GM still studying $100,000 Cadillac, hoping to boost market share, Cowger says
08:59 May 17, 2004
AUTOMOTIVE NEWS
Gary Cowger is still wearing his "29" pin.
The president of GM North America says he will keep wearing the pin until GM hits 29 percent market share in the United States. Then, he says, he'll get a "30" pin.
But GM's light-vehicle share dipped last year, from 28.6 percent to 28.3 percent. And although GM has become a leaner, more productive organization, it is still battling in a crowded, hyper-competitive market. Cowger discussed GM's challenges with Automotive News Editorial Director Peter Brown and Reporter Dave Guilford.
It looks like your truck sales are on fire, and the bigger the better. Your big trucks in particular are really doing well. What are we going to expect to see from the car side of the business? How do you get out of being in the low-margin commodity business on the car side?
You've gotta go in there segment by segment. Luxury is doing well. Cadillac is just on fire. Had a great year last year, up 16 percent, up over 16 percent retail in the first quarter, and it's having a great April. You've got the CTS, and we're coming out with the STS. You've got the Impala, and the Malibu is really starting to get ramped up. The areas that we really need the help is in Buick, of course, and we've got the LaCrosse that's going to hit this year, so that'll be a big boost for Buick. Buick we've got in good shape with the Rainier and the Rendezvous, and now we've just come out with the Rendezvous Ultra, so that's kind of a repeat of the Cadillac story where we had the Escalades coming in and then we followed with the cars. So Buick gets the LaCrosse this year and next year they get the LeSabre (replacement). Help's on the way there.
With Pontiac, the Grand Prix just keeps gaining momentum. Arguably, we think, the GTP Comp 4 is one of the best, if not the best, front-wheel drive performance cars out there right now. The GTO is doing extremely well. I was just with a group of dealers that are really pleased with the way that that's taking off. Then we've got the G6 coming, the Grand Am replacement - huge, huge positive clinic data on the G6. So Pontiac's getting filled out, Buick's getting filled out. And (for) Saturn we're going to have three new entries in three new segments. Help's on the way everywhere. But today, as you say, the car segment itself is under a lot of pressure - not just for ourselves, but for all of the segment.
As you clarify the positioning of divisions like Pontiac and Buick, I can come up with a one-sentence definition of what they mean. For Saturn, I can't quite do that. What is Saturn's personality?
We're going to give Saturn much more of an import-intender look, a European flair if you will. That's Saturn's niche. The Saturn brand still brings in a lot of non-GM intenders, conquest people. They will continue to do that. What we have to have is compelling vehicles.
Is there a Sloan-type price hierarchy? How does Saturn fit into that? Because I see Saturn as being right in the middle of the Chevy territory.
The differentiator is the customer base you're going after. Chevrolet brings in a lot more loyal GM intenders. I think that's going to change with Chevrolet as the Malibu, the Maxx, the new Cobalt come out this fall. I think you're going to see a lot of people re-thinking in those segments what their choices are.
If Saturn is for import-intenders, where do they go when they leave Saturn?
That's why you broaden the appeal of Saturn and you broaden the range. That's what our channel strategy is all about, so we keep people in the family and move them to other brands if they have a need for something that's currently not in that channel. I mean, look, this channel's going to be pretty broad. When you get to the six entries, you're going to be able to go all the way from a roadster to a full-sized big brother to the Vue. So you're going to have a broad range to move around in the Saturn brand.
For most of the 1990s, the mantra at GM was "run common." Is that still the main focus?
"Run common, run lean," as Jack (Smith) would say. Yeah, that's still the focus. What running common does is it drives a lot of things. It drives the ability to be flexible, it drives the ability to leverage General Motors' size and purchasing power, particularly on the equipment and process side, the manufacturing side. With global architectures, it allows you to get the parts that the consumer doesn't see much more common, and then differentiate everything the consumer sees and interfaces.
I think we're really starting to deliver on that promise. Just look at the Epsilon, from the (Opel) Vectra to the (Saab) 9-3 to the (Chevrolet) Malibu to the (Pontiac) G-6. Completely different. Products completely different feel, ride and handling, the whole thing. You'll see more and more of that. That's because of Jack's getting down to one manufacturing organization, one engineering organization, where you'll really be able to leverage the size. And, by the way, we're not the only one doing it. There's a lot of people out there using common architectures today.
