GM January Sales sink 20%

[Havasavana]

Originally Posted by t-rex

Some factors that may possibly slam domestics this year:

1.) The construction bubble is about to burst, and is slowing down significantly in many major markets. This is going to seriously impact profitable fullsize truck sales.

2.) boblutzfan's aforementioned credit nightmare. I have colleagues who earn six figures and live paycheck to paycheck. That's sheer insanity, and that's how much of America lives. In some affluent housing markets, foreclosures are 20% of the market. This isn't the sign of a "strong economy." This ridiculous overspending and overextension, not to mention banks who these days seem to lend money to anyone with a pulse, could very well crash, and crash hard in 2007. If it does, it'll hit the middle class hardest, and that's Detroit's bread-and-butter. Many "expert" economists expect 2007 to be the year when reality catches up to the 2/3rds of the population who have been living in credit-card la-la land for the past decade or so. I hope it doesn't happen too suddenly, or too catastrophically, but it's inevitably going to happen.

3.) Gas prices. Sure they've dropped. But not a soul I've talked to thinks they're going to stay low. I'm stunned by how many people I talk to, with little knowledge of current events, who are familiar with "peak oil" and are aware that the oil ain't gonna be around forever. Many Americans are bracing themselves for the reality of $3-a-gallon fuel. And that means far fewer Yukoburbahoes being sold to the masses. This hurts Detroit twofold: firstly, its core profits are on these vehicles and secondly, Detroit's reputation is that of building nothing but fuel-suckers.

4.) Bad press. Believe it or not, many Americans lump GM and Ford together as one domestic entity. Ford's woes are likely dragging GM down simply because customers view all domestics as the same. This customers nervous. Who wants to buy a Ford when the company may not even exist in 5 years time? Now most of us who follow the car biz know that's not likely to happen, but to the masses of car buyers out there, it's a realistic possibility.

And the bad press isn't unwarranted. Ford's in the pitiful shape it's in because of it's OWN doings. GM and Ford for the past decade have put every dollar into SUV/Trucks and abdicated the car market to the imports. It's not the press' fault that these companies put all their eggs into the collective SUV basket. This segues into:

5.) The "day late and dollar short" problem. Sorry guys, the '08 Malibu isn't going to save GM. Neither will the G8. Neither will the CTS. Good cars they may be, but domestic brands fly so low beneath buyer's radars, it's possible that damage has already been done. These should have been on the market years ago, while GM was at least still on buyers' radars.

Which brings me touch on what other posters have mentioned. I too am REALLY tired of this "just wait until 1996" or "our '09 models are going to revolutionize the market" schtick I've been hearing since the Smith/Zarella era. I don't buy it. In fact I'm sick of it. And apparently so is a huge portion of the car-buying public.

GM's financial situation may have improved, and the products are definitely getting better, but that matters little if customers aren't buying them, and buying them in large numbers. Lambda and Aura aren't niche models, they're volume models. And the numbers I'm seeing don't look very volume-ish to me. And the volume models sales are dropping at a quite alarming rate. I don't see a shred of evidence of any "turnaround" in GM.

While I do in fact hope the best for GM, the harsh fact is, that it may take years, even another decade, for GM's reputation to be equal to that of import brands. I wouldn't toot the horn too loudly in '07.

Great post IMO. GM and Ford are like frail old people, and the likely coming economic downturn/collapse is like the flu. The healthy (Honda, Toyota) get sick, the frail die or are weakened such that they die in the near future. What is so encouraging about GM's retail sales being down 'only' 8%? The 900 SUVs are well stocked now where they weren't a year ago if I recall correctly. And they do have some updated other vehicles on the lots. GM's new trucks will clash with Toyota's new Tundra, and both will hit a declining market for the reasons T-REX has identified. Looking in detail, by model, at Honda and Toyota shows a very mixed bag. Lots, even most, models showed reduced sales, but both companies were bailed out by big gains by a few models. But their high volume stuff, Accord/Civic/Camry/Corolla, did very well. Going from what many people have posted on Edmunds about Camry transmission woes, Toyota might have trouble brewing. Not having another good source of info about this issue, I don't know if the complaints are valid or not, but it 'seems' that a lot of Camry owners are unhappy with their new cars. If the issue is real, and continues to be unresolved, it'll hit the mainstream media, and maybe CR, at some point. But will this be enough to get people to give GM a look?

One other factor is the reduction in GM and GM-supplier employees and the effect on GM sales. These people have bought a lot of GM vehicles in recent years and are likely out of the market now.

[tgagneguam]

Originally Posted by 63GrandSport001

How much did GM reduce fleet car sales? they stated they would drop them by some 40,000 units in Januray and if that is the case then this wasnt that bad.

Why didn't they replace the sales with retail sales, then, particularly when we are led to believe that GM's offerings are just as competitive as Toyota's? Why couldn't we just set the bar low and ask that GM keep retail sales the same? As you know, they fell, too.

