By on March 6, 2013

In the first part of this series, we looked at Dan Akerson’s problematic relationship with the truth, focusing on the gap between his stated intentions and his actions. Akerson is hardly the only example of an auto executive to indulge in personal myth-building or ego-driven dissembling. Analysts, employees and shareholders can forgive all kinds of personal shortcomings in a chief executive so long as he has a clear plan for success and the proven ability to get results. Unfortunately for GM, Dan Akerson brings nothing to the table in this regard that might outweigh his negatives.

The depth of Akerson’s strategic failure is nothing short of stunning, encompassing almost every element of GM’s global footprint.

From China to North America, from Europe to the developing world, General Motors is not only failing to take advantage of its fresh start, it is mortgaging its future at every turn. Changing the culture of a company the size of GM would be difficult under the best circumstances, but when the boss is completely in over his head it becomes a task of sysiphean futility.

Akerson’s lack of strategic vision for GM is probably best encapsulated by the unfolding mess in Europe.

With its US operations newly profitable, fixing its long-troubled European operations should have become an overriding priority for GM after its IPO, if only because every analyst cited it as cause for bearishness. Over two years after the IPO, GM’s plan for Opel (if in fact one exists) is as inscrutable as ever. Negotiations with unions are stuck on the ground floor, and while competitors like Ford are taking bold action to cut capacity, GM’s executives talk about a “product-led” Opel turnaround in a market that likely won’t ever return to past levels.

It would be bad enough if Akerson simply didn’t have a plan beyond waiting to see if Opel’s problems solve themselves, but instead he has doubled down on GM’s European problems by spending $400m on a stake in Peugeot-Citroen. That investment needs no special criticism, as about $200 million of it had to be written off after less than a year. But beyond the sheer tactical stupidity of investing in a vulnerable automaker in the midst of an industry shake-out, doubling the company’s exposure to the very problems that were plaguing Opel stands alone in terms of sheer strategic failure. Clearly Akerson missed the pre-bailout debate over a possible GM-Chrysler merger, which ended with the consensus that combining two companies with the same problems is a bad idea.

Unable to convince anyone that there is a plan to solve GM’s European mess (or that there was any logic behind the PSA alliance), Akerson has floated the notion that the French automaker will somehow help as a partner in developing markets. Beyond the fact that PSA has few accomplishments worth mentioning in developing markets (not coincidentally one of the reasons it’s in trouble), the move throws GM’s relationship with its previous developing-market partner SAIC into question. Having forged extremely tight ties with SAIC, which helped arrange a Chinese bank loan to fund its overseas operations in 2009, GM is now being led away from its Chinese ally. There might be some rationale for Akerson’s move away from SAIC if it actually made GM less dependent on its Chinese partner, but GM will continue to rely on its Chinese partner for growth in Asia and low-cost technical development. Meanwhile, the fact that one of the world’s largest automakers won’t expand into developing markets beyond China without a partner (which would eat into already-low developing market profit margins) is nothing short of baffling.

In China itself, Akerson has overseen a period of relatively strong volume growth. However, with the overall market slowing, the emphasis is moving towards the profitability of the luxury market, and here GM is losing ground to the competition. Despite its early advantage, Buick has been stuck in neutral, and Cadillac is losing relevance as German luxury brands attack the market. GM’s volume growth, on the other hand, has all come from its Wuling low-cost commercial vehicle operation, which offers only miniscule profits per vehicle. With profit opportunities few and far between in the current global climate, and blessed with a Buick brand that has been beloved in China for decades, GM could be making a lot more money in China. Adding insult to injury, GM’s aggressive joint technical development also means SAIC is already debuting technology like dual-clutch transmissions that GM doesn’t even offer in developed markets. Without brand equity now or a clear technological advantage going forward, GM’s future in China is hardly being guided with care.

But if it’s important for GM to squeeze more profits out of China in the short term, the same is doubly true for the North America. The US market is projected to supply a huge percentage of global profits over the next several years, making it a major priority for every automaker. Thanks to the bailout, GM almost can’t help but make money in its home market, but Akerson and his team have shown no ability to lick GM’s nagging problems. Market share is not only stagnant at best, it continues to closely track incentives. Last November, GM’s incentives as a percentage of average transaction price fell below the industry average for the first time, resulting in its worst monthly market share since bankruptcy. With inventory levels remaining stubbornly high as well, it’s clear that Akerson has made no progress on any of GM’s persistent profit drags.

Worse still, Akerson’s underwhelming results in GM’s most important market are further undermined by his strategic decision to back an aggressive push into subprime lending. Having acquired Americredit, the new GM Financial has rapidly become a leader in subprime auto lending, helping GM move cars out the door but introducing new financial risks to the company. GM Financial’s default rate is pushing up, and is already higher than any other in-house lender in the business. In short, Akerson is taking GM back to the bad old days of “redlining” sales with big inventory, big discounts and subprime financing, but still can’t change the company’s momentum on market share or profitability.

For all the open wounds, impetuous alliances, self-destructive dependencies and lost opportunities scattered across GM’s global empire, the strategic mistake that underlies all of Akerson’s failures as CEO has to do with product. As a board member, Akerson was famously critical of GM’s cars; as CEO he has only hurt the product renaissance that was underway when he arrived at GM. From his well-documented decision to rush the new Malibu to market, crippling what was arguably GM’s most important car, to a signing off on a batch of too-conservative trucks, Akerson has proven repeatedly that he simply does not understand the business that he is in. And yet, despite his clear ignorance of even basic facts of the car business, he has developed a reputation for making rash decisions to “shake things up.” This fits perfectly with the pattern described in Part One of this series: Akerson is driven by ego rather than strategy.

The car business is hugely unintuitive. It looks easy, at least to the many neophytes who try their untrained hand in the field, only to go down in flames, taking investor money with them. Running a multinational car company probably is one of the most complex tasks in the world. Your research won’t bring fruits for ten years, or never, but you must spend billions on it. Your products must be right for markets and economies 5 years from now, all over the world. You are up against companies like Toyota and Volkswagen, run by CEOs who have cars in their genes, who have been around cars all their lives, and who know how to direct and lead armies of engineers, marketing and finance people into victory. The competition won’t call for Akerson’s head: The longer he is in his job, the more assured is their victory.

We were made to believe that GM was saved by the government. In reality, it was the American automobile industry that was saved from certain annihilation by foreign carmakers, and we should thank the government for it. In truly Washingtonian fashion, they win the war and lose the peace by putting the American car industry in the hands of an utter amateur. The man in charge of a car company must be a strategist and tactician of the caliber of Alexander the Great, leading from the front, knowing when to dismiss his advisers, knowing when to do the unexpected, having a sixth sense for a sudden opening in the ranks of the opposition, intuitively knowing how to ruthlessly exploit a weakness.

