The Truth About Cars » Inside The Big Three http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Mon, 20 Oct 2014 20:00:44 +0000 en-US hourly 1 http://wordpress.org/?v=4.0 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Inside The Big Three http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com/category/news-blog/inside-the-big-3/ Too Big To Fail, Too Confused To Operate: Analysis Of 619 Pages Of Cobalt Engineering Documents [w/ Full Text] http://www.thetruthaboutcars.com/2014/04/too-big-to-fail-too-confused-to-operate-analysis-of-619-pages-of-cobalt-engineering-documents-w-full-text/ http://www.thetruthaboutcars.com/2014/04/too-big-to-fail-too-confused-to-operate-analysis-of-619-pages-of-cobalt-engineering-documents-w-full-text/#comments Thu, 17 Apr 2014 14:00:20 +0000 http://www.thetruthaboutcars.com/?p=799138   The House Energy & Commerce Committee recently released the documents GM submitted for investigation, which includes emails and internal reports documenting GM’s response to reports of their early Chevrolet Cobalt and Saturn Ion models inadvertently shutting the car “off” while driving due to an ignition cylinder that was, simply, too easy to turn out […]

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The House Energy & Commerce Committee recently released the documents GM submitted for investigation, which includes emails and internal reports documenting GM’s response to reports of their early Chevrolet Cobalt and Saturn Ion models inadvertently shutting the car “off” while driving due to an ignition cylinder that was, simply, too easy to turn out of the “run” position; and in the case of several accidents, allowed the ignition cylinder to rotate out of the run condition before or during accidents, causing the airbags to not deploy when required.

The documents, totaling 619 pages (some with repeat info), reveal just how deep seated “old GM” was in their cost cutting ways (Driving down supplier costs to the point of sacrificing quality, admittedly poorly designed ignition cylinder, and removing internal quality control on the parts), and just how blind sided “new GM” was during their investigations. It also confirms how suspended engineers Ray DeGiorgio and Gary Altman were involved in the ignition switch response, and fuzzy problem solving. Full text and an analysis of key documents below.

We already know the basics of how this happened, but it’s still surprising just how ingrained GM was in putting the issue aside. The key issues are these:

  • GM became aware of the ignition issue in the 2001 preproduction Saturn Ion and the 2005 preproduction Chevrolet Cobalt.
  • Gary Altman initiated the report that lead to the insert, and Ray DeGiorgio consulted on the fix and argued against ignition switch changes.
  • Many different options were proposed, including suggestions from Delphi.
  • Cost played a major role in the decision to not recall the ignition switch early on.
  • The later key insert was the result, and was seen not as a fix, but as a “containment.”
  • GM also had very little oversight on parts from Delphi, only relying on Delphi’s incomplete testing.
  • GM’s engineers knowingly put the cars to market with a defective ignition switch.
  • This lead to ISB #05-02-35-007.
  • In 2006, DeGiorgio eventually signed off on design changes for Delphi, that included a stronger spring and plunger for the detent mechanism in the ignition cylinder, which provides a physical resistance between the different key positions.
  • When implemented in 2007, the new ignition cylinders cost less than a dollar per unit more than the original design; $400,000 to retool the production lines. These are the same changes that were deemed “not an acceptable business case” in 2005
  • As company, however, no one knew who signed off on the change until the Melton family lawsuit.
  • In court, DeGiorgio testified that he was unaware of changes to the ignition cylinder that would have effected the detents, only mentioning the key change..
  • Later investigations showed that the Cobalt had a substantial number of airbag warranty claims.
  • Higher level GM representatives broadsided by NHTSA’s investigations and disapproval of their slow reaction to other recent recalls.

First up, Gary Altman’s and Ray Giorgio’s role in the ignition cylinder issue is a problem. In court, Altman claimed that he did not feel that the Melton’s car was “unsafe.” This coming after submitting the initial mechanical complaint about the ignition falling out of run, in 2004:

docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD017.pdf
During the investigation, several different approaches to modify the ignition cylinder were brought up to DeGiorgio. All of which were quickly dismissed by DeGiorgio, because the switch was already “very fragile,”

docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD017.pdf (1)
Later on, all fixes were dropped, as it wasn’t deemed necessary. With a tight deadline and budget, the engineers could not justify any of the fixes at the time, as it wasn’t an “acceptable business case.”

docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD017.pdf (2) docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD017.pdf (3) docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD017.pdf (4)

In 2006, DeGiorgio finally signed off on a design change for Delphi. The design change included  a stronger spring and longer detent plunger to increase the force needed to switch the key between different positions, along with an unrelated electrical upgrade. In an unexplained move, DeGiorgio did not assign a new part number to the improved switch design. The design change added 90 cents to the parts cost, and about $400,000 in tooling costs.

 

cobalt report 3
docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD047.pdf (1)

But, with this large of a role in the decision to delay the redesigned ignition switch, DeGiorgio claimed that he was not aware of any mechanical changes to the switches during his testimony in the Melton family suit against GM:

docs.house.gov meetings IF IF02 20140401 102033 HHRG-113-IF02-20140401-SD056.pdf
Though, he did sign off on the changes, and worked with Delphi to test batches of ignition cylinders that contained an upgraded PCB (Printed Circuit Board), and detent plunger:

cobalt report 14

democrats.energycommerce.house.gov sites default files documents GM-Commodity-Validation-Sign-Off-2006-4-26.pdf

 

Curiously enough, though, is that GM had very little oversight on Delphi’s quality control, and Delphi did not check the rotational torque needed to turn past the switches detents. GM simply accepted Delphi’s parts and trusted their QC. But with rumored tensions between GM and Delphi, it’s said that cost cutting measures might be to blame as GM forced Delphi to push prices down, sacrificing parts quality. If this were true, GM’s choice to outsource QC to the supplier left them in the dark for too long, preventing them from seeing the immediate effects of their problems with Delphi:

cobalt report 4cobalt report 18

While this was going on, GM released the key insert as a “containment solution;” it would be the minimum needed to alleviate the problem for effected customers. This was chosen over two other modifications to the ignition cylinder, which were seen as a “partial solution” in the case of adding an additional detent mechanism to add more resistance to rotating the key out of “run,” and a “sure solution” involving moving the ignition switch higher up on the column, using a gear drive system to reach the rotary switch responsible for selecting which electrical circuit to run on. The added gearing would also increase rotational torque, the design stated.
cobalt report 11
cobalt report 12cobalt report 13
In 2007, the NHTSA began to probe into the surprising number of airbag-related complaints, despite “GM’s indications that they see no specific pattern.”
cobalt report 15

The issue was set aside, for the most part, until GM was informed by the Melton suit that there was a possible design change in the switch, based on an investigation into junkyard-found switches from the effected models. The testing showed that there was a noticeable change in detent torque, but no documentation from GM to show the changes. The GM engineers and representatives in the case were caught off guard by this design change, and began an internal investigation. This investigation lead GM engineer Brian Stouffer to find the documents that showed DeGiorgio signing off on design changes with no part number change.

cobalt report 5cobalt report 16
Finally, the most impressive point of this story comes from GM’s reactions to the NHTSA’s investigations. The NHTSA emailed GM asking for clarification on several other recalls, documenting GM’s reactions to other product issues with a disdain for GM’s penchant for doing the least amout possible to avoid full recalls; ie: regional recalls for parts failures in the rust-belt states. Saying that some were broadsided by this information would be an understatement:

cobalt report 19[...]
cobalt report 19

The response by Mike Robinson, VP for environment, energy and safety policy, sums up GM’s perception and confusion over their responses to the Cobalt issue, and several other poor recall responses in the past. “This note from NHTsA, both the content and tone, comes like a bolt out of the blue,” he states, “We worked way too hard to earn a reputation as the best and we are not going to let this slide.”

cobalt report 19
To summarize, GM is its own worst enemy. They responded poorly to incredibly early reports, dismissing the issue too quickly as a casual problem. With reports going back to 2001, during the Saturn Ion development, there is no reason why the switch should have come unmodified to the Cobalt development; never mind the dismissal of the problem before the car was produced. Ray DeGiorgio’s role in this problem is larger than he initially lead on in the Melton case, though his motive in this discrepancy is unknown at this time.

Full text to all 619 pages can be find here.

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US Justice Dept, House Panel To Investigate GM Ignition Recall http://www.thetruthaboutcars.com/2014/03/us-justice-dept-house-panel-to-investigate-gm-ignition-recall/ http://www.thetruthaboutcars.com/2014/03/us-justice-dept-house-panel-to-investigate-gm-ignition-recall/#comments Wed, 12 Mar 2014 11:12:40 +0000 http://www.thetruthaboutcars.com/?p=770273 Things are going from bad to worse for General Motors amid the fallout related to the long-delayed recall of 1.6 million vehicles worldwide over a faulty ignition switch installed between 2003 and 2007, as both the U.S. Justice Department and a House panel plan to conduct separate investigations into the matter. Automotive News and Bloomberg […]

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Things are going from bad to worse for General Motors amid the fallout related to the long-delayed recall of 1.6 million vehicles worldwide over a faulty ignition switch installed between 2003 and 2007, as both the U.S. Justice Department and a House panel plan to conduct separate investigations into the matter.

Automotive News and Bloomberg report the Justice Department’s investigation will focus on whether or not GM violated criminal or civil laws in failing to alert regulatory bodies sooner than they had about the switch, with lawyers in the U.S. Attorney’s Southern District of New York office leading the charge.

Meanwhile, the House Energy and Commerce Committee will determine if either the automaker or the National Highway Traffic Safety Administration — who is also conducting an investigation into the recall via a 107-question survey due April 3 — missed anything “that could have flagged [the] problems sooner,” according to Representative Fred Upton, who also added:

If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyzing complaints that Congress created to save lives is being implemented and working as the law intended.

On top of the aforementioned inquiries, GM itself has hired Jenner & Block LLP chairman Anton Valukas to head an internal investigation into the handling of the recall. Valukas was the appointed examiner for the Justice Department in the inquiry of Lehman Brothers over the financial institution’s downfall in the run-up to the Great Recession in late 2008.

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U.S. Government Sells Remaining General Motors Stock http://www.thetruthaboutcars.com/2013/12/u-s-government-sells-remaining-general-motors-stock/ http://www.thetruthaboutcars.com/2013/12/u-s-government-sells-remaining-general-motors-stock/#comments Tue, 10 Dec 2013 10:30:21 +0000 http://www.thetruthaboutcars.com/?p=676634 It’s official: the United States government has sold off its remaining $49.5 billion investment in General Motors. U.S. Treasury Secretary Jack Lew announced that of the aforementioned investment — made during the fallout of the Great Recession — $39 billion came back to the government’s coffers while the taxpayer lost $10.5 billion on the deal. […]

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It’s official: the United States government has sold off its remaining $49.5 billion investment in General Motors.

U.S. Treasury Secretary Jack Lew announced that of the aforementioned investment — made during the fallout of the Great Recession — $39 billion came back to the government’s coffers while the taxpayer lost $10.5 billion on the deal. The government originally received 912 million shares — or 60.8 percent total ownership — in exchange for saving the automaker from certain doom in 2008. Once the company regained its footing in November 2010, the government began selling shares in a divestiture that lasted until this afternoon, when only 2 percent remained of GM remained in the federal investment portfolio.

On the other side, GM’s stock rose to $41.17 during regular trading hours, the highest peak the stock has seen since their IPO debuted in 2010. The automaker currently sits upon a nest egg of $26.8 billion in cash, and is considering bringing back dividends to their stockholders. Most of the nest egg was built during 15 consecutive months of profitability based on the strength of their brand and rising sales in North America and China.

