I recently received a review of the Cadillac BLS by a South African scribe. While the writer responded to my revisions by retreating to the pub, I couldn’t stop thinking about the obscure object of his ire. The execrable BLS– a Saab 9-3 reskin with neither style nor grace– was born in the middle of GM’s so-called product renaissance. BLS sales projections started at 20k units per year, then fell to 10, then seven. And now I learn that instead of killing this poor-selling, po-faced, brand-defiling half-breed, GM has appointed one Wolfgang Schubert to “save” the BLS.
In case you thought GM might send in a car guy to make the BLS more competitive, please note that Schubert hails from GM's Brussels office, where he “coordinated European Union affairs.” According to The General, increasing the BLS’ fleet and leasing sales is the red tape wrestler’s main task. James Vurpillat, Cadillac's director for international marketing and brand development, confidently predicted that Caddy will sell 3k BLS’ to the fleet market– roughly twice the number of mock-Caddies Trollhatten will produce this year.
Many of the GM faithful will read this sad tale of misbegotten motorcars and misplaced marketing and condemn me as an eternal pessimist, blinded by a relentless search for the dark clouds inside The General’s silver lining. Why focus on one crap car [not] sold to Europeans and South Africans when there’s so much good news flying through the media ether? For example, GM has finally sold 51% of its GMAC financing unit, adding $14 billion to the corporate coffers over the next three years. The cash ought to give GM CEO Rick Wagoner’s turnaround some much-needed breathing room.
OK, Generous Motors’ current cash burn is producing neither heat nor light, the last piece of furniture has just been thrown in the fire and the temperature (i.e. market share) is still dropping. But hey, November sales are up six percent! We’re talking double digit increases in the sales of GM’s high profits trucks and SUV’s! OK, that’s compared to a cataclysmic ’05 and Toyota pulled further ahead with a 22.8% sales increase. But hey, the new Lambda-based crossovers are coming! OK, GM’s chances of conquesting a transplant customer with their me-too, late-to-the-party CUV’s are smaller than the decreased margins vis-à-vis GM’s full-sized SUV’s.
But hey, costs are coming down! Workers are leaving! Oh right, so is Kirk. Yes, there is that. When GM’s largest private investor says screw it, I’m out of here– banking a mere $100m to [partially] cover his lawyer’s fees– you’d be forgiven for thinking GM is a lost cause. Lest we forget, Kirk Kerkorian had his main man Jerry York on GM’s Board of Bystanders, snuffling through the books. Oh, and about those books… GM is still the focus of seven SEC investigations.
And what about that Delphi thing? You know; the bankrupt former GM subsidiary and current parts supplier that’s determined to suckle on GM’s tit even if it kills them, GM and the UAW. Despite enough legal extensions to add a couple of chapters to Kafka’s The Trial, it’s still not sorted. Experts reckon that if Delphi goes off-line for a month, the corporate mothership will founder. At the same time, a sharp up-tick in domestic gas prices would strangle demand for GM’s mission critical cash cows. But hey, GM’s products are getting better! Better interiors, better mileage, better design!
And where are these mainstream products that will kick the transplants’ collective ass and save GM? Coming. Now it’s dual-mode hybrids. Or was that plug-in hybrids? Hydrogen fuel cells? Flex fuel? Diesels? (No, not diesels.) Anyway, when the good stuff arrives, will it be better than the competition, or somewhere closer to just about as good? The truth is GM needs a series of grand slam home runs, and the hits ain’t happening.
You don’t need to drive a BLS to know that GM isn’t keeping up. In fact, Rick Wagoner’s administration has consistently bet on the wrong horses– from ill-advised foreign alliances, to poo-pooing hybrid technology, to putting all its eggs in an SUV-shaped basket, to gently refreshing rather than boldly re-imagining its products. While Wagoner is right to attack GM’s unsustainable cost base, all his company’s structural problems flow from product-related failures.
Maybe I am a pessimist. But the GM faithful need to read the following exchange and ask themselves a simple question: if GM’s turnaround is doing so well, why can’t the man at the helm spread a little love?
Automotive News: When would you realistically like to see North America return to profitability?
Wagoner: As soon as possible.
Automotive News: Do you have any kind of target that you'd like to share?
Wagoner: Not that I'd like to share.
93 Comments on “General Motors Death Watch 102: Cut the BLS...”
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I don’t think I’d describe KirkKerk’s exit as inside trading on GM’s perilous financial standing.
