By on September 3, 2007

oldsmobile_aerotech_concept.jpgLast week, I spoke with former Florida Oldsmobile dealer Robert Horvath. Horvath insisted that General Motors cut a secret deal with Toyota to deep-six Olds. Reacting to this tin foil hat analysis of Oldsmobile’s demise, TTAC commentator canfood extended his deepest sympathies. “When something so unexpected and seemingly nonsensical happens it causes people to attribute it to some kind of outside force or even some kind of supernatural event.” Less charitably, if you refuse to accept reality long enough, you lose the ability to do so. The men helming GM are on that arc.

Bob Lutz is the poster child for GM's delusional denial. For some reason, GM’s Vice Chairman of Product Development can't get his head around the fact that only a handful of his employer's products are demonstrably better than the competitions', while most are patently worse. The idea that the new Chevrolet Malibu is no Accord killer simply doesn't appear on the former Marine aviator's radar screen. And if the new Honda Accord [continues to] kick the Malibu’s ass in the sales chart? Why there must be other, more sinister forces at work. 

In fact, it’s only a matter of time before Maximum Bob will be shuffling around a swank hotel in a terry cloth bathrobe muttering Horvathian diatribes about The Black Dragon Society’s secret pact with The Oval Office. Rick Wagoner will eventually succumb to the same paranoid psychosis– only he’ll bore bystanders with endless, detailed expositions on currency manipulation, health care policy, union relations and the unequal burden of federal regulations on American automakers. 

I know I’m getting ahead of myself. I'm preparing for GM’s August sales stats. Even as the bad news hits the wires, The General’s spinmeisters will claim the faltering housing market caused a general downturn in U.S. automobile sales which, they will insist, led to their precarious predicament. In other words, the corporate big wigs will trot-out the Curly defense: “I’m a victim of coicumstance!”

Of course, Toyota’s growth in this declining market is proof positive that GM is a “victim” of nothing more (or less) than its own incompetence. Not to put too fine a point on it, the artist formerly known as the world’s largest automaker is circling the bowl because it can’t get out of its own way.

I mean that literally. GM’s stifling bureaucratic structure lies at the heart of the American automaker's multi-decade fall from grace. And if you thought GM’s management had reacted to the company's evaporating U.S. market share by keelhauling its corporate culture, ending octo-divisional internecine warfare and unleashing the world-class creativity lingering within, think again.

From tail lamp designs to drivetrains, GM product decisions are [still] made, remade, unmade, abandoned and resurrected with scant regard to deadlines, aesthetics or electro-mechanical harmony. What’s worse, GM’s new emphasis on “global development” has made the design process worse. Which brand gets what bit when and where in what form for how much is now a subject of international debate.

Overlapping fiefdoms continue to force GM designers and engineers to implement the simplest solution, rather than the best. A new Cadillac based on the old Saab platform? A new Saab on a Chevy platform? We can do that! Three new crossovers on the same Lambda platform? Why not four? Saturn Aura and Chevy Malibu twins based on an Opel? OK! Import another rear-wheel-drive Aussie V8 for Pontiac after the first one flopped? Go for it! It all makes perfect sense to someone. (I'm looking at you Mr. Car Czar). But not the consumer.

It’s the bureaucracy, stupid. And what has GM’s CEO done to dismantle the enemy within? Nothing. Why would he? Dismantling GM’s bureaucracy would destroy Rick Wagoner's power base and annihilate the only world he's ever known. And yet the devolution of power was GM's only possible savior. 

Ask yourself this: would an independent Pontiac have created the lackluster lineup currently littering their dealers’ lots? Would those dealers also be selling Buick sedans and crossovers and GMC pickup trucks and SUVs? Would a full functional Cadillac offer cars that compete on price rather than style or quality? If Saturn had controlled its own destiny, would they have built Americanized Opels for their rabidly loyal customers? And what about Oldsmobile? As Mr. Horvath pointed out (repeatedly), the Oldsmobile Cutlass was America’s best selling car from 1970 to 1985.

In truth, GM’s bureaucracy killed Oldsmobile the same way it’s poisoning Pontiac, Cadillac, Saturn and the five other brands GM flogs stateside. By failing to nurture, protect and value each brand’s [once] unique promise to its customers; by chasing the next big thing rather than doing every little thing to fulfill that promise, GM's sucked the soul right out their product.

At some point in the not too distant future, the cancer will kill the host. GM’s bureaucracy will drive the company into bankruptcy. Toyota and the transplants may have been the instrument of this ignominy, but they were never its cause.

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55 Comments on “General Motors Death Watch 144: Nolo Contendere...”


  • avatar
    jurisb

    probably gm should have spun off all the units, allowing them to swim on their own or drown. otherwise the mothership gets so much spoiled that even doesn`t bother going beyond regrille-job.
    GM must understand – there are american loyalists, who gnash their teeth but still go for homerun purchase. and there are pragmatics, who simply buy the best product available. building cars on german, korean and japanese platforms, yet imparting them with american level of interior and mechanics quality- doesn`t appeal neither to loyalists, nor to pragmatists.
    Choose a side, mister GM!
    if you go for an american revolution, then choose at least one- revolution or american. I am not 12 anymore to believe both could work together………
    Got engineers?

  • avatar

    There may be clarity in spreadsheets, but there’s very little soul to be found in ledgers.
    The last great experiment in mass manufactured cross platform slap-on-a-brand car making is headed for a steep deceleration. Just make certain to step out of the way when this train wreck hits town.