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The Legend of Ford’s Truck Czar’s Rule Over Truck Mountain http://www.thetruthaboutcars.com/2013/11/the-legend-of-fords-truck-czars-rule-over-truck-mountain/ http://www.thetruthaboutcars.com/2013/11/the-legend-of-fords-truck-czars-rule-over-truck-mountain/#comments Tue, 12 Nov 2013 07:59:30 +0000 http://www.thetruthaboutcars.com/?p=648954 Once upon a time, one man rose from the realm of sales to helm Ford’s truck division. With his iron fist, he divided the F-150 range into several specialized units, reaping the rewards as his dominion over the light truck market expanded. That man is Doug Scott, and this is the tale of how he […]

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Doug Scott

Once upon a time, one man rose from the realm of sales to helm Ford’s truck division. With his iron fist, he divided the F-150 range into several specialized units, reaping the rewards as his dominion over the light truck market expanded.

That man is Doug Scott, and this is the tale of how he came to be the Sovereign of Truck Mountain.

Though his title is humble, Ford’s Truck Group marketing manager has brought in $22 billion in revenue over the years, bettering his competitors through offering an F-150 for everyone. For example, contractors and landscapers just starting out could have the STX for just over $26,000, while businessmen making the big bucks off the Bakken could opt for the top-of-the-line Limited for around $54,000, and hardcore off-road prerunners can feel like a reptile in their Raptor beginning at $45,000.

This strategy has not only paid off for Ford, but has inspired General Motors and Chrysler to play follow the leader, with the Italo-American alliance spinning off the Ram brand from Dodge for greater focus while GM’s bowtie has unveiled their own luxury pickup to go up against the F-150 Platinum Edition. Meanwhile, the F-150 has lived at the summit of Truck Mountain since 2010, picking up $4,000 per truck than GM per Kelley Blue Book.

With 2013 sales on track to hit 700,000 units, and recording the best October since 2004, Scott aims to keep his competitors on their toes. His latest from the F-Series is a sport truck dubbed the Tremor, whose 3.5-liter turbocharged V6 will push the superbeast from zero to 60 in 6.4 seconds, just over one second slower than the V6 version of the Mustang.

The Tremor, like the King Ranch, the Raptor and all of the other F-150s, were born from the collaboration between the marketers and engineers within the truck group, who, in turn, gathered their information on what customers want from the customer relationships built through events and organizations, such as the Professional Bull Riders Association and the Future Farmers of America. The result: a 34.6 percent share of the truck market through September 2013, with the Chevy/GMC tag team a close second at 30.7 percent, and Ram a distant third with just 16.3 percent.

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Chevrolet In Duel With Volkswagen For The Heart of China http://www.thetruthaboutcars.com/2013/10/chevrolet-in-duel-with-volkswagen-for-the-heart-of-china/ http://www.thetruthaboutcars.com/2013/10/chevrolet-in-duel-with-volkswagen-for-the-heart-of-china/#comments Mon, 28 Oct 2013 17:53:54 +0000 http://www.thetruthaboutcars.com/?p=636369 When one thinks of General Motors’ relationship with China, Buick flashes into the mind like a brake light in the Beijing smog. Sometimes, Cadillac comes up, as well. However, with Volkswagen preparing to slingshot past them in a manner akin to Danica Patrick being flung toward the front of the pack with help from Tony […]

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#8 Chevrolet Cruze. Picture courtesy globaltimes.cn

When one thinks of General Motors’ relationship with China, Buick flashes into the mind like a brake light in the Beijing smog. Sometimes, Cadillac comes up, as well. However, with Volkswagen preparing to slingshot past them in a manner akin to Danica Patrick being flung toward the front of the pack with help from Tony Stewart, CEO Dan Akerson is planning to aggressively push Chevrolet through the choking air, and into as many Chinese garages as he can find.

As Automotive News reports, the push will be directed by GM China’s chairman Tim Lee, who will also add SUV sales goals to the maturing market:

We got still a lot of mother brand-building to do for Chevrolet and we will resource that appropriately and get that job done… It’s a brand that has a total history in the country of about seven or eight years, so based on that relatively short time in the marketplace, our brand awareness is good, our product consideration is good. But can it be better? I guess.

The first volley fired in the upcoming battle for Chinese automotive supremacy will be the introduction of the second-generation Cruze to spur demand in the country’s burgeoning western sector, as well as smaller — and, one hopes, fully occupied — cities. GM aims to add 1,000 dealerships to this area by 2017, backed by an $11 billion investment through 2016 that promises to establish four new assembly plants manufacturing locally around 5 million units per year. GM also plans to bulk up Cadillac’s presence in China with a locally built version of the ATS come 2014.

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Ford’s Transit Taxi To Connect Passengers Worldwide http://www.thetruthaboutcars.com/2013/10/fords-transit-taxi-to-connect-passengers-worldwide/ http://www.thetruthaboutcars.com/2013/10/fords-transit-taxi-to-connect-passengers-worldwide/#comments Tue, 22 Oct 2013 17:00:14 +0000 http://www.thetruthaboutcars.com/?p=631698 With a few successes under Ford’s strap with the American buckle, the Blue Oval made be known its aspirations to go for the world championship belt in ferrying drunk revelers and harried air travelers with their Transit Connect Taxi in its debut in Hong Kong. “Ford Transit Connect Taxi has proven itself in taxi fleets […]

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Ford-Transit-Connect-Hong-Kong-Main-ArtWith a few successes under Ford’s strap with the American buckle, the Blue Oval made be known its aspirations to go for the world championship belt in ferrying drunk revelers and harried air travelers with their Transit Connect Taxi in its debut in Hong Kong.

“Ford Transit Connect Taxi has proven itself in taxi fleets across the U.S.,” said Ford’s head of global product development Raj Nair in a statement. “Now, we are building on that success, offering the vehicle for sale in even more markets, including global cities like Hong Kong.” The taxi, set to go on sale in 2014 globally, will run off of Hong Kong’s liquefied petroleum gas infrastructure, an option that has been available since 2010 in the U.S. domestic market alongside compressed natural gas and gasoline.

Under the hood, a 2.5-liter engine attached to a six-speed automatic will keep things moving smoothly, or as smooth as driving (or riding in) a taxi can be, at least. The new taxi is longer than the previous domestic-only models, with seating for up to five and more room for the myriad of baggage travelers will be dragging tiredly behind them. The taxi is also shorter for more clearance for strip club adverts on the roof, with a lower floor allowing for easier access, especially if converted for wheelchair use.

In exchange for spreading the love of the Transit Connect Taxi around the world, Ford has plans to bring the Transit Connect Wagon from Europe to the United States for the 2014 model year. The people carrier holds seven, and sips down a gallon of fuel every 30 miles on the highway. Ford truck communications manager Mike Levine has high hopes for the newest addition to the family:

We believe there’s an opportunity. The Transit Connect Wagon is virtually the same size as seven-passenger minvans were when they were introduced in the 1980s. Since then, they’ve gotten too big, too expensive and consume too much fuel.

The Transit Connect Taxi currently serves markets in New York, Los Angeles, Chicago and Miami, with the Blue Oval owning 60 percent of the taxi market. Ford offers the C-MAX Hybrid for taxi service, as well.

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Ford CEO Mulally To Head Boeing Or Microsoft Soon? http://www.thetruthaboutcars.com/2013/10/ford-ceo-mulally-to-head-boeing-or-microsoft-soon/ http://www.thetruthaboutcars.com/2013/10/ford-ceo-mulally-to-head-boeing-or-microsoft-soon/#comments Sat, 19 Oct 2013 16:06:35 +0000 http://www.thetruthaboutcars.com/?p=627322 The rumor mill has been grinding away as of late regarding the possible return of Ford CEO Alan Mulally to helm either one of two of Seattle’s many economic engines: Microsoft and Boeing. In the face of these rumors, Mulally has opted not to dispel the rampant speculation. Reuters was  among those in attendance at an […]

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ford-ceo-alan-mulally-china-lincolnjpg-894a92e3f2c9121aThe rumor mill has been grinding away as of late regarding the possible return of Ford CEO Alan Mulally to helm either one of two of Seattle’s many economic engines: Microsoft and Boeing. In the face of these rumors, Mulally has opted not to dispel the rampant speculation.

Reuters was  among those in attendance at an automotive conference in Wuhan, China, where Mulally’s response to being asked whether he was directly or indirectly approached by either company to take the wheel was, “I love serving Ford.” He added that there were no changes to the plan laid out for Ford to find a successor to the third longest serving CEO when he steps down at the end of 2014, though Reuters did report that the auto maker may be open to an earlier departure should Mulally accept an offer elsewhere.

Since taking over Ford in 2006, Mulally helped steady the then-troubled company through his One Ford plan, which led to the sale of acquired brands — including Aston Martin and Volvo — to bring the focus back upon the Ford and Lincoln product lines. In turn, Mulally’s Ford was the only auto maker to avoid the pitfalls and bailouts experienced by Chrysler and General Motors during the Great Recession’s early days in late 2008.

With Microsoft’s market price still stagnant a decade on, and Boeing’s own woes with the 787 Dreamliner, either company could possibly benefit should the right offer approach his desk, especially if hand-delivered by his senior contacts in both companies to his home in Seattle.

Of course, when asked if he were open to a new executive post upon the end of his term at Ford, Mulally laughed and only had three words for the reporter: “I don’t know.”

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Former Volvo CEO Stefan Jacoby to Run GM’s International Unit Minus China http://www.thetruthaboutcars.com/2013/08/former-volvo-ceo-stefan-jacoby-to-run-gms-international-unit-minus-china/ http://www.thetruthaboutcars.com/2013/08/former-volvo-ceo-stefan-jacoby-to-run-gms-international-unit-minus-china/#comments Mon, 05 Aug 2013 14:49:28 +0000 http://www.thetruthaboutcars.com/?p=498260 Stefan Jacoby, whose most recent job was CEO of Volvo, has been hired by General Motors to head their international operations. Jacoby replaces Tim Lee who is slated to become chairman of GM China as that unit is split off from the rest of GM International. Lee will continue to head global manufacturing for the […]

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Stefan Jacoby new

Stefan Jacoby, whose most recent job was CEO of Volvo, has been hired by General Motors to head their international operations. Jacoby replaces Tim Lee who is slated to become chairman of GM China as that unit is split off from the rest of GM International. Lee will continue to head global manufacturing for the Detroit based automaker. The business unit that Jacoby will be running will still have operations in more than 100 markets in Africa, Asia Pacific and the Middle East.

Before Volvo, Jacoby had been CEO of Mitsubishi Europe and he had been in charge of Volkswagen’s U.S. operations, one of a number of positions that he held at VW. His tenure at Volvo ended following a mild stroke that he suffered in September of 2012, though it was reported that his health had less to do with his departure than a conflict with Volvo vice chairman Hans-Olov Olsson over strategy and executive hiring as well as a failure to meet sales growth objectives in China. Other than saying that he is fit to do the job, GM declined further comment on Jacoby’s health.

Jacoby is the latest former VW executive to be hired at GM, with Karl-Thomas Neumann now running Opel, Michael Lohscheller, Opel’s CFO and Tim Mahoney GM’s, head of global marketing, all joining the company within the past year.