If January '07 were an anomaly, then much of the criticism would be unjustified. I think the reason for the frustration evident on this site is that this month is yet another bad month for GM fraught with the usual excuses that quite honestly for many people are growing exceptionally hollow. And rightfully so!

Get your act together, GMNA!

[monkeylizard]

I'm just wondering..... if GM and Ford are reducing the supply to rental companies, then who is supplying them? I'm sure the rental companies still need a steady supply of cars. Could they be Camry's and Accords? Could that have anything to do with the rise in sales for Toyonda? Does Toyonda report their mix between retail and fleet?

[fenwah]

Originally Posted by SJZ3

I'm trying to understand this logic.

People you know will decide not to buy a Saturn because they don't take GM Card points, but they will go buy a Toyota/Honda/Nissan...even though they also don't take GM card points?

Call me crazy, but the problem doesn't seem to be the GM Card Points, they just like the Toyota/Honda/Nissan better.

Unless of course you are saying these people go and buy a Chevy or Pontiac or something. Then as far as GM is concerned they shouldn't care, because they got the business anyway.

I'm in the same boat. I'm under the old GM CC plan. As of right now, I have $3200 in earnings...will max out at $3500 probably in July. I will be buying a car around Labor Day or December 2007. I'm seriously considering buying an Accord instead of a GM vehicle...they just don't have anything that interests me in the $25k - $30k price range. I just talked to a dealer about four hours away. They have a 2006 Infiniti G35X...MSRP $39K...willing to sell it to me for $30K. That's so tempting. Still, I want to wait another 8-12 months with my current car though. It's been paid off for six years...I really don't want a car payment again. The G8 may be the car that gets me into a GM showroom. Looking forward to the unveiling next week...and can't wait to take one for a spin. I find it ironic that one of the few cars I like by GM is being built down under.

[1487]

There is no simple solution and all this whining about the Lacrosse being lame and GM's styling not being up to par and what not is pointless. for basic family transportation most of GM's stable is suitable and comparable to imports. GM has an image problem that is very hard to overcome and many people wont by GM (or domestic period) without incentives. Buyers have come to expect incentives from the Big 3 and many of GM's products, even the good ones like Aura, are going to have trouble selling in large numbers. The Lacrosse, G6, GP, etc. are slumping because they do not have big incentives on them and GM has cut fleet sales. If GM increased those two things you would see better numbers for those vehicles.

Contrary to popular belief in the fantasy land of automotive internet forums people to do not base car buying decisions on grab handles, 4 speed autos, rear armrests, etc. Most car buyers barely know whats under the hood, could care less about grab handles and arent going to pay for bluetooth, navigation or any of the other features that people on here swear are necessary for GM to sell cars. The majority of import buyers dont know if their car has pushrods or not and they arent even concerned about the specific features. They just know imports are reliable and cool and they would prefer to be seen in one.

[Pucks]

Originally Posted by 1487

Contrary to popular belief in the fantasy land of automotive internet forums people to do not base car buying decisions on grab handles, 4 speed autos, rear armrests, etc. Most car buyers barely know whats under the hood, could care less about grab handles and arent going to pay for bluetooth, navigation or any of the other features that people on here swear are necessary for GM to sell cars. The majority of import buyers dont know if their car has pushrods or not and they arent even concerned about the specific features. They just know imports are reliable and cool and they would prefer to be seen in one.

I have to agree with the above. Ask the average soccer mom if her minivan engine is DOHC vs pushrod? Do you think she'd know? It's become a status thing as much as anything else. The quality the past few years, at least, has been there for Detroit -- better than the europeans, not quite as good as the Japanese.

[boblutzfan]

Originally Posted by Pucks

I have to agree with the above. Ask the average soccer mom if her minivan engine is DOHC vs pushrod? Do you think she'd know? It's become a status thing as much as anything else. The quality the past few years, at least, has been there for Detroit -- better than the europeans, not quite as good as the Japanese.

Even if it is just status - then GM needs to offer it. Who cares if the soccer mom knows what DOHC or OHV is - if she "feels" like she is driving an inferior vehicle - then she won't buy it.

Perception, Status, brand equity, features, etc - these are all things that mean nothing to reliability - but everything to marketability. The Malibu is the first non Cadillac GM sedan to offer only DOHC engines. I predict that this smart move by GM will really help the marketing and final sales of 2008 Malibu.

[Realist]

Originally Posted by t-rex

Some factors that may possibly slam domestics this year:

1.) The construction bubble is about to burst, and is slowing down significantly in many major markets. This is going to seriously impact profitable fullsize truck sales.