    And to the above. Not only did they build a compact Cad on a Saab platform. Saab engineers were begging to be allowed to use the Cad 4×4 platform for the Saab SUV, and were told to get lost and make do with the ancient leftover done to death a thousand ways spare parts the Caddie folks wouldn’t touch.
    (And let’s not even discuss the logic of Saab building an SUV to begin with. Once that was a given, it should have been given whatever resources were required to make it a world class vehicle. Instead what was launched was laughably bad.)

    I swear, Lutz and his cohorts must be raving lunatics. They buy Saab to turn it into a luxury brand, and then they proceed to gut it. At least they should be holding a polished and illustrious range of Caddies to show for it, but no — if anything those are even worse off.

  • avatar
    tracy

    I loved Lutz comments on the new malibu being a ‘no-excuses’ car that ‘offers standard features that competitors in any class don’t offer’.

    Mr. Lutz – would that be the Accord? In the Accord I can get NAV, Bluetooth, rear arm rests, more hp (with better fuel economy to boot!), better resale value, more room, a manual tranny if wanted, etc… The list goes on and on.

    Mr. Lutz or should I say Clutz – I think you meant to say the COMPETITOR offers stuff that you can not get in the malibu in any trim level!

    But the malibu does offer the same square corporate radio that GM is famous for!

    I would be willing to bet that if you took out the typical 30% to 50% of GM cars that go to fleet and the probable 30% to 50% that are sold to employees, family, etc… that GM’s true RETAIL market share in terms of cars is no more than 10%.

  • avatar
    Dynamic88

    I was talking the other day, to a guy who thought all Saturns were still made in the US. He’s buying Saturn because he wants to buy GM. He’s buying GM because he wants to buy American.
    Needless to say, he was not thrilled to learn about rebadged Opels. He’s not looking to buy GM-Germany. He’ll probably go to Chevrolet, and that’s ok for GM, but how many Saturn buyers when they learn they aren’t buying American are going to go to Toyota?

    RF

    “Ask yourself this: would an independent Pontiac have created the lackluster lineup currently littering their dealers’ lots?”

    No.

    “… Would those dealers also be selling Buick sedans and crossovers and GMC pickup trucks and SUVs?”

    Well, not if Pontiac were independant, because then they’d probably try to be a full line auto maker. But this is one thing GM is doing that makes some sense. P/B/GMC as a sales channel, with three distinctly different brands, producing distinctly different types of vehicles. They aren’t quite there yet, but they’re working on it.

  • avatar
    dwford

    The Malibu platform illustrates GM’s wasteful design and engineering processes which have lead to it’s current state. The idea behind the Epsilon platfrom was that it would be shared between Europe and the US, used the Opel Vectra, Saab 9-3, and in the US for the midsize sedans. The problem, is, they DON’T use the same platform. Some parts may be interchangeable, but the cars can’t be built on the same assembly line – a clear indicator that there are fundamental differences in the chassis.

    Even in the US, This chassis started with the current Malibu, got “upgraded” for the G6, got upgraded again for the Aura, and now yet again for the “new” Malibu. This upgrade process has occurred over the last 5+ years, and each car is better than the last, but now we have a restyled 08 Malibu on the same chassis with more upgrades. So even though the US and European versions of this chassis are not interchangeable, the US versions aren’t either!! This waste is what is causing GM’s financial problems.

    GM also continues repeating it’s mistakes with this platform. The G6 was introduced with the terrible 3.5L v6 as it’s only engine, despite the 4 cylinder being the most popular engine in the Grand Am. 2 years later, the Aura is introduced with the same terrible engine standard, albeit with a better v6 upgrade, but again with no 4 cylinder – it’s coming… Now the 08 Malibu will get both a 4 cylinder and the 3.6L v6 at launch, but by now both engines are short on power compared to the competition. The 3.6L now makes 252hp, compared to 268 in the Camry and Accord, and 270 in the Altima. the 2.4L 4 cylinder is similarly underpowered.

    I am sure the 08 Malibu will be a much better car than the current one, but built on the same old chassis with the same old underpowered engines and pseudo-hybrid, I don’t see how it will be the world beater GM envisions.

    Oh, and 2 years from now the new Epsilon II chassis will be here in the new Aura, so GM will have obsoleted itself again.

  • avatar
    KatiePuckrik

    I used to find GM’s indefensible excuses funny, almost charming. Now they just get on my sodding nerves. Really, I have never seen a company give up before they even started. Which just goes to show you how Charles Darwin was a genius; If you can’t adapt, get out of the way for the new generation!

    Now I don’t want to hear any bleating about how the UAW are a cancer on GM and will kill Detroit because frankly I don’t believe it. I used to believe the “UAW are a cancer” idealogy before I realised that the UAW aren’t directly related to the slow down in sales figures. The UAW aren’t going out on the streets telling people to buy Toyota, Honda and Hyundai (The latter has union problems of their own!). No, GM can stop the sales figures falling if they decided to put a little work in. So strap on your leotard! Here is Katie’s five point plan to a healthier company!

    Step one: You’ve lost that loving feeling: Let go of every excuse. Your sales aren’t slipping because the downturn in the housing market or the global economy. They’re falling because your cars lack something which the competition are offering. Find out what it is! The competition looked at your cars when they were trying to crack the North American market.