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GM Misses Estimates, Doubles Losses In Europe http://www.thetruthaboutcars.com/2013/02/gm-misses-estimates-doubles-losses-in-europe/ http://www.thetruthaboutcars.com/2013/02/gm-misses-estimates-doubles-losses-in-europe/#comments Thu, 14 Feb 2013 14:33:17 +0000 http://www.thetruthaboutcars.com/?p=477510 For decades, big corporate profits were blasted as a sign of greed, especially by unions. GM changed all that. When a sheep dipped GM, free of legacy finance costs, and not paying taxes due to losses a normal company would not have been able to carry over after a bankruptcy, declared a record $7.6 billion […]

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For decades, big corporate profits were blasted as a sign of greed, especially by unions. GM changed all that. When a sheep dipped GM, free of legacy finance costs, and not paying taxes due to losses a normal company would not have been able to carry over after a bankruptcy, declared a record $7.6 billion profit in 2011, chests of GM boosters swelled with pride, as if the profits had been theirs. A year later, there is $2.7 billion less to be proud of. GM’s European millstone, Opel, continues to drag the company down. Opel’s operative losses more than doubled to $1.8 billion for all of 2012.

GM reported as $4.9 billion profit for 2012, and “a weaker-than-expected fourth-quarter profit on Thursday, citing wider losses in Europe and lower vehicle prices in its core North American market,” says Reuters. Analysts had hoped GM would do better.

The situation in Europe is expected to be getting worse. CFO Dan Ammann told Reuters that “GM still sees industry sales in Europe declining in 2013 and is “not betting on” a pickup later in the year.”

GM wrote down $5.2 billion worth of assets in Europe. GM’s $423 million investment for a 7 percent stake in Peugeot, is now carried at half price on GM’s books. Ammann said that GM has “no intention of putting more cash into Peugeot.”

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GM Back To Its Channel Stuffing Ways http://www.thetruthaboutcars.com/2012/04/gm-back-to-its-channel-stuffing-ways/ http://www.thetruthaboutcars.com/2012/04/gm-back-to-its-channel-stuffing-ways/#comments Sat, 14 Apr 2012 15:45:37 +0000 http://www.thetruthaboutcars.com/?p=439947 The Nikkei [sub] comes with the good news that “Japan’s automakers have finally resolved the inventory shortages that have hindered their sales in the U.S. market.” According to the Tokyo wire, Japan’s automakers “are in a better position to compete with their Western and Korean rivals,” now that lots are stocked again. Well, not quite. […]

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The Nikkei [sub] comes with the good news that “Japan’s automakers have finally resolved the inventory shortages that have hindered their sales in the U.S. market.” According to the Tokyo wire, Japan’s automakers “are in a better position to compete with their Western and Korean rivals,” now that lots are stocked again.

Well, not quite. Japanese inventories are still fashionably slim compared to some Detroit chubbos. Pop some Tums and have a look.

According to data compiled by Automotive News, Honda has a 54 day supply. Around two months are considered normal for the industry.  Toyota however has only a 32 day supply, smaller Subaru has 30.

Let’s take this opportunity to look at all lots.

Days of supply Units Days Apr 2012 Days Mar 2012
Detroit 3: 1,534,900 70 72
European 231,300 53 42
Japanese 827,400 43 46
Korean 122,200 27 34

The Detroit 3 definitely have no shortage of cars with an average of 70 days’ supply on the lots. The Europeans are at the current industry average with 53 days of supply. The Japanese have 43 days’ worth  on the lots, but “the Koreans” have only 27 days.

Units Days 1 Apr 2012 Days 1 Mar 2012
HYUNDAI-KIA 122,200 27 34
SUBARU 35,000 30 33
BMW 32,300 30 33
TOYOTA 230,400 32 36
PORSCHE 3,600 41 41
NISSAN 226,400 47 54
JAGUAR LAND ROVER 9,200 47 48
DAIMLER AG 44,500 51 45
HONDA 244,000 54 50
MAZDA 62,300 54 59
Industry 54 57
FORD 477,300 60 68
CHRYSLER GROUP 354,900 61 66
VOLVO 15,000 63 66
VW GROUP 116,200 67 42
SUZUKI 6,800 72 68
GENERAL MOTORS 713,200 86 80
MITSUBISHI 22,500 88 125
TOTAL 2,715,800 54 57

Indeed, Hyundai-Kia’s supply is the lowest of them all with only 27 days until empty. As indicated by the Detroit 3 number, American makers are generously stocked, but averages can be deceiving.

Ford and Chrysler carry a regulation two month supply on the books.

The absolutely worst of Detroit is GM with a nearly three month supply. Only consolation: Deadman walking Mitsubishi carries two days more. While days to sell are down industry-wide, inventory is increasing on GM lots: From March to April, it took a week longer to move an already sluggish inventory.

GM’s lot queens: Escalade EXT (144 days), Yukon (136 days), Yukon XL (133 days), Sierra (132 days), CTS (124 days), all Cadillac cars (123 days), all Buicks (121 days).

Have a look at this chart: No wonder that GM is losing market share. The cars are all sitting on the lot.

 

 

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General Motors Trying Stealth Tactics For Super Bowl Ads http://www.thetruthaboutcars.com/2012/01/general-motors-trying-stealth-tactics-for-super-bowl-ads/ http://www.thetruthaboutcars.com/2012/01/general-motors-trying-stealth-tactics-for-super-bowl-ads/#comments Thu, 05 Jan 2012 19:46:59 +0000 http://www.thetruthaboutcars.com/?p=424547 Rather than running commercials during the Super Bowl, General Motors is looking to try something more subversive – product placement within other brand’s TV spots during the big game. Automotive News reports that GM marketing man Joel Ewanick was investigating the possibility of paying other advertisers to insert GM vehicles into their ads. But various […]

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Rather than running commercials during the Super Bowl, General Motors is looking to try something more subversive – product placement within other brand’s TV spots during the big game.

Automotive News reports that GM marketing man Joel Ewanick was investigating the possibility of paying other advertisers to insert GM vehicles into their ads. But various contractual elements related to Super Bowl advertising may kill the idea in its nascent stages.

Super Bowl ads are apparently restricted via a form of non-compete clause. Ford and Chevrolet could not run ads in the same “pod” (i.e. commercial break), and GM’s plan would cause havoc with this arrangement. Having GM products inserted into another company’s ad, as well as commercials for GM’s own products would cause a logistical nightmare for the people who decide where and when ads are placed.

Furthermore, the plan would run afoul of a long-standing policy against buying a 30 second spot and then re-selling 5 or 10 second blocks of time. NBC, which broadcasts the game, would also have to approve any ads that feature the promotion of an unrelated brand. The article also mentions a “reward system” that would give small prizes to viewers who are able to spot product placements, though no details on this seemingly silly scheme were given.

As much as Super Bowl ads have become a part of pop culture, meriting their own examination, the undeniable fact remains that for many, the ads are a great way to grab another beer or, shall we say, recycle the liquids via the municipal sewage system.

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GM Will Build Less To Make More http://www.thetruthaboutcars.com/2011/08/gm-will-build-less-to-make-more/ http://www.thetruthaboutcars.com/2011/08/gm-will-build-less-to-make-more/#comments Thu, 11 Aug 2011 15:43:15 +0000 http://www.thetruthaboutcars.com/?p=406674 “In attempts to boost profitability, GM wants to cut the number of vehicle platforms by half over the next decade and consolidate the number of engines,” reports the DetN. That’s the good news. The bad news is that “GM’s executives admit the automaker continues to have an inefficient manufacturing network, weak supplier relations and too […]

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“In attempts to boost profitability, GM wants to cut the number of vehicle platforms by half over the next decade and consolidate the number of engines,” reports the DetN. That’s the good news. The bad news is that “GM’s executives admit the automaker continues to have an inefficient manufacturing network, weak supplier relations and too many variations in the types of engines and vehicle underpinnings it uses to build cars and trucks globally.” If the DetN says it, then it must be true. Putting platforms and engines on a diet is seen as the cure.

Mary Barra, GM’s product chief, told the DetN and an assemblage of Wall Street analysts that by 2018, “GM hopes to build 90 percent of its vehicles on 14 platforms — half the number now — and boost manufacturing efficiency by 40 percent.” Not to nitpick, but if you build 90 percent of your vehicles on 14 platforms, then you can’t build the remaining 10 percent on thin air and you will need more platforms for low volume cars. So we talked a bit to GM to find out more about how they will go from zaftig to svelte.

The basic story is that GM is trying to streamline its “too many variations in the types of engines and vehicle underpinnings,” and this is a good thing.

Currently, only a third of GM’s volume comes from cars that share what GM calls “core architectures.”  The rest sits on a hodgepodge of what GM charitably calls “regional architectures.” Currently, there are 30 “Core Architectures” and an untold number of regional dishes.

In the future, GM’s local chefs will have to use a common cookbook.  By 2014, in the world of cars that is tomorrow, the number of “Core Architectures” will shrink to 24, but the global volume that uses these core architectures will grow to 62 percent. Four years later, by 2018, all regional architectures will have vanished. The number of global architectures will have shrunk to 14. Those 14 global architectures will serve 90 percent of the volume.

But again, what about the remaining 10 percent? “There are a few cars that have a unique architecture, which they share with nobody,” explains Klaus-Peter Martin, GM spokesman in Detroit. As examples, he names the Chevrolet Corvette and some vehicles produced with GM’s JV partners in China.

Likewise, the number of engine platforms will shrink from currently around 20 to less than 10 in 2018. Keep in mind theses are engine platforms, which allow a multitude of engines.

GM expects global efficiency gains between 35 and 40 percent from this, which is a tall order. But if you look at how little global commonality there is currently in the world of GM, those numbers should be doable. With a lot of screaming from the natives.

Michelle Krebs of Edmunds says “it’s the course a lot of manufacturers are taking. Everyone is trying to get to greater economies of scale.”

Volkswagen for instance is moving away from platform-think and goes to its new kit architecture. This allows a much higher number of different cars with different character, built from modules. Object-oriented car design, if you will.  On a smaller scale, BMW creates a number of engines, gasoline and diesel, from one building block, a single, standardized cylinder.

This industry takes huge investments, and spreading them across as many units as possible is the name of the game. If you make the most from the least, you win. Don’t think “badge engineering” when you hear this. If done right, the slimdown can make the offerings more attractive, and can help the brand(s) gain sex-appeal. That of course remains in the eye of the beholder. If you like the right lady, you’ll complain that the left one is the wrong one.

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It Turns Out GM And Ford Really Don’t Like Each Other http://www.thetruthaboutcars.com/2011/07/it-turns-out-gm-and-ford-dont-really-like-each-other/ http://www.thetruthaboutcars.com/2011/07/it-turns-out-gm-and-ford-dont-really-like-each-other/#comments Thu, 21 Jul 2011 17:06:18 +0000 http://www.thetruthaboutcars.com/?p=403792 Earlier this year when it seemed that a price war could be brewing in the US market, one of TTAC’s industry sources noted that the problem wasn’t strictly a question of business competition. Speaking on background, the source told us that when speaking with old friends at Ford and GM, the level of mutual distaste […]

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Earlier this year when it seemed that a price war could be brewing in the US market, one of TTAC’s industry sources noted that the problem wasn’t strictly a question of business competition. Speaking on background, the source told us that

when speaking with old friends at Ford and GM, the level of mutual distaste for each other is very high…it seems to be getting personal. Lots of egos involved, [which] increases potential for short-sighted decision-making

At the time, I was willing to chalk up this animosity to the usual industry hyper-competitiveness (or at least a return to form after the lockstep mutual support of the bailout era), but it seems I should have paid more attention to our source’s concerns. As it turns out, the bad feelings between Detroit’s cross-town rivals has apparently gotten worse…

Jalopnik reveals that NYT auto reporter Bill Vlasic’s forthcoming book highlights just how uncivil the Ford-GM rivalry has become:

What [Ford marketing boss] Jim Farley really wanted to do was kick the daylights out of General Motors. “I’m going to beat Chevrolet on the head with bat,” he said with a slightly wicked smile. “And I’m going to enjoy it.” There was a saying going around Ford: GM was like the kid who was born on third base and yells out, “Hey Ma, I hit a triple!” Farley and his fellow Ford executives and workers were ready to rumble.