Akerson was put at the helm of GM by politicians who know even less about the car business than an Akerson. As the politicians sell their shares in GM and leave, they should take their man with them. If Akerson is replaced with a CEO worthy and capable of guiding GM, the stock will surely bounce, making the exit less painful.

The real tragedy of all this: the deep reserves of talented people at GM do know how to make quality products, and the company had been making real progress towards a brighter future. Now it is being wildly misled in nearly every aspect by a man who bullied his way to the top of a company he doesn’t understand in an industry that he doesn’t understand. As we will explore in Part Three of The Case Against Dan Akerson, this has led to a complete loss of confidence in the carpetbagging telecom man and his cronies, jeopardizing GM’s new lease on life. For the good of the company, it’s time to replace him with someone who understands the business… or at least understands when he doesn’t understand the business.

Previous: Breach Of Trust. Forthcoming: Part 3: Loss Of Confidence.

Editor’s note: Renaissance_Man is a nationally and internationally known industry analyst who prefers to remain anonymous

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87 Comments on “The Case Against Akerson, Part 2 of 3: Lack Of Strategy...”


  • avatar
    mike978

    Another well written and accurate installment in this series. I just hope stock holders take note.
    I would say the jury is out on whether the new trucks are too conservative and will not do well. The current truck at the end of its life is outselling the F-150 again for the first time in a while (GMC and Chevy combined).

  • avatar
    jimboy

    Good article! I have said since the ‘bankruptcy’ that GM was never ‘scared enough’ to actually change it’s culture from within, as Ford and Chrysler did. It continues to stumble along in it’s arrogance that it will always be here, or be bailed out once again, to the tune of billions of dollars of taxpayer money.

    Sadly the upper ‘management” (term used very loosely) still hasn’t figured out that it’s all about “Product, Product, Product” and nothing else. When I first heard that Akerson was going to achieve economies of scale by reducing vehicle development, I knew right then that GM was heading right down the same path that led it to bankruptcy in the first place.

    I was once quite a GM fan, decades ago, now it’s like watching a drug addict deteriorate into chaos and death. Sad to see, and worse for a once great company to be turned into a caricature of what it once was.

    I see very little chance of recovery for the General.

  • avatar
    cc1982

    Okay — look, there are probably some good reasons to hate on Dan Akerson, but this article is just ridiculous. There are several just plain innaccurate statements, cobbled together with a bunch of ad hominem attacks that really detract from the argument. I disbelieve that the person who wrote this article is a “known and respected analyst” as one would expect at least a bit more attention to the facts. Let’s go through them:

    1) Negotiations with unions stuck on the ground floor: What does this mean? They just completed negotiations with respect to Bochum, does that not count? Would a different CEO have gotten the unions to roll over? The German unions, with government backing? This has never happened.

    2) Ford bold action to cut capacity: True, they’re cutting capacity in the UK and Belgium, where its fairly easy to do. You can’t cut capacity in Germany because of the political allegiances and union ties to government. Its never been done — and GM certainly has tried. Any auto analyst knows this. If GM had Ford’s footprint they would have closed the same amount of capacity. You cant just pretend all of Europe is the same — the UK is very different from Germany/France

    3) PSA alliance: $400m ?? How big is GM? This is a drop in the bucket, and they expect $1bn in synergies from shared platforms. This takes a while to come online. If this analyst would appreciate some long-term thinking in Europe, they’d actually probably respect this deal. Most of the “car guys” in Europe certainly do. It makes a ton of economic sense, and they’re making it happen for a pittance.

    4) “Doubling” the company’s exposure to Europe: Actually, all new manufacturing (for say the Mokka) is happening in Korea as they attempt to reduce production in Europe. And they are closing Bochum. A JV to share platforms with PSA actually off-loads European exposure. Man. Did you think they are like completely combining operations or that GM has some financial exposure to PSA? That’s…not true other than a laughingly small equity stake.

    5) How is GM being led away from SAIC? Because they have a sourcing and platform JV with PSA? Do you realize how many JV’s GM has? I think they have double digits in China ALONE. SAIC is very focused on keeping GM technology, and growing market share there. They could care less about some PSA deal in Europe.

    6) GM won’t expand into developing markets without a JV: except for any car exported from Korea to one of 20 Asian countries, except for their Russian production, and except for all of their South American production.

    7) Do you know what’s going on in China right now? GM has gained massive amounts of market share despite a price-war that is really taking its toll on their higher-profit brands. Buick continues to gain market share, and Cadillac demand is so high they have to build a production facility there over the next 3 years. Now, is Buick growing 20%+ anymore? No — but no one realistic can expect that. GM’s performance in China over the past 3 years has been really impressive given the macro-economic headwinds, which of course your article ignores.

    8) US market: Everyone knows the business under-invested in capex during the bankruptcy and so had a stale product cycle into 2012. Of course market share fell. They said it would. Hell, anyone expecting it not to must fundamentally misunderstand the US auto market. But, GM’s new product launches have actually gained a ton of market share (ex-Malibu, of course). Sonic, Cruze, Spark, and incoming Impala. All in traditionally bad segments for GM. Explain that one away. Now, with the trucks finally coming online (current product is so stale) do you really want to bet on GM continuing to lose market share into the next year? If so you aren’t much of an “auto analyst”

    9) Subprime lending: do you know how well subprime auto lending performed in 2008-2009? FANTASTICALLY. It was one of the best asset classes in the entire world, which surprised many observers, because it has the word “subprime” in it. In reality, its vastly different than subprime housing loans because cars can be repossessed easily and people tend to stop paying for their house first because foreclosure is so hard. GM is smart to move more aggressively here, they can get more cars sold and earn a great return on a misunderstood asset class. Your argument is basically based on the word “subprime” being bad without actually understanding the drivers of that business. Check your facts here.

    10) Malibu: Yep, Akerson was “famously critical” of the…Malibu. Which was a real product disaster, because its not a good car. So, are you saying he was wrong, and the Malibu was a great car? Or that he should have just lied about it? Or not done anything to fix it?

    11) Batch of “too conservative” trucks — we’ll see how they sell, buddy. And lets wait for those (rumored to be fantastic) MPG numbers at the end of this month

    12) There aren’t any actual arguments made in the last 4 paragraphs of this piece, just kind of bland insults. Except, of course, that Akerson isn’t a “car guy” — which is true. I think that’s really the issue here — car guys can’t believe some former private equity guy could ever be successful, so they are doing their best to shoot him down. And really poorly researched/argued articles like this are what follows.

    Before you put in part III, spend some more time making sure you’ve done your research. I don’t really even like Akerson because I think he communicates poorly and doesn’t seem to have an eye for design, but the case above is comically over the top. The company seems to have made a ton of great strides (not perfect, of course) since bankruptcy, and he’s done a pretty good job managing it. Also I’m in no way associated with the company just had to do something about the ridiculous hate that seems to go unchecked about GM on this site.