    Step two: Save trees, kill some bureaucrats: Why does it take so long to get things approved, eh? Why do your cars bear little resemblance to your concepts? Ever heard the saying “A camel is a horse designed by commitee?” or put it simpler “Too many cooks spoil the broth”. If too many managers get involved a project can go down the toilet quicker than your stock price. Kill some managers and allow some freedom to your engineers. You do have great engineers, just rubbish managers! Set realistic targets for them. Remember, “On time, in budget and well engineered. Pick two.”

    Feeling the burn yet?

    Step three: Perception gap? What perception gap?: Give your customers the right incentives. Forget cash on hood, it’s counter productive. Think laterally here. You complain that your quality and reliability is on par with the Asians. Why are you so coy about proving it? Put your money where your mouth is. If you can’t stand behind your product, why should a customer? Theoretically, this should cost you no extra money, because if, like you say, there’s no difference between the Asians and yourselves then the extended warranty should cost you nothing!

    Step four: Brand ahoy!: Volkswagen has 6. Toyota has five. All of which are managed well. You’ve got 11 brands and they all don’t have a clue what they’re doing! Give your brands a focus, somewhere to go. You’ve got overlap from Hummer and GMC, SAAB hasn’t got a clue what it is and Cadillac isn’t thought of in the same vein as Mercedes-Benz and Lexus (which only came into being in 1987, or thereabouts!). SAAB’s cars are made in Germany and the factory in Sweden is making Cadillacs for Europe. Which raises an interesting point. Why are you trying to introduce Cadillac as a luxury brand in Europe when SAAB could have done the job for you?

    Step five: If you can’t be bothered to study, cheat!: Let’s face it, it’s far simpler to let other blaze a trail then copy their ideas. Admittedly, this idea doesn’t give you much kudos for your image but it is considerably cheaper! Remember, this is NOT the 1950′s! You are nothing special. There are many other car manufacturers out there with better ideas. So don’t be afraid to pinch a few for yourself. Toyota’s lean manufacturing system, Hyundai’s way of killing a perception gap, Honda’s bullet-proof reliability etc. If you consolidated these ideas people may look at you with some pride rather than derision! Never fall into the trap that GM is above everyone else. You’re not. That’s how you fell into this mess to start with (and in 1973).

    Feel you heart beating? That’s the burn, baby! You’ll see the pounds flying off and see a leaner, better GM! Once you’ve done Katie’s patented 5 point plan, only then can you start the advanced chapter of “Getting concessions from the UAW”. But that chapter may be a while. I’m currently writing an easier chapter:

    “How to get blood out of a stone”…….

    P.S. Here’s another tip. Please don’t employ people whose names can be “punned” to represent an idiot (i.e Bob “Putz” and “On the Fritz” Henderson). You’re making it too easy for us!

  • avatar
    oboylepr

    Bob Lutz is the poster child for GM’s delusional denial

    I still cannot get it through my head how a mega-corporation like GM with all that talent and human resources is in denial to the extent they are. They are like a giant spacecraft heading directly into a star with no one willing or able to change it’s course. Or maybe it’s on the course the powers that be want it to be on. It’s no wonder Captain Kirk beamed down to Las Vegas. He couldn’t change it’s course either.

  • avatar
    MX5bob

    Lutz’s delusion is most evident in citing a few bits of progress as evidence of a complete turnaround. With problems of titanic proportions, he stuffs a few mattresses into the gaping wound in the hull and declares the crisis over. It’s not.

    A few, and by that I mean three or four, good to very good vehicles is not enough to save 11 brands of GM. Nissan saved itself with essentially two models, but that’s one much smaller brand. So, when Mr. Lutz can finally point to three small cars made with fit and finish on par with the better GM products, and that are made here and not on Daewoo’s slap-dash assembly line, then Roberto Maximo will have something to brag about.

    Provided he’s not in a straightjacket.

  • avatar
    jthorner

    My money is on Ford surviving and GM going down in flames. Imagine how that is going to hit the legions of GM retirees.

  • avatar
    starlightmica

    Funny, wasn’t Lutz the one who was supposed to rappel down off his helicopter and singlehandedly change GM culture? Or was he too insular to begin with, simply winging it at Chrysler?

    Iacocca, having jumped the shark about 20 years ago, now regrets not having Lutz at the helm of Chrysler instead of Eaton. Hmmm, what would Lutz have done if he had been given the reins of Chrysler back in the mid-90′s, kept it limping along, or run it into the ground even faster?

  • avatar
    AGR

    For a generation many good intentioned people have been trying to tell GM what to do, and offered free and valuable advice.

    It would seem that all these kind generous people are not understanding that nobody is listening.

    Lutz is GM’s “mouthpiece” he was hired for that purpose, and does an excellent job as a mouthpiece. It would have made sense for GM to hire Wolfgang Bernhard several years ago, how come they did not do it?

    August sales headed south, and everyone will conveniently use the “credit crunch” to rationalise the results. Not just GM, every manufacturer will use the same line.

  • avatar
    naif

    Thank you again Mr. Farago.

  • avatar
    Prado

    “It’s the bureaucracy, stupid” …. Absolutely! GM cannot build enough fresh, unique, and non-overlapping products for all of its divisions and they never will. GM is not doing enough to resolve this fundamental issue.

    What does the ‘new’ Malibu bring to the table that does not already exist in the Aura? Nothing. Half of the interior looks like it was directly lifted from the Aura including the rock hard door armrests.

    Other than bureaucracy, why does Saturn even still exist in the GM portfolio? It seems like this would be a no-brainer to unload this franchise and its well regarded dealer network. I find it hard to believe that GM couldn’t sell or give away this brand. They would be much better off for having one less brand to try to fill with products.