Likely it’s more like a spoiled brat who can’t play the game by his rules, so he takes his ball and goes home. But not before flailing at the big kids — hence the announcements that he was dumping first half, then all his shares in the media. After all, those reporters didn’t get the story off his SEC filings, did they?
Whatever it’s dynamics and quality are, it’s actually a pretty good looking.
jrhmobile:
Captain Kirk originally believed that GM was undervalued and that radical actions– as outlined by York last January – would help The General recover. We’re talking cutting brands, losing bad investments and trimming bureaucracy. In fact, Deep Throat tells us that York had a large spreadsheet of all GM’s makes/models and he couldn’t believe the number of vehicles that overlapped. He wanted to streamline so GM could focus on its core brands and products.
Look at it this way: GM’s stock was heading south when Kirk bought in. It then went up to above his tender offer price and stayed there for most of the summer before drifting below $20 last December. Kirk sells some (for tax reasons) and then buys back in the low 20’s. The stock rose again as word got out about the Ghosn deal.. and was the best performing stock in the Dow for a while.
Now Kirk bails and the stock only takes a minor hit? He knows as much as any investor in his company, if not more, and he’s bailing completely? What do other investors see that he doesn’t?
gm`s single problem is unwilligness to create. if it is a car company guys you must make cars- not portfolios, gen-x appeal, mrket strategy or whatever. concentrate on cars. how long you are going to screw around with rebadged korean daewoos as chevys? americans are patriots and they bought american cars even if they were worse than japanese, why they should buy a rebadged opel vectra, or opel sintra? it doesn`t appeal to americanism. you desperately suck out any hi- tech appliance from other companies, whether it`s platform and engine from opel`s australian holden( nice , your gto is actually having the same body , only 2door as 1994 german engineered opel omega.) or toyota`s hybrid technology you seem to take complicated mechanisms from others, while your own company seems to be unable to construct anything more than aturn signal light bulb, vanity visor, or rusted brake calipers. a company is as strong as its ability to build complex multi- mechanism gadgets. gm killed the proposed minivan not because there was no demand because but rather because the old body opel sintra rebadge that continued from 1994 (( the same like ford introducing second gen windstar, miserably left on it the same old body) ditto with chrysler vans- god be merciful to those ancient leaf springs and cast iron OHV blocks.)was to obsolete and could not be rebadged further.guys in detroit listen to my golden words- they should be carved in your narrow foreheads-1.IMPROVE FIT AND FINISH. stop making cars with huge gaps. it refers to interior as well. no gaps. look at your RIP aurora gaps between front headlights and bumper.NO GAPS. NO GAPS.
2. stop using cheap shiny leather for interiors, forget grey plastic, it looks like paled old black.
3. MAKE QUALITY rubber isolation on door frames where it is visible. not the thick primitive diarrhoea lines you do. make them slim. make plastic of higher quality, smooth, still matt and dark.
4.start MAKING models not mods.( caddy escalade is not a model it`s a rebadge modification)
5 ADD DIVERSITY, instead of killing, add new models. add new versions( coupe, hatch, wagon.Where is fusion wagon for ford?
6.outer mirrors not from one piece, make the foldable, painted. gas cap should open from inside. screw stupid cheap shift knobs for conditioner- put digital screens.
7. the main one- american cars MUST be designed and manufactured by an american company.( buying opel doesn`t make it american) make your own platforms and engines. STOP PARASITING.invest ten billion in engines( from 1,6 to 4liters) and new platforms, don`t ashame yourself taking everything from foreigners( like ford form mazda, chrysler from mitsu and merc)
8. share platforms with other brands like saturn, buck, pontiac within gm, but never share bodies. never. share engines, but never bodies. make distinct looks. I can trace any cars origin by a-pillar, front windshield and gas cap. you can`t fool me.
9. be selective for your workers-( what quality a refugee from pakhistan can bring to an american company?)
10. be obsessed with quality and sense of achievement, not profits, or wallstreet shareholders.
juris bzozovskis, Latvia, kuldiga. (small town in cave people country)
From the Detroit news this morning:
[quote]LaNeve didn’t specify a time frame for ending a sales skid now in its fourth year, though he later told reporters, “If we grow a tenth of a point next year, I’ll be thrilled out of my mind. “If we gain a tenth, that’s a hell of a job.”[/quote]
I don’t know what kind of Bizzaro world GM’s PR flacks are living in when a 1/10th point increase in market share makes them ecstatic other than stopping their market slide, but I suspect old Kerk knew a lot more than some of you think.
