But GM, Ford and D-C are in different circumstances.
While GM has a profitable foreign division (they make Vauxhaul, Holden, Opel
and Saabs), the foreign division is not as big as Ford's. GM sold about
$28.6B worth of vehicles in North America last quarter vs. about $17.3B
outside North America. GM has also had to pay out lots of money to cover the
pensions for Delphi (the parts maker in bankrupcy that GM used to own).
Ford has a higher percentage of overseas operations. For every 10 cars they
sell here, they sell about 8 oversears (sorry, I couldn't find overseas
sales figures) vs about 5 for GM. So they are able to balance out overseas
One thing I don't understand is why GM sold GMAC. I mean that was making
money for them. And even when they lost money on a car, they could get some
back by financing it.
D-C is a whole other ball of wax, because they were part of a merger of
equals with Diamler-Benz (it just seems Dialmer-Benz was more equal).
I am sure that how well paid up the pensions are for the three companies
plays into their financial results. However, making liabilities for the
future like they did without knowing the ballpark of the future costs is
rather stupid. Which why companies go with 401ks rather than pensions
nowadays. And European operations have an advantage because the government
does the pensions in most european countries.
It seems for will do alright with the Focus and the 500. They also sell a
lot of trucks, which aren't doing as well right now as they used to.
Actually, it is all about making cars people will buy. I want a BMW, a
Hummer, Explorer Sport Trac, an Escape Hybrid, a Honda Fit, an Dodge Ram
with 4WD (but no plow), Dodge Nitro CrossFire, Liberty, and a Honda ATV
(4wd + plow, too). I need a really big garage. Which of these am I likely to
buy in the next year: none (although the Honda Fit is the most likely one).
It's what people will buy, not just what they want.
You like the Nissan Versa (30 MPG city, 34 HWY), I like the Honda Fit
(33/38), others like the ToyotaYaris (34/40). The Mini Cooper is cute, too
(27/35). But the Cooper is a lot more money.
The Big 2 also have offerings in this class: Ford has the Focus (27/37) and
Chevy has the Aveo (27/35). I was a bit surprised to learn that Ford and GM
have offerings in this class.
Apparently, D-C will bring out the Smart in the next year or two.
Both these companies, or should I say their managements,
have big, big egos! Actually the Americans nowadays are
very much like the French- i.e. bloated egos to the extreme.
Listen to what GM boss says:
"We will enter into discussions with the management of Renault and
Nissan with an open mind - eager to hear their ideas of how an alliance
between our companies might work to our mutual benefit."
This guy's company is facing utter bankruptcy while he sounds to me
as if he is going to make a concession to keep an open mind (!!!)-
probably believes the French are in bigger trouble than GM and they
are going to be the ones arguing before him for an alliance (???).
Well, I think he better keep an open mind!
Anyways, the French can be equally arrogant as the Americans,
and me thinks these "talks" will be very very short lived.
So they're facing bankrupcy. Do you understand what bankrupcy is? It's not
uncommon to be in that position and it is recoverable. It takes strong
leaders to turn companies around. Your opinion is that GM should just roll
over and play dead? Big egos? Of course. Weak little men don't rise to
run big companies. Your suggestion for how GM should handle things?
Listening to GM's boss who would have thought that bankruptcy
also means _failure_.
First and foremost recognize and admit nearly complete competitive failure
as a car manufacturer (especially passenger car segment). Second eradicate
any vestiges of denial, ...stop the lies so to speak!
These would be mental pre-requisites for any meaningful recovery effort
whether it be with the help of the French, or Japanese, or without them.
I doubt that's going to happen, though, because GM believes they are
basically not failures but victims, for example of excessive costs etc.
They keep ignoring the fact that in the US they haven't had a competitive
car product in years (Saturn division is just as big a failure as is the
GM, perhaps even bigger).