  • avatar
    mikey

    Well here we have another Death Watch.Whats strange about this one I ask myself?
    I got it! I can’t find one thing to disagree in either the editorial or any of the 13 comments so far.
    The only thing I could add would be,the denial thing ,starts at the top.Much like another {and similar in this case substance}.It flows downhill.

  • avatar
    KatiePuckrik

    Prado

    why does Saturn even still exist in the GM portfolio?

    I think the real question is “Why DID Saturn exist?”. I reckon the conversation went something like this

    Roger Smith: We don’t have enough brands!
    Board Member 1: We’ve got 10!
    Roger Smith: Not enough! Now hear me out. I want to create “Saturn”. A Euro-car killer brand!
    Board Member 1: A Euro car killer? Well, what the hell did we buy SAAB for?!
    Roger Smith: SAAB? We own that?
    Board Member 1: Yes!
    Roger Smith: Oh, I don’t know why we did that, but trust me! It’ll work!
    Board Member 1: Someone flip a coin.
    (Someone flips a coin)
    Board Member 2: Heads or Tails?
    Roger Smith: Heads.
    Board Member 2: Heads it is! OK. Create “Saturn”.
    Board Member 3: You know, we’re going to have to stop making our business decisions like this…..

    For the record, if anyone hs noticed my last 2 posts, I’m started to get a bit flippant towards GM. Seriously, maybe “The Hudsucker Proxy” was actually a documentary…..?

    Also for the record, I realise the chronology is wrong, but I don’t care! Anyway, I’m sure you understand my point…..

  • avatar
    jrlombard

    AGR is right, no one is listening. A bunch of corporate ‘atta-boy’ back patters are hoping to keep their mouths shut just long enough to keep moving up the ladder so that they too can find their golden parachutes. The culture reinforces this attitude.

    GM doesn’t seem to understand branding, and if they knew that they didn’t understand it, that might be okay. What if GM were to be just a manufacturer…think of it like a contract company. Then spin off each of the brands into their own holding companies. Utilize inside and outside talent to refine each brand to eliminate overlap and maximize their unique market proposition. The brands could then schedule production with the manufacturer utilizing their lines, labor and tooling. This utilizes the talents of all involved and doesn’t allow….

    (snort, grunt, cough)
    …Whoa, just woke up. I just had the craziest dream…

  • avatar
    50merc

    “Businessmen go down with their businesses because they like the old way so well they cannot bring themselves to change. One sees them all about–men who do not know that yesterday is past, and who woke up this morning with their last year’s ideas.”

    True. The funny thing is that this was said by Henry Ford, the guy who kept making Model T’s long after its time.

  • avatar
    Adamatari

    Actually, both Geo and Saturn were good ideas fundamentally (Saturn more so, since they made their own cars). GM needed and still needs good, efficient small cars. The problem is that they have a corporate culture that is hostile to these vehicles, which is what sunk Geo and what killed off all the innovative ideas Saturn started with (like the plastic panels, which owners loved for the most part).

    Even Ch.11 bankruptcy is unlikely to flush the crappy managers and beancounters out of the system. Heck, I’m not sure even the engineers at GM are really equipped for the modern era – why does the Z06 exist alongside the Aveo? Can’t they make a decent sub-2L engine? While I must give them credit for developing sophisticated pushrod engines, it’s not clear that they’re sophisticated enough to take on the competition in the V6 category. How do they think the company can survive when all the effort is put into the V8 engines? Why the hell would they make a new Camaro, especially as a large V6/V8 throwback in the age of the small, Turbo I4 sportscar?

    GM’s whole existence needs to be rethought, from the smallest car to the biggest truck. They have to look at the competition and look at the future – the only reason they’ve even lived this long was the lucky cheap gas of the 90′s and the SUV boom. GM’s been facing it’s past glory of the 50′s and 60′s instead of looking to the future seriously, and that’s what’s killing it.

  • avatar
    buickgrandnational

    I was telling someone yesterday that I probably would have gone into the automotive industry if I didn’t have to move to the Hellhole Formerly Known as Detroit.

    Maybe that’s why the Big 2.8 are in such trouble: no one in their right mind would actually want to move to the Detroit area, so their talent pool consists of the sons and daughters of current Detroiters–and many of the smarter ones have long since moved out to greener pastures, anyway.

    If I became CEO of a Big 2.8 automaker, the first thing I would do is move HQ to Chicago or NYC.

  • avatar
    tech98

    I thought Saturn started out with a decent chance in life — revised Japanese-style work rules in a greenfield factory in the South, new approach to the dealer network, an acceptable import-fighting compact sedan product, etc.

    For a brief moment in the mid-80s, it looked as if the rest of GM might learn from Saturn’s experimentation and improve the whole corporation.

    But GM’s jealous bureaucracy killed it. The rest of GM seemed to resent that Saturn wasn’t mired in the same miserable, suffocating culture that they endured. Product development was starved to the point of gross uncompetitiveness, independence slashed and destroyed, and Saturn was sucked into the Gaping Maw of Mediocrity that suffuses the rest of the organization.

    I’ve been following the US auto industry for about three decades, and I’ve finally faced the fact that hoping for the US makers to wake up and produce competitive world-class product is like expecting that this time Lucy will hold the football so Charlie Brown can kick a field goal.

