GM: 2006 Review, 2007 Preview

[Havasavana]

Why should we think the Aura will do so well? There is a 94 day supply sitting out there. Has it not been out long enough? Is the advertising lacking? Maybe sales will build, but so far it doesn't look good to me. The Cobalt has a 98 day supply vs. a 40 day supply for the Civic.

I'm just wrapping up John DeLorean's book "On a Clear Day you can see General Motors". Say what you will about his drug deal and his own car and his lifestyle, BUT as far as I can tell he was a hell of an engineer and a hell of a good manager. Evidently people at GM thought highly of him since he went up so fast and did well at each job. But he just quit. Fed up with the obstructionism, delay and flat incompetence at the top. Bean counters running the show, and this was in the 60's-70's. What was the path of the current CEO? What I'm reading in this book, coupled with Lutz's rant a few days about about CAFE, but really about what he seems to think about GM's continued dependence and focus on big heavy cars and trucks, tells me things haven't changed enough at the top. Imagine you're a mid-level manager within GM who has a view different from what Lutz (and Wagoner) apparently believes. How comfortable would you be in really pushing for what you believed? Lutz talks about 'gotta have' stuff. BS. What the VAST majority of people gotta have is transportation. Most people apparently don't eat and sleep cars. They are happy to buy 'toasters' that work. Bitching about CAFE, CR, or the wrong perception that the general public has about GM is not helpful.

Also, think about the sorry situation GM is in from a management perspective. Lutz is viewed as some kind of savior; if not for him GM would be lost. The guy is how old? Is there not ONE other person within GM who could do what he does? Is there not ONE person outside of GM who could be brought in who could do what Lutz does? Come on. And Wagoner. There were strong indications that the board was wavering in the support of Wagoner a few months ago. But who else? Guess they didn't have an answer. Jack Welch, widely viewed as a management guru, has said the number ONE responsibility of a board is to have a strong bench with several people who could step into the top job and not miss a beat. Does Welch know whereof he speaks? If so, GM is in trouble starting at the board and on down.

So far, I'm impressed with Mulally. He's holding people responsible and expecting them to be prepared for meetings. And he's making moves. I'm afraid it's too late for Ford, but if Ford could lure him, why not GM? At least the guy has a record other than bubbling up within GM. Isn't there somebody else out there of his caliber?

[mkaresh]

On a Clear Day... is an awesome book. Just be aware that it is one person's perspective, and can be expected to make that person look good.

[Havasavana]

Originally Posted by mkaresh

On a Clear Day... is an awesome book. Just be aware that it is one person's perspective, and can be expected to make that person look good.

Right, and this is something that kept coming to mind as I read it. But, he did move up rapidly, which of course some incompetents have done as well, and, unless he flat lied about facts, he turned things around at Pontiac and Chevy. There were plenty of areas, however, where his renderings might not have been accurate.

Of course it really wasn't written by DeLorean, but by J. Partick Wright who used what DeLorean told him as well as gave him in the form of files. I don't know to what extent Wright checked the material with other sources. The credibility of the book though is enhanced by what was written years later by Keller and Maynard as well as by James Womack's book. And by losses in market share that continue over 30 years later.

[63GrandSport001]

I think that in 2007 GM will show everyone in the world why they are the worlds largest auto maker.

[PontiacBixler]

Pricing is still an issue.

How can GM talk a big talk about lowering pricing on their line ups and then make the Solstice have a $21995 price tag???? What happened to Putz-Lutz sasying that the Solstice was to be a sub-$20k car? Greed.... that's what it is....

That only goes to show me that GM thinks every car other than the Solstice is over priced and not worth it. Guess what? That Solstice is WAY OVER PRICED. For the amount of money, you could easily get a new Camaro when it comes out and it will be a much better car.

GM still has not gotten the point.

[Pontiac-Custom-S]

Originally Posted by PontiacBixler

Pricing is still an issue.

How can GM talk a big talk about lowering pricing on their line ups and then make the Solstice have a $21995 price tag???? What happened to Putz-Lutz sasying that the Solstice was to be a sub-$20k car? Greed.... that's what it is....