  • avatar
    threeer

    Walked the Buick lot while mom’s Verano was being serviced…took one look at the Encore and shook my head. 18% Chinese…sad. And not that it’s even really that cheap, when you consider what it is. A misstep in GM product line…

    • 0 avatar

      Importing a vehicle in a non-existent vehicle category in the US to test the waters before investing heavily in producing here?

      Sounds like a great strategy to me…

      • 0 avatar
        threeer

        And where is the evidence that Buick/GM plans to “invest heavily” in producting here (by here, I assume you mean the US)?

        • 0 avatar

          I never said it WAS going to be produced here, I meant that the market is untested so before the investment is made, there needs to be some proof that there is demand.

          The same way that the Buick Regal (Opel Insignia) was produced in Germany and shipped here and it did well enough that the investment was made to produce it here at Oshawa Assembly.

          • 0 avatar
            doctor olds

            @TCBRacing- Your ideas about bringing a product here to test the waters is logical, but it is not what happened with Regal. Up until the Auto Task Force told them to go back to the drawing board, GM was planning to channel Buick along with Pontiac-GMC, which had already been made one division.

            Regal was brought in as soon as possible to give the Buick-GMC dealers a lower priced product to offer.

          • 0 avatar

            I beg to differ Dr. We had Opel Insignia’s here in our fleet in 2008, well before BK. I remember seeing one with full Opel badging in the customs line on the Blue Water Brdige in Port Huron in late 2008 and wondered why we didn’t bring it over here. 2 years later…

          • 0 avatar
            doctor olds

            @TCBRacing- We often have GM products from all around the world in the area, especially around the proving ground and engineering locations in SE Mich. Some product engineering is also done in Ontario. I may be mistaken to say that Regal was not in the plan, though I do not recall seeing that car in the future Buick Lineup pre-retirement Nov. ’08.

            My point was that I don’t believe GM wanted to import them from Germany to test the waters, so much as to get them to dealers sooner than Oshawa could be tooled up to make them after Pontiac was canned.

            The cars were more costly for GM to build in Germany and did not have the high quality of NA produced cars.

    • 0 avatar
      doctor olds

      The Encore is built in Korea. Reviews have been good. Hyundai and Kia seem to be doing fine with Korean produced products.

      • 0 avatar
        threeer

        …with 18% Chinese content. Pass. Sorry, we all have our crosses to bear, and minimizing Chinese product here in the USA is one of mine. It isn’t easy, that’s for sure…

  • avatar

    Not going to bother reading this garbage of an article. It is no secret that TTAC wants GM dead. If Akerson was really bad for GM, there is no doubt he would hailed on this site as the second coming of Jesus. GM has enough car guys who if given a chance would run the company to the ground. What it needs is a business man and Akerson is just that. You are talking about a man who gave up a more lucrative high payin job to work for GM. One who gave up living close to his family in Virginia to make sure one of America’s largest industrial companies doesn’t die.

    • 0 avatar
      Autobraz

      Not going to bother reading this garbage of a comment. It is no secret that alluster wants TTAC dead. If Bertel was really bad for TTAC, there is no doubt he would hailed on this article as the second coming of Jesus. TTAC has enough car guys who, if given a chance would run the site to the ground. What it needs is a business man and Bertel is just that. You are talking about a man who gave up a more lucrative payin job to work for TTAC. One who gave up living close to his family in Germany to make sure one of Canada’s largest websites doesn’t die.

    • 0 avatar
      Stumpaster

      If you read the article you’d understand that the writer wants GM to survive. As to Akerson’s sacrifices, read the first article, it’s all in there.

      • 0 avatar
        KixStart

        Stumpmaster’s right.

        I think most of us want GM to survive and to do well but we’re really concerned about how they’re going about it. Forecasting unfortunate developments is not the same as wishing for them.

        However, some do have such an irrational hatred of OBAMA!!! and UNIONS!!! that they want GM TO DIE DIE DIE!!! and don’t care about the human cost of the collateral damage.

        Probably sucks to be such an empathy-deprived grinch but it’s also not unusual.

    • 0 avatar
      jkross22

      Dan, Is that you?

  • avatar
    CJinSD

    Is anyone really still confused about the PSA bailout? This was GM, an appendage of the fascist Obama regime, using money stolen from the taxpayers to help Obama’s campaign chances by keeping the economic realizations surrounding a PSA collapse from entering the public consciousness during the election cycle. There isn’t any other explanation, and anyone still looking for one needs a breakthrough in the effectiveness of psychiatric care.

    • 0 avatar
      NN

      Wow, what do you drink?

      Love the insider articles on the incompetence of Akerson. GM clearly needs a change at the top. Whoever is writing this at least sounds like they thoroughly get it. The chasm between the leadership seen at Ford and even Chrysler with Marchionne compared to GM is huge.

      • 0 avatar
        doctor olds

        This is NOT an insider’s view. It is based on rumor conjecture and spin around what some journalist wrote. I am no Akerson fan, but this author draws a lot of conclusions from very little information, none of it from the inside.

        • 0 avatar
          jkross22

          Any proof of your assertions, or just a guestimate?

          • 0 avatar

            I agree Dr.

            I mean with lines like this I doubt the author even is in the auto industry…

            “In reality, it was the American automobile industry that was saved from certain annihilation by foreign carmakers, and we should thank the government for it.”

            I work at GM and can tell you that this line also shows that it could not possibly be an insider…

            “…and the company had been making real progress towards a brighter future.”

            We had, but if anything change and improvement have accelerated since Bankruptcy.

            It seems like the author must have shorted his GM stock and is hoping for a beat down to get out…

            “If Akerson is replaced with a CEO worthy and capable of guiding GM, the stock will surely bounce…”

            Besides the initial drop after the IPO, the stock has done pretty well with him in place…

        • 0 avatar
          doctor olds

          @jkross22- If you are looking for a quote from some journalist about what Akerson said and what it means, no, i don’t have that kind of proof.
          I suppose it is an experienced and educated guesstimate, if you will. I do know that the facts show that new GM under Akerson’s lead is doing quite well, whether because of or in spite of him!
          As I wrote, I am not a big fan and criticize him for dumping Tom Stephens, pulling the Malibu release ahead against the advice of the people who understand the elements that support a good product launch. I am confident that our author has absolutely no idea what GM’s plans are and Akerson’s role in creating them. It is an immensely large and complex enterprise that defies the simplistic analyses presented here.

    • 0 avatar
      rnc

      Yes because it’s so well know that “Americans” love the “French” and vice versa, and god only knows the havoc that a failing French industrial giant like PSA, would have wrought on the election, thus depriving Romney (who would have shot his first-born with an assault rifle if he was standing in front of an NRA crowd) of his god purchased given right to the presidency. There’s a part of me that really wants to find the sarcasym in what you just said, but I know it isn’t there.

