Volume for the sake of volume is NOT a good thing.

GM still moves more metal than any other car maker in the American market. Yet it is facing bankruptcy.

KnightR/T: You don’t think Honda would be thrilled to move 500K Accords?

Not if Honda makes little or no money on each one sold.

KnightR/T: That they wouldn’t give anything to have the Accord dominate the market segment?

No, they wouldn’t. If Honda wanted to, it could probably boost sales dramatically – even in this market – by either cutting the price drastically or offering hefty rebates. Honda hasn’t taken this approach, because it realizes that blindly chasing volume for the sake of volume is really a form of suicide for a car company.

Saab
Volvo
FIAT
Aston Martin
Land Rover
Jaguar
Isuzu
Mazda
Daewoo
Hughes
EDS
XM

Good to see how well most of those worked out.

You don’t think Honda would be thrilled to move 500K Accords?

Sure, they would be, but they have competition that keeps them from getting there.

Unlike Detroit, Honda acknowledges its competition and takes it into account. Since they can’t generate sales at those volumes at a profit, they instead avoid using a business model that would guarantee losses when those unrealistic targets were missed.

Detroit should take notes. Building large numbers of vehicles that can’t be sold without steep discounting is a “strategy” that is guaranteed to lose money. Building vehicles that aren’t good enough to get the volume makes the situation even worse.

The Detroit Defenders refuse to accept basic truths: that they have contempt for their customers, inferior products, and unrealistic goals.

Any business run this badly would lose money. We tried to warn them, but they didn’t listen. It’s not my fault that they ignored the obvious, but now it looks as if I’ll be stuck with paying for it, anyway.

What utter ‘holier than thou’ hogwash. Acquire everything that moves? What are you talking about? I’m saying volume is a good thing. You don’t think Honda would be thrilled to move 500K Accords? That they wouldn’t give anything to have the Accord dominate the market segment?

Selling more is not synonymous with selling garbage or pissing away profits. You’re debating a straw man argument you set up for yourself. You wonder why I’m defending GM? It’s because people like you seem to think we’d all be better if they didn’t exist.

> The leadership is far too committed to failure in order to make that work. Until they understand that the customer is king and deserves to receive value for his or her money, these companies will fail.

This is such a stupid statement it’s hard to fathom. Really? That’s your strategy? Good ‘ole Wagoner, too dumb to realize that The Customer Is King. If only we could drum that into his pea-sized brain, the customers would flock to GM! Christ.

Obviously not, otherwise, they’d be trying to get it.

Actions speak louder than words. Honda in particular is a company that has avoided Detroit’s acquire-everything-that-moves-(and-some-stuff-that-doesn’t) “strategy”, and has instead decided to do something controversial to the Motown maniacs — trying to generate sustainable profits.

The defenders have been wrong for decades. They are still wrong. They are so insistent on being wrong that even absolute failure isn’t a wake up call.

Unfortunately, bankruptcy isn’t going to help, either. The leadership is far too committed to failure in order to make that work. Until they understand that the customer is king and deserves to receive value for his or her money, these companies will fail.

Are you kidding? Honda would give a corporate kidney to have GM’s volume if they could preserve the same profit margin! So would BMW. With the exception of niche, luxury products that benefit from artificial scarcity, market share is almost universally a good thing. It’s only because of volume that GM has lasted as long it has, and I wouldn’t be surprised if some of the low-volume makes end up having to consolidate within the next year.

The ONLY hybrid that “makes sense” is the Prius, It still commands over 50% of the hybrid market, even with the new players. Common wisdom says that the Prius was a triumph of technology, turns out it REALLY was a triumph of marketing, being right there with the product that was green, and more importantly showed the world that YOU were green, and without giant HYBRID tattooed all over your vehicle. The big 3 didn’t lose the technology battle, they were just a little behind and have now caught up. But the fact that they got spanked in the marketing battle…..THAT is embarassing.

As the other poster said, show me the midsize GM hybrid that gets 48 in the city. I’m waiting.

