GM Finally Steps Up

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Thread: GM Finally Steps Up

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    GM Finally Steps Up

    Under fire, the automotive giant will unveil its plan Tuesday for coping with $4-a-gallon gasoline.

    NEW YORK (Fortune) -- In opera, it isn't over until the fat lady sings. In the auto business, it isn't official until General Motors opens its mouth.

    That day comes Tuesday in Wilmington, Delaware when embattled GM (GM, Fortune 500) chairman and CEO Rick Wagoner will explain to shareholders just how the automaker plans to survive the changes sweeping the industry.

    Observers from Tokyo to Toledo will be paying close attention.

    Automakers are going through an unprecedented two-dip depression in the U.S. Not only is the subprime crisis and the attendant economic slump driving sales to a 15-year low. But also, expensive gasoline and looming federal and state fuel economy standards have sent panicked consumers fleeing from their pickup trucks and SUVs, which are very profitable for Detroit, into low-profit or no profit passenger cars.

    Late to catch this trend as usual, General Motors and Ford (F, Fortune 500) are frantically rewriting their product plans for the next dozen years to account for changing standards while they try to prop up sales of their current model lines in the short term.

    Meanwhile, there is chaos at the nation's dealerships. Light trucks aren't selling so they are sitting in inventory. Owners aren't buying because they either can't sell the truck they have or can't get the price they need in order to afford the down payment on a new one. Other customers, who took advantage of easy credit terms a year or two ago, are failing to make their monthly payments and getting their vehicles repossessed.

    Ford stepped up the plate first. Twelve days ago, it announced production cuts, the accelerated introduction of more small cars, and continued shrinkage of the company. Along with that came the news that it couldn't make the auto business profitable in 2009 as it had promised, and then later, that its U.S. market share would fall below the level that it had targeted.

    Expect GM to announce much of the same production cutbacks and shifts in product emphasis on Tuesday. It won't be as specific about future earnings as Ford because it got out of the guidance game a couple of years ago.
    More at link: http://money.cnn.com/2008/05/30/news...tune/index.htm
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    Re: GM Finally Steps Up

    Well, this is what Rick would IDEALLY tell share holders tomorrow, although it is unlikely:

    1. A specific time frame for building all vehicles with ethanol capability. Face it, the sheer fact of GM announcing this would sink oil prices starting the minute it is announced. If GM implemented a plan like this, I could assure you that the ethanol industry would become more viable and the infrastructure would improve drastically to give the people a true choice of which fuel to buy. GM has the sheer size and market share to pull this off.

    2. A no nonsense axing point for all USA GM factories. Sure, it would hurt but it has to be done. Give a date of 2015 (off the top of my head) as the very last day of the existence of a USA GM factory. Implement this by slowly utilizing other factories around the world by building off of global platforms. GM does not need to negotiate with the UAW one bit, just tell them the way it's going to be. GM has the right to close any of their factories at any time. If the build quality lessens because of disgruntled UAW workers, make sure that swift and adequate actions are used to ensure product quality.

    Again, this is a pie in the sky chance but it would be the right thing for GM to announce on Tuesday.
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    Re: GM Finally Steps Up

    I wouldn't want GM to totally pull out of the country....but I would support them moving into new factories in areas where the UAW currently has no presence. If they were to build a couple of assembly plants in an area with a huge blue collar workforce that isn't union friendly, like, say, Houston and simply didn't allow the UAW in....I don't see a problem with that. I doubt the UAW would be as quick to go on strike if the plant is in the middle of nowhere, Alabama even if they were involved.

    Hyundai and Mercedes Benz opened new, modern plants in the Birmingham area. Toyota opened a plant in San Antonio. Nissan started to spend billions in the Jackson, Mississippi area about a decade ago.