      Go Honda

      • 0 avatar
        CJinSD

        Talking about PSA failing would be talking about Europe crumbling, which would mean talking about how Obama’s statist scheming is the application of an authoritarian ideology that has failed and continues to fail again and again. Did you really miss other efforts by the Obama regime to keep an EU implosion off his sheep’s radar?

    • 0 avatar
      geeber

      It has been well-established that GM’s leadership is perfectly capable of making boneheaded decisions on its own, without any “guidance” from the federal government.

      Remember the Fiat fiasco…?

  • avatar
    areader

    The WSJ did a long article about Akerson not long after he was seated and it was far from complimentary. It contained several items that were obviously sourced from other high-level GMers. Discounting somewhat for resentment toward the “new guy”, several rang too true from my experience with newly installed know-it-all know-nothings. Since then he pulled a key person away from Reuss without any consultation; something that reeks of arrogance and a lack of understanding of how to build or sustain an effective team. His actions since then have indicated more of the same.

    Of course, the comment about the new trucks is speculation, but if true, that speaks to more than Akerson.

    One of more follow-up articles regarding the board would be interesting. I don’t know how many members are Akerson recruits or supporters. Given the mess in Europe, it can be hoped that some analysis has been made there and Akerson’s decisions and views have been examined. At least Wagoner had knowledge. I think Rattner’s a smart guy, but he sure screwed up letting this jackass in the game.

    • 0 avatar
      rnc

      Wagoner was Roger Smith’s hand chosen protoge, the fact that a person of that pedigree was ever allowed to be made CEO of GM and then also given the same 10 year time span to play with a wrecking ball… (actually know one really knows what anyone who was CEO of GM after Smith could have possibly done, trying to run a giant company that was technically bankrupt and operationally so broken, while pretending everything was peachy, for 20 something years would be a recipe for disaster for any executive. but still that any board would have allowed Smith’s protoge to even play with the steering wheel, let alone handing the keys over, says enough about pre-bk GM)

      • 0 avatar
        geeber

        When the federal government finally suggested that it was time for Rick Wagoner to leave, it’s telling that several board members were mad at…the officials overseeing the bailout and restructuring who pushed for the change.

        • 0 avatar
          doctor olds

          It tells you they knew something you don’t.

          The board and most of us inside GM liked what Wagoner was doing. GM’s successful product of today is the result of his leadership, as are leading positions in the BRIC and the breakthrough UAW contract of 2007 that enables the US makers to be profitable now.

          • 0 avatar
            geeber

            Wagoner oversaw the continued loss of market share, the waste of resources on too many dead-end projects and eventual bankruptcy.

            The “breakthrough” UAW contract needed to be negotiated in the late 1990s or early 2000s. It was apparent long before 2007 that GM’s labor and legacy costs were not sustainable. At any rate, GM lost money, as ect has shown, so any crowing over GM’s recovery is wildly premature.

            The fact that Wagoner was viewed well internally largely provides more evidence that the GM board and employees live in their own world.

          • 0 avatar
            doctor olds

            @Geeber- No doubt the UAW should have come to the table earlier, but they did not do so until 2007 and Rick Wagoner was a strong force in them finally coming to their senses.

            GM is absolutely NOT losing money. The company had an operating profit of $16B in the past two years.

            “The fact that Wagoner was viewed well internally largely provides more evidence that the GM board and employees live in their own world.”
            It could just be that you have it wrong.

            The board members are surely more successful in business than you or I, and have a solid basis of facts and data upon which to form their opinions. Logic would suggest their view is better informed than yours.I know for certain that mine is.

  • avatar
    E46M3_333

    I wonder how many car enthusiasts who read automotive blogs care a whit of what happens to GM. They’ve been off my radar screen as brand I would consider buying for the last 25 years; I don’t see that changing.

    The epiphany came when I bought my first BMW–a gently used, two year old 1996 328is coupe with a five speed. As an engineer, I realized there was more engineering that went into the mechanism that unlocked the driver’s door on that BMW than goes into an entire GM car, based on the few I’ve owned and driven as rental mules. The Corvette is probably an exception to this, but unless I break down and buy a pinky ring, I’m not considering the Corvette.

    • 0 avatar
      APaGttH

      Ya, there’s more technology in a Corolla than a CTS-V, or a Volt, or the upcoming SS, or the ZL1 Camaro, or the turbo Verano, or the…

      /eyeroll

      • 0 avatar
        CJinSD

        Yeah, there’s plenty of engineering in a GM product. Unfortunately, that engineering effort is focused on making a product that drug addled absentee thugs can bang together correctly 78% of the time, or repurposing some component that was amortized while Carter was president, or costing something out to the point that it might compensate for legacy costs. It still keeps the engineers busy, even if they don’t get the satisfaction of focusing on product excellence.

      • 0 avatar
        NormSV650

        Oh come on, Corolla is advertising “lendgary 35 mpg”. So it got be good? Pfft!

        • 0 avatar
          KixStart

          The current Corolla is some 6 to 8 years old at this point and it’s still a surprisingly good car at a pretty modest price. It’s surprisingly roomy, peppy enough, nearly as good on gas as the latest from other manufacturers (even with a 4-speed auto) and tops in reliability for over a decade.

          Yeah, I’d say it’s pretty well engineered.

          I wouldn’t say it’s sexy or sophisticated but it’s a car, not a girlfriend.

          • 0 avatar
            rwb

            Peppy enough for who, exactly? The deceased? Last time I drove one, the last three quarters of the throttle didn’t do anything, if it weren’t drive by wire I’d have thought it was broken.

          • 0 avatar
            APaGttH

            @rwb

            Peppy enough for a Prius C driver or someone who just gave up their ’71 Beetle they’ve had since college.

          • 0 avatar
            KixStart

            Peppy enough for me and it’s quicker than 2 of the 4 GM cars I’ve owned. But I’m not handicapped by expecting my transportation to fulfill some need beyond transportation.

            I now own a Prius. 52mpg. I love it. It’s not expensive, amazingly roomy, peppy enough, comfortable, quiet, way better on gas than practically anything else and tops in reliability for the better part of a decade.

            If you ask me, it’s also pretty well engineered.

            One of my friends had a ’79 Monza two-door, back in the day, bought new. After about 3 years, the doors started to sag. I’d say that car was a little bit under-egineered.

            Fast-forward a ways. Another friend inherited a grandma car… A Toronado (maybe a ’90), also with saggy doors. That car was perhaps a bit under-engineered, too.

            Maybe tomorrow I’ll go over to some of the cheap lots, see if anybody has any later two-door GMs and find out if GM ever figured out how to engineer door hinges.

          • 0 avatar
            APaGttH

            @KixStart

            My father had a ’58 Thunderbird. It ate its oil pump and the engine grenaded.