I think the arguments stu and Knight are making lack the accountability for how money should be spent and whether this money will ever get repaid. Listening to what I heard this morning from the GAO testimony and the congressional questions, it appears this lack of clarity on how the D3 books look today shows the very essence of the lack of accountability and honesty in reporting people are so pissed off about to begin with.

Giving money to these guys would be like showing up to an AA meeting with a case of Mickey’s.

Let’s step back for a second — can you see the possibility that maybe, just maybe, that the fact that they don’t pursue that sort of market share, yet still make profits, is an indication that the answer to your question is “No”?

These losing “strategies” have harmed Detroit for decades, not just during the last few months. Every time that we critics have tried to warn you about how mistaken the Detroit Defenders have been, we have been summarily insulted, ignored and otherwise brushed off, with our intelligence questioned and our patriotism assaulted. Now that we have been proven right, not even the hint of an acknowledgment or apology has been offered.

Consider the possibility that your assumptions about the business are wrong. If you were right, you wouldn’t be in this situation.

Absolutely right, you gotta make a profit, but volume is something everyone wants…if Honda and BMW could sell cars at the same volumes as GM, wouldn’t they make more….Profits?

I agree that the Big-3 have made a lot of mistakes and mis-steps but you’re missing my only point up above-the Big-3 STILL have volume. Lot’s of volume. If they can fix their businesses, whatever that entails, they may be able to make a lot of money with all of that volume.

Yes, I would buy a car from a bankrupt company. The bankruptcy courts and/or government will make sure the warranties are secure. If they big-3 get bailed out the government will have to pay for the warranties anyway.

GM will be able to have much stronger brand awareness when they are able to say (whether or not true) that the Malibu is the best midsize car, instead of having to say that it’s the Malibu, no, wait, it’s the G6, it could be the Lucerne, wait, it might be the Aura.

Marketing only Chevrolet and Cadillac is the best way to establish clear brand awareness. Getting to that point requires Chapter 11.

Would you buy a car from a bankrupt company? I wouldn’t. What good is a 5-year warranty if there’s no one around to pay for parts? Delphi filed for Chapter 11 three years ago and they’re still there. By the time GM manages to regain the public’s trust in their long-term viability, they’ll have lost tens of billions of dollars in brand awareness and ceded huge swaths of the market to foreign competition. It’s all reminiscent of that old doctor’s jab, “the operation was a success, but we killed the patient!”

KnightRT: You’ve got the long term thinking wrong. Chapter 11 restructuring is what will pay off in the long run. In the short run bailing out the companies feels warm and fuzzy, but in the long run that will only lead to American Leyland.

It’s not about making “almost as good” product, its about making profit. Nobody can run a viable business with the infighting, product line perverting, ad-revenue sucking redundant dealerships, oppressive UAW contracts and hundreds of billions in debt that the big-3 have.

You’re arguing two things: (1) they may need more money, so it’s not worth the expense to give any at all, and (2) the management isn’t capable of making GM competitive.

I strongly disagree with both points. The entire world is in a squeeze right now, but it won’t be that way in two years. Hedge-fund managers are already relishing the good times ahead because the market is so undervalued right now. When they find the next flight of fancy to seize upon, the whole system will spring right back. But if we let our manufacturing base fall into oblivion for the sake of a temporary cash-flow problem now, it’ll never come back. How fantastically short-sighted this all seems to me!

GM is perfectly capable of making competitive products. My car is a 2002 Malibu, the second-to-last model year of a car that initially came out in 1997. Relative to my 2004 Camry, the car is crap. But the 2004 Malibu was an enormous leap forward, and the 2008 Malibu, one of the best in the class and a car I’d buy in a heartbeat. I know this because I test-drove every car in the class. GM has made greater strides in quality in design in the last 10 years than they’ve made in the entire history of the company. Where they’re not crippled by the sheer weight of the union tax (Cobalt), their vehicles are actually competitive.

But they are a monolith, and it’s unreasonable to expect them to transform themselves overnight. Management wasn’t stupid enough to bankrupt the company; it took a worldwide financial panic. I don’t see how it’s fair to cast no blame on the banks, and then claim that the sole cause of GM’s woes is that they just didn’t “get it.”

