LTSG part II

[Cdesign]

I wrote the thread, "My plan for Long Term Sustained Growth" before long term sustainability was the catch phrase around DC.

To further update the plan, and make it even more likely to suceed, I am adding one key ingredient.

Cheap Cars. In the US, cars and homes are the two major costs of living. Many people need vehicles in order to work. Riding a bus or train is simply not an option. However vehicle prices have risen steadily, incomes are going down, and there plenty of options at 30k, yet very few under 10k. Therefore, I would propose that GM create a Cheap Car division out of Saturn, instead of killing it off. Ride out the current platforms and start introducing very inexpensive cars. Not Aveo's rebadged, but new inexpensive cars that don't necesarily say "cheap". Look at the new Fiat 500, the original Beetle, Scion, Kia, etc. They don't need 12 inch wheels and to look like a regular sedan after being crushed.

I would say the cars should range in price from 7,000 up to 14,000. With a range of cars under 10k even, there would be a lot of customers who could then buy a new car who previously couldn't, or had few options. In addition, the looks would draw in buyers who would otherwise buy a used vehicle to get something better looking.

In addition, Hummer stays. Instead of trying to become the end all SUV, Hummer becomes a military and farm spec vehicle manufacturer. From a 10,000 dollar basic light weight 4X4 which would be easy to fix and hard to break to a full out armored 150,000 dollar troop transport. They would move towards off-road capable lower priced vehicles instead of loaded up cush-wagons which some people might actually take off road. A cheaper jeep alternative, but not with as many different badges. A 2 door open top jeep style off-roader for 10k, with truck and SUV bodies optional. Hummer would in effect become a government supplier.

Saab, keep them and stop running their show. Let them run on their own and learn from it.

[Bravada]

Cheap Cars. In the US, cars and homes are the two major costs of living.

Forget the US.

Therefore, I would propose that GM create a Cheap Car division out of Saturn, instead of killing it off.

This might actually happen. GM's third-best-selling make worldwide is actually China's Wuling, which is set to expand into "acceptable" small/cheap cars.

Not Aveo's rebadged, but new inexpensive cars that don't necesarily say "cheap". Look at the new Fiat 500, Scion

They aren't cheap. Having said which, EXPENSIVE small cars is what GM should definitely look at.

Saab, keep them and stop running their show. Let them run on their own and learn from it.

There is no show being run. And Saab is GM by now. Having said which, Saab run independently of GM's corporate groupthink and resulting obstacles / compromises might be just what the brand needs.

[1999 White C5 Coupe]

I am 55 years old and when I began driving at age 16, many cars were sold that were basic cars without many options (such as power steering, power brakes, a/c, automatic transmission, radio, etc.). My first car was a used 1965 Chevrolet Malibu 2 door with no options. Cars then without the advanced safety equipment and design of today's vehicles were death traps, and caused many injuries and fatalities.

Given the state of the economy, I suspect you will see a return to a decontented vehicle over the next few years. The vehicle will contain the required safety equipment, but many convenience features will be removed to reduce cost and weight.

[Cdesign]

Originally Posted by 1999 White C5 Coupe

I am 55 years old and when I began driving at age 16, many cars were sold that were basic cars without many options (such as power steering, power brakes, a/c, automatic transmission, radio, etc.). My first car was a used 1965 Chevrolet Malibu 2 door with no options. Cars then without the advanced safety equipment and design of today's vehicles were death traps, and caused many injuries and fatalities.

Given the state of the economy, I suspect you will see a return to a decontented vehicle over the next few years. The vehicle will contain the required safety equipment, but many convenience features will be removed to reduce cost and weight.

Bingo,

I think the saftey features will stay, what I propose is to start a new wave of cheap cars which are cheap, general transportation. This does not mean they need to be boring and ugly though. Roll up windows, basic radio, manual locks, no MP3/4/5 dock, no 40 gig hard drive, just a basic vehicle. ABS and so on would need to stay, but otherwise, offer a truly basic car, and it will catch on. Power seats? Power mirrors? Who really needs these things? If you cut out all the unecesary stuff and put it in a nice package, it could become an icon, like the original beetle. I say keep a radio because if I can buy a head unit at Wal Mart for 25 dollars, GM can make one or buy one for less. Adding 15 dollars to a 7k vehicle is not going to break the bank.

Does GM need to make expensive small cars? That is a horrendous formula. If they make cheap good looking cars that are cheaper than the competition and look better, they could potentially sell millions.

[Cdesign]

to further expand on Bravada's thoughts,

GM needs to stop going up market. When you go up market you are making more expensive vehicles. But who is there to buy them? People are being laid off left and right, incomes in the US are dropping. The people who are not worried about their incomes are buying Bentley's and Ferrari's, mercedes and BMWs.

GM needs to become profitable per unit, period. Then, utilyzing it's global infrasructure, build a true world car. Something that an be sold for 7,000 dollars and be profitable, and be attractive, not a box on wheels.

The Original VW Beetle should be an influence. It was extremely basic, fuel efficient, cheap, reliable and pretty neat to look at. However it should not stop wth one vehicle. A whole brand dedicated this idea would enable GM to offer a variety of vehicles to more people who today can't afford to buy a new vehicle for 30k. I think if the majority of these vehicles were FWD and then some more sporty models were later offered with RWD, even with small engines they'd be a it with younger kids. Also if the weights were kept in check, a basic 2+2 2200 lb car with a 200 hp engine would be a great beginers sports car. It could be offered with a small 100 hp engine in base form as well.
The cars would not need to be tiny either. A midsize 4 door with ample space for 4-5 adults selling for under 10k in base trim, powered by a small fuel efficient engine, wouldn't be fast but it could be cheap and reliable.

Basically, this would enable GM to offer cars at a part of the market no one is going after which is growing. Then, once they do get that big hit in this segment, they'll own it.

I'd rather see them make 5m cheap cars and make 500 dollars on each one, than set up to make 1m mid-market cars and not sell 500k and lose money on each one.