            Fast-forward 45 years later and the Thunderbird had the tendency to have its transmissions grenade.

            I guess I’ll check out some of the used car lots to see if Ford has figured out to build a driveline.

            (strawmen arguments are fun!)

      • 0 avatar
        E46M3_333

        Did I miss the post where the Corolla’s engineering excellence was being argued? I think you have a reading comprehension problem.

        • 0 avatar
          APaGttH

          Hey, you said, “I realized there was more engineering that went into the mechanism that unlocked the driver’s door on that BMW than goes into an entire GM car…”

          I confess guilty to then making the leap that surely a Corolla must have more technology than a 328i door unlock mechanism. I apologize.

          But since we are discussing “superior” BMW engineering why don’t we discuss failed fuel pumps, a front suspension that eats LCAs and ball joints for breakfast, while the whole suspension slowly crumbles even with normal driving, and the continue slow slide of commoditization of BMW turning a legend into a meh, there is better. Never mind that most in the B&B as well as the resident TTaC staff will advise, strongly, against buying a used BMW anything unless you have a fat trust fund account to support all the parts and service the previous owner escaped. I haven’t even touch on the quality nightmare the X5 is, or discussed Mini and failed wiring harnesses, oil leaks, and oh yes, the exploding fuel pumps that have this nasty habit of setting cars on fire.

          But yes, BMW, definitely builds engineered marvels. If you say so.

          /eyeroll

          • 0 avatar
            E46M3_333

            I’ve owned six BMWs, bought four of them used and have never, repeat never, had an unexpected or unruly repair problem with any of them.

        • 0 avatar
          jkross22

          Since when do strawmen arguments rely on an honest use of facts? Better to just make it up as he goes along.

          • 0 avatar
            APaGttH

            What is strawman about BMW fuel pump issues, bad front LCAs, basically the requirement for a full front suspension replace by 100K miles, or the overall woes of the X5.

            I didn’t even start with the comparison.

            Sorry you don’t like me, I’m not here to make everyone happy.

      • 0 avatar
        jkross22

        Putting words in other people’s thought bubbles is not a good way to prove a point – it simply makes you look silly.

        Tsk tsk.

  • avatar
    areader

    I have an ’08 Express with 73k on it with no problems. VVT in the engine, stability control, etc. Had an ’07 Trailblazer with the 5.3 that gave me 24mpg highway. One control module failed and was fixed under warranty. Have a ’12 Impala with lots of power and is cheap reliable transportation. I had a couple of VWs years ago and that was enough for me. I read constantly here about the grief that comes with the “well engineered” European masterpieces if you own them past warranty. To each his own.

  • avatar
    ect

    “Akerson was put at the helm of GM by politicians who know even less about the car business than an Akerson”

    Actually, he was appointed President and CEO (after a strong personal lobbying campaign, apparently) by the Board. Of GM’s 15 Directors, 11 have private sector backgrounds. Whatever Akerson’s flaws may be, he was appointed by business people, not by politicians.

    “The US market is projected to supply a huge percentage of global profits over the next several years, making it a major priority for every automaker. Thanks to the bailout, GM almost can’t help but make money in its home market”

    GM’s 2012 financials show an operating loss of $3.2 billion on a global basis. Also according to GM, the pre-tax loss (a somewhat different measure, but the only one available) in Europe was $1.8 billion. Assuming that China is profitable, and South America (much smaller business, unlikely to make a big difference in either direction) is close to break-even, then GM must have made an operating loss in North America. Perhaps somewhere in the $500 million-$1 billion range.

    The biggest change was in gross margin (revenues minus the direct materials, factory and factory labour cost of making what you sell), which GM does not break out by segment. Gross margin plummeted from 12.4% in 2011 to only 6.7% in 2012.

    GM has also been unable to arrest its declining US market share. In the 2008-2012 period, it lost roughly 1% per year of share(up from an average loss of about 0.75% in the period 1976-2008). If present trends continue – which I am the first to acknowledge is should never be viewed as certain, or even probable, for betting purposes – Ford will outsell GM in the US in 2014 or 2015.

    On top of that, GM’s balance sheet shows that cash and cash equivalents fell by $5 billion in 2012.

    All in all, the numbers show GM’s present position as something that should have senior management working in crisis mode. How much of this is Akerson’s doing is open for discussion, but largely moot – if it happens on his watch, he takes responsibility for it.

    I have no love or hate for GM, but I know people who depend on it for their livelihood. For their sake, I hope the company survives and prospers. I have also seen, over the course of a long career in executive management and professional services, that it takes a whole lot of people, working hard and smart, to make a company prosper, but a few highly-placed dunderheads can do enormous damage. My fear is that GM’s executive management is sleeping its way into Bankruptcy 2 in much the same way that it did into Bankruptcy 1.

    • 0 avatar
      doctor olds

      GM, in fact had more liquidity at the end of 2012 than 2011. GM,in fact, reported an $8B operating profit last year, despite how the numbers have been spun here, and $7B of it was generated in North America.

      Your claim raises questions: How can a publicly traded company claim an operating profit if there really was none? Why would the business community not cry foul? Why did Buffett throw another $0.5 Billion into GM if they are so bad off?

      You should be careful who you believe. You may want to review GM’s operating report which is readily available at GM.com under the investors tab to learn what is really going on. They eliminated $29B in future pension liability with a 2.2M salary pension buyout in 2012, for example, and hit all time record sales in China just in January. You seldom see anything positive about the company here, but they truly are doing very well.

      • 0 avatar
        cc1982

        Yeah any reported losses were just accounting, they actually did $5.0 billion of net income in 2012, ignoring accounting related adjustments with no cash impact.

        But, you’re right, Europe lost about $1.8bn pre-tax. Next year its expected to be about $1.2bn (getting better even in a market where production will continue to fall).

        GM’s 10-K is a good place to start with respect to running the real numbers.

        • 0 avatar
          doctor olds

          @cc1982- The $4.9B net was income attributed to common stock holders after preferred stock holders were paid. The business actually generated $7.9B or so before those payments. I agree the 10-K is a good place to start, though it is difficult to separate real costs from “book” costs, imho!

          When folks think about the situation in Europe, they should bear in mind that the situation has deteriorated with continuing market decline. GM was taken down here by a union powerful enough to demand unsustainable costs, despite business realities. If anything, the union in German may be even stronger. It will not be a quick fix. It isn’t that GM doesn’t know exactly how to fix the cost problem, it is that they have limited ability to do so in the face of union power.

        • 0 avatar
          ect

          I did run the real numbers. I don’t know where you found your net income number, but it’s not real.

          GM’s Income Statement shows net income of $6.136 billion for 2012, AFTER “accounting related adjustments with no cash impact” – and in fact, only because of these adjustments.

