Which Brands Should GM Cut?

[ucsd_ucla_dad]

<p>

Didn’t I read that the Volt, if sold right now, would be in the $50,000 range?

I’m not sure they’ve released what it would really cost without subsidies and without being a loss-leader but I think it’ll be expensive to start with. Hopefully after a couple of years of production they can get the costs down. We’ll have to see how the Volt ends up working out. But we’ll also start to see similar mainstream electrics from other manufacturers just as we’re seeing hybrids from more manufacturers. </p>

<p>Again, for the 3 domestic manufacturers, they really need to focus on profitability right now along with some potential market-grabbers like the Volt (if it doesn’t take cause too much of a negative profitability impact).</p>

[michuncle]

<p>You have Chevy at the entry level and Cadillac at the high end. </p>

<p>GMC: Re-branded Chevy SUVs, trucks and vans except for their Kodiak commercial line. You could shut it down to save mostly marketing and some tooling costs.</p>

<p>Buick: Only consists of three lines (LaCrosse, Lucerne and Enclave). The Lucerne (which replaced the Park Avenue) has the same underlying chassis as the Cadillac DTS. The LaCrosse (which replaced the LeSabre) uses the same platform as the Chevy Impala and the now defunct Pontiac Bonneville. While Buick’s quality numbers (J.C. Powers) are generally good, the ratings are skewed because of the Regal and Century models that stopped production in 2004. The well received Enclave is the same crossover as the Saturn Vue and the Chevy Traverse. </p>

<p>Pontiac: GM’s excitement division. Chevy’s with lipstick. The G5/G6 matches up with the Chevy Cobalt and Malibu. The Bonneville is gone; replaced by the G8 (built in Australia by Holden and based on a rear drive chassis from GM’s German subsidiary Opel). Great car but hasn’t sold like the old Bonneville. The Vibe is the same as the Toyota Corolla based Matrix. Great gas mileage so GM needs it badly to boost their CAF</p>

[hops_scout]

<p>

Clearly, Hummer should go. The problem is who would buy it? Rumors of potential Indian, Russian or Saudi buyers are just that. Then there are the dealers that had to create stand alone Hummer stores. Big investments and looming lawsuits… Plenty of bad Karma to go around!

</p>

<p>I wonder if AM General would want their brand back… AM General makes the HUMVEE for the United States Military and owned the HUMMER name until just a couple years ago. I personally would like to see it go back because the original HUMMER is much better than the GM models. Some of those “stand-alone” HUMMER dealers were just that before GM bought the name…</p>

[BunsenBurner]

<p>^^Yes, sell Hummer to Russia. The Russian “elite” loves those tanks: image + practicality (have you seen their knee-deep mud roads?!) My impression is that the Russians love SUVs; imagine a long-bearded Russian monk driving a Jeep through muddy puddles while talking on his cell phone - priceless!</p>

<p>Or better yet, make Hummers in the US and export them to Russia.</p>

[va_bene]

<p>yourworld:</p>

<p>The worst car my family ever owned was a Mercury Sable, the thing broke down every month and we finally got rid of it and purchased a Toyota Sienna. The Toyota still runs great.</p>

<p>On that note, I’ve had too many bad personal experiences with cars from the big three (ford and chevy most recently) to justify ever buying one for myself, my Subaru works well for me. </p>

<p>The one thing that the big three make well is trucks, a demographic that I think a lot of people are disregarding. Nearly all the cars I see driving around are imports, and nearly all the trucks are American!</p>

[yourworld]

<p>hmm, you sound like a shill for foreign car worshippers from California, where imports are automatically superior and domestics are bad. </p>

<p>What sort of problem you Sable had ? I have 148k mi and not a single thing wrong with the motor. Radiator hose had minor leak couple yr ago, that’s it.</p>

[futurenyustudent]

<p>I always thought that Buick was a little old lady brand-the kind of cars that little 90 year old ladies buy to drive along the highway at 20 miles an hour an annoy the crap out of everyone else on the road. However I’m in favor of GM going into Chapter 11 so they can dump the union contracts, dump the current management, and start over.</p>

[futurenyustudent]

<p>GM outsold Toyota? They’d better! 13 brands vs. 3 (if you include Scion). On a per-brand basis, if GM beat Toyota by only 700,000, then Toyota’s kicking their butt. And plus they don’t have to have 13 different marketing budgets. Or pay incompetent, lazy CEOs hundreds of millions of dollars for that matter.</p>