    There have been so many false dawns, bombastic PR releases and “This time we really mean it” snow-jobs out of Detroit since the late 70s that I just don’t believe anything they say anymore. Their corporate culture remains arrogant and insular, obedient-conformist, spreadsheet-worshipping and engineer-denigrating. Their propaganda is so transparent that they aren’t even trying to convince critical thinkers anymore, just braying to a dwindling audience of die-hard loyalists and rubes who don’t want to think. Buying patriotically just makes you a mark to be exploited with this crowd.

  • avatar
    Dynamic88

    “I was telling someone yesterday that I probably would have gone into the automotive industry if I didn’t have to move to the Hellhole Formerly Known as Detroit.”

    I used to know some engineers who worked for Ford who had moved here from the East Coast. They didn’t live in the Ctiy of Detroit (no one with means does) but instead in one of the many decent suburban cities the ring the hellhole.

  • avatar
    yankinwaoz

    Step three: Perception gap? What perception gap?: Give your customers the right incentives. Forget cash on hood, it’s counter productive. Think laterally here. You complain that your quality and reliability is on par with the Asians. Why are you so coy about proving it? Put your money where your mouth is. If you can’t stand behind your product, why should a customer? Theoretically, this should cost you no extra money, because if, like you say, there’s no difference between the Asians and yourselves then the extended warranty should cost you nothing!

    Bingo. This is what amazes me about GM. When they start putting that much cash on the hood, it just reinforces the perception that they make cheap junk.

    As said above, if GM is as great as they claim, then back the products with a real warranty. Get rid of the weasel clauses such as “original owner only”, “drive train only”, and a million other exceptions. Make the warranty clean, simple, and straight forward. No BS.

    Seriously…. if you want buyers to part with a large chunk of cash for your product. Then make yourself worthy of their investment.

    A lot of buyers would rather spend a little extra money and buy something that lets them sleep at night knowing that that they got something excellent for their money. Sure beats that nagging feeling that you just wasted money buying garbage.

  • avatar
    raast

    From a customers perspective alone, if you head on in to the any GM showroom and objectively evaluate the vehicles they are producing…for a great many you have conclude “what were they thinking?” The initial concept of some of the vehicles may have started out fine, but in the end the cost cutting dept really did a hatchet job by selecting the use of poor materials or having the unit assembled outside of the US or Canada. (Oshawa generally does a decent assembly job, too bad the parts are mediocre). There are simply too many divisons offering the same stuff with cosmetic differences. Basic business practice seems to elude management completely – a base Allure has no fold down rear seat, it’s an option. So from a business model standpoint there is the cost-of-posession for two types of seats in inventory, where one would suffice and obviously be a selling point. Seems to me some of the competition has figured stuff this out.

  • avatar
    jaje

    The Big 2.8′s sales are in the tank b/c they can no longer get the marginal/bad credit sales anymore as the market has tightened it’s financial belt. I’ve seen people try to trade in a 3 year old malfunctioning Taurus (surprisingly right after the warranty expired) with ~10k in negative equity b/c their credit was so bad (the customer noted that they tried to buy a Camcord but their credit was turned down).

    Mitsubishi relied heavily on selling cars to those who couldn’t or shouldn’t have bought them in order to get that sale. Mitsubishi then took a huge hit when they (expectedly) defaulted on their high interest (almost usury violation) loans and left Mitsubishi with a car that had little resale value and a bankrupt customer.

  • avatar
    jthorner

    The contrast between Honda’s way of designing and building vehicles and GM’s is remarkable.

    Honda pretty much has two engine families, a 4 cylinder and a V-6. They cover their entire vehicle range with variations of these two. All are high tech engines which are amongst the best in their class. Honda has four basic platforms: Small (Fit), Compact, Mid/Full size and van/truck. The Compact is used to build Civic, CRX and RDX. The Mid/Full size gives you Accord, TSX, TL and RL. The van/truck does Odyssey, Pilot, Ridgeline & MDX.

    With this relatively small engineering base Honda sells more cars, crossovers and minivans in the categories in which it competes than does GM.

    Four base designs, two nameplates, period. Honda also keeps it’s option count way down by bundling options into trim level packages. The Acura division is the most extreme this way in that most of it’s vehicles have only one option, with or without Navigation system. I will bet that once the cost of Navigation systems is down to $100 or so it will also cease to be an option. It is much easier to design and manufacture a car one way. This is part of how Honda delivers very high value vehicles. For 2008 even a base model Accord will have all the passive and active safety goodies including ABS, stability control, airbags everywhere and tire pressure monitoring. Running a Honda factory must be a joy compared to running a Chevy/Buick/Pontiac/Saturn factory.

    Contrast the efficiency of Honda/Acura to the mishmash of efforts called Chevrolet, Buick, Pontiac, Saturn and Saab.

    Take away GM’s full sized body-on-frame truck business what you have left isn’t worth much.

  • avatar
    Ronin317

    What’s even funnier is that Ford seems to be getting the shared platform right across the board with the Mazda 6, Ford Fusion, Mercury Milan, and Lincoln MKZ. All the while, GM still just has no clue about how to run with a similar car across different lines. Then again, we’re talking about a company that can’t seem to keep the Caddy brand up either…

    And since we’re talking Malibu here, who on earth likes the trunk design on the regular Malibu? Is there actually anyone that says “hey, it looks good”? I’m not talking about the MAXX here either, as that is a travesty not worth bashing.

  • avatar
    PeakVT

    “GM’s stifling bureaucratic structure lies at the heart of the American automaker’s multi-decade fall from grace.”