          The 2 major accounting adjustments, writing off goodwill ($-27.145 bn)and counting all their tax credits available for future use as current income ($+34.831) added to net income by $7.686 billion. Without these entries, GM would have reported a net LOSS of %1.55 billion.

          Reporting a loss while continuing to tell the world that the company is performing wonderfully was apparently not a desirable result. So, management went looking for ways to turn loss into profit – hence these large accounting adjustments. In the public company world, it’s called “managing earnings”.

          One might wish that management would apply as much energy to acknowledging and fixing the operational issues that are hurting GM as they do to trying to disguise them.

          I agree that “GM’s 10-K is a good place to start with respect to running the real numbers”. I did. So should you.

      • 0 avatar
        ect

        doctor olds, all the numbers I cited came directly from GM’s financials. The apparent “increase in liquidity” comes from adding $9 billion of deferred income tax to current assets – which is questionable practice (if they won’t be fully utilized in 2013), and certainly does not represent a real asset usable today in the business (try borrowing against deferred taxes, for example).

        This notional item aside, other current assets fell by $4.5 billion, while current assets rose by $0.5 billion – which reflects the negative cash flow of $5 billion referred to above, and by others.

        Of great concern is the reduction in gross margin % from 12.4% to 6.7%. This reduced gross margin dollars by $8.5 billion – which is real cash money, money they needed to pay their bills, but didn’t have.

        You ask, “How can a publicly traded company claim an operating profit if there really was none?” In fact, GM reports an operating loss of $30.36 billion in its income statement. Most of this is represented by a goodwill impairment charge of $27.14 billion, which I ignored as it is only an accounting entry, not a cash or cash-equivalent item.

        Warren Buffett makes his own decisions. He’s had pretty good track record over the years, but he’s had his share of klunkers, as well. If he’s chosen to put money into GM, only he can say why.

        With respect, you like to say everyone else is wrong about GM’s numbers and that the company is doing well, but without offering any specifics. I get that you want GM to do well. So do I, which is why it is so frustrating to see the continuing loss of market share and worrisome trends in the financials, while executive management insists that everything is going swimmingly.

        • 0 avatar
          doctor olds

          That is because the company is doing well! As i have written, I’ll side with Buffett.

          GM did report an operating profit of almost $8B.
          From their earnings report:
          http://www.gm.com/content/gmcom/home/company/investors/earning-releases.content_pages_news_emergency_news_021413-q4-earnings.~content~gmcom~home~company~investors.html

          “Full-year earnings before interest and tax (EBIT) adjusted was $7.9 billion, compared with $8.3 billion in 2011.”

          GM’s share did rise to 19% last month, btw. We’ll see if their prediction for a slight gain this year comes to be.

          It is not just wishful thinking behind my comments, but a desire to address obvious spin. The financial world seems to believe GM actually is making money and despite your argument that they depleted cash last year, that they still have plenty of liquidity. Time will tell if this is the truth or not, but I side with publicly released information over sideline analysis that seems to rely on hidden info.

          • 0 avatar
            ect

            doctor olds, the number you refer to as “operating earnings” is not that – it is EBIT (earnings before interest and taxes), which is a very different number, and includes all of the non-operational items – including accounting adjustments.

            Market share results by month will vary – and always have. Throughout GM’s long decline, results by year have varied. 1 month is not meaningful. For the most part, neither is 1 year. You have to look at the trnd line. Unfortunately, GM’s trend line over the last 35 years (both before and after 2008) is bad. That’s not analysis, it’s simply factual information that is publicly available:

            http://wardsauto.com/keydata/historical/UsaSa28summary

            I have been doing M&A work, around the world, for 30+ years, much of that from executive management positions in public companies. I know how to read financial statements, and the importance of doing so dispassionately. I don’t argue that GM “depleted cash last year”, it’s obvious from their reported financial statements that they did.

            I don’t rely on “hidden info”. Nor do I rely on press releases, which very carefully cite partial numbers that present the company in the best possible light. The numbers I cite are taken directly from GM’s actual financial statements, as filed with the SEC. For example:

            http://www.sec.gov/cgi-bin/viewer?action=view&cik=1467858&accession_number=0001467858-13-000025&xbrl_type=v#

          • 0 avatar
            doctor olds

            @ect- thanks for straightening me out.

    • 0 avatar
      jimboy

      And, GM is tax exempt for several years due to a sweetheart deal with the feds, surprise surprise! How would their financials stack up if they actually had to pay some taxes? Not Good, I suspect.

      • 0 avatar
        doctor olds

        @jimboy- earnings are typically reported EBIT, Earnings Before Interest and Taxes.

        This carryforward of tax credits for old GM losses was not a gift, but provided in exchange for new GM to take on the huge liability of the pension programs. Otherwise, they would have bankrupted the Pension Benefit Guaranty Corp and taxpayers would have gotten stuck with the bill.

        There were a number of unusual things about the GM bankruptcy. Frankly, it is amazing that Chrysler first and then GM are the only auto companies to ever recover from bankruptcy and the Obama adminitration deserves credit for the lightning speed of the bankuptcy which most of us expected would become a death spiral due to consumer attitudes about buying from a bankrupt automaker.

        There is no sign of that happening, despite the spin here. Wikipedia lists over 1,700 defunct auto brands in America. Recovering from bankruptcy is exceedingly rare.

  • avatar
    Domestic Hearse

    *exit
    **misled

    Anyway, good article. Another strong argument against Akerson. However, with the accusation that his decisions have no strategy behind them, I’d be much more inclined to believe the arguments put forth were the writer identified, at least, to what s/he does. If this is an editorial from a journalist, it’s a good read, but conjecture. If it really is from someone well-placed inside GM, and has a front row seat to what’s going on, it still may be conjecture, but well-informed conjecture.

    • 0 avatar
      geozinger

      I’m sorry but I don’t follow your logic here. First you say this is a strong argument against Akerson, but then you say you’d be more inclined to believe these arguments if we had an idea of who was writing these posts.

      I actually agree with your query about whoever is writing the posts; I’d like to know what brings them to these conclusions.

      Without some sort of bona fides from this person, this is all just conjecture.

      • 0 avatar
        Domestic Hearse

        It is a strong argument against him.

        If all this is true, and not merely conjecture about his motivations or (lack of) business acumen, very, very strong argument against him.

        Should the writer turn out to be in the thick of the events, part of the mix, in the battle him/herself, this is very damaging. Consider it eye witness testimony.

        If however, this writer is a journalist or casual industry observer, and they’re making their observations based on only what they see from the outside, then their arguments against Akerson weakens considerably. They may be right – he has no strategy and is flailing around. Or they may be wrong, he has a strategy, we just aren’t privy to his rationale from the outside.

        Still strong. Just a matter of degree. All based on who is doing the telling and what their relationship to the events are/is. Hope this clears up my own logic.