Based upon the 2007 tally of yearly sales, GM was either the largest or the 2nd largest carmaker in the world, Ford is 4th behind VW and even Chrysler is producing about the same volumes as Hyundai or Renault…So if GM is done, then I guess everyone but Toyota is ‘done’ too?!?!

Honda, PSA, Renault, Nissan, BMW, Fiat would all love to have the sales volumes the ‘done’ Detroit automakers have. There’s still a lot of volume out there-why do you think the Chinese are keeping a wary eye and an open mind to these proceedings? If they could snap up a domestic OEM for pennies on the Yuan, they would instantly have a huge volume surge and a big foot in the door here.

People have been voting with their wallets, yes indeed and the trend is more towards the transplants,I will agree but the actual sales numbers, not the sales trends still show very large sales figures for GM and Ford.

I now have that Diego rescue pack song stuck in my head.

For those of you without kids:
http://www.nickjr.com/shows/diego/index.jhtml

-ted

I believe it’s well documented here on TTAC and elsewhere that a bailout will not “save” Detroit. These companies are going bankrupt sooner or later. It’s better to take the blows now than a bigger blow later.

Until the product improves, the marketing won’t help. The GM lineup is bereft of appealing product, and the few vehicles that they do have that are appealing cannot sell in large enough numbers and at high enough prices to achieve profitability.

The vehicles are not appealing to the American consumer. If they were, people would be buying them. As it turns out, a Cobalt sucks, no matter how good the advertising is, which is why people who don’t run rental fleets don’t buy them.

All of the current plans under discussion on Capitol Hill — bankruptcy, pre- and unpackaged, bailout — don’t address this critical product gap. All of the plans are doomed to fail, because they focus on cutting their way to prosperity, something that they have already been doing without success for years.

Sorry, there won’t be a “return to greatness” or a boost in market share. People actually like their Toyotas and they will continue to buy them.

So while the bailout may on the surface look like throwing money away, it is rather more helpful than throwing money at wars in Iraq and Afganistan or shipping money to oil exporters where no tax revenue is collected.

The choice is pay now for a bailout or pay later as tax revenue is lost in the knock on effects of bankruptcy of the 2.8. There is little doubt that these effects would be substantial in a bankruptcy where union and dealer contracts are abrogated.

And the resulting turmoil for automotive suppliers and in the auto market itself is bound to have very negative tax implications for the government.
Expect auto sales to drop even further as buyers sit on their hands out of uncertainty about what to do.

visit http://www.GeneralWatch.com and read Return to Greatness. post opinions here or email me at Buickman@GeneralWatch.com

remember, we don’t need a Volt, we need a Revolt.

However, January 20th is not all that far away and Capitol Hill and the White House will have a slightly different set of players involved than today. Ford has it’s money figured out, Chrysler is screwed and might not make it that far and GM can send more I.O.U.s to their suppliers for 2-3 more months, temporarily layoff a whole bunch of folks and crawl back to the table in late January when the D.C. climate will be a little more receptive to their needs. If the powers that be in D.C. can unlock the $25B from the ‘retooling to build green’ legislation this week, then they can all survive for at least another few months until President Obama gives a rousing pro-Big-3 State of The Union Speech in late January and will probably get the whole country behind the idea of ’saving’ the domestic auto industry.

With that said, I believe Obama to be a populist more so than a person of principle and if the anti-bailout voices get louder, he will hear that very clearly and turn his back on the Big-3 believing he is doing the will of the people. If I were the Big-3, I would be working hard on Obama, Richardson, Granholm, Biden, Emanuel,and Geither to get their cases heard now so when January rolls around the next Administration is hopefully on-board with their wishes.

It does seem incomprehensible.

First of all, the finance arm of the economy has to date received 4 trillion dollars.

However, if that collapses, then everything goes. And as we can all agree, 2535 billion for Detroit is only the beginning. Some analysts claim that GM will need 400 billion before the company has a line of cars that are topical to demand, and sufficiently competitive. There is no way the present management and company structure will achieve that.

Still – if people aren’t buying, then nothing gets sold. That’s why financing is being supported.

On another note – if the financing arm of the economy goes, then every piece of property in the western world is reduced to about 1/10 of its stated value, if we’re lucky …