I was out at a Saturn product event at Milford, and Lori Queen talked about there being 800 new part numbers in the 2005 Saturn Ion, and boy is it going to be better. My thought was that Toyota and Honda would not do that - they redesign a car and use a lot of common parts even in the redesign, and more or less fix it for four years. GM has always had a tendency to make a lot of changes as they go, which strikes me as not lean.
Hopefully what you saw on the Ion was big changes on the interior, big changes helping those areas that consumers have told us quite frankly, need improvement. It's not a big change in the architecture. The architecture is doing well. But when you make color changes, when you make changes to the interior style and graphics, that drives a lot of parts numbers. We watch that very closely.
Is there any trend at GM to make fewer mid-cycle changes?
We've always looked at what is the value of a mid-cycle change. If you have an obvious failing, whether it's a content issue or a feature issue or even a performance issue, you want to remedy that. But this idea of just having a mid-cycle enhancement for its own sake, the data I look at say those don't pay off very well.
Are you doing anything differently?
Yes, we are.
You're being ...
What I just said. We're looking at if a product's out there that has obvious feedback that "this is a shortcoming," and we agree, then we'll remedy those kinds of things. But to just say, every third year you're going to have a mid-cycle enhancement, we're thinking much differently on that today.
Obviously, what it means is less changing. We want to do less changing. We want to have engineered solutions that basically stay the same. You may have to tweak them one way or another, but the engineered solution itself remains the same.
You mentioned when you introduced this that there's a block out there where you're not on their consideration list, and you're trying to get at that.
Right, non-GM intenders. I have not seen the data on that. But this is much more of a long-term kind of dialog. Month after month, year after year, people read this. It's like the "Magic Bus," where 232 buses basically save us the same amount of fuel as about 8,500 small car hybrids. It gets you to start thinking about that's why our philosophy on hybrids has always been start at the big end, where the percent fuel economy affects big amounts of fuel, and then work your way down. Whereas others, because they developed the hybrids for their own markets and then brought them here, wound up having the hybrids at the small end. We're just trying to get people to think about that.
There is no magic silver bullet out there. There is a matrix of technical solutions for problems that are caused by externalities - price of fuel, regulations. If you're a full-line producer that has a Cadillac and a Chevrolet, that's why you need to have all the technologies out there. That's why we're never selling one silver bullet. We make 2 million diesels a year. We understand that diesels work in markets where they can work. We're going to make a million hybrids available by the '05-'06 time frame.
Are we going to see diesels in mid-market GM cars and trucks?
You'll have to find the technological solution, which we have people working on, or you're going to have to change the regulations. Our next set of regulations are four times as stringent as the new regulations Europe just put into effect this year. There are some that say maybe they will change the regulations. If they change the regulations, that's one of these externalities.
Isuzu is about to be a GM division that has a product range consisting of two GM trucks. Do people cross-shop you and Isuzu?
I think there's probably very little interplay between us and Isuzu. Their volume is small. What we try to do is support them here with what they say they need.
You don't care that they have a sport-utility that's much the same as yours?
That's the whole thing of flexible architectures. Can you dial in much different character? I think when you see and drive the Saab 9-7x, you will say, that is a Saab. You know, the Camry drives the Lexus 330. Are those much different vehicles? I think so. So we can do the same thing. It's the execution.
Is Cadillac any closer to the $100,000-plus super-luxury vehicle?
That is a product that we definitely want to do. It is not an approved program yet, but we are definitely working on such a vehicle. But it is not an approved program.
If you were a betting man ...
It is not an approved program (laughs). It is something that we all want to do.
The Buick Velite concept car stirred up a lot of excitement. What are the Velite's chances?
Clearly what we're trying to show there, like we did with the (Cadillac) Sixteen, is the direction that Buick's going in. I feel good about that. I feel good about the reception that it got. I think we're getting our platform strategy lined up where it's starting to make a lot of sense where we can drive those kinds of derivatives. So I'm feeling good about Velite, or a Velite-like vehicle.
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