…This was like the glory days again — Ford versus GM, let the better car company win. “We’re going to beat on them, and it’s going to be fun,” said Farley. “F—- GM. I hate them and their company and what they stand for. And I hate the way they’re succeeding.”

Now I understand why people are forever accusing TTAC of “hating” one car company or another… it seems that behind a thin veneer of professional courtesy, the auto industry nurtures a viciously competitive streak that crosses into hatred and contempt for competitors. What a pity it is that competition isn’t enough any more, and that executives have to “hate what their competitors stands for” to motivate themselves. Isn’t taking pride in your own products and achievements enough?

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Inside The Mind Of Dan Akerson http://www.thetruthaboutcars.com/2011/06/inside-the-mind-of-dan-akerson/ http://www.thetruthaboutcars.com/2011/06/inside-the-mind-of-dan-akerson/#comments Mon, 06 Jun 2011 19:48:44 +0000 http://www.thetruthaboutcars.com/?p=397555 The Detroit News snagged a lengthy interview with GM CEO Dan Akerson, giving observers one of the first in-depth looks at the man who will be leading The General for the next three to four years. The interview is to lengthy to summarize here, but there are a few items that are worth noting… For […]

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The Detroit News snagged a lengthy interview with GM CEO Dan Akerson, giving observers one of the first in-depth looks at the man who will be leading The General for the next three to four years. The interview is to lengthy to summarize here, but there are a few items that are worth noting…

For one thing, Akerson has some serious ambitions and doesn’t mind sharing them with the world.

There are a couple milestones in my tenure I want to accomplish. I want to earn $10 billion a year profit. I want get the U.S. pension fund to fully funded — and we’re making real progress there. I want to make Europe profitable on a sustainable basis.

None of these are going to be easy to accomplish. A $10b profit would require a doubling of GM’s performance last year, and the other goals (particularly in regards to the troubled European operations) will divert a huge amount of cash. Meanwhile, the old GM challenge of “culture change” continues to be one of Akerson’s top priorities as well, as he seeks to develop a competitive atmosphere and break down the tradition of “boss worship” which holds back the necessary give-and-take.

But possibly the biggest challenge Akerson faces has to do with GM’s product, and the DetN includes a separate write-up of Akerson’s thoughts on the matter. Speed of development is one of his major changes, and he acknowledges that his desire to pull forward development of the 2013 Chevrolet Malibu faced internal dissent (which he overruled, raising questions about the alleged death of “boss worship” at GM).

On the issue of fuel economy, he argues that the Chevrolet Volt

is a novelty (today), but it won’t be in five years. It’s going to be an old, old technology and old news.

He also says ethanol will “die slowly” and hints that GM will eventually start selling dual-fuel commercial vehicles, capable of running on natural gas or gasoline. Akerson also says that

we’re not going to do these big, heavy trucks that are making 15 miles, 12 miles to a gallon.

Which, given rising CAFE standards and gas prices, comes as no real surprise. It does, however, create some challenges to his goal of $10b annual profits, as much of GM’s profit traditionally comes from the sale of large trucks, and fuel-economy-improvement-related cost increases for pickups are projected to be costly.

Akerson made a few surprising statements on the luxury front, including a perplexing assessment of Cadillac’s next two vehicles, the XTS and ATS, which he says

are not going to blow the doors off, but they will be very competitive.

Whatever that means. And despite his apparent lack of confidence in the next generation of Caddies, he still took a potshot at Ford, saying

They are trying like hell to resurrect Lincoln. Well, I might as well tell you, you might as well sprinkle holy water. It’s over

In general, Akerson comes across as quite candid, possibly overly so (though you won’t hear us complaining about it). But for all his ambitions, he offers relatively little in the way of specific strategies to accomplish them. For example, his desire to make GM more like Toyota is hardly a “strategy,” as every automaker has been studying and trying to replicate Toyota’s success for decades. Speeding up development is an indication of his approach, but it brings with it worries about future quality. Similarly his desire to compete with every Volkswagen model while simultaneously downsizing and restructuring Opel sounds like a tough balancing act. But then, when it comes to turning around a company as large and perennially troubled as GM, ambitious goals and tough strategies are the only way forward.

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TTAC Contest: What Car Inspired GM’s Panel-Gap Improvements? http://www.thetruthaboutcars.com/2011/05/ttac-contest-what-car-inspired-gms-panel-gap-improvements/ http://www.thetruthaboutcars.com/2011/05/ttac-contest-what-car-inspired-gms-panel-gap-improvements/#comments Fri, 20 May 2011 19:03:25 +0000 http://www.thetruthaboutcars.com/?p=395634 The auto media has been receiving its advance copies of Bob Lutz’s forthcoming book “Car Guys versus Bean Counters” over the last few weeks, and have been leaking some of the more provocative statements and conclusions from it. I too requested a book and tore through it over the past week, enjoying Lutz’s direct voice […]

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The auto media has been receiving its advance copies of Bob Lutz’s forthcoming book “Car Guys versus Bean Counters” over the last few weeks, and have been leaking some of the more provocative statements and conclusions from it. I too requested a book and tore through it over the past week, enjoying Lutz’s direct voice and keen insights into his time at General Motors… as well as the attention-grabbing, politically-charged statements that the rest of the media seems so fixated upon. The bad news is that I won’t be able to write a full review until we get closer to its mid-June launch date, but the good news is that our forbearance has been rewarded: despite sideswiping yours truly in one passage, a brief but rewarding email conversation has generated more mutual respect, and Mr Lutz has agreed (in principle) to a TTAC interview to accompany our review at the time of the book’s release. Sometimes observing an embargo is worth it.

But fear not: just because the promise of an interview with one of the most influential figures in the industry has us delaying our review for another month or so, we’ve got more Lutz-related material with which to build up to what I expect to be a watershed interview for TTAC. Next week I’ll be publishing a review of Mr Maximum’s previous book “Guts,” and to kick of the coming months of Lutzmania, we’ve got a very special contest that is sure to stump even TTAC’s most well-versed Best and Brightest.

Shortly after Lutz’s arrival at GM, he began tackling the problem of body panel gaps, which at the time was 5mm with a variation of up to 2mm, a standard that he “complained and complained” about, given that the Germans and Japanese were building cars with smaller gaps and almost no variation. At one point, Lutz attended a large meeting at GM’s Milford Proving Grounds in which he and senior execs from GM’s Product Development, Design, Quality and Manufacturing examined GM’s then-current lineup and compared them to the competition. After some loud complaints about GM’s inability to create crisp panel gaps, Lutz was confronted by the executive in charge of GM’s sheet metal fabrication, who apparently grabbed Lutz by the lapels and raised him up on his toes, saying

OK, I think I’ve heard about as much of this shit as I want to. YOU are now going to take ME to the car that you think is best and we’re going to focus on that one.

Lutz then took him to one of the competitive cars that Lutz thought was the best sheet-metal-wise… which leads us to the question: which car did Lutz identify as having the best sheet metal of the competition? This vehicle became GM’s “new standard for sheet metal,” and learning from it directly improved GM’s sheet metal quality, according to Lutz. So, what was it?

Leave your answer in the comments section, and the first correct answer gets our Lutzian prize: a special booklet and USB storage drive (along with branded packaging) that was handed out to journalists attending the launch of the Chevrolet Volt. In short, your knowledge of GM’s obscure history will gain you a piece of GM’s less-obscure history. Qualifying answers must identify the make, model and generation (expressed in the range of model-years produced or model code, for example “1998-2005 (E46) BMW 3 Series”). This contest is closed to GM employees, members of the auto media or anyone else in possession of an advance copy of “Car Guys”(i.e. show a little honor and don’t cheat).

Good luck!

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GM Ramps Up Production. Of Cheerful Numbers http://www.thetruthaboutcars.com/2010/12/gm-ramps-up-productio/ http://www.thetruthaboutcars.com/2010/12/gm-ramps-up-productio/#comments Wed, 08 Dec 2010 09:32:43 +0000 http://www.thetruthaboutcars.com/?p=376212 Even the Detroit News, by some regarded as an extension of the Big 3 PR departments, can’t help but ask: “Are Detroit’s new automakers falling back into old habits?” New automakers? Old habits? Well, it sure looks like the Big 3 have drastically ramped-up production. Production of good numbers, that is. Especially one of them […]

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Even the Detroit News, by some regarded as an extension of the Big 3 PR departments, can’t help but ask: “Are Detroit’s new automakers falling back into old habits?”

New automakers? Old habits?

Well, it sure looks like the Big 3 have drastically ramped-up production. Production of good numbers, that is. Especially one of them has been very busy in that department: GM. The General currently has a 95 day supply of cars sitting on dealer lots, up from 76 days in August.

The industry average stands at 67 days, says a Citi Investment Research report. A two month supply is considered normal. What’s more, carmakers are supposed to switch from rich to lean at this time of the year: “With December production poised for a typical seasonal slowdown, inventory should end the year around the 60-day norm,” Citi analyst Itay Michaeli wrote in his report.

GM’s answer? GM says everything is fine, they are bulking up for a strong 2012. Jim Bunnell, general manager of GM’s dealer networks, doesn’t “want to leave anything on the table. We don’t want to be short.”

The other old and new automakers are a bit more cautious.

Ford has a 71 days’ supply.

Chrysler Group LLC has a 79 days’ supply.

Both higher than the industry, but not alarmingly so.

GM desperately needs better news, and cars stuffed into the channel are considered and reported as sold. For the first 11 months, GM’s sales rose only 7 percent. Whereas Ford rose 19 percent and Chrysler 17. In November, GM’s ”sales,” despite an overstuffed channel, rose only 12 percent. Ford’s sales went up 20 percent and Chrysler’s 17 percent.

What’s more, GM could be within spitting distance of the world’s number one carmaker, Toyota. When global production numbers are counted, it will most likely be a photo finish this year, and every car made counts – even if it sits around unsold.

Good year-end numbers would be good for the newly minted stock. Overstuffing could also be its undoing. “If they don’t get it, then Wall Street will punish them in January,” said Warren Browne, a retired GM executive who now runs his own firm, WP Browne Consulting LLC.

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New Research Reveals: Your Father’s Oldsmobile Was Designed By A Sex-Obsessed Pervert http://www.thetruthaboutcars.com/2010/11/new-research-reveals-your-father%e2%80%99s-oldsmobile-was-designed-by-a-sexpervert/ http://www.thetruthaboutcars.com/2010/11/new-research-reveals-your-father%e2%80%99s-oldsmobile-was-designed-by-a-sexpervert/#comments Sat, 27 Nov 2010 10:35:49 +0000 http://www.thetruthaboutcars.com/?p=374610 Arthur Ross started in 1935 as a „Creative Designer” at GM. He did Cadillacs and Buicks. He had a hand in drawing the lines of some famous cars of those times, the Cadillac Sixty Special, LaSalle, Fleetwood, and the Buick Y-Job, GM’s first concept car. He also was a pervert. Now don’t get me wrong. […]

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Arthur Ross started in 1935 as a „Creative Designer” at GM. He did Cadillacs and Buicks. He had a hand in drawing the lines of some famous cars of those times, the Cadillac Sixty Special, LaSalle, Fleetwood, and the Buick Y-Job, GM’s first concept car. He also was a pervert.

