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What's Driving GM Sales? Two Words: "Quality Sells"

8K views 63 replies 43 participants last post by  CoolAid 
#1 ·
automotive news

July 22, 2014

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GM Sales Surge Despite Recalls As Barra Proves Quality Sells

General Motors Co.’s Mary Barra is projected to report her second straight quarter of rising sales, adding to evidence that the CEO is weathering the biggest wave of recalls in U.S. automotive history.

Second-quarter revenue may rise 2.7 percent, the average of estimates compiled by Bloomberg.

Barra, who has been before congressional panels four times in six months as the first female CEO of a global automaker, is benefiting from booming demand for redesigned large SUVs and heavy-duty pickups introduced on her watch even as she’s grappled with the almost 29 million vehicles recalled in North America, including 2.59 million compact cars with potentially faulty ignition switches linked to at least 13 deaths. GM shares, as of Tuesday, have gained 6.2 percent since the small-car recalls began in February.

“From a legal, fiduciary, protecting-the-franchise standpoint in the congressional testimony environment, I thought she was phenomenal,” Adam Jonas, an analyst with Morgan Stanley, said Tuesday in a telephone interview. “She navigated a minefield in a way that was really, really good.”

While recall headlines have dominated in the U.S., sales have increased, rising 2.5 percent through June. The total U.S. market rose 4.3 percent during the same period. GM’s results have been helped by new SUVs such as the Cadillac Escalade, which rose 18 percent in the first half, and GMC Yukon, which gained 54 percent. The Buick brand, helped by the new Encore small SUV, rose 13 percent.

The sales gains come as GM reduces its spending on incentives, according to researcher Autodata Corp. The average spending per vehicle on light-duty trucks fell 10 percent during the first half while Ford Motor Co.’s truck spending rose 2.3 percent.

“We expect GM results to improve markedly in 2Q, as the profit impact of transitioning to a new line of full-size ‘heavy-duty’ pickup trucks and large SUVs goes from a modest headwind in 1Q to a significant tailwind in 2Q,” Ryan Brinkman, an analyst at JPMorgan Chase & Co., wrote in a note to investors.

Encouraged by the second quarter, some analysts such as Itay Michaeli of Citigroup Inc. expect GM will forecast an accelerating second half. Second-quarter earnings per share may slide by almost a third to 58 cents. The company projected a $1.2 billion charge in the quarter for recalls.

“If you set aside the ignition-switch disaster, GM has produced an array of cars that people really like,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan in Ann Arbor. “It’s hard to remember that because the ignition recall is such a disaster.”

Truck production, including light- and heavy-duty pickups and large SUVs, rose 18 percent through June compared to a year ago to reach the highest level since the fourth quarter of 2007, estimated Brinkman. GM built more Cadillac Escalades than in any quarter since the first three months of 2008, he wrote.

Average transaction prices on the Escalade “are through the roof,” he wrote. “We expect ‘Suburban-sized’” North American profits excluding recall costs, he said, referring to the large Chevrolet SUV.
 
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#12 ·
I thought this bore repeating.

The one good gift from Dan Ackerson. Say what you will about him, he did have perception enough to give us Mother Mary.

Is it pronounced Bear-a or Bar-a?
BAHR-AH, I believe.
 
#3 ·
Quality? You can't build a vehicle that hasn't been recalled. Quality?

Try idiocy. Stupid people buy Total Recall Motors' vehicles - everywhere you look you find a superior product in nearly every model class.

If you had to pick two TRM models that are worth buying - Impala because it is the best of the worst class of cars (LaTosse and XLS) and Opel Regal - because it is NOT a Buick.
 
#10 ·
Funny, aside from the headline, the article never mentions the word "quality". And here I thought the article would perhaps tell us that GM cars have improved in quality. Have they? Because it's kinda sad that it has taken them 4 decades to discover the Japanes' secret and why the domestics went bankrupt: quality.
 
#30 ·
What will kill me now is if people try to take the profits without the ignition disaster figured in for the next round of contract "negotiations".
 
#35 ·
I don't know about a cut in incentives. I just saved 3500 plus invoice pricing on a crude diesel. $4500 off sticker. On a 27k vehicle.
 