Now that is something I would agree with to a point. I'm in full agreement
that GM spent too long trying to force their way on America with a handful
of issues that they should have had the corporate integrity to fix. Their
method of dealing with it was to dismiss American consumers. The 60 degree
engine gasket issue is the classic example. On the other hand, they have
designed and built some absolutely great cars. I've owned several Buicks
which I would stack up against any Lexus, Toyota or Honda, or most cars from
Europe any day, and am confident that I'd have the better car. Likewise,
despite some problems that I believe GM should have addressed long ago
(gaskets, heater blowers, wheel bearings), I really love my current car ('03
Grand Am GT). It has plenty of power, has been getting 26-28mpg since local
stations switched over to summer fuel (mostly local driving), and I'm not
overly gentle with the gas pedal. So much to really like about GM cars,
all spoiled by a bit of really bad management practice.
I agree. Corporate culture begins with the ethics of the executives.
Well, I do believe they have had competitive products and in fact, superior
products in some cases. But I agree that the arrogance of GM management has
caused the disgruntled customer base that is now showing its feelings by not
buying new GM cars. Sometimes that's exactly what it takes to shake things
up. GM has a long way to go before being down for the count and I for one
would rather see the current leadership replaced than any alliances formed
with the likes of Renault. Technology alliances are one thing, corporate
governance alliances are something else altogether.
Reading your post made me realize what GM's real problem might be (?).
One has to agree that they've had some good cars and engines in the past
and have showed themselves capable of producing superior automobiles.
So why is it that they seem not to care? It can't be just top management's
bloated ego as I initially thought. These people, as you pointed out, are
shrewd businessmen afterall.
Well, my suspicion is that they've gotten complacent because of the
high degree of "monopoly" they enjoy in the pickup-truck business.
The fact is that small town and rural America has no choice but to
buy domestic. There are no, or very few, import dealerships in places
like rural Kansas, so to speak, and GM over the years has built up a vast
empire like network of dealerships across the country.
Until recently there weren't even any larger import trucks, not to mention
any rural import dealerships to support them.
My hypothesis is that the high degree of "monopoly" that GM enjoys in
this very large and profitable market had to make them complacent and
not care much about competition creeping up in urban areas and the passenger
I am no automobile industry specialist by no means but I suspect this may
be _THE_ underlining core of GM's overall problems. Essentally reliance
on a strenght (a substantial degree of monopoly/semi-monopoly in one market)
that has lead them to care little about the rest of the business.
I think there is a lot of similarity between what AT&T experienced and what
GM experienced - very close to what you are describing. AT&T really did
enjoy much more of a monopoly than GM did so their corporate behavior might
well have been more extreme than GM's but I think the similarities are
there. And... it does come down to monoploy or maybe even the belief that
America needs "us". AT&T used to tell consumers what they wanted. We were
all the loyal subjects of AT&T. Then came divestiture and the changes that
the telecommunications industry went through. AT&T spun off Lucent, but
Lucent was just a smaller version of AT&T. Still the same attitude of we
know best. Then Lucent spun off Avaya and at first it was just more
propagation of the same attitude. Avaya faced a whole new world though.
There was new competition, new ideas in the market place, new needs, new
desires in the marketplace. Fortunately for Avaya, they did manage to
change the corporate attitude some. They became more responsive to market
trends and to what the competition was doing. In some cases that meant that
they had to follow the market because new ideas were coming from other
companies and they were coming faster than the 800 pound gorilla was used to
moving. Avaya recognized that if they were going to maintain the market
leadership position that they inherited from Lucent, they would have to do
business the way companies like Cisco were doing business. Well - long
story short, they did embrace that idea and they remain a leader in the
telecommunications industry today, despite their AT&T legacy. Certainly -
in part due to that legacy as well. But the point is that the 800 pound
gorilla does have to wake up and realize that the "what's good for me is
good for america" philosophy isn't enough to get you through anymore.
There's new competition out there and their ideas have taken hold.
I agree completely with this. The thing that bothers me most about GM's
management is that we are not hearing them acknowledge any shift in the
marketplace that they need to catch up to. I don't want them to part the
company out or to create strange bed fellows with any other company, but the
appearance of head in the sand just smacks of an attitude that says "we know
what's best" and is what got them into this mess in the first place.
and trim the fat in the management.