  • avatar
    corntrollio

    “If Akerson is replaced with a CEO worthy and capable of guiding GM, the stock will surely bounce, making the exist less painful.”

    Exits?

  • avatar

    “As the politicians sell their shares in GM and leave, they should take their man with them.”

    I thought he was a bank-wanker. A hedgie. That’s why he brought in his hedgie buddies, for the new GMAC or whatever. Private, not public. No?

    I guess they’re all the same.

  • avatar

    Carlyle, I meant to say. Bertel, please put comment editing back.

  • avatar
    Conslaw

    The only thing worse than GM’s chief executives in recent memory is GM’s board, both pre and post bailout. I’ve heard too many people say that nobody could have foreseen GM’s bankruptcy. That’s a load of bull. It was right there on GM’s financial statements, that once you adjust for the medical and pension commitments etc. that GM had negative equity. The board has a history of letting a series of inept executives run the company to the ground. Akerson should have been fired for the Malibu fiasco all by itself.

    BTW, Rather than coming from Anonymous, this piece would have had more punch coming as a masthead editorial. It’s worthy.

    • 0 avatar
      doctor olds

      @conslaw- This piece is BS, and your ideas about GM’s bankruptcy are not accurate.

      The whole US industry was financially depleted by years of unsustainable labor costs and adversarial government policies that harmed them uniquely. GM was not alone in this regard.

      GM was forced into bankruptcy by the financial collapse and credit freeze about the middle of October, 2008. That event collapsed the NA car market so completely it dragged Toyota to its first ever global loss just due to the last 2 1/2 months exposure to NA. GM was far bigger in NA and hit far harder as a result, but Toyota actually went on to lose more than GM in 2009 Q1. The got some assistance from the Japanese government, but had deep financial resources of their own to tide them over.

      No one foresaw that collapse and the auto sector certainly did nothing to cause or even contribute to it.

      GM’s balance sheet was demolished by an accounting change that required them to write it down by $30 some Billion and then came their $20 some Billion contribution to the UAW VEBA.

      GM responded with a plan to increase liquidity by $15B at the beginning of ’08 in response to the first $4 gas spike’s suppression of the new vehicle and especially the truck market.

      The plan was working to raise liquidity when the financial crisis eliminated all credit. The UAW contract of 2007 cut almost $8B in annual costs by its full implementation when the VEBA was up and running in 2010. It is unknown and unknowable whether GM would have survived until then if the financial world hadn’t collapsed, but there was light at the end of the tunnel after very many years of darkness.

      • 0 avatar
        geozinger

        Doc Olds: That’s one of the best encapsulations of the situation as it stands. I’m actually going to copy and paste it for future use!

      • 0 avatar
        mcs

        “The whole US industry was financially depleted by years of unsustainable labor costs and adversarial government policies that harmed them uniquely. GM was not alone in this regard.”

        I don’t know about Ford and Chrysler, but GM’s problem was that they placed a priority on production numbers over quality. I was there and privy to information you obviously weren’t given. No third hand information here – I’ve personally tried to pull vehicles that were improperly assembled due to equipment failure and was told to “forget about it kid, the dealer will catch it.”

        As far as labor conditions go, what about hell holes like the old Fleetwood plant? Any idea how hot that un-airconditioned multi-floor factory would get in the summer weeks before change-over? Try doing quality work when you’re dripping with sweat. Going back further in history to Ford – what would you have done if you were working in the Rouge Plant when Harry Bennett and his merry men in the Ford Service Dept.were having their fun?

        The management of the US auto companies created or exacerbated their own problems. They created the working conditions that gave the unions the fuel to grow. they set the policies that drove down the quality levels. Maybe you didn’t see these issues from within the bubble you were kept in? Stop blaming everyone else.

        • 0 avatar
          doctor olds

          @mcs- My comment is of a high level, global or systemic nature. No doubt, quality issues were among the many factors that caused GM and all US makers to lose share. Of course, they all had to lose share as soon as other companies entered the market anyway.

          I don’t doubt that a supervisor in a plant told you something like you wrote, but also know that leadership did not support that attitude at higher levels and certainly not at the top levels.

          Simply put, despite deteriorating business conditions, GM,F and C were forced by UAW power to keep paying every worker they had on the payroll for the rest of their lives, providing retiree health care for them and their families for the rest of their lives, as well! GM once employed 800,000 workers including 360,000 or so at what became Delphi.

          In 2008, GM’s UAW retiree health care bill alone was $7B/ year, a cost not borne by any off shore competition.

          Jobs bank, workers kept on the payroll despite there being no work for them anymore, added another $0.8B a year.

          UAW favoring CAFE mandates forced all 3 of them to build loss making small cars in America while competitors simply imported what they built and sold elsewhere. Around 1998, I had the opportunity to chat with the Manufaturing Mgr. of GM’s Small Car Group and learned GM suffered an average loss of $1,600 per car on the 1.6 million cars they produced at the time, for a drain of $2.6B a year. I don’t have that number for GM just before bankruptcy, but it is certainly on the order of $10B a year total additional costs that GM had compared to say, Toyota.
          This set of facts is why GM “overproduced”. Better to get something out of workers they had to pay anyway. They were trying to make the best of an untenable situation.

          There is plenty of blame to go around for GM and the other domestic’s decline in share, but there is no question about what caused the financial depletion. Inability to control labor costs regardless of business conditions, and a mandate to build loss making product in America. These factors are the 800# gorilla.
          This is not to knock UAW people, most of whom simply want a good day’s pay for a good day’s work, but their leaders for misleading them and never allowing the reductions necessary to keep the businesses strong until the 2007 contract. God Bless Gettlefinger! Unfortunately, the financial crisis swamped them before the savings could be realized.

  • avatar
    johnny ringo

    rnc:
    Wagoner was not Roger Smith’s successor, it was Robert Stempel, who if I remember correctly lasted about a year (if that) before being fired by the GM board of directors because he could not stop the GM market slide and kept repeating things were about to change. That seemed to be one of the few times the board roused itself out of slumber and actually did something. Stempel was followed by Jack Smith (no relation to Roger) who was another in a long line of totally mediocre GM ceos.

    • 0 avatar
      Lorenzo

      According to wiki, Stempel was made CEO in August 1990 and fired sometime in 1992, hardly long enough to make an impact. There was a recession going on in the 1991-92 period, along with a Savings and Loan crisis. Both hit big car-market California particularly hard.

  • avatar
    nickoo

    Ug. I just spend 15 minutes typing out a response as to why each brand from GM failed, only to see it not post. I’m not going to redo it. Instead I’ll just say that each individual brand that is under GM has had massive failings in the last 20 years and all of them continue to have failures. IN this day and age, you can’t continue to produce failures in the auto industry and expect to survive long. The ultimate in vehicular arrogance from GM, the vehicle that truly signaled the end, was the chevy uplander. Every single time I see one of those rolling abortions I throw up a little in my mouth.