Generally not looking too good (for the General).
It’s really interesting actually: I wonder how long it takes until things will become similarly critical over here in Germany. So far, the Japs don’t play a major role on our market yet, but there are signs that indicate a similar development, only to be delayed by a few years.
Our “German” car industry (only about 50 percent of a VW Rabbit is still truly German though) might get in deep trouble soon, similar to the big 2.5 on the American market.
Toyota only has a market share of about 5 percent here – but growing insanely fast. Lexus has only just started selling cars seriously, still with a micro-market share. Acura & Infiniti aren’t even here yet. When they are, things might get real ugly for the local producers. Merc, VW and BMW are already discounting heavily (up to 4k Euros off an E-Class) to stabilise their market share, while Toyota and Honda are growing rapidly without any official discounts.
If the German automakers were clever, they’d better take the States as an example to study what they have to do if they wanna survive the next 20 years.
Just look at what attractive cars Toyota are coming up with:
The new Auris (ex-Corolla): 2.2 Diesel, 180 hp, 400 nm, 215 km/h, 0-60 in 8.1 sec, extremely good mileage, state-of-the-art exhaust cleaning. Now THAT’S technological leadership! (have a look at http://www.auris.de )
Best regards from Dusseldorf, Germany –
Herman
I hear their new marketing strategy involves dropping the ‘L’ from the name. Serious whoever said this was good looking, yeah if you like the looks of a flying turd.
“Maybe I am a pessimist”
Nearly fell off my chair, RF. I hereby nominate that as your Understatement of the year.
I call gm and ford’s new stuff, partials or temporary as in a denetist cap until the real one is ready. First, I was intrigued by the new full sized buick, equiped it stays around 30K, not a bad price point. However, the three the local dealer had were 3.8 liter (read 30 year old) iron pushrod engine designs. The same as used forever in the retired park ave. (ford did it last year with the new 500 sedan using the 3 liter taurus engine). So if we are not grafting some badge engineered body onto a pre existing chassis, we are designing a new body with old power trains. ( the gm large buick uses the now completely obsolete 4 speed auto as it’s only tranny on the six) If these exercizes are to scare the hell out of the foreign brands, I don’t think so. By the way I forget the name of the new buick but I remember park ave vividly, the last one went from 1997 to 2005 unchanged. I have a nissan xterra with their 4 liter 21st century V6. It along with honda and toyota can easily do the job of v8’s all day. In fact the japanese and vw witha turbo four can do the job of many large displacement older engines. This is done with: two tiered induction headers, variable valve timing, newer injection systems,etc. Of course the trannys are no less than 5 speed autos or sometimes 6 as in vw or variable as in nissan. All of this techno stuff is on the foreign moderate priced cars and it’s across the board. You can’t option an obsolete engine & tranny, there aren’t any. In other words the foreign autos are as modern under the sheet metal as the outside design. Your going to say well ford and gm have some of this stuff, yes but it is limited in availability or in higher priced models like cadillac. Even the new gm trucks have the four speed auto (but the six speedis on the way) story comes out here. The trouble with this thinking is when gm finally get’s there the competitors have moved the bar higher. And the merry go round completes another revolution.
Robert,
I have no doubt that you are quite correct that the BLS stinks.
But I’m with jrhmobile on this one. York’s exit speach basically said these guys won’t do what Kerk and I want, so we’re leaving. Slick Rick played them masterfully, going along with the Ghosn talks to assuage, and then killing them with beaurocracy. Kerk/York’s exits were mirror images of Ross Perot’s 2 decades prior, except that Perot got PAID to leave.
As far as the Rick not revealing profitability projections, that’s pretty much par for the course now for senior execs at public companies. The dirtiest 2 words in the Fortune 500 today are “Sarbanes Oxley.”
When you are in the middle of a turnaround, you learn that things happen slowly, and that additional problems surface. It may well be that Rick expects a profit next year, provided gas stays at $2.25, negotiations with Delphi and the UAW work to GM’s favor, and the economy stays on track. But since these aren’t certainties (by any means), Rick would be a fool to make bold predictions about profitabiility.
As far as the BLS goes, I don’t truly care whether they sell 20K or 2K. The difference is the same as a good week vs. a bad week of Silverado sales. I think the BLS is meant to give Caddy a foothold in Europe to build off of. If fleet sales build some familiarity with the product, that may not be a bad thing, so long as the quality is decent. No one at GM could possibly believe the BLS is a serious competitor to the 3.