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    Re: GM Finally Steps Up

    Late to catch this trend as usual, General Motors and Ford are frantically rewriting their product plans for the next dozen years to account for changing standards while they try to prop up sales of their current model lines in the short term.
    This has been like watching a car crash in slow motion. Standing on the side lines, it's been painfully obvious for several years that fuel expenses would likely rise sharply and that GM's small car portfolio was agonizingly substandard.

    As the GMT-900 beasts were rolled out, they seemed absolutely huge and out of place with this impending reality. I realize that the big trucks offered good margins, but how much strategic vision did the company demonstrate?

    It's gonna be a rough year.

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    Re: GM Finally Steps Up

    Quote Originally Posted by Clownzilla View Post
    Well, this is what Rick would IDEALLY tell share holders tomorrow, although it is unlikely:

    1. A specific time frame for building all vehicles with ethanol capability. Face it, the sheer fact of GM announcing this would sink oil prices starting the minute it is announced. If GM implemented a plan like this, I could assure you that the ethanol industry would become more viable and the infrastructure would improve drastically to give the people a true choice of which fuel to buy. GM has the sheer size and market share to pull this off.

    2. A no nonsense axing point for all USA GM factories. Sure, it would hurt but it has to be done. Give a date of 2015 (off the top of my head) as the very last day of the existence of a USA GM factory. Implement this by slowly utilizing other factories around the world by building off of global platforms. GM does not need to negotiate with the UAW one bit, just tell them the way it's going to be. GM has the right to close any of their factories at any time. If the build quality lessens because of disgruntled UAW workers, make sure that swift and adequate actions are used to ensure product quality.

    Again, this is a pie in the sky chance but it would be the right thing for GM to announce on Tuesday.
    I agree on the first point, Especially given the ethanol requirements that I believe are built into the new Fuel Economy laws. I don't know if flex fuel is proprietary somehow, or the imports just don't buy into the concept but an announcment like that to say all GM cars will be flex fuel would have a major effect on the industry. It's possible that Ford would then jump on that wagon very early as well since they could probably implement a sweeping plan like that very quickly as well, and we'd see a rapid expansion of ethanol infrastructure and accelerated research into non-food ethanol production.

    On the second point I disagree. Not only would GM no longer be a domestic automaker in my eyes (thereby immediately eliminating me from their customer base) but given the state of the economy, it would be foolish. As the dollar weakens, production will be moving more and more back into the country, why would you want to be on the wrong side of the exchange rate?

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    Re: GM Finally Steps Up

    The title to the thread is not what I thought was going to be in the article at all.

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    Re: GM Finally Steps Up

    Quote Originally Posted by ByTheLake View Post
    This has been like watching a car crash in slow motion. Standing on the side lines, it's been painfully obvious for several years that fuel expenses would likely rise sharply and that GM's small car portfolio was agonizingly substandard.

    As the GMT-900 beasts were rolled out, they seemed absolutely huge and out of place with this impending reality. I realize that the big trucks offered good margins, but how much strategic vision did the company demonstrate?

    It's gonna be a rough year.

    What can you say to GM about this? To quote Hyundai.."DUH"

    I'm a big GM supporter, but todays conditions snuck up on us just a bit faster then continental drift. But don't worry, I hear Pontiac is getting the G3/Wave to help out with the small market. BRILLIANT!

    Hey, can anyone tell me why PONTIAC can sell the G3, VIBE, G6 etc. as 4 doors models but not the G5? Like that is what is going to tarnish Ponitac's reputation (not that the old girl has much reputation left anyway).
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    Re: GM Finally Steps Up

    Quote Originally Posted by ByTheLake View Post
    This has been like watching a car crash in slow motion. Standing on the side lines, it's been painfully obvious for several years that fuel expenses would likely rise sharply and that GM's small car portfolio was agonizingly substandard.

    As the GMT-900 beasts were rolled out, they seemed absolutely huge and out of place with this impending reality. I realize that the big trucks offered good margins, but how much strategic vision did the company demonstrate?

