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My work has appeared in a number of major publications either as writer, photographer, or source. I enjoy talking about all things automotive.

November 2009

Today, GM has some very good products. Vehicles like the Chevrolet Malibu and Cadillac CTS are very competitive, but they aren’t class-leading. It’s not that GM can’t build class-leading products; it’s just that they have the whole market to cover with “good” products while other companies can concentrate on one segment. It’s a very competitive marketplace with very strong competitors. GM is spread very thin.

Having good gas mileage or winning an award or two does not mean the vehicle is “class leading.” While there is absolutely a need in the marketplace for vehicles like the Silverado, recent economic shifts have proven that you can’t rely on sales of full-sized trucks to carry the rest of the company. Manufacturers need to be ready with cars when more than half of the marketplace buys cars and yet more than half of the sales from GM (and Ford and Chrysler) come from trucks.

It’s a global marketplace and no company is rooted in any one country. GM, like Toyota and Honda, harnesses their global reach to design and build their vehicles as best as it can. Whether it’s Australians working on the Zeta platform (for the Chevrolet Camaro and Pontiac G8) or Germans working on the Epsilon platform (for the Chevrolet Malibu, Saturn Aura, Pontiac G6) or Koreans working on the Theta platform (for the Saturn Vue and the new Chevrolet Equinox), the money and technology flows around the world. But now GM is selling divisions and brands and reducing it’s ability to compete globally, which had been a key strength of General Motors.

If GM were to close its doors (which I can’t see happening), the supplier base would be hurt. But most of GM’s suppliers have spread their eggs across many baskets, including many of the transplants. It would take some time, but the suppliers would shift their focus from GM to one or more of the transplants (and/or remaining Big3). And the production volume lost if GM were to disappear would eventually be made up by other companies. Production volume would remain in the US as it is more economical to build many vehicles in North America than to import them. Suppliers would grow to support this change in the industry. Auto workers would remain, supplier workers would remain…possibly at lower volumes but still making the same number of vehicles and the industry would continue. The transplant companies are not so dumb that they don’t realize a vibrant US economy is necessary for the sales of their products. Whether or not the car companies are physically based in the US, the American economy will survive and grow and thrive.

And when it comes to the US market, the Big3 have put themselves in a bad position. While the reliability and durability of Big3 cars is on-par with the top brands from other countries, perceived quality and dynamic thinking is not quite there. Why did Toyota and Honda have to come out with hybrids nearly a decade before any of the Big3? Why aren’t there any diesel cars from the Big3? GM was ahead of the curve with the EV1…so where has that technology led? GM was toying with fuel cell and steam(!) powered vehicles in the 1960s and rotary and Sterling engines in the 1970s…what have they done lately?

The US can and does compete on a manufacturing level…or else Toyota and Honda and Nissan and Mercedes-Benz and BMW and the rest wouldn’t be making vehicles on US soil. Why do US manufacturers need to put $3,500 of incentives on every car and truck for every $2,000 that the other brands use to sell their products? Why are 5-year old GM products worth a fraction of the competitive models from Honda and Toyota?

GM touts the strength of its Chevrolet Malibu, but why does the Camry (as well as the Accord and Altima) outsell the Malibu with fewer dealers and a higher price tag?

Loaning money to failing companies without a concrete turnaround plan was a losing proposition and bankruptcy was the only possible outcome. Without filing for bankruptcy, GM had the impossible task of turning itself around. With a bankruptcy filing, they have the nearly impossible task of convincing the buying public to make a long-term investment, with the purchase of a vehicle, in a company that just walked away from many of its American creditors…including contracts with American workers.

History has shown that businesses do not learn much from the past experiences of their industry, so little can be expected from GM and Chrysler following this recent set of events. Loaning money to these companies should be treated as if a parent were loaning money to their child: it’s as good as gone. Even with large holdings in GM and Chrysler, getting any return on the government’s investment is a long shot. With some luck, the American workers will take this opportunity to find more stable employment in preparation for the next market shake up.

9:16 am | Categories: general motors, chrysler, ford, toyota, honda, government, uaw
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Comments

coolrunning - Jul 11, 2009 8:40 pm

There is no reason not to BUY AMERICAN. The quality and reliability is excellent. If I wanted to drive around in a little oriental casket-on-wheels that gets 10 mpg more than my Chrysler 300C, I would have bought one. The last 6 cars I have owned have all been Chryslers, and they were all as relaible and well built as any of the Hondas or Tototas I have owned. Where an American sedan exceeds the mark is road worthiness. When I make one of my frequent road trips, it is between 400 and 1200 miles one way. I have done them in the Japanese cars everyone loves so much, and I am hurting for days after. I'll take a Chrysler, Lincoln or Cadillac any day over even a Lexus or Infinity. Yes, they are nice cars. No, they do not have the same "cruise factor". I was very excited when Daimler-Benz merged with Chrysler. The car I am driving is a direct descendant of that marriage. It was very disappointing to see the deal dissolve and Chrysler fall into such financial trouble. I believe Chrysler is building better cars now than ever before. Why don't most Americans know this? Chrysler apparently has the same image as they did in the 70's. "A company that builds cars that nobody wants or needs". How can the inventors of the minivan be struggling to compete in that market? How can a Chrysler 300C, (selling for less than half the price of a similar sized Mercedes) not be perceived as such a bargain that the company is having trouble keeping up with the demand? Dollar for dollar, I feel the current lineup of Chryslers is the best value Americans have had access to in many years. Nevertheless, it is largely ignored by the very market they are built for, in favor of under-sized foreign cars whose only virtue is mpg. I have never been impressed with the mileage of the smaller cars anyway. If they are half the size of an American car, they should get about twice the mileage. I have consistently seen 24 mpg HWY with my 300C. Should a Toyota Corolla or Honda Accord get over 50 mpg? Americans need to start buying American while they can. Soon, if nothing changes, we will have no choices because the Big3 will be a faint memory of days when America led the world in automobile production.