    This is really the only explanation: a bureaucracy as stifling as grandma’s parlor on a summer day. Lots of people like to blame the unions, but the problem has always been a bureaucracy that makes the federal government seem like a model of efficiency – and senior management that is (for reasons I don’t understand) unwilling or unable to change the corporate culture.

  • avatar

    @jthorner

    Cuttingly straightforward analysis of the difference between success and abject failure between Honda and GM. You just need to add one other thing, Honda has a philosophy.

    “The best mileage performance in each class of vehicle.” Something they’re now clearly demonstrating and which has added to Honda’s impetus towards success.

    Compare that to GM Lutz the Klutz’ statement: “Rich people don’t care about the price of gasoline.” For a mass marketer, GM committed the grave error of taking its eyes off the needs of the mass of consumers.

  • avatar
    CeeDragon

    “It’s the bureaucracy, stupid”

    The bureaucracy is a symptom of a larger problem, I’m afraid. All of the comments are glaringly obvious to most people outside of the “Hellhole Formerly Known as Detroit” (well said, buickgrandnational!)

    However, many people in Detroit, and especially if they work for the big 2.8, have a very different viewpoint. They lived through decades and generations of a car culture that has thrived with “the bureaucracy”. The conversations that they have and the messages that they receive (e.g. from that journalistic beacon, The Detroit Free Press) tell them, “this is just a bump in the road… we’ll be fine after our next big thing and we can get back to the normal laziness, graft, politics, and payoffs. Anyone who disagrees is a commie/pinko/liberal/terrorist.”

    The real problem is the car culture in Detroit. It tells the Detroit designers/engineers to aim low for the family cars and produces the Sebring. It tells management that everyone (i.e., real men) needs to tow stuff in large SUVs and keeps the resources on them. It tells senior management that they’re entitled to ginormous pay and golden parachutes for pitiful performance. It tells the union that they’re entitled to the same, plus extra rest breaks.

    I’ve said it before. For the American auto companies to survive… I mean, really survive and not be just a shadow of their former selves, they need to seriously change the culture. And that means getting out of Detroit.

  • avatar
    Antone

    GM is an example of business values (short-sided greed, one-way thinking: “ahead!”, brand loyalty exploitation, A.D.D. marketing, massive present moment denial, will-in-to existence statistical theory, etc.) in the US.

  • avatar
    the_stig

    Robert Farago, I’m convinced we’re related somewhere down the line… thank you, this is exactly what I have been saying for years. GM does not hold themselves accountable for their actions or misfortunes; it’s always been the other guy or some mystical force raining down on them. I live near the Oshawa plant in Canada, and they are freaking out about the PERMANENT layoff of up to 1200 employees on their truck line, and as per usual this Buzz Hargrove guy come on the TV and blames the government, fare trade, Toyota and all the other “imports”. No mention of, “well we’ve screwed up a lot over the last 20 years or more so now we’re paying for it.” Sorry GM, but the excuses will not fly with the consumers who are wise to your inferior products.
    …and as for Katie Puckrik, will you marry me?

  • avatar
    Lichtronamo

    Maybe when Mullally finishes fixing Ford, he can move over to GM.

    Mullally gets it with his “One Ford” plan. The idea that a Ford Fusion sold in the US should be similar and have the same character as the Ford Mondeo sold in Europe or the Mazda6 sold in Japan. He gets that Ford must stretch from entry level up to entry luxury with only Lincoln on top of that, which is why Mercury will be gone in five years. GM doesn’t need Saturn, Buick, Pontiac, Saab and having them means less money to focus on (especially) Chevrolet and Cadillac. Why do you need an Aura and a Malibu to compete against one Accord and Camry?

    BTW, I have to agree with the comments here that the new Malibu (not to mention the Aura) is about to be blown into the weeds by the new Accord. Also, don’t plan on buying one of those G8′s with a V-6 unless you too like being blown away by more pedestrian cars like Camry, Accord, and Altima. Nice hood scoops, though the rest of the car looks pretty vanilla.

    Yes, yes. There is the 3.6L direct injection. Which I read last week has a design flaw that creates higher levels of NVH. Good.

  • avatar
    Rday

    But the New VEBA? plan will save GM and the rest of Detroit from Armageddon. Right. Just like Detroit looking for some magical solution to all of their problems in one simple program. They don’t get it. The only way they can survive is to change the whole corrupt system. This means that they need a complete new cast of characters in all positions. What are the chances of that happening??

  • avatar
    hltguy

    Look on the bright side, where else can you get a $6,000.00 rebate on a short bed truck, such as being offered on Dodge trucks here in California? Plus the additional markdown from sticker, that means a new truck for under $15K, albeit a Chrysler product. But therein lies the desperation of the situation, 30 to 35% price reductions from sticker and the product continues to sit on the lots. Just announced today, Ford sales were down 14.4% in August, they only sold 63,000 autos in August, which means some dealers probably only sold three of four new cars in the month.
    By the way, can someone answer this question for me: Why did GM put the sun roof over the back seat in the Malibus? I have rented a couple of Malibus and that struck me as rather odd.

  • avatar
    Ashy Larry

    @Ronin317 –

    I’m not sure Ford has the platform share down pat. The Milan, Fusion and MKZ are dangerously close to one another in price and features. It’s pretty difficult to justify buying a Milan if you can afford the Linocoln or if you could save some bucks by going for the Fusion (which can be very similarly equipped). And apart from an unusual interior/exterior design (that still retains the basic shape of the Fusion), the MKZ really does look like a rebadge — certainly more thorough than a Cimmarron rebadge, but maybe more like the 9-7x rebadge.