#37 ·
I don't know about a cut in incentives. I just saved 3500 plus invoice pricing on a crude diesel. $4500 off sticker. On a 27k vehicle.
That's a catchy new model name. GM is definitely on the ball here...:fall:
 
#36 ·
Two woids: Re Bates. LOL, J/K of course!! Haha!! :lmao:
 
#38 ·
Some other pertinent quotes from the same article:

“From a legal, fiduciary, protecting-the-franchise standpoint in the congressional testimony environment, I thought she was phenomenal,” Adam Jonas, an analyst with Morgan Stanley
"The sales gains come as GM reduces its spending on incentives, according to researcher Autodata Corp."
"And she continued to clean house, flushing the company of safety problem after safety problem -- including four recalls of less than 100 vehicles and about 17 million vehicles for ignition issues, including more than 12 million in June alone."

This quote, more than anything illustrates why Mary Barra is great for GM: "Barra returned to the Senate for another hearing in July, this time receiving praise from one of her harshest critics. “Mary Barra has stepped up and with courage and conviction has confronted head on the problem and the corporate culture that caused it,” said U.S. Sen. Claire McCaskill, D-Mo. If she can get these folks to come around, she can most definitely get GM employees to rally behind her and the direction in which she wants to take GM.

We, as GM fans, can be proud of the CEO we've been lucky enough to get. She is candid, real, and has taken ownership in a way that hasn't been done in a very very long time. We can and should be proud of the fact that the Toyota propaganda sheet (Consumer Reports) recently ranked the Buick Regal at the top of its class. GM's new cars seem to be no excuses and no holds barred to the point where even CR can't help but recognize them in such a positive light. "No more crappy cars..."

We are lucky that we have two "car people" running GM - Mary Barra and Mark Reuss. I too am optimistic about what the future holds.
 
#40 · (Edited)
Timely.

Autoblog on today's recalls:

"At this point in 2014, it's starting to seem like there are more days with a GM recall than without. Perhaps most troubling about this latest volley, though, is that every vehicle is from the past few years, indicating that GM's quality woes may not be limited to pre-bankruptcy vehicles."

But yeah, quality and all that.....

I'm all for GM but there are some serious blinders in here.

Yay me. My two sig vehicles got recalled today. Both are only up to two a piece so far. Guess I'm lucky I bought so much quality.
 
#46 ·
What Quality? (Maybe perceived quality by the general public).

While having my Volt services went to have a look around our Australian GM range of fine vehicles.....
The only decent panel and light assembly fit is on our Australian built GM cars who's factory will close - Now That's irony !

The rest Korean or wherever made is poor.

Even my USA made Volt, let me know when GM can make head light and tail lights that don't condense water on the inside LOL!
 
#49 ·
The recalls, it appears, have actually been a boon. Holman Jenkins at the WSJ reported recently that GM has been very successful in selling new cars to people who brought in their beleaguered Cobalts. He went so far as to suggest that the current recall-mania wasn't so much trying to get bad news behind GM as it became a sales tactic.

Interesting.
 
#51 ·
I could buy that.

I've been in more GM dealerships in the last few years than many reasonable people would even believe and they are all as high pressure, slimy tactic'd as ever. All the old stupid tricks. "Can't find the trade keys", "How much do you want to spend per month?", relentless call backs, etc...
 
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#62 · (Edited)
"Quality sells". Yes it does and it will be some time before we know whether the cars GM is building now will be quality vehicles. Should read: "Perception of quality sells".

How many time have we heard the claim made that GM is concerned with quality every time a new CEO has taken over in the past 40 years?

The J car was going to send the Japanese back across the sea, the 97 Malibu "The Car You Knew America Could Build", The ION "set to re-energize the small car segment".

The whole Saturn experiment to give GM a blank page on how to build a quality automobile [and whose concepts Olds studied and tried to emulate as well as groups sent to Spring Hill working on the mostly new for 95 Cavalier] and whose techniques would filter into GM's mainstream brands was a failure due to corporate infighting. And recently the 2.5 ECOTEC with the zebra striping in the cylinder walls is cropping up in the "New GM" products. Claim after claim over the years.

Sorry gentlemen: I'm still a skeptic. And I've owned GM cars for the past 25 years and followed the story for well over 40. Heard it all before.

Had my 05 ION recalled for it's ignition switch and cylinder and still can't get the key out of the ACC position. Two complete replacements of the parking mechanism that has the sensor in it related to the ignition switch release. 9 years I've been fighting this, no one but GM techs working on the same problem since new. An opportunity to sell me another GM car? I don't think so.

It will be years before the toilet is flushed of establishment types that built the foundation for GM's bankruptcy. One woman or man is not going to change this culture of incompetence in a year or two with fancy interiors and soft feel surfaces.
 
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