2.) boblutzfan's aforementioned credit nightmare. I have colleagues who earn six figures and live paycheck to paycheck. That's sheer insanity, and that's how much of America lives. In some affluent housing markets, foreclosures are 20% of the market. This isn't the sign of a "strong economy." This ridiculous overspending and overextension, not to mention banks who these days seem to lend money to anyone with a pulse, could very well crash, and crash hard in 2007. If it does, it'll hit the middle class hardest, and that's Detroit's bread-and-butter. Many "expert" economists expect 2007 to be the year when reality catches up to the 2/3rds of the population who have been living in credit-card la-la land for the past decade or so. I hope it doesn't happen too suddenly, or too catastrophically, but it's inevitably going to happen.

3.) Gas prices. Sure they've dropped. But not a soul I've talked to thinks they're going to stay low. I'm stunned by how many people I talk to, with little knowledge of current events, who are familiar with "peak oil" and are aware that the oil ain't gonna be around forever. Many Americans are bracing themselves for the reality of $3-a-gallon fuel. And that means far fewer Yukoburbahoes being sold to the masses. This hurts Detroit twofold: firstly, its core profits are on these vehicles and secondly, Detroit's reputation is that of building nothing but fuel-suckers.

4.) Bad press. Believe it or not, many Americans lump GM and Ford together as one domestic entity. Ford's woes are likely dragging GM down simply because customers view all domestics as the same. This customers nervous. Who wants to buy a Ford when the company may not even exist in 5 years time? Now most of us who follow the car biz know that's not likely to happen, but to the masses of car buyers out there, it's a realistic possibility.

And the bad press isn't unwarranted. Ford's in the pitiful shape it's in because of it's OWN doings. GM and Ford for the past decade have put every dollar into SUV/Trucks and abdicated the car market to the imports. It's not the press' fault that these companies put all their eggs into the collective SUV basket. This segues into:

5.) The "day late and dollar short" problem. Sorry guys, the '08 Malibu isn't going to save GM. Neither will the G8. Neither will the CTS. Good cars they may be, but domestic brands fly so low beneath buyer's radars, it's possible that damage has already been done. These should have been on the market years ago, while GM was at least still on buyers' radars.

Which brings me touch on what other posters have mentioned. I too am REALLY tired of this "just wait until 1996" or "our '09 models are going to revolutionize the market" schtick I've been hearing since the Smith/Zarella era. I don't buy it. In fact I'm sick of it. And apparently so is a huge portion of the car-buying public.

GM's financial situation may have improved, and the products are definitely getting better, but that matters little if customers aren't buying them, and buying them in large numbers. Lambda and Aura aren't niche models, they're volume models. And the numbers I'm seeing don't look very volume-ish to me. And the volume models sales are dropping at a quite alarming rate. I don't see a shred of evidence of any "turnaround" in GM.

While I do in fact hope the best for GM, the harsh fact is, that it may take years, even another decade, for GM's reputation to be equal to that of import brands. I wouldn't toot the horn too loudly in '07.

Well said. A harsh, yet realistic view on the current situation for GM. I too am sick of hearing "wait for our new models just around the corner, they will turn things around". While some believe a true turnaround is occuring at GM, I beg to differ. The simple fact that GM's corporate culture remains largely the same as it was 10 years ago means that GM is still in no position to go toe-to-toe with the imports, especially with Toyota, who is about to overtake them in global sales.

[markusername]

I have to agree with some of you who have posted lately. I know of too many people (even within my own family) who simply do not even put GM as a possibility when looking at new cars.

Doesn't matter how high tech, nice, styled, reliable the new xyz is. Doesn't matter if even CR says xyz is better then the camry. They will still not put GM on the shopping list to even consider.

I think someone posted earlier their father owned a GM dealership and they had bought GM for 40 years, yet his daughter and boyfriend would not even consider a GM.

Unfortunately there is not a whole lot that can be done. People have long memories when it comes to something as expensive as a car. I know in my parents case the 4 domestics in a row they bought in the late 70's till the late 80's gave them so much grief! They finally bought their first Toyota camry in the late 80's and now they too fall in the boat of people who will not even consider a GM. Every time they are looking for a new car (every 2 or 3 years) and I even mention something like the new Aura - all I hear from them is 'Son dont you remember what happened the last time we bought GM?'. And that is the end of the argument for them. They remember what happened to the last 4 domestics they bought.

Problem is that for most people (unless your last name is Gates) a car is very expensive and they rely on it as thier lifeline. We all know the domestics screwed over a generation from 1975 to 2000. And a lot of those people will not forgive or forget. And let's be honest, Toyota and Honda have not really given those people a reason to come back.

There is no right or wrong answer. GM has to move forward and continue to produce new cars like the Aura. GM fans need to realize though - it doesn't mean the numbers will be there. A generation has been lost. The war of perception takes years if not decades to change. Even if GM produces the best cars in the world from now on, it will be 2015 before perception starts to catch up to reality.