[yourworld]

<p>I am sure GM CEO are not lazy. GM’s problem is high demand from union, benefits and pension. It hamstrings GM and the whole auto industry. Toyota has not have to deal with this sort of problem. future sounds like a foreign car worshipper too.</p>

[tenisghs]

<p>Foreign carmakers have a huge advantage over American (Big 3) carmakers.</p>

<p>The information below is from the Brookings Institution.</p>

<p>

The basic hourly wage received by a UAW worker in a Big Three plant is close to that received by a Toyota or Honda worker in a U.S. plant. The UAW-negotiated wage was roughly $28 an hour in 2007. For new workers, the hourly wage was lower; senior workers made more money. The major cost difference between UAW members and employees in foreign-nameplate factories in the U.S. comes in fringe benefits. The UAW has been one more of the more successful American unions in fighting for generous pensions and health benefits for its members. </p>

<p>It is hard to compare the cost of fringe benefits provided to active workers, because foreign-nameplate auto manufacturers in the U.S. do not report all their labor costs in a way that makes a comparison easy. We do know, however, that active workers in a Big Three plant are considerably older than their foreign-nameplate counterparts, meaning the cost of funding their pensions and health benefits are higher. Providing health benefits to a 55-year-old worker can cost as much as three times the money an employer spends on a 25-year-old, even if both workers are covered by an identical plan. </p>

<p>**Because the Big Three have an older workforce, their employee benefit costs are higher than those of their foreign-nameplate competitors. This would be the case even if both foreign and domestic producers offered the same benefits packages. Historically, however, the UAW has negotiated better benefits for its workers. **

</p>

<p>[Is</a> Big Labor Killing the Big Three Automakers? - Brookings Institution](<a href=“http://www.brookings.edu/opinions/2008/1204_big_labor_burtless.aspx]Is”>http://www.brookings.edu/opinions/2008/1204_big_labor_burtless.aspx)</p>

[tenisghs]

<p>Here’s more information about the impact of a bankruptcy on the Big 3 automakers, especially General Motors:</p>

<p>

The government may also be reluctant to see automakers in bankruptcy. </p>

<p>HIRSCH: **If GM were to go into bankruptcy, one effect that that would have is that their retirees, their pensions would go over to the Pension Benefit Guaranty Corporation, the PBGC, and that’s a massive pension plan. Now, the GM pensions have been relatively well funded until just recently because of the drop in equity value. Much of that would still be funded but there would still be additional costs to taxpayers associated with that being shifted to the PBGC. That’s something else that I think the government would like to avoid. **[length: 0:52]</p>

<p>While the faltering economy and squeeze on consumer credit have hurt the auto industry as whole recently, Hirsch says foreign-owned firms, operating in the U.S., don’t face the same challenges as Detroit. </p>

<p>HIRSCH: The widespread perception is that the auto industry in the U.S. has not done well over time. That’s a bit misleading. What is the case is that the U.S.-owned companies have been shrinking over time, but the overall U.S. auto industry, if you look back say to the early 1970s, has about the same employment as it did then but much higher output. Productivity in the industry has increased tremendously. What has changed is that the U.S.-owned firms, the Big Three, Detroit, has been shrinking while at the same time there has been very rapid and steady growth in foreign-owned plants in the U.S., typically located a little farther south with largely non-union workforces. The U.S.-owned firms have what now are called legacy costs which are their promises to retirees for both pensions and healthcare costs. Those were sustainable as long as Detroit’s sales were high relative to the number of retirees. But as sales have withered, their share of the U.S. market has fallen. Now they have, General Motors has, more retirees than they do current workers. That’s hard to sustain.

</p>

<p>[AYSPS</a> - Hirsch: Big Three automakers hampered by legacy costs](<a href=“http://aysps.gsu.edu/2653.html]AYSPS”>http://aysps.gsu.edu/2653.html)</p>

<p>Bankruptcy is NOT the answer.</p>

<p>Futurenyustudent, if you think imports are so much better, keep in mind the workers who make the cars in foreign-owned auto plants are non-unionized and at-will employees. It’s a shame since the Big 3 revolutionized Americans’ lifestyles AND travel arrangements in the 20th century, but they instead receive ignorant comments like futurenyustudent who believe foreign carmakers such as Toyota/Honda should take over because they are so awesome and error-free (which is NOT true).</p>

[kjofkw]