That only goes to show me that GM thinks every car other than the Solstice is over priced and not worth it. Guess what? That Solstice is WAY OVER PRICED. For the amount of money, you could easily get a new Camaro when it comes out and it will be a much better car.

GM still has not gotten the point.

Are you saying you think that you will be able to get a new Camaro in the 22,000 price range? If you are, you're dreaming! I would think 30,000 or higher for the new Camaro.

Great review/preview by the way!

[ChevyRules]

Originally Posted by PontiacBixler

Pricing is still an issue.

How can GM talk a big talk about lowering pricing on their line ups and then make the Solstice have a $21995 price tag???? What happened to Putz-Lutz sasying that the Solstice was to be a sub-$20k car? Greed.... that's what it is....

That only goes to show me that GM thinks every car other than the Solstice is over priced and not worth it. Guess what? That Solstice is WAY OVER PRICED. For the amount of money, you could easily get a new Camaro when it comes out and it will be a much better car.

GM still has not gotten the point.

Why get a Miata when I can get a Mustang at the around the same price? Why get the Impala when the Malibu is at a similar price point? GM losses $10K on every Kappa sold. The Camaro and Solstice are in two different markets.

Are you saying you think that you will be able to get a new Camaro in the 22,000 price range? If you are, you're dreaming! I would think 30,000 or higher for the new Camaro.

Great review/preview by the way!

WTF? Where are you getting that from? Lutz said it himself for the Camaro to be successful it has to be around $20K with the V6. The only Camaro that will be close to $30K and maybe above it will be the LS3 equipped Z28/SS Camaro.

[komododave]

I hate to be any kind of downer to GM, but Saturn is not GMs great savior. They came up with nothing new, they have nothing extrodinary that is their own. If you want to call anyone GM NA's savior, it is Opel, the company that delivers every Saturn to the dealership except the Outlook and Sky. Incidentally, Opel also has a version of the Sky, the GT. It is identical, just like every other saturn is to an opel. I'm not saying that this is a bad thing, in fact I'm surprised it took this long for GM to import the good cars it produces from Europe. It's just I don't think Saturn as a company should be praised beyond belief. They just happened to be the recipient in greatest need of some new life. It could have easily been Pontiac or Chevy that got these great vehicles. And next year? It will be the year of Zeta from the Aussies and all the great vehicles spawned from the platform coming together and teasing us an incredibly large amount before 2008 and the new rwd vehicles.

[PocoToro]

Originally Posted by Chevy_Rules

GM losses $10K on every Kappa sold.

Where do you get this figure?????????

You read like your a doom and gloom on GM

[civilzues]

Some things from 2007 that are already sparking my intrest:
2008 Enclave, Astra, "BRX" "9-4x" and the Buick theta- hopefully they keep the rendezvous name. 2008 MCE Cobalt along with G5 and a very big hope that the CAMARO comes out in August rather than 2008.

NOTE: when using spell check camaro was not in the dictionary and it asked me to change it with freakin camry. thats not funny at all

[jzchev28]

Originally Posted by mkaresh

Excellent write-up, Nick. Especially the bit on pricing, people don't realize how close GM is to getting rid of huge incentives, which seemed impossible at the beginning of 2006. Only thing I disagree with is your evaluation of Cadillacs new ad theme. I think it won't last long. Time will tell.

Chevrolet Revived, I feel your desires are clouding your forecasts. I don't remember any predictions that Toyota would pass GM in 2006. Can you find one from a reputable source? In contrast, there are plenty of people saying this will happen in 2007. It's all but done. GM itself has been expecting this to happen for some time now, the only question was when. And the when is 2007. Toyota's new capacity is a known fact, as is their ability to spend whatever money is necessary to keep all of those new plants running at capacity.

At the same time, GM's new products will pick up few if any sales overall. What they will do is sell at higher transaction prices, helping profits, and you can count on this rather than share being GM's focus. Just as Toyota can cut prices to hit its volume targets, you can count on GM to raise prices to match any increase in consumer interest. It's what they've done in the past, and it's what they'll do again each time they feel they can.