hudsonthedog - Jun 9, 2009 8:35 am

Whatever your political views are, GM's bankruptcy has been expected since the previous administration, which would have done similar things. The UAW will learn quickly that having GM healthy is good for the UAW members. Simply making all its vehicles in North America will not make GM healthy by itself. If the UAW doesn't bend, it will be the UAW that is hurt the most.

sandman235 - Jun 8, 2009 3:53 am

Taxpayer money was used to occupy the private sector and pay off a political contributor. The reason that Obama went through with the automobile bailout is 'cause it put UAW in an ownership position and on the board. Wall Street Journal: "The Administration's concessions to the UAW also restrict the company's ability to import smaller, more fuel-efficient cars that it already makes overseas. UAW President Ron Gettelfinger boasted on PBS's NewsHour last week that "we, quite frankly, put pressure on the White House, the [auto] task force, the corporation" to bar small-car imports from overseas. GM is also selling its Opel operation in Europe as part of this restructuring, and the Washington Post reports that one of Treasury's sale conditions is that Opel's new owners must stay out of the US, and even out of China, where GM's business is strong." This is pure protectionism to protect people that voted for Obama and shaft everybody else.

sandman235 - Jun 8, 2009 3:47 am

Obama used taxpayer money to buy General Motors, and essentially give it to the United Auto Workers. See, this is the dirty little secret. Obama is returning the nation's wealth to its rightful owners. We've got an economy in collapse, and he's implementing his campaign agenda regardless. UAW is a political contributor and this is socialism.

hudsonthedog - Jun 4, 2009 8:12 pm

It kinda is our fault. We as Americans want big, powerful, gas-hungry cars and trucks. Our gas has been too cheap for too long and the car companies have catered to it. But they built these vehicles with the assumption that gas prices would never go up and that the American consumer would always want 14 mpg pickups and 18 mpg cars. By the way, Saturn has always been part of GM.

craigbrooks - Jun 4, 2009 4:05 pm

We'll really have to wait and see what this does. Being in the preowned car business I can't wait to see what this does to buyers. Since Chrysler went CH 11 we haven't seen any downturn in the selection of their products. Time will tell.

kentuckyranger - Jun 4, 2009 1:36 pm

You hit the Nail on the Head my friend. In the last decade, the big 3 have concentrated on large, Fuel hungry Vehicles like the Escalade, Excursion, Hummer, Grand Caravan etc... Not to mention the huge Pickup Trucks with massive V8, V10 and Fuel sucking Turbo Diesel Engines. Like you said, what have they done lately? How about a Hybrid Escalade, huh??? It gets a whopping 21 MPG, used to get that in my old 68 Chevy C-10 Pickup... Too much too late. Then GM comes out with the Evo1, an all Eclectic, very high priced Car that they should have come out with back in the 90s... What's bad is the Knee jerk reaction from Americans. In the last few Months Gas prices have went way down so now Toyota, Honda and GM are stuck with inventory that no one wants. Now that Gas is making its big comeback in price gouging I'd say the race for "Green Cars" will begin again and maybe the EV1 will be the savior they thought it was going to be. What I don;t like is how us Tax payers have spent Billions bailing out these Companies because of their poor business practices, why should it be our fault? Well one problem if we let a Co like GM die is the fact that 80% of the Cars thay manufacture is outsourced. If GM goes under it will affect not only the Thousands working at GM but the Hundreds of Thousands working at Plants making everything from Headlights to Sun Roofs and Bumpers. I used to haul parts for Toyota Motor Manufacturing in Georgetown Kentucky and they did the same thing. I'd go out a pick up things like Window,s, Dash Boards, Headlights, Engine Blocks, Bumpers, Shock absorbers, Door Panels, Sun Roofs, Tires, Wheels, Seats, you get the idea. Allot of the places I'd pick up also made Parts for Co's like GM, Ford and Subaru. That's why so many Cars look so much alike, their Parts come from the same places. But if a Co like GM stopped ordering Parts from these Factories they'd have to shut that part of the Line down and lay off everyone involved in the manufacture of said parts. In fact, I used to pick up Door Panels at a Factory in Bardstown Kentucky that also made Items for Ford and Saturn. But their main focus was Toyota. If Toyota stopped ordering parts, they'd have to shut the entire Plant down because the other Co's don't order enough inventory to keep them going. So in a way, we kind of have to hep Co's like GM out because they provide more work than anyone who doesn't realize just how the Automotive industry works would understand. Working for Toyota and can tell you that if they shut their Plant in Georgetown down, I know of so many Plants that would close up shop it would make your head spin. Trim Masters in Kentucky, Bridgestone Tire in Alabama, Purilator Filter in Tennessee, TMMK Engine and Transmission in West Virginia, Bridgestone Firestone in Tennessee, Arvin Sango in Indiana, Monroe Shocks and Strut manufacturing in Tennessee and Alabama, I could go on and on. If a Plant like Toyota or GM was to close it would affect Jobs and economies in so many different Towns and States that the affect would be felt hard by allot of People. Also, if GM shuts down we're talking about more than just one Motor Manufacturing Plant, not to mention the Saturn Plant which GM took over a few Years back. I guess what I'm trying to say is that our bail out of GM is kinda like having your Brother in law move in with you. If you don;t help him out, you'll be in hot Water with the Wife. In the mean time you try to get him to see the err of his ways... ;O)

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