And my understanding is they can't move the production out of country
due to a contract with UAW. So they'd either have to get rid of the low
mid end divisions or go under because social engineering only gets you
They had 40 something years to put their act together after Japanese
but it looks like it's too late now.
Noone else seems to care to have one. It seems to be regional though.
In the environments that are not as heterogeneous
(mid west) I've heard the opposite is true. And American car should
be fine for people who do not blast thru mountain ranges weekly.
If I did not have to turn I might have considered one myself.
But sky is heavy and is missing two doors, solid roof and a decent 5sp
It's amazing that it fares well against MX-5 in reviews.
GM could've just killed Cobalt and beaten Mazda to market with Kabura,
but for some reason decided to go head to head with Mazda that had 15+
headway. I'm scratching my head what GM was thinking.
They could've been the only ones with a sub $20k rwd compact sedan
and probably a lot of people would've bought into that.
Wherever people drive a lot, I mean really long commutes, they tend to
buy more imports cause generally they're more reliable.
Why do you say such nonsense, barring a turbo, there is nothing better
read more comfortable, than driving a big torquey American pushrod
engine through high mountains. I used to do it weekly for several years,
traveling the Sierras from Reno to Bay area. Most import engines get
buzzy on steep inclines, but old American pushrods really shine in this
application managing to stay relaxed and at relatively low rpm's.
behind people like you crawling on those 2 lane overpasses. I don't
mind tooling uphill at 5k rpm.
Does not bother me in a least bit. That's what the engines are designed
to do: to be in
the range between max torque and max hp whenever you need it.
What's the point of a V6 if it's coupled with an automatic so I can't
access 70% of the power
the engine can produce? I'm paying the price in high gas consumption
and weight with a 6 cylinder anyway.
If you mean 4 cyl compact plus automatic then yes, I agree. That's a
Esp so in the mountains.
DEC does not exist anymore. The fact that HP/Compaq are profitable is not a
statement that DEC is alive and well. You missed the whole point.
Correct - and so did GM and so did IBM. The prophets of doom are quickly
predicting the total demise of GM and my point was (and remains) that the
same things were being said of IBM when DEC was eating IBM's lunch. Well -
IBM turned itself around and is hugely profitable today. The fact that DEC
made a fortune in its day is completely irrelevant.
There's a conflicting statement. I guess you believe that only PC's are
computers. Those mainframes and servers are quite profitable for IBM but
more importantly, IBM has become one of the largest forces in the world of
Systems Integration. It's all about a company re-making itself.
Again - nice information point but not relevant to my point. My point was
that IBM is the classic example of the behemoth falling prey to its own out
of touch business practices and re-making itself into a thriving
corporation. In fact - IBM still holds the leadership position it had
worked so hard to create.
I'm betting GM will re-invent themselves to become something that is in the
same genre of a company that they were for decades, but with a new approach
to their business. If they do, I'm saying they will continue to be a factor
to contend with.
Business is cyclic. Given enough time, the Japanese business machine will
fall victim to itself as well. The Japanese are riding on their high right
now. At that, they are only approaching the fall of an American giant. Not
a spectacular high point in the bigger picture. Let's wait and see how this
all unfolds. GM can still bring about their own ultimate demise - it's all
about management decisions.
IBM started moving to charge for mainframe support services about 1970
after settling a USA Gov lawsuit on bundling mainframe support services
in the rental price.
Most users rented IBM computers, but many did buy. Often they bought at
a discounted price after they had a computer for a few years.
Before the settlement with the USA Gov service income was low, but
after it gradually grew until it exceeded the hardware sales.
The net affect was an increase in IBM mainframe domination; certainly
not the objective. It did result in an increase in independent software
I was there, both before and after the change in IBM bundling.
Get real. Many of GM and Ford models, as well as Korean brands, have been
higher rated by buyers in recent surveys than some of the so called superior
Japanese brands. The fact remains GM and Ford outsell all of the import
brands and they ALL, domestic and foreign, make some that are not up to
snuff on occasion. That is why they all have a warranty, even Rolls Royce.
The problem is too many buyers today expect the manufactures to fix their
car forever, for free ;)
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