I'm also confused by your labeling the new Malibu a "heavy MCE." It goes well beyond a MCE. MCE's at most slighly alter the sheetmetal. In the case of the new Malibu, the exterior and interior are entirely new. It's unusual for GM to fully redesign a volume product after just four years on the market, but that's what they've done. A good sign, actually. In the past they would have continued to flog the ugly old Malibu well past its sell-by date.

i think toy-leta will try this year but i think they are goining to fail, and my hopes are its going to cost them a pretty penny as well

[stevecmh]

great to see that Toyota recalled more vehicles this year. hopefully some large news agency will pick up on that story..

GM is defintily in the midst of the big turn around. i cant wait to see what the next few years bring

[ChevyRules]

Originally Posted by PocoToro

Where do you get this figure?????????

You read like your a doom and gloom on GM

Search around GMI. You'll find it somewhere. Too lazy to do it myself.

[racy]

Originally Posted by ChevroletRevived

As you can see, 2007 will bring some very important launches to market. It's a very important product year for GM. Cadillac's most important model, the CTS, will be all-new and better then ever. The STS will be getting a heavy MCE. The test of whether buyers can get past a name and badge on the hood, the Buick Enclave, will be introduced. The new Malibu and Cobalt will show whether or not America is ready to purchase truly competitive Chevy cars in large numbers. The Malibu, not the Aura, will be the true tell-tale of whether or not GM can sell a mid-size car en masse. It’s competent, and it just might be the first GM mid-sizer to truly give the Camcord a run for it’s money. Many products will be receiving MCE's for 2008, as the lineup revamp continues. MY 2007 products that were introduced late in the year will start to hit their stride, affecting GM's sales numbers and profitability significantly. The Lambda crossovers and GMT-900 trucks will have large average selling prices and high profitability per model. 2007 is a pivotal year. In a product war that is just heating up, GM is ready for battle in 2007, with significant product launches and programs in place that will continue 2006's momentum. 2007 really is the year when it all comes together, as GM's product offensive picks up speed.

I have three questions:

1. Any word on whether the Astra will be offering a diesel powerplant here in the states ? I *really* think GM has an opportunity to take the lead in the upcoming diesel trend. I hope they don't blow this one.

2. Any details on the Cobalt enhancement? Will it be something like a refresh that includes new radio knobs, or will it be more indepth with different powertrain options and design change? Here is my fear with the Cobalt: GM was happy to announce that the Cobalt is finally profitable. Therefore, they will invest no serious money into the refresh in order to retain the "profitibality" status for the model. End result, like too many GM vehicles to list, the Cobalt will quickly become uncompetitive, wither and die on the vine. My hope with this vehicle is that they not only stay competitive, but shoot for class leadership. GM, please do the right thing with the Cobalt.

3. What is the realistic forecast for the Aveo? Will it go away, will it be mildly refreshed, or will it be enhanced enough to compete with the other new subcompacts?


Thanks for the nice write up.

[racy]

Originally Posted by Havasavana

Lutz talks about 'gotta have' stuff. BS. What the VAST majority of people gotta have is transportation. Most people apparently don't eat and sleep cars. They are happy to buy 'toasters' that work. Bitching about CAFE, CR, or the wrong perception that the general public has about GM is not helpful.

I was embarrassed when I read the Lutz comments on CAFE standards. It made me wince.

His statements align precisely with what I say once a week on this board: For each bit of encouraging news we get from GM, we get an equally horrid bit of news that completely cancels out any hope and ultimately returns me to a state of despair with regards to thoughts about GM in general.

One week we get Wagoner talking publicly about plugins, and the very next week we get Lutz making an arse of himself and everyone around him by blaming GM's woes on strict CAFE standards. Just when I think GM is turning the corner, I hear something that reminds me they are still oldschool corporate mentality, talking out of both sides of their neck.

Will the real GM please stand up?