    It's gonna be a rough year.
    I cant believe people here are so easily influences by half ass articles like the one here. The GMT900s came out in 2006 which means that they were likely under development in 2001 or 2002. GM (or anyone else) cannot just cut a billion dollar product overnight because gas prices went up. Even in 2006 gas prices werent high compared to today. MEanwhile companies like Toyota who are supposedly on top of every trend are launching huge gas guzzling pickups and SUvs and no one in the press cares. This time last year the media was swooning over the Tundra and saying how it was the import truck that was going to break the Big 3's stranglehold on the pickup market. In 2008 the media ignores the Tundra and pretends that only the Big 3 spent money developing trucks. The best sellinng hybrid is the Prius and its been out since 2004. Toyota didnt develop the Prius in response to $4 a gallon gas because when the Prius was being engineered gas was under $2 a gallon. Toyota was in the right place at the right time and they are reaping the benefits. Even with the Prius under their belt Toyota spent a billion dollars on a new 14 mpg pickup. IF they know so much about the market and anticipated gas prices why would they do that?

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    Re: GM Finally Steps Up

    Quote Originally Posted by 1487 View Post
    I cant believe people here are so easily influences by half ass articles like the one here. The GMT900s came out in 2006 which means that they were likely under development in 2001 or 2002. GM (or anyone else) cannot just cut a billion dollar product overnight because gas prices went up. Even in 2006 gas prices werent high compared to today. MEanwhile companies like Toyota who are supposedly on top of every trend are launching huge gas guzzling pickups and SUvs and no one in the press cares. This time last year the media was swooning over the Tundra and saying how it was the import truck that was going to break the Big 3's stranglehold on the pickup market. In 2008 the media ignores the Tundra and pretends that only the Big 3 spent money developing trucks. The best sellinng hybrid is the Prius and its been out since 2004. Toyota didnt develop the Prius in response to $4 a gallon gas because when the Prius was being engineered gas was under $2 a gallon. Toyota was in the right place at the right time and they are reaping the benefits. Even with the Prius under their belt Toyota spent a billion dollars on a new 14 mpg pickup. IF they know so much about the market and anticipated gas prices why would they do that?
    That's because the US Media WANTS every US auto company to fail. They are no good, and can't compete no matter what they bring to market!

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    Re: GM Finally Steps Up

    Quote Originally Posted by Ambalanche View Post
    That's because the US Media WANTS every US auto company to fail. They are no good, and can't compete no matter what they bring to market!
    It's absurd - automobiles were first introduced in the United States - and now foreigners are beating the United States at its own game. GM, Chrysler, and especially Ford are suffering a lot of pain right now.
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    Re: GM Finally Steps Up

    ...Now, when there is so much confusion in the market place and among investors, is the time for Wagoner to step up, create a vision for the months ahead, and suggest how GM and the rest of the auto industry are going to meet this looming challenge...
    Rick hasn't stepped up to the plate for the six or so years he has been head of GM, so I'm pretty clear tomorrow won't be that much more inspiring a day for the Rickster, either.

    And I think Alex, in writing this article, surprisingly overstates GM's influence in today's automotive market. I'm not so certain what his motivation was.

    Quote Originally Posted by Ambalanche View Post
    That's because the US Media WANTS every US auto company to fail. They are no good, and can't compete no matter what they bring to market!
    I know that you know that Detroit is primarily responsible for Detroit's failure, Ambalanche. The media may or may not want Detroit to succeed-I don't know if that's really true-but Detroit can blame itself that it has no real compelling vehicles on the lot during times of high gasoline prices. Like Toyota and Honda do.

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    Re: GM Finally Steps Up

    Quote Originally Posted by A.J. View Post
    It's absurd - automobiles were first introduced in the United States - and now foreigners are beating the United States at its own game. GM, Chrysler, and especially Ford are suffering a lot of pain right now.
    Detroit mostly makes it easy for foreign competitors to take their market share. As I see it, with the exception of a few niches, Detroit largely walked away from automaking; foreign brands simply filled the void with largely more competitive vehicles. It was un-American of Detroit to surrender their industry without a fight. Frankly, it was embarassing.