Now don’t get me wrong. Where I come from, “pervert” is a honorific, and I have been to certain parties where the host proudly walked around with a red sash, inscribed “Hentai-ou.” Which is Japanese for something like “King of the perverts.” All in attendance bowed to him. It’s a Japanese thing.  I’m familiar with harder core environments also.  I worked for Volkswagen during a certain period.  (“Bertel, how many girlfriends do you have?” “Two.” “Sorry, you don’t qualify for a board seat. Get some more.”) But let’s get back to Art Ross.

During the war, Ross was assigned to GM’s Camouflage and War Services Section. War over, he became Chief Designer of Cadillac, then Oldsmobile. Those were the golden years of American car design, and in fourteen years as Chief Designer, Ross literally changed the shape of the industry. In 1958, Ross left GM and started his own design house, Arthur Ross Associates. Remember the Parker Pen? A Ross design. Arthur Ross died in Chicago in 1981.

His estate contained a large body of art Ross had drawn, painted, airbrushed, and magic markered in his free time (and possibly during boring conferences.) It came in two genres.

His traditional art, including portraits, surrealistic paintings, and a treasure of car designs can be found at The Art Of Art Ross.com.

His, how shall I say this, more eclectic art is found at Erotica By Art Ross. Now let me warn you that this is not for the faint of heart. I had to do hours of painstaking research, sifting through his complete body of naked bodies, engaged in various activities, before I found one (and only one) image that is barely SFW. This is Thanksgiving weekend, you are not supposed to be working. You are safe unless your wife has installed snitching software on your home PC. In that case, she already knows about your activities. But once you click on Erotica By Art Ross, you see stuff your mother didn’t dare to warn you about. You have been warned now. I don’t want to hear any complaints.

Ross’s work reflects his fantasies of statuesque blondes, with the occasional BBW thrown in. His most prolific and most pornographic period was during the WW II time – designing new camouflage patterns obviously wasn’t challenging enough to keep his wandering mind focused.

So now we know it: Your father’s Oldsmobile was designed by a dirty young man.

(Side story: I wouldn’t have known, would I not have received mail from our in-house connoisseur of fine Detroitophilia, from our buff-book buff, Mr. Ronnie Schreiber. Strangely, he shied away from writing the piece himself, saying “I figured that it was suitable for B&B (Bertel & Baruth). I’ve only looked at just the home page, so I disclaim any blame if you find something offensive, or not offensive enough.” Sure, Ronnie. I just loved those erudite Playboy interviews.

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Akerson: BMW Better Than Cadillac http://www.thetruthaboutcars.com/2010/09/akerson-bmw-better-than-cadillac/ http://www.thetruthaboutcars.com/2010/09/akerson-bmw-better-than-cadillac/#comments Thu, 09 Sep 2010 12:05:50 +0000 http://www.thetruthaboutcars.com/?p=365181 When you start a new job, it’s considered important to make a good impression. How does the saying go? “Start as you mean to go on”. Well, Dan Akerson, I suspect, tried to heed that advice and ended up putting his foot in it. The Associated Press reports that Dan Akerson, CEO of Government (soon […]

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When you start a new job, it’s considered important to make a good impression. How does the saying go? “Start as you mean to go on”. Well, Dan Akerson, I suspect, tried to heed that advice and ended up putting his foot in it. The Associated Press reports that Dan Akerson, CEO of Government (soon to be “General” again) Motors, presented a webcast to GM employees. The usual CEO rhetoric came out. “GM needs to keep competitors on their heels rather than responding to what they do” said one GM worker, who asked not to be identified as the broadcast was not available to the public; despite being owned by them. “Attack mode” was another phrase used. But then Mr Akerson said that GM’s Cadillac brand has to make cars that are better than BMW’s. Now I thought this was quite a harmless statement to make. The CEO set a (quite high) benchmark to beat. Sounds reasonable, right? Not according to some.

The comment drew the ire of USA Today. As the article said, “How sad if he really said that. He’s echoing the out-of-date bias of many car shoppers. Cadillac, data show, already is better than BMW.” Blimey! Calm down, lads! The article then goes on to quote J.D Power and Associates’ Initial Quality Study (IQS) and Vehicle Dependability Study (VDS). In those studies, Cadillac ranks higher than BMW nearly every year. USA Today then starts ranting about how even “bad” GM (their word, not mine) beat BMW.

“In IQS scores back to 2005, Cadillac finished as high as third of some three dozen brands surveyed, and no worse than 13th (except for 25th in 2007). BMW, meantime, ranked 3rd back in 2005, but since then no better than 16th of about three dozen brands. (The exact number surveyed varies by one or two each year.)”

On the VDS, they mentioned that Cadillac, apart from years 2005 and 2007, beat BMW. Then things started getting hot under the bonnet.

“Sure, but BMW will blow the doors off Cadillac, right? Apparently not. In a “run what ya brung” challenge race last October, Caddy’s CTS-V took first, second and third. The highest-finishing BMW was an M3 in fourth. BMW declined at the time to send a factory-backed car and driver because it was a GM-sponsored event rather than a neutral competitive setting. Still the showdown was open to all production-stock (unmodified) cars, so, theoretically at least, it was a fair fight.”

Now whilst these are all valid points, there’s one point which USA Today doesn’t mention. In August 2010, The US public bought 12,689 Cadillacs. In comparison, 19,450 BMW’s were purchased. So, even with those points which USA Today raised, the US public isn’t buying it, literally. But, I think that USA Today was extremely harsh. I don’t think Dan Akerson meant anything by that comment (if he did say it, GM won’t confirm it). I like bashing a GM CEO as much as the next person, but give him a chance!

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Ed Whitacre Emails The Troops http://www.thetruthaboutcars.com/2010/08/ed-whitacre-emails-the-troops/ http://www.thetruthaboutcars.com/2010/08/ed-whitacre-emails-the-troops/#comments Fri, 13 Aug 2010 17:25:15 +0000 http://www.thetruthaboutcars.com/?p=362919 Editor’s Note: GM’s outgoing Chairman/CEO Ed Whitacre sent the following email to GM’s senior executives today [via Detroit News] My goal in coming to General Motors was to help restore profitability, build a strong market position and prepare this iconic company for success. While we have more to do, it is fair to say that […]

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Editor’s Note: GM’s outgoing Chairman/CEO Ed Whitacre sent the following email to GM’s senior executives today [via Detroit News]

My goal in coming to General Motors was to help restore profitability, build a strong market position and prepare this iconic company for success. While we have more to do, it is fair to say that GM is headed on that path. Our earnings for the last two quarters show that. Our strong sales show that. And the enthusiasm from everyone I meet at GM shows that.

We are on the right track. And I have complete confidence that Dan Akerson will keep us moving forward. Dan is committed to GM; he’s been a key player in the decisions our Board has made over the last year. He will do a great job, and deserves your complete support.

I have enjoyed my time as CEO of GM more than I can say, and I am pleased to stay on as Chairman through the end of the year. I am excited about this company, and I want you to know that it is the people of GM who make this a very special place. You are the best, and I truly appreciate all you do.

Thank you for the privilege of leading this great company. I am anxious to see the new heights that you will achieve as you continue focusing on designing, building and selling the world’s best vehicles.

Ed Whitacre

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Jerry Flint (R.I.P) Lays Into GM, October 2000 http://www.thetruthaboutcars.com/2010/08/jerry-flint-r-i-p-lays-into-gm-october-2000/ http://www.thetruthaboutcars.com/2010/08/jerry-flint-r-i-p-lays-into-gm-october-2000/#comments Wed, 11 Aug 2010 17:19:37 +0000 http://www.thetruthaboutcars.com/?p=362716 Editor’s Note: Legendary auto journalist and TTAC inspiration Jerry Flint died this week. Rather than write a sappy eulogy, we’ve decided to let Jerry speak for himself. What follows is a speech Flint gave to GM employees at Milford Proving Grounds in October 2000. It’s feisty, passionate and deeply insightful… the kind of speech that […]

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Editor’s Note: Legendary auto journalist and TTAC inspiration Jerry Flint died this week. Rather than write a sappy eulogy, we’ve decided to let Jerry speak for himself. What follows is a speech Flint gave to GM employees at Milford Proving Grounds in October 2000. It’s feisty, passionate and deeply insightful… the kind of speech that made Jerry famous, and paved the way for sites like TTAC. Moreover, it shows just how deep GM’s problems run, and serves as a timeless warning against the worst impulses of the business. Rest In Peace Jerry… we will always remember you at your best. [Courtesy: The Olds Zone Hat Tip: Ken Elias]

There was an auto executive, he was a very high ranking GM man.  You all know his name but I won’t mention it because it might embarrass him.  He’s not at General Motors anymore.

I once asked this man what he would do if he found himself the chief executive of General Motors.  He said, and I quote, “I would fire 1,000 executives.” End of quote.  I’m not sure whether it made any difference to him which 1,000 executives, if he had anyone in particular in mind, or any thousand would do.  I just tell you this to start things off.

Fasten your seat belts, it’s going to get bumpy.

This talk will be divided into four sections.  In the first, I will tell you something about myself.  That’s long.  In the second I will tell you the mistakes General Motors has been making.  That’s longer.  In the third part, I will tell you why General Motors makes these mistakes.  That’s short.  In the fourth part, much shorter I am afraid, I will suggest what you can do about it.

I was born in Detroit, in the city, in 1931.  We lived on Willis between Second and Third, a few blocks south of Wayne University, which was a city university back then.

I went to the neighborhood schools, tough schools; it was a workers hillbilly neighborhood.  As a boy, my father and I would walk miles from our apartment to the Fisher theater to see the movies, and we walked to save the nickel bus fare.  We would always stop at the General Motors building to look at the cars, and the models.  They used to have a contest.  Young people would enter futuristic car designs, or make a copy of a Louis the 14th carriage.  I loved that GM display, and dreamed of the day we would have a car.

We moved uptown and I went to Central High School, where by the way, a classmate was Sander Levin, now a member of the House of Representatives and brother to Carl, your senator.  Then I came to Wayne University, worked as a copy boy on The Detroit News, as a writer for Motor News, the AAA magazine and on the college daily.  When I graduated after 3 1/2 years, in 1953, I enlisted in the U.S. Army.  The Korean War was on but I served in Europe, in intelligence, in what we called The Army Security Agency.

When I came home in 1956, I joined the Wall Street Journal in Chicago, and in 1958 transferred to Detroit.  I worked for the Journal in Detroit until 1967, when I became the New York Times bureau chief in Detroit and I held that position until 1973, when I transferred to New York for the Times, working the national news, then as a financial editor, then the national labor writer.  In 1979 I joined Forbes magazine as its Washington bureau chief, and in the 1980s transferred to New York where I worked in various jobs, including assistant managing editor.  I retired in 1996, but now write columns, six a month, one for Forbes Magazine monthly called Backseat Driver, plus a weekly column for Forbes.com, plus as monthly column for Ward’s Auto World, The Contrarian, and a monthly column for The Car Connection.Com.

I haven’t just written about cars.  I’ve covered politics, and am mentioned in the making of the President, 1968, by William White.  Along the way I’ve done some foreign reporting, chasing Communists in Central America during the Carter/Reagan years.  I’ve swung through Africa, Somalia, Nigeria, Angola, and South Africa.