    • 0 avatar
      doctor olds

      @nickoo- Just curious how you square your view with the reality that Chevrolet had an all time record sales year in 2012?

      • 0 avatar
        geeber

        Chevrolet is enjoying record sales largely because of its trucks. Trucks account for a very large portion of Chevrolet sales today, and Chevrolet trucks still have a very good reputation. The Silverado/Tahoe/Suburban platform is, in many ways, the 21st-century equivalent of the 1960s Bel Air/Impala/Caprice.

        The problem has been with Chevrolet CARS. Except for the Corvette and some versions of the Camaro, most of them have ranged between lousy to mediocre over the past 30 years. Things have improved over the past five years, but the progress has been very uneven – compare the very competent Cruze, for example, to the underwhelming new Malibu.

        Despite record sales, I’d say that Chevrolet still isn’t out of the woods. Remember that GM was the biggest car company in the world right before it was forced to beg for a bailout from the federal government. Size is not necessarily a good indicator of strength or excellence.

        • 0 avatar
          doctor olds

          @geeber- to weaken my own point in the interest of accuracy, it is Global Chevrolet sales that hit a record.

          Chevrolet once sold very many more vehicles in America than they do today, over 3 million cars and trucks, if memory serves. Oldsmobile sold 1.2 million in the best years.

          Lest you doubt just how strong Chevrolet is in America financially, consider that GMNA made $7B last year and 71% of their sales were Chevrolets.
          The new trucks are very important, but even the old ones surged ahead of Ford with a few more bucks on the hood.

          Don’t count Chevy out. They will release 13 new products this year and their smallest cars are selling much better while contributing bit to the bottom line.

          The cost dynamics are very different today than just before the collapse. It really is a whole new business.

    • 0 avatar

      Cadillac ATS – Success
      Cadillac XTS – Success
      Chevy Sonic – Success
      Chevy Malibu – Good car but a not quite as good as the competition (marginal fail)
      Chevy Cruze – Success
      Chevy Spark – Success
      Chevy Impala – Will be a success
      Chevy Volt – Success
      Equinox/Terrain – Success
      Buick Verano – Success
      Buick Regaal – Good car but stuck not quite in the middle of the LaCrosee and Verano (marginal fail)
      Lambda Triplets (Enclave, Traverse, Acadia) – Success

      For comparison let’s look at Honda…

      Civic – Failed – had to redesign
      Crosstour – Fail
      Acura ILX (actually any Acura) – Fail
      Accord – Success
      Minivan – Success
      Pilot – Fail
      CRV – Success

      Not seeing your point @nickoo, maybe you should put 15 minutes back into explaining your argument…

      • 0 avatar
        geeber

        The Civic underwent a rushed makeover for 2013, and the new car has received very good reviews. Consumer Reports once again includes the Civic on its “recommended” list, thanks to this makeover. You’ll have to move that one from the “fail” column to the “success” column.

        The Pilot is a fail? Really? Sales are strong, and it has been consistently rated at or near the top of its class. Styling isn’t the greatest, but, judging by customer acceptance, they don’t seem to mind, and the styling doesn’t affect the performance of the vehicle.

        Also note that for Honda (the division, not the company), all of its core products – Civic (the 2013 version), Accord, Odyssey and CR-V – have been critical and sales successes.

        The Cadillac ATS is a “qualified” success, in the sense that it has been stealing sales from the CTS.

        And, sorry, not every Acura is a fail. The new RDX has earned good reviews and is selling significantly better than the previous generation (February sales were double last year’s figure). The MDX continues to sell well, even as Honda prepares to introduce the next-generation version.

  • avatar
    geozinger

    I follow the automotive industry as much as the next guy who has a regular life, and these series of posts have been interesting. I can’t necessarily say that I buy the arguments wholly, but it has been fascinating to me in one particular way.

    After reading this last installment, it almost seems like the poster is arguing for an auto industry insider to run GM, whereas four or five years ago there were people screaming their heads off to have an auto industry outsider to run GM.

    It’s been mentioned on this blog (and others) before that the automobile industry is very unique and there’s a certain subset of people who can work effectively in it. With Whitacre and Akerson, we’re seeing the results of “outsiders” pulling the levers at one of the biggest enterprises in the world. It seems so far, the results are a mixed bag.

    If I were able to choose, I’d go with Mark Reuss. Car guy, knows the GM system(s) and has been groomed for the position.

    Or bring back Bob Lutz.

  • avatar
    Dave M.

    “@nickoo- Just curious how you square your view with the reality that Chevrolet had an all time record sales year in 2012?”

    I’d be curious to see a retail/lease sales split out. Retail means you’re selling a vehicle people desire (unless it’s fire sale prices, then it becomes a default financial choice). Lease means purely default financial choice, perhaps based on expected long-term service. Not necessarily a bad thing, but not as desireable as retail.

    Finally, what’s the profit per unit?

    • 0 avatar
      sunridge place

      http://www.experian.com/assets/automotive/white-papers/2012-q3-state-of-automotive-financing.pdf

      See page 21 for Q3 2012

      Honda Finance was at 41% leasing in Q3 but they were really pushing attractive Civic leases to clear out the 2012′s before the quick refresh for 2013MY.

      GM gives most of its prime leasing to Ally and you can see Ally right around Ford/Toyota as far as mix. Hyundai was a bit higher than I would have thought…guess the 10 yr powertrain warranty isn’t as big a selling point as a cheap lease.

      The luxury brands are almost all lease which shouldn’t surprise anyone.

      But, don’t fall into the trap that leasing isn’t just as profitable as a retail sale if its done correctly. If you do the numbers right you make money and have a somewhat captured customer that you can target as they come towards the end of their current lease.

      That scenario should help Volt #’s in the future if their customers are as happy as the Consumer Reports data says.

      Buick has also been pushing 24 month leases with a suite of benefits to get people in the ‘new’ Buicks…those are quick turnaround and they’ll be in the market again.

  • avatar
    henkdevries

    I’m very skeptical at what GM does. Not necessarily connected for that reason, but I like this story. It mentions some things that I didn’t know and puts it together nicely. However I do agree with Geozinger that I don’t buy it all. In my opinion this story lacks numbers to substantiate the story. I expect something more from “a nationally and internationally known industry analyst who prefers to remain anonymous”.

    In it’s current form this article looks more like an extended comment made by a regular TTAC visitor. Only this time he took an some more time to write it down in a nicer way than he would with his regular comment.

  • avatar
    Type57SC

    Some decent points. On AmeriCredit/GM Financial, saying that they have too much sub-prime market share shows that this guy is clearly not a financial analyst. they bought the leading subprime leader. of course they have higher subprime market share than other Captives. but who would you rather have make subprime loans? Guys that just rotated out of the OEM marketing dept or people that have spend their lives in subprime lending?


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