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    Re: GM Finally Steps Up

    So what are all these compelling vehicles that Toyota has and GM doesn't? The Corolla is more compelling than a Cobalt? Doesn't get better mileage. The Matrix is better than an HHR? The Camry better than a Malibu. The reason GM is not doing better has a lot to do with media bias.

    Another thread on here says that GM has historically relied on trucks and SUV's. It seems that GM has spent billions on new platforms and new cars from them. The Delta and Epsilon platforms are recent examples of GM building a competitive product. Had GM not spent a lot on revamping their large trucks and SUV's the media would have heaped even more praise on Toyota for the new Tundra and Sequoia and claimed that GM let yet another segment slip away from them. It's a no win situation for GM with the media. Is it GM's fault that Toyota can't build a relevant large truck or SUV?

    Look at the last two vehicle assembly plants that Toyota has invested billions in. Both of those plants were for large trucks and SUV's. Their next plant is for a Highlander. Why are they getting all the praise for being so green? Certainly can't be media bias.

    GM invested in a new company using a new technology to produce ethanol. Toyota has increased the demand on building batteries that get their raw materials from a company that has caused a lot of environmental damage. If the companies doing those things were switched, you would definitely hear more about GM producing batteries that are responsible for raping the Earth and Toyota is looking to relevant solutions for our planet.

    The bigger Toyota gets, the bigger the target on their back will become. It will be interesting to see how they handle a fall from grace. Will they let go of all those temporary workers they hire with no benefits? Will they close plants and produce more vehicles back in Japan? We just may see what the real Toyota is like when the chips are down.

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    Re: GM Finally Steps Up

    Hopefully there will be some dramatic action taken tommorow to help GM get through this downturn in the economy. GM needs to tighten it's belt to compensate for losses it (and the whole industry) will be experiencing in the coming months.

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    Re: GM Finally Steps Up

    Quote Originally Posted by 1487 View Post
    I cant believe people here are so easily influences by half ass articles like the one here. The GMT900s came out in 2006 which means that they were likely under development in 2001 or 2002. GM (or anyone else) cannot just cut a billion dollar product overnight because gas prices went up. Even in 2006 gas prices werent high compared to today. MEanwhile companies like Toyota who are supposedly on top of every trend are launching huge gas guzzling pickups and SUvs and no one in the press cares. This time last year the media was swooning over the Tundra and saying how it was the import truck that was going to break the Big 3's stranglehold on the pickup market. In 2008 the media ignores the Tundra and pretends that only the Big 3 spent money developing trucks. The best sellinng hybrid is the Prius and its been out since 2004. Toyota didnt develop the Prius in response to $4 a gallon gas because when the Prius was being engineered gas was under $2 a gallon. Toyota was in the right place at the right time and they are reaping the benefits. Even with the Prius under their belt Toyota spent a billion dollars on a new 14 mpg pickup. IF they know so much about the market and anticipated gas prices why would they do that?
    While I don't disagree with your comments, I suspect the reason that the media has their sights on GM is because GM focused so much on large fuel hungry trucks and SUV's. While Toyota could be accused of doing the same, they deflected attention by nature of the fact that they have a stable full of fuel efficient cars that the consumers line up to purchase.

    If you view the car market from a large scale perspective, GM has been out of the car market for years. They are late to the party and it is taking some time to catch up. Remember the 1980's when the Olds Cutlass was the number one selling car in North America? Back then GM had a line up of hits that consumers flocked to dealers to buy. Today the tide has changed as consumers head to Honda, Toyota and now, even Hyundai stores to buy their favorite cars. We all know many a consumer that wouldn't even consider entering a GM store (no matter how good a Malibu is), something that was unheard of 20 years ago.

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