Recently I was named one of the top 100 financial journalists of the century by TJFR, a financial journalists group.  I was ranked along with the likes of Ida Tarbell (the great muckraker who brought down the Standard Oil Trust), B.C. Forbes (founder of Forbes Magazine), Barney Kilgore, the creator of the modern Wall Street Journal.  I tell you this so you will understand that I just may know what I am talking about.

As to the auto business, I was there when Ed Cole created the Corvair and there when John Delorean created the GTO that Ronny and the Daytonas sang about.  I was there when Karl Hahn taught us to ‘think small’ about his beetle-shaped Volkswagen, and I was there when George Romney brought forth the compact Rambler and slew the dinosaurs in the driveway.  I was there when the Edsel was born, and when Bob McNamara of Viet Nam fame created the little Ford Falcon, the first car to really kick Chevy since the 1920s.  And better yet, I was there when Lee Iacocca introduced his Mustang.  I was there when Soji Hatori brought Toyota here.  Soji, by the way, dumped his Japanese wife and married an American blonde in a blimp over Los Angles.  I was there when Studebaker owned rights to distribute Mercedes cars in this country, and I was there in Utah when Sherwood Egbert sent his lovely Avantis racing across the Salt Flats in a last doomed effort to save Studebaker.

I drove Ralph Nader into Detroit from the airport when he came with his new book, Unsafe at Any Speed, and I knew Haagen Smit, who explained smog, and Bill Mitchell who knew how to make cars look long and low for General Motors.  I was there when Lee saved Chrysler with his K car and the minivan, and yes, I advised my readers to buy Chrysler stock when it was at 7 on its way down to 3.  I was there when Tom Gale and Bob Lutz did cab forward, and saved Chrysler again, and yes, I told my readers to buy Chrysler again at 10.

I do all this name dropping so you know that I know the difference between cars made of steel and cars made of clay, and more important, that I know the difference between men made of steel and men made of clay.

OK, end of Part 1.  Now I am going to talk about General Motors.

You won’t like what I have to say.

You are badly led, with an organization that just doesn’t work. I’m going to prove this to you, and my proof is an unparalleled number of errors, mistakes, and failures.

This isn’t a new theme with me.  In Wards Auto World of May 1998 I raised the question of GM strategy.  I noted that you had a strategy board that didn’t know anything about auto strategy

I wrote that your strategy board had decided that luxury sport utility vehicles had no place in the company’s own Cadillac division, thereby going about as far as anyone could to destroy Cadillac.  This isn’t hindsight. Mercedes, BMW and Lexus all understood what was happening at the same time that GM rejected a Cadillac SUV, and they created SUVs, and so did Lincoln.

Quoting from that column on Saturn: “The board is taking seven years to get Saturn a second car, (it really took ten years) thereby leaving its most warm and fuzzy division to wallow in a small-car depression.  Instead of investing in success, this board starved it.” end of quote.

You know, they took away the Saturn’s product engineers.  They are out to make Saturn into another Oldsmobile.  Look at the LS launch.  First, the idea of forcing Saturn to use a German platform designed for a metal body on a car with a plastic body is ludicrous.  It cost more and took longer to do than to get a completely new platform for Saturn.  Then the car design was completely undistinguished, and the actual launch was the worst I have ever seen in 40 years.  The result is that sales are one-third expectations in the first year and the factory lost a shift.  I figure that is as $500 million a year loss.

This is the board that has never updated and will soon kill the Camaro. That should take a good part of the excitement from Chevrolet.   GM executives don’t seem to understand that the art in the auto business is building desirable vehicles, not killing models and closing plants.

Your strategy board completely missed the trend to car-based all wheel drive vehicles, and is years behind the Lexus RX 300, the Honda CR-V and the like. Even Ford is in production of the Escape.  How many more years must we wait for such a GM vehicle?

Now let’s go beyond that 2 1/2 year old article:

Your management built an all-new pickup truck without four doors, when Dodge and Ford and Toyota all had four-door big pickups.  To this day no one at GM admits to have made that decision.  It must have been someone they promoted. How could they build an all-new vehicle with three doors when they knew, they knew, their competitors would have four?

How could they be a door short on an all-new vehicle?  Your company still, still, doesn’t have a four-door small pickup.  That is unfucking believable. Ranger creams them.  If Dodge Dakota had the capacity, it probably would outsell the Chevy S-10.  I asked one of your highest-ranking executives why no 4-door S-10.  He explained that since a new S-10 was coming a few years down the road, they didn’t want to spend the money.  Your people never, it seems, have head the word “competition.” Now about a month ago you did begin production of a Chevy S-10 Crew Cab.  That is a type of four door, but different from the usual design.  In fact, this is a vehicle you build in Brazil, so you could have produced it here earlier.  And it is priced $4,000 above the two door.

I’m sure they will sell some, but why are they years late in matching the competition.  There is only one answer.  Incompetence.

Just to repeat what I am doing now, I am listing dumb decisions by your management that proves they know nothing about the auto business. The EV-1.   I am all for experimentation, but to spend $250 to $400 million for a 2-seater with a 40-mile range, are we out of our minds?  That is the greatest car disaster ever, covered up by the press because it’s a green disaster.  The EV-1 makes the Edsel look like a bases loaded home run in the last of the ninth of the seventh game of the World Series.

Once the then-chief executive of your company, Jack Smith, said to me, and I quote, “You don’t think we can do anything right.” I told him that I did think they did one thing right, they did a good job cutting manufacturing costs.  And guess what?  They’ve fired the man who did it, Don Hackworth.

And talking about strategy boards, did you know that the chief of design is not on the GM global strategy board, but your vice president of human resources is.  That’s right: the global strategy board, the head of design isn’t on it but the head of the employment office is.  Go figure.

Brand marketing.  I don’t think much of brand marketing theories.  To me they are just a way of avoiding the idea of building a better product.  I suppose that if your idea of a new model change is putting six more raisins in a box of cereal, then brand marketing might be important.  But even if I did believe, the idea that every single car model is a brand is incredibly dumb.  No one in the industry believes this, except at GM.  The idea that Chevy Impala is a separate brand, that Chevy Monte Carlo is a brand, that Cavalier is a brand, that Malibu is a brand is nutsy kookoo.  You can’t have 75 brands within GM.  It won’t work, but it has been the GM strategy.  And what’s the result of this strategy?  Falling market share every year this management has been in power.

Look at the numbers.  Your management has lost an average 3/4 of a percent point of market share very year, from 35% to down toward 28% this year.  My belief is that you are headed to 25% of the market.  I would also predict that before long someone high will “take the fall” for this loss, which I put directly on the top management and its theories.

Supplier relations: Your company has the poorest supplier relations in the industry, and a reputation of mistreating suppliers, of trying to beat down their prices unfairly.  If someone comes up with a great innovation, GM is the last company it will try to sell it to for these reasons.  I have had the CEO of major suppliers say this.  Yet this is how your management does business.

Another disaster was the strike of 1998, which cost GM, I believe, better than $2 billion in profit.  General Motors provoked that strike. Look, I covered the UAW in Detroit.  I knew Walter Reuther and Leonard Woodcock and Doug Fraser.  I knew the company negotiators like Malcolm Denise of Ford and Earl Bramlett of GM.  I was the labor writer of the New York Times.  GM deliberately provokeded the strike.  I’m not saying that was wrong.  It is OK to provoke a strike, and GM had some justification But when GM was 24 hours from winning, the company surrendered.  Apparently GM decided that winning would hurt the UAW’s feelings.  Why provoke a strike unless you intend to win?  Why surrender when victory is in your grasp.  At a cost of $2 billion.  The performance of your management was unbelievable here.

How about the dealer ordering system, which was installed by present management?  The company has been in business since 1907, and it sets up a system that keeps dealers from getting the cars they need.  This cost GM one-half of a percent of market share, which is 85,000 sales, or $2 billion in sales.  How could your management install an ordering system that didn’t work?  How?

Fit and Finish.  Look, the quality of your fit and finish is the worst in the industry, excluding Koreans.  Your executives know it, too, but what are they doing about it?  I’ll know they are doing something when an executive vice president is given the public responsibility of improving fit and finish, and his bonus is on the line.

The dealers.  You want to know something.  The only reason you are still selling 28% of the market is your dealers.  The biggest distribution system in the business.  And your management hates them.  They actually announced a plan to buy 15% of the GM dealers, to go into competition with their own dealers, and then when the dealers blew up, your chief executive said he didn’t know anything about it.  Well, GM is disorganized but I don’t believe that Roy Roberts invented and publicly announced a billion-dollar acquisition plan all by himself.

Sorry.

Design: What do you want me to say?  GM invented car design, Harley Earle, Bill Mitchell.  I knew some of these people.  Now, you have the Aztek.  For God’s sake, why couldn’t they hire somebody.  Ford did, Chrysler did, Mercedes and BMW did, they all do (not the Japanese-their designers really are Japanese).  Now GM did hire someone from the outside, a French woman from Renault.  Now I like French women, and I wish her well, I am sure she is talented.  But please explain to me who buys French Renaults besides the French…and a few Spaniards.  Who?  Nobody.  Why can’t GM find an American who understands the American culture, and who can create a PT Cruiser, or a Thunderbird?  Why do they hire a foreigner?

I ask you, if you didn’t work for GM, would you drive a GM car?

Let’s get specific: How about that pickup truck design.  You know, that’s where the money is, the T800 platform.  The pickup is the heart of it.  You used to be #1 in pickups, now you are behind Ford F-150 and Dodge Ram has scored big off Chevy.  So you designed a new truck, darn good truck, too, except for the rattles.   But when it came to design, they made it look like the old one.  You know why?  Because instead of relying on your designers to design a modern-looking truck, you took the designs to focus groups, and they picked the old look.  So your new truck looks dated when it comes out, and in a couple of years will really look dated.  And as noted earlier, they forgot to put four doors on it at first.  These are the reasons I believe your Silverado sales are less than expected, why you are rebating it.

Then we have the Pontiac Aztek.  I’m not going to dump on it, and I hope it catches on.  I hear it’s a dud, but you never can tell.  But have never, never seen such dislike of a vehicle design, never.

Look, even the future stuff, the show cars, they just don’t look right.  I know it and you know it.  Why hasn’t this management done something about it?

Oldsmobile: Look, Olds is dead.  Your management is saying that they did everything possible and its up to the dealers and the customers to save Olds.  Those are code words.  Figure five years and gone.  They did give Olds new product, but it was product without any design distinction, without any engineering firsts, a new engine that wasn’t better than the competition, and mediocre quality and inexperienced leadership.  Hell, they fired the experienced leadership.  Remember the Rock, John Rock.  The head of Olds today used to sell Alpo dog food.  You figure it out.  Five years and dead.  Why five years?  It’s a legal strategy.  Starve it to death so sales fall, so we can’t be sued.

Cadillac.  Let’s not go over 15 years of disaster.  Let’s just say that I’ve seen the new Catera, to be built in a new plant in Lansing.  But where’s the new motor.  The old German motor was one of the Catera problems, and they are putting that old engine in the new car, maybe with a horsepower boost. That’s not the way to save Cadillac.  The car needs a great engine and it doesn’t have one.  And I understand that rushing out the Escalade was to save the dealers, but long run it reinforced the idea that Cadi is a Chevy with thicker leather.  BMW builds an all new X-5.  Mercedes builds an all new ML 320.  Cadi gets a redone Tahoe.  If they could create new vehicles, and even new factories, why couldn’t GM?  Some management.