<p>Love our Vibe. It’s about 3 years old. Very roomy and versatile. The hatchback and fold down seats even carried an 8’ tree I bought this summer. We can also camp in it folding down the front passenger seat! Only complaint is that it is noisy. Would love it even better as a hybrid or electric! We looked at hybrids back then, but the cost could not be justified, even with higher gas prices.</p>

[Consolation]

<p><<there has=“” been=“” a=“” lot=“” of=“” ranting=“” and=“” raving=“” on=“” the=“” tv=“” in=“” papers=“” about=“” how=“” folks=“” aren’t=“” buying=“” u.s.=“” car=“” company=“” cars.=“” i=“” guess=“” my=“” point=“” is…these=“” companies=“” need=“” to=“” look=“” at=“” what=“” people=“” are=“” buying…and=“” consider=“” moving=“” that=“” direction.=“”>></there></p>

<p>That is PRECISELY what they did when they moved to SUVs. The reason there aren’t more sensibly-sized cars available is that most Americans DIDN’T WANT THEM until a couple of months ago. </p>

<p>We currently have a Focus station wagon that’s about two years old and a 1994 Escort station wagon. The other two cars we’ve owned since the mid-eighties were both Taurus station wagons. All but the second Taurus have been extremely reliable.</p>

<p>I think that I am practically the only person I know who has never owned an SUV.</p>

[toblin]

<p>The GM Corp. makes allot more that autos. One of GM’s subsidiaries, Frigidaire, makes the best appliances in the world. Not the most expensive, but the best.</p>

[tenisghs]

<p>Toblin, GM also has GMAC. GM is a huge multinational corporation.</p>

[hops_scout]

<p>

I think that I am practically the only person I know who has never owned an SUV.

</p>

<p>Consolation, you’re not alone. As far as I know, my parents have never owned an SUV. They currently have a pick up (S10) and a minivan along with a Chevy Malibu that I drive. My sisters both have Cavileirs.</p>

<p>They have talked about getting one though…</p>

[michone]

<p>I agree that the unions are a big drain on the finances of the auto companies. H and I are both professionals with master degrees and will not retire with anything near the benefits of the union workers. It’s not only the auto workers. Teacher retirement systems and benefits are the major component of school budgets. The same goes for government workers - who retire with great benefits and health plans, while the rest of us pay for it with higher taxes. This has been an ongoing problem for some time. Unions were created to protect the american worker, but this has gone too far.</p>

[system]

<p>hops, I never owned a SUV either. I saw the stupidity of it long ago and refused to join the herd. </p>

<p>I have a friend whose family members all drove SUVs or GMC truck, including mom who drove to markets only and Dad has office job. This was sunny calif and inclement weather was outlawed.</p>

[futurenyustudent]

<p>

Futurenyustudent, if you think imports are so much better, keep in mind the workers who make the cars in foreign-owned auto plants are non-unionized and at-will employees. It’s a shame since the Big 3 revolutionized Americans’ lifestyles AND travel arrangements in the 20th century, but they instead receive ignorant comments like futurenyustudent who believe foreign carmakers such as Toyota/Honda should take over because they are so awesome and error-free (which is NOT true).

</p>

<p>They may not be perfect, but Toyota made ~$13 billion in the last year ending 3/31/2008. GM lost $43 BILLION in that same period. Honda in the same period made ~$4.5 billion. at ~140 yen/dollar. Toyota knows how to make money selling cars. GM apparently doesn’t. And no amount of throwing taxpayer money at them is going to change anything. They’ve been losing money for 3 years now-what’s $25 billion going to change? GM is free to dump the union contracts too-welcome to free enterprise. Nothing in the law requires them to hire unionized workers. What do you want me to do? Kiss their feet? It’s great that they “revolutionized American lifestyles and travel arrangements in the 20th century”(for better or worse, we’ll see), but stop dwelling on the past. That’s LAST CENTURY.</p>

<p>Bankruptcy court is where they can dump the union contracts, pension costs, and most importantly, THE MANAGEMENT. The same management that ran the company into the ground is going to RUN THE COMPANY INTO THE GROUND AGAIN once it exits bankruptcy. Just look at the airline industry.</p>

[hops_scout]

<p>

Toyota knows how to make money selling cars. GM apparently doesn’t.

</p>

<p>Yep, it’s pretty simple. To make money selling cars, go overseas so you can pay the “employees” pennies all the while charging the consumer thousands of dollars for an item that cost only hundreds to make. </p>

<p>Sounds reasonable…</p>