling Altima better than chevy

[63GrandSport001]

According to some industry insiders its kinda a secret that Ford is in a worse situation then GM. The media is attacking GM because GM is the most attackable of the two companies. Ford's sales have slid for the past 7 years from 1999 and continues to slide. Ford saw a 5% decrease in sales this year compared to GMs 4% decrease and Ford is also seeing loses in the NA market as well.

GMs problem is profits in the NA market, they are trying to work through this problem to their best ability. If it wasnt for the high cost of healthcare then GM would probably be profitable in the NA market. Globally (globally includes the NA market) GM sales have actually increased by about 200,000 units compared to last year and despite sales decreases in its NA market. With the GMT-900s coming out they should be able to sale them without rebates. This should help GMs profit margins a great deal.

The Malibu should have been styled better then it has been styled, but I dont see a single issue with the Cobalt. I would buy one (two door ofcorse) over the civic, corolla, or Focus.

[mgescuro]

Originally Posted by FoMoCo Fan

This is why I keep saying GM is in worse shape than Ford, the legacy costs are FAR more daunting than those Ford faces, even if Ford's sales are dropping as fast or faster than GMs are.

I was just thinking about that.
Why is GM getting more of the media attention, when Ford sales are falling as fast, if not faster, than GM???

[joe1280]

the gmt900s will start rolling the profit in

[New_Mexico_Sunset_on_Rt66]

This was a good comment:
"Pragmatically, Lutz does not believe volume is everything, even on a global scale. “I don’t think anyone can aspire to having anything like 25% market share anywhere anymore. There is too much choice available and everyone is selling right around the world.

“It’s just not reasonable for GM to get back to the days of 30% share of the US market, but we did sell nine million vehicles around the world last year and our main growth is outside North America.”"

Although it's tough for us, as GM enthusiasts, to see giving up the No. 1 slot. But it's true, it is just an esteem thing, it does nothing for the bottom line. Perhaps by scaling back and having improved products, they can grow the market share again. Toyota is doing it with Scion.

He's right. Products are not the problem now. Now it's the "legacy" costs.

[mgescuro]

Originally Posted by Cortazzo

But I keep hearing about Ford's almost medieval management structure with the fiefdoms and whatnot. That kind of attitude will be a hinderance to progress. I think GM has done a lot of great things, and we just have to wait for more of the products designed under liberated GM to hit the streets. Hopefully then they can make money nad put these media murmurings to rest.

GM's done done quite a lot to axe the "feifdoms" and consolidated a lot of the structure.
However, Ford instituted a global collaboration structure many years before GM started.

I think PAG is what is bringing Ford down; however, once PAG"s problems are solved -- primarily Volvo and Jaguar -- it will be an extremely profitable unit.

[mgescuro]

Originally Posted by New_Mexico_Sunset_on_Rt66

“It’s just not reasonable for GM to get back to the days of 30% share of the US market, but we did sell nine million vehicles around the world last year and our main growth is outside North America.”

If the growth is outside the NOrth American Market.... then it is smart for GM to continue to invest outside the NOrth American market.... AND to build cars that are specific to global markets.

This is why GM needs Holden, Daewoo, Opel and Saab more than ever. It is their global presence that is going to keep GM afloat, especially since Chevy and Cadillac need time to ramp up and globalize their product lineups.

[Geotpf]

This is like taking an aspirin to cure the pain but not looking at the underlying cause.

There are two aspects here: Health care costs, and pension costs.

Health care costs are higher for American automakers because American voters want it that way. The Japanese voters want government paid, universal health care, so Japanese automakers have lower costs. The American voters don't, so American automakers have higher costs.

Now, as for pensions, it's not like workers in Japan don't get a pension. However, the Japanese automakers are growing, so there are fewer retirees compared to workers, while the American automakers are shrinking, so there are more retirees. The cause here is shrinking sales causing the the higher pension costs-not higher pension costs causing less investment causing shrinking sales-that is the effect (although once this cycle starts, it's hard to get out of). This cycle also increases the effects of the health care costs. If GM was growing instead of shrinking, none of this would be an issue.

The solutions here are:

1. Have American voters vote for politicians who support universal health care.
2. Make products people want to buy.

[DuSpinnst]

Originally Posted by Geotpf

The solutions here are:

1. Have American voters vote for politicians who support universal health care.
2. Make products people want to buy.

Easy to say, very hard to do.

[Geotpf]

Originally Posted by DuSpinnst

Easy to say, very hard to do.

Well, if it was easy, GM would have done it by now.

[ghughes]

FOMOCO is going to have to merge to survive - maybe even with GM! - face it!