    But Ford has been struggling for decades when it comes to figuring out just what Mercury is, and Lincoln probably needs something far more than a heavily rebadged Fusion to effectuate a resuscitation of that brain-dead brand.

  • avatar
    indi500fan

    FWIW SAAB was purchased by GM in 90.
    Long after the Saturn project was started.

    Just noticed August was GM’s highest market share percentage of the year. Time to do a Toyota mediocrity watch piece, guys.

  • avatar
    Landcrusher

    Katie,

    I like your idea of UAW as a Cancer. It defeats your point. The cancer inside a person isn’t responsible for much at all of what is wrong with the person. I have lost a lot of family to cancer, and mostly, they were fine until very near the end. The cancer wasn’t responsible for their financial problems, personality quirks, or anything other than a few “symptoms” which were mostly livable.

    Still, if new cells had a choice, how many would choose to start life in a cancerous body?

    No, the UAW is not responsible for all the problems, but it is a cancer on the body which will likely never thrive again until it is cut out. The combination of the UAW, government, and big bureaucracy is just too much.

    The latter is not capable of reform without relief from the other two. There is a certain personality type which must be present for innovation in an organization. Large organizations like Ford, GM, the military, and other government entities are in a constant state of “involuntarily” driving these people away – EVEN THOUGH THEY MUST HAVE THEM TO SURVIVE. The UAW along with the laws and culture that surround it is the unnecessary bit of straw on the camels back. Corporate culture and bureaucracy are necessarily a part of ALL large automakers.

    The bottom line is that the UAW must lose power, the culture must change, and the bureaucracy must change. ALL THREE.

    The only other thing is to hope for a change in circumstance. Rational actors all, the players are all doing the only thing they know – grab all you can whether it sinks the ship or not. Best to be the last one with a paycheck than get thrown overboard for trying to change/save the ship.

  • avatar
    KatiePuckrik

    Landcrusher,

    My point was that it ISN’T the UAW’s fault. It’s GM’s incompentent management. Basically, we’re looking the Automotive equivalent of the “Cuban missle crisis”.

    You’re absolutely right, that the UAW needs to lose power and the management needs to change culture. Trouble is neither party wants to back down for fear that the other party is bluffing. If the UAW back down first and management don’t fufil their promises of reform, then the UAW will be super annoyed. If management back down and the UAW still carry on squeezing Detroit then everyone will lose. What they need is an abitrator. But not even Ed Gein would want to get involved in this bloodbath!

    But, this doesn’t exonerate Detroit’s management from the crap cars, they’ve approved, the golden parachutes they’ve given themselves, the mistrust built up between staff and themselves, the poor quality and reliability, etc. The UAW are about 15% of the problem.

  • avatar
    Geotpf

    GM’s sales were actually up in August:

    http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewpressreldetail.do?domain=2&docid=39053

    And, weirder still, Toyota’s were down:

    http://pressroom.toyota.com/Releases/View?id=TYT2007090441305

    Looking closer, it looks like GM’s sales were mainly up due to oddly high full-sized pickup sales (which goes contrary to the whole housing-market-downturn-will-kill-pickup-sales thing). I’ve seen ads on TV recently for deals on GM’s full sized pickups, so I’m guessing incentive spending on them was sky-high this month and bargin takers pounced.

  • avatar
    starlightmica

    Just noticed August was GM’s highest market share percentage of the year. Time to do a Toyota mediocrity watch piece, guys.

    Whoa. Fleets, fella.
    G5 up 73%
    HHR up 50%
    Uplander up 29% (what the…!?!)
    Torrent up 22%
    Equinox up 13%
    Gran Prix up 11%

    Now with UAW contracts expiring a week from Friday, wouldn’t it have helped a little if the numbers went down?

  • avatar
    buickgrandnational

    “I used to know some engineers who worked for Ford who had moved here from the East Coast. They didn’t live in the Ctiy of Detroit (no one with means does) but instead in one of the many decent suburban cities the ring the hellhole.”

    Oh, I know. Been there many times. But I hate suburbs. I’m a city kind of guy.

  • avatar
    BTEFan

    The overlapping brands have been eating each other alive for decades now. Now, models within each division are cannabalizing each other. I was at the old GM store that I worked at last week talking to the inventory controller. We chatted about which models are selling etc. They sold 1 new STS last model year (2007). And they are a large Pontiac Buick Cadillac store in a metro area. Folks take one look at the STS, see how similar it looks to an CTS, check out the price or the lease payment they can get, and, well, drive off in the cheaper of the two. The STS is a decent car, its got the great V6 and V8, AWD, distinctive styling etc, but it looks a little too much like the cheaper car, so the cheaper car gets the sale. Same thing happened with the Park Avenue. The 2000 LeSabre filled the need for the (rapidly declining) market for large semi premium cars, and it made the Park Ave redundant. Now, Buick has 3 car lines. For now….

  • avatar
    Austin Greene

    Hello McFly? Is there anybody at home?

    I hate to be a contrarian, but didn’t I just read that GM’s sales went up this month?

  • avatar

    Frank’s preparing an editorial on GM’s August results.

    As a preview, I’ll say this: fleets and commercial.

    If you seriously believe retail customers are flocking to GM (and away from Toyota), please hang fire until we submit our analysis.