True story: One of the most important businesswomen in America decided to buy an SUV.  Her name is known to all of your directors.  She’s big.  She asked a friend of mine if he could get her some to test drive.  He said he could and would get her a Cadillac Escalade.  She said to him, and this is the quote: “Don’t insult me.”

The Escalade isn’t a bad vehicle.  It’s quite OK.  But the prestige of Cadillac is so low that a well-known person says that being offered a Cadillac to drive is an insult.

Which brings us to Powertrain.  Would someone tell me what Powertrain has been doing for 20 years?

You know, a while back GM was the greatest engine maker in the world, the greatest.  Then some jackass stuck Chevy engines in Oldsmobiles.  Instead of saying, we’re sorry, it will never happen again and firing the idiot, GM solved the problem by eliminating divisional engines and setting up one big engine operation, Powertrain.

In my lifetime, in my lifetime, GM Powertrain has never turned out a world class four-cylinder engine in North America.  Never.

The best Six, the 3800, is as old as Methuselah, so they are trying to sell an ancient engine to a generation that doesn’t want a two-year-old computer.  There’s a little four-cylinder engine in the $10,000 Toyota Echo that has more technology than any GM engine today.  Your first engine with variable valve breathing comes out next year.  Let’s hope they can build it. The Japanese and Europeans have been building them for years; that’s why they are good now.  We’ll see what happens to your new variable valve engines next year.

All you hear is Northstar Northstar Northstar.  BMW, Mercedes, Toyota, Honda wouldn’t have Northstar in their cars.  No variable valve breathing.  What GM needs is a new small block V-8.  Where is it?  Don’t ask me.

In fact, you are buying a six-cylinder engine from Honda for Saturn.  Saturn was created to prove that Americans could build as good a product as the Japanese.  Now they are buying Honda engines for Saturn, which proves that this management not only can’t build a better engine, it’s given up trying. In Heaven you can hear Ed Cole and Boss Kett sobbing.  GM has to buy engines from a competitor

They don’t even have a five-speed automatic for their own cars which are front wheel drive.  They are getting one, when the competition is getting six speed automatics.  GM will get its five when the competition is getting a six speed.  Actually, GM did make five speed automatics for rear wheel drive cars, and sold them to your competitors.  Believe it or not, you helped your competitors whip you.

This management is so inept that its own wholly-owned subsidiary, German Opel, revolted.  Did you know that?  The board of directors of German Opel, appointed by GM, revolted.  They blamed Detroit for stripping Opel of resources for GM’s globalization, thereby wrecking Opel quality.  The American head of Opel, Dave Herman, agreed with the Germans, so GM in Detroit, in effect, fired him, ordered him transferred to Moscow.  The German board said no, you can’t fire Dave Herman unless we say so and fuck you guys in Detroit.  Unprecedented.  It took a half-year to straight this out, and they are still mad.

And while we’re on this, how about this “alliance” strategy?  GM spent billions buying 20% of Suzuki, half of Isuzu, 20% of Fiat, 20% of Subaru. Remember, I’m supposed to be a good financial reporter, voted one of the century’s best.

Well, this alliance strategy makes no sense at all to me.  Did you know GM has owned part of Isuzu since 1971, that’s 29 years?  What have they gotten from it?  They’ve been in Suzuki since 1981.  19 years.  What have they gotten from it?  In profits?  Nothing.  They get to sell the Geo Tracker. They don’t even get the good Tracker.  You get the old one.  Billions down the ratholes and they call it a strategy.  Well, it is, a losing strategy.

Here’s am aside:

This year’s General Motors annual report said “It’s no secret that, in recent times, General Motors has been thought of by some as the ‘product laggard’ in the industry.  We don’t think that description has ever been fair.  However, that image is going to change.”

Well, I’m the one they are talking about.  And they say it’s isn’t true but it’s going to change.  Why, with the same people leading the team?  They are doing the best they can.  It just isn’t good enough.

The other day I saw the new SUV the GMC Envoy.  That’s the new Jimmy, like the new Blazer will be called the Trailblazer.  That Envoy looked good, darn good.  But the version I saw had only two rows of seats, no third row option.  GM will build an extended wheelbase version for a third seat.  That extended seat version will be the same length of the GMC Yukon that has a third seat.  You’ve got to understand, the extended wheelbase Envoy and the Yukon, both the same length, will sit three feet apart in the showroom.

Why do that?  Why not build one Envoy, an inch or two longer if need be, with an optional third seat.  If it’s not comfortable, the salesman sells the Yukon.  You know, that is what Ford is doing.  The new Explorer will have a third seat option, with no $200 million spent for an extended wheelbase version.

The same thing will go for Chevy extended wheelbase Trailblazer and the Tahoe.  Ain’t there anyone in RenCen who knows how to play this game?

How about the advertising?  Remember the Cadillac Ducks?  All that money spent to introduce the Catera with stupid and silly ads.  How about the new Cadillac advertising theme?  “The power of &.” I don’t know anyone that knows what it means.  And they never fire an ad agency.

I will say the Onstar ads with Batman are terrific.  Super.  I don’t understand how they got them.  I figure they’ll fire the guy who did them.

There’s so much.  It goes on and on.  They talk about a major effort to build a five-day car; you can have it built-to-order and delivered in five days.  What, you need a five-day Cavalier?  The major reasons for not having what the customer wants are corporate.  That is, they want V-8s and you don’t have enough V-8 capacity, so you give incentive money to sell sixes. They want silver paint jobs, but the company bought white paint and wants to use it up.  Sure, they should make it faster to get a car built-to-order, but that’s no big deal.

E-Business, China, your management puts its hopes in all these fantasies. Meanwhile, Toyota is going to outsell your cars in California.  Last year, you registered 182,000 cars in California.  Toyota registered 161,000.  You were just 21,000 ahead.  When will they pass you?  And they are catching up in trucks, too.  Your management doesn’t know that beating Toyota in California is more important than dreaming about China.

And there’s no modern GM convertible, either.  Chrysler sells 60,000 Sebrings.  Ford Sells 40,000 Mustangs.  Good business.  But it’s more than that.  The convertible is the spirit of a company.  That’s why Toyota builds them.  You have the ancient and soon to die Camaro and the two-seat ‘Vette.

Do we have to go on?

Everybody makes mistakes.  But your management makes so many of them. The proof of their incompetence is in the number of mistakes.  There is absolutely no reason to think that this will change.  The same people who made the mistakes are still in charge, and they haven’t admit

End of Part 2.

Part 3, a much shorter segment.  Why these things happen.

Listen carefully: You have a management that doesn’t know much about the American car business.  It isn’t that they are bad people or dumb people.  I assume they are smart.  They just don’t know much about the American car business.  Look at their resumes.  The chairman and former CEO was the former treasurer who made his bones negotiating the joint-venture deal for the Fremont plant with Toyota.  As a reward was made boss of GM Canada and then GM Europe, and he did a good job, a good job.  But he had no American car experience.  And in Europe, he had top people around him; they knew the business.  That wasn’t true here.

Your new CEO likewise was a financial official, who did a good job in Brazil and a good job in Europe, but had little American car experience, until he was made president of North American operations.  His on-the-job training was running North American Auto Operations.  He lost market share very year and was promoted to CEO.  Most of the disasters that I’ve described, and the fall in market share, came on his watch.  Yes, you did make profit here.  It would be amazing if you couldn’t make a profit in a 17 million-car year. What happens when it goes to 13.5 million and you have 25% share?

Look, I don’t have anything against financial people.  One of the best officers I knew, Bill Hoglund, the man who turned around Pontiac, you know, ‘We Build Excitement,’ was a financial man.  But he had cars in his heart, and that’s what counts, what’s in your heart, not what you studied in graduate school.

Your president today of North American operations was selling eye wash five years ago.  Actually I like Ron Zarrella.  He is terrifically smart, and a quick study.  But he doesn’t have any experience, the knowledge you get from seeing how things really work.  If he had great backup, that might be OK.  But the backup is awful.  They don’t know the auto business, either. Ron is like a quarterback just out of college, playing for the NFL in his first year, and with no protection.  He’s going to get sacked an awful lot.

It’s one thing not to know the business.  But worse, your management doesn’t like people who do know something about the American car business. Look at the top-flight people who have gone.  JT Battenberg, one of the best, gone from GM.  Don Hackworth, who once headed Buick and then manufacturing, going.  Lou Hughes, gone.  Mike Losh, the CFO who once headed Pontiac and Olds, gone.  John Rock, who saved GMC, bounced.  Ed Mertz of Buick, gone.  My impression has been that they actually consider knowledge of the business as some kind of disadvantage.

But worse is the management system they have set up.  You don’t have a working system.

Gentlemen, and ladies, again, I am supposed to know something about managements.

Let me tell you a story.  Years ago, in the 1950s, Pontiac was going down, and GM sent over Bunkie Knudsen to take over.  He took over 60 days before Job 1.  He went down to the styling shop to see what he had coming in 60 days.

Pontiac was an old man’s car then.  It’s styling symbols were two wide chrome stripes running down the hood, we called them suspenders, and the Pontiac Indian head on the hood.

It was only 60 days before Job 1, and Bunkie couldn’t do much, so he said take off the suspenders and the Indian head.

Well, one day I asked the vice president of Buick, you remember, Ed Mertz, if he could walk in 60 days before Job 1 and strip chrome off his car.  That was in the day of The 4 Phase System of new car development.  You remember the 4 Phase system; it started at Phase Zero and ended at Phase 3. I want you to know I never thought much of a company with a 4 Phase System that starts at Zero and goes to 3.  Anyway, I told Mertz the Knudsen story and asked if he could go into design 60 days before Job 1 and strip off chrome.

He said, “Sixty days before job 1?  Hell, that’s Phase 5.”

Gentlemen, I have not found one man in GM who could by himself order a piece of chrome stripped off a car.  Your management has created a system without power or responsibility, or with power and responsibility so diffused that it takes forever to get anything at all done.  Even the VLE have to hold meetings to strip off a piece of chrome.

You could say your CEO has power, but he says he doesn’t know anything about design or engineering or marketing so why would he do anything.

Look, the division chiefs are nothing anymore.  They aren’t vice presidents; they have no power over quality even.  A division like Cadillac has about 50 people on the payroll.  They probably will be eliminated in time and the division chief, too.

The brand-marketing boss is supposed to have power, but as far as I can he or she has power over the advertising.  The VLE is supposed to be the boss, but they aren’t vice presidents, and they report to manufacturing and manufacturing never wants to change anything.

As far as I could tell, the most powerful car guy was Don Hackworth, but he’s gotten his head chopped off.

And there seems to be no penalty for failure.  Has anyone been fired for that Saturn disaster?  I figure the worst launch on top of the worst platform decision, which was, by the way, forced not by Saturn people but by top management of GM.  Have they shaken up design for those boring products? Have they changed the brand management for the market share loss?  Did they ever fire anybody for lousy advertising?  There is no penalty for failure.

How can anyone who knows something about the American car business, about cars, get to the top, or even the #2 position, of GM.  I don’t see the pathway up.  Engineers don’t count for anything anymore in this company as far as I can tell.  You know, even Fred Donner, the ultimate financial man at GM, who set up the last management system about 40 years ago, felt that while there should be a financial man on top, the #2 should know something about cars.  Not today.

I recall John Rock, then a vice president of Oldsmobile, said to me, “This system won’t work, but it will take them 10 years to find out.”