  • avatar
    jthorner

    “Uplander up 29% (what the…!?!)”

    Uplander and the rest of the GM minivans are dead men walking. The junk has to go somewhere. There is no 2008 Uplander/Venture/Lumina APV. Three names in three generations and every one missed the mark.

  • avatar
    seldomawake

    Katie:

    I’m 100% in agreement with your 5 points. Slap some measurable metrics and deadlines on those points, and we should have a turnaround plan that’s simple, clear and should work. I do wonder if Mr. Lutz and Mr. Wagoner have a similar, public turnaround plan? Is the turnaround plan (now 5+ years old, I imagine) even publicly available?

  • avatar
    SLLTTAC

    Unless one has a financial interest in GM, who cares whether it survives or fails? Packard, Studebaker, Kaiser-Frazer, and many other corporations are long gone, but shoppers for cars and trucks today have a greater choice than ever before. A compelling reason for wishing Ford and GM success is that the national defense does need industry strength.

    By the way, the phrase is “nolo contendere.”

  • avatar

    SLLTTAC factories not companies are the crucial element in national defense. History is the guide. In the second world war, GM and Ford factories in Germany and other Axis countries produced at full steam for the Axis just like Toyota and Honda would for us if it came down to winning or losing a war if needed. The parent company has no say. Of course the days of hardware such as tanks and trucks determining the outcome of war are probably long gone.

    BTW what does SLLTTAC stand for?

  • avatar
    Axel

    GM’s problem right now is mostly marketing. Their product is rapidly catching up to the competition, but the branding situation is a mess. Yes, there is still platform sharing, but while the average guy on the street 15 years ago knew that the Bonnie/88/LeSabre was the same car, he doesn’t know today that the Impala/Grand Prix/LaCrosse are the same car (bad example, but anyway…). The branding sitation can be cleared up as follows:

    “Bottom-tier” brands: choose either extra quality, extra performance, or extra value.
    Chevy = value
    Ponty = performance
    Olds-er-Saturn = quality

    Actually, they’re getting there. Chevy should offer you the “most car for the money,” and Impala certainly fits the bill. With Cobalt and Aveo… well, at least they’re cheap.

    Ponty should be a Vee-Dub killer. Screw ginormous RWD cars – that’s SO last century. They should be making hip, smaller FWD cars with tight handling, snazzy interiors, and forced-intake engines. As a corollary, they should just fold all of Saab’s assets into Pontiac. Build excetement, already!

    Olds, I mean, Saturn is doing pretty much what they should. Extra quality all around with Aura and Vue, and by all accounts, the sold-for-a-loss Astra should continue the trend. Most quality for the money.

    The bottom 3 brands can share parts and platforms freely as long as their products meet their brand aim.

    “Top-tier” brands:
    Buick = Lexus
    Cadillac = Bentley

    Here is where GM needs a revolutionary change. They fail so miserably on their upper brands as to take the rest of the company down with them. It’s not a platform-sharing issue (with Buick) as much as a general quality issue. Saturn should not have nicer interiors than Buick!! You should not get inside a Buick and feel like you’re in a mid-trim Toyota!!

    Anyway, just some thoughts.

  • avatar
    PatPage

    jthorner, The 2008 Chevrolet Uplander lives, even if not in your mind.

    Axel, I like the way you think!

  • avatar
    jthorner

    Several news sources said that 2007 was the end of the line for all the GM minivans. Maybe that changed. If so, my apologies:

    http://en.wikipedia.org/wiki/Chevrolet_Uplander

    Perhaps it has gotten a stay of execution through the 2008 model year. In any case, it is a non-competitive product at the end of it’s days.

  • avatar
    50merc

    There may have been a time when a Buick Roadmaster had prestige similar to that of a Lexus 4xx today, but “Cadillac = Bentley”?? Cadillac sells, what, maybe 200,000 vehicles a year, including trucks. If Cadillac aspires to Bentley status, I think it’s a case of reach exceeding grasp.

  • avatar
    Rastus

    I will only concede that GMs problems are strictly “marketing” if you EXPAND the idea that “Marketing” is the defining of products which sell.

    Of course, “defining” meaning ENGINEERING.

    So, from an abstract point-of-view, I agree that GM’s problems are “Marketing”-related.

    But here’s the clincher….this has been the case for 30 years!!!

    30 years to waveing the flag, the down-on-the-farm Po-Folk, bib overall wearing, straw hat, shaft-of-wheat-in-the-mouth BS which is GM has gotten it what?

    A twin-tower collapse of market share.

    “Aw Shucks!! We’s just some Good Ole Boys trying to make a livin’” bullshit!!

    Anyone with a lick of sense will look at the “green” Aurora as a mediocre, 32nd-rate, last-ditch effort that it is.

    They’s hurting Wheezy…hold on tight, they’s hurting!!

    http://www.urbansake.com/wp-content/uploads/2006/08/jeffersons.png

    Let the pig bleed, ’tain’t worth saving.

  • avatar
    CeeDragon

    GM’s problem right now is mostly marketing.

    It’s this sentiment that’s kept GM from fixing their real problems. It’s easier to do “brand management”, “channel marketing”, etc. rather than engineer good products.

  • avatar
    jthorner

    “Robert Farago : September 4th, 2007 at 7:57 pm
    Frank’s preparing an editorial on GM’s August results. As a preview, I’ll say this: fleets and commercial. “

    Are we still going to see this analysis?


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