Your board of directors.  I believe there is only one person on the entire board who likes cars, and it’s not Jack Smith, the chairman, either

The stock price: it is as high as it is because of Hughes, bought by Roger Smith.  Without Hughes I figure GM could be selling at 35.  And you can thank Carl Icahn, the old raider for pushing it up 12 points by announcing a raid.  Now he’s gone.  Where will it go?

Enough, end of Part 3

Part 4.  What can you do about it?

Well I hope someone made a tape of this speech.  If not, I can give you a copy of my text.  Each one of you should drop a note to each member of the board.

You could do it in a round robin, if you wanted.  That is, everyone signs the same note, in a circle.  That’s a round robin.  No one stands out. Tell them you don’t know if I’m right or wrong but you’re worried about GM.

Urge them to set up a committee of outsiders, men who know the business, to study GM and report back with a plan of action in 60 days.  Make suggestions about who should be on this committee.

How about Bill Hoglund, ex GM executive vice president.  How about Roger Penske, how about Lee Iacocca, or Bill Mitchell or Bob Eaton or Bob Lutz or JT Battenberg or Maryanne Keller.

The board must order that all records and minutes be made available immediately to the committee.  They must order that all officers make cooperation with the committee their first, their first priority.  That’s anyone obstructing, delaying or acting in any way uncooperatively shall be suspended by the committee awaiting board action.  Who could they hire if they went that way?  Believe me, there are people out there who could lead General Motors back to Glory.  And throw another shrimp on the barbie. That’s a hint about one of them.

The committee should have the right to interview people outside of GM for positions within the company.  The committee members must be paid terribly well for their work, too.  That’s because if they do it for free no one will respect the report.  They only respect what they overpay for. You can call this “The Committee of Public Safety.” What else can you do?  Go to church and pray.  Your company is going down to 25% of the market.  That’s not terrible.  You can make money at 25%, Ford does.  But I don’t see leaders coming up the pipeline.  All I see is more stretch goals.

When you write to your board members, tell them that’s you don’t understand how a company that depends on products, has no upward mobility for product people.  None of the top executives are product people. Write slogans on walls, too.  Victory or Death, Beat Ford, V, Sic Semper Tyrannis.

That’s it.

My last words:
Never Give Up,
Never Surrender,
And don’t let them take you alive.

Any comments or questions?

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What’s Wrong With That Video? WTO Edition http://www.thetruthaboutcars.com/2010/08/what%e2%80%99s-wrong-with-that-video-wto-edition/ http://www.thetruthaboutcars.com/2010/08/what%e2%80%99s-wrong-with-that-video-wto-edition/#comments Sun, 08 Aug 2010 18:51:18 +0000 http://www.thetruthaboutcars.com/?p=362428 Doesn’t it bug you when other countries give their carmakers money? Doesn’t it bug you a hell of a lot when other countries give their carmakers money with they express  purpose to increase exports? Shouldn’t those felonious countries be dragged in front of the WTO and shot? Well, there are exceptions.One such exception is Ford. […]

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Doesn’t it bug you when other countries give their carmakers money? Doesn’t it bug you a hell of a lot when other countries give their carmakers money with they express  purpose to increase exports? Shouldn’t those felonious countries be dragged in front of the WTO and shot? Well, there are exceptions.One such exception is Ford.

At his good-will tour to Detroit, President Obama came bearing gifts for Ford. Ford will receive $250m in government financing that will help export more than 200,000 vehicles, the White House announced, and the DetN printed it.

The money doesn’t come from the Whitehouse. It comes as a loan guarantee by the Export-Import Bank of the United States. It will finance $3.1b of export sales for more than 200,000 vehicles to buyers in Canada and Mexico.

Why?

Says the DetN: “The bank makes loans to help boost exports, in part to level the playing field when other countries help industries with exports.”

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GM Management Purges Over http://www.thetruthaboutcars.com/2010/04/gm-management-purges-over/ http://www.thetruthaboutcars.com/2010/04/gm-management-purges-over/#comments Sat, 10 Apr 2010 19:07:44 +0000 http://www.thetruthaboutcars.com/?p=352039 GM’s CEO Ed Whitacre has told the remaining employees that his purges of senior management are complete. “I want to reassure you that the major leadership changes are behind us,” Whitacre wrote in a March 31 letter obtained by Bloomberg. “The team we have in place today is the team that will take us forward.” […]

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GM’s CEO Ed Whitacre has told the remaining employees that his purges of senior management are complete. “I want to reassure you that the major leadership changes are behind us,” Whitacre wrote in a March 31 letter obtained by Bloomberg. “The team we have in place today is the team that will take us forward.”

Whitacre, 68, said he wrote the letter to quell employees’ anxiety. Apparently, they wondered who will be next. Never good for morale. “People who have been there a long time, even if they are doing a good job, they worry about getting the phone call because of all the turmoil,” said Joe Phillippi, president of consultant AutoTrends in Short Hills, New Jersey. “Getting out there and saying the team is in place is a good idea.”

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A Quick Conversation with GM CEO Fritz Henderson http://www.thetruthaboutcars.com/2009/06/fritz-henderson-gm-cant-make-a-decision-so-what-else-is-new/ http://www.thetruthaboutcars.com/2009/06/fritz-henderson-gm-cant-make-a-decision-so-what-else-is-new/#comments Thu, 18 Jun 2009 14:14:30 +0000 http://www.thetruthaboutcars.com/?p=319798 “We need to be able to make decisions faster.” Thus spake GM CEO Fritz Henderson to Automotive News [sub] at the National Business Summit yesterday. In what can only be termed a blinding flash of the almost obvious, he continued, “As part of the General Motors moving forward, you don’t normally think of us as […]

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“We need to be able to make decisions faster.” Thus spake GM CEO Fritz Henderson to Automotive News [sub] at the National Business Summit yesterday. In what can only be termed a blinding flash of the almost obvious, he continued, “As part of the General Motors moving forward, you don’t normally think of us as speedy or fast, and that’s what we should be. But when you’re fast you do make mistakes. My view is if you’re slow, you make more mistakes. You just don’t notice it.” Huh? Anyway, what about organizational changes? What’s he waiting for?

That will be a discussion with you on a different day. [Ed: Not so fast! Not so fast!] But there are a number of things we need to do to run the business differently.

And what might those be?

It’s not just about getting our cost structure right and getting our capital structure right. It’s also making sure the decision-making process we use is working better. That’s our responsibility.

Well, it’s good to hear you’re finally taking responsibility for something. Does that mean the PTFOA will back off and let you take care of business?

They’re going to be actively involved through the bankruptcy process.

For how long?

We said 60 to 90 days, but it could be outside that. I’m not making another prognostication at this point.

And then what? The government will own 60 percent of the company. Do you really expect them to go away and let you run things?

Assuming that the judge approves the bankruptcy process and the 363 process [dividing GM's good and bad assets] and we were to exit, the board would be in place and I expect we’d be operating on that basis then.

Gotcha.

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Inside GM: Gooooood Morning Service Department! http://www.thetruthaboutcars.com/2009/04/inside-gm-gooooood-morning-service-department/ http://www.thetruthaboutcars.com/2009/04/inside-gm-gooooood-morning-service-department/#comments Wed, 15 Apr 2009 11:01:16 +0000 http://www.thetruthaboutcars.com/?p=310852 While GM finishes its 40-year rush to judgement, heading for its June 1 date with a bankruptcy judge, there are still such things as GM customers. You know; millions of people who own GM products. And these people are—shock!—still buying cars and getting their cars serviced. And there, on the sharp end, dealers, salesmen, service […]

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While GM finishes its 40-year rush to judgement, heading for its June 1 date with a bankruptcy judge, there are still such things as GM customers. You know; millions of people who own GM products. And these people are—shock!—still buying cars and getting their cars serviced. And there, on the sharp end, dealers, salesmen, service managers and technicians are all attempting to come to grips with the competitive, financial and psychological dangers implicit in a GM C11. To calm these troubled souls, GM’s North America Vice President of Vehicle Sales and Service has been Bob Marleying these forward troops, telling them that every little thing’s gonna be alright. To that end, last month, Mark LaNeve announced the launch of a “weekly conversation” with GM dealers: “reinventing GM.” There was one e-mail communication on April 3.

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Inside GM: Mystery of Crap Interiors Solved http://www.thetruthaboutcars.com/2009/03/inside-gm-mystery-of-crap-interiors-solved/ http://www.thetruthaboutcars.com/2009/03/inside-gm-mystery-of-crap-interiors-solved/#comments Fri, 20 Mar 2009 16:53:15 +0000 http://www.thetruthaboutcars.com/?p=288681 Although it’s not exactly the riddle of the Sphinx (answer: man), many of our Best and Brightest have wondered why GM can’t make a decent car interior. Even before GM Car Czar Bob Lutz assumed the throne (since abdicated), the American automaker has admitted that they need to step up their game within its vehicles. […]

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Although it’s not exactly the riddle of the Sphinx (answer: man), many of our Best and Brightest have wondered why GM can’t make a decent car interior. Even before GM Car Czar Bob Lutz assumed the throne (since abdicated), the American automaker has admitted that they need to step up their game within its vehicles. And yet, in the main, the fit and finish of GM interiors still doesn’t make the grade. Obviously, there’s a whole host of contributing factors—from supplier contracts to union work rules. A GM insider recently contacted TTAC to provide an important piece of that particular puzzle. Agent X reveals one of the main reasons GM’s interiors failed to match the competition: the executives didn’t know there was a problem. Still don’t. Here’s why . . .

As you probably know, ever since GM was founded, its execs have either been driven by a chauffeur or provided with carefully prepared and maintained examples of the company’s most expensive vehicles. Of course, there are times when the suits must sign off on the company’s more prosaic products. Since 1953, this intersection between high flyer and mass market occurred at GM’s Mesa, Arizona, Desert Proving Grounds (DPG). The execs would fly into Phoenix’s Sky Harbor airport, limo out to the DPG and drive the company’s latest models.

Our agent says that all the vehicles the execs drove were “ringers.” More specifically, the engineers would tweak the test vehicles to remove any hint of imperfection. “They use a rolling radius machine to choose the best tires, fix the headliner, tighten panel and interior gaps, remove shakes and rattles, repair bodywork—everything and anything.”

Did the execs know this? “Nope. And nobody was going to tell them . . . As far as they knew, the cars were exactly as they would be coming off the line. That’s why Bob Lutz thinks GM’s products are world-class. The ones he’s driven are.”

I asked Agent X if the GM execs would ever drive the cars again. Did he know if Wagoner or Lutz dropped in at a dealership to test drive a random sample off the lot? He found the idea amusing.

Well, did the DPG at least send a list of changes to the design and production teams? “The tweaks were never reported to anyone,” he says. “That would’ve been a sure way to kill your career . . . We’d see the cars come back to us after production with the exact same problems.”

According to Agent X, GM’s testing regimen is getting worse, not better. GM has sold-off the DPG (soon to be a major resort). The replacement facility in Michoacán, Mexico, has proven problematic—weather and local topography are hampering testing procedures—and the new Yuma, Arizona, facility is not yet up and running.

And anyway, GM’s reduced its DPG testing by over seventy percent. “The buzz inside GM is now ‘from road to lab to math.'” In other words, laboratory tests are replacing road tests, until computer simulation can replace lab tests.

Agent X and I agreed that GM’s product development system was and is fundamentally flawed. Equally important, we also shared the belief that there’s tremendous talent locked-up inside the CYA hell that is GM’s corporate culture. “Look at the ZR1,” he said. “It shows GM can make great, world-beating cars.”

“But what about the Corvette’s interior,” I asked. His silence spoke volumes.

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