But you have to start somewhere. BMW started in the US with the 1600/2002, an amazing vehicle, but completely off target from what American Lincoln and Caddy buyers wanted. Lexus’ second model was an ugly rebadged Camry. Acura’s second model was a rebadged Quint (read: long Civic). These guys seem to be doing OK 20 years later.
I know I’m a broken record on this, but GM will sink or swim on the quality of their US product. The 2007 introductions of the Silverado, Yukon and Enclave are successes — almost universally lauded as best in class. Furthermore, the mediocre vehicles currently in the lineup — small and midsized cars — will no longer be engineered in the US. If Opel can engineer vehicles as well as Honda, and Holden can keep up with the Mustang and 300C, we’ll see a rennaissance at GM in 2 years.
Product introduced from 2007 to 2010 is what Wagoner and Lutz control. History and the market will judge them on whether they can deliver.
Either way, it’ll be fun to watch.
SherbornSean:
Thank you for the well-argued rebuttal. But you still have to wonder, what kind of organization would green light the BLS?
The 2002 was an excellent vehicle that embodied Bimmer's brand values. The BLS is a betrayal of everything Cadillac supposedly stands for. It's a Saab 9-3 with the ignition key next to the steering wheel.
Merc, VW and BMW are already discounting heavily
I agree with you on Mercedes and to a lesser extend to VW, but BMW and also Porsche are benchmark companies.
Mercedes has been moving in GM direction over the last decade. They decided to cut development cost and the 94/95 E-class was the first result. Compare that to its direct competitor E39 5 series and you’ll find it hard to believe that those two are from the same generation.
Then Mercedes went on with introducing models in any market segment imaginable and unimaginable, with huge overlap and poor built quality. Eventually the once so proud Mercedes had to call back 1,1 miln cars for brake problems. One can only hope that the pre-updated current E-class was the final low point. The new S-class and upcoming C-class are reason to be optimistic, but they still have to kill off the B-class and R-class.
For what Lexus, Infiniti and Acura are concerned. Lexus has been on the market in Europe since 1990, and their lack of succes is because the cars just don’t have the style, appeal and driving experience that Europeans want from “premium” cars. Maybe a good part of Americans can be lured away from the German competition with some cool gadgets and a totally numb driving experience, but Europeans don’t want that. I don’t see that many chances for Infiniti either. Maybe Acura could have some succes if they focus on sporty models, but I think they’ll just be stealing sales from Honda.
I concede on the BLS.
And the point you make about the 2002 and BMW’s core values (until they abandoned them to become a luxury brand) is an important one. Regardless of sales, the BLS should embody what Cadillac is all about, and does not. That LWB Seville they developed for the Chinese market would have been a better choice.
Fleet and lease sales are important because in many companies in european countries cars are a company perk. Not just for executives, but across the board.
These vehicles are often leased.
So, it does make sense for GM to try and gain a foothold this way.
Thank you for the well-argued rebuttal. But you still have to wonder, what kind of organization would green light the BLS?
The same kind of organization that has four division selling the Trailblazer, the same organization that thought a warmed-over Opel Omega would make a nice entry-level Cadillac, the same organization that thought the Monaro could easily be the GTO (well, I liked that one but they did not sell it up in the Great White North).
I don’t know how many times in their history, the General has tried to sell “iceboxes to eskimoes” but they never learn from their mistakes… or their successes.
What kind of organization would green light the BLS?
Same one that greenlighted the Vega, the Phoenix, the Aztek, the Catera and the Isuzu I-mark, to mention just the worst of the worst. History repeats itself, just like Groundhog Day.
Same one that greenlighted the Vega, the Phoenix, the Aztek, the Catera and the Isuzu I-mark, to mention just the worst of the worst. History repeats itself, just like Groundhog Day.
The I-Mark? Can we blame that one on GM? I had an I-Mark (Turbo’d and “handling by Lotus”-ized). I was a ton of fun for a 19 year old kid back then!
I even traded it for an Impulse… which was also fun.
I always liked the Isuzu cars, they were distinct… until GM Geo’d them.
The European market is hard to conquer, especially the market for luxury cars. Brand loyality is strong and the image that comes with the badge is important. That’s also why Lexus is struggeling to establish itself since 1990. What the L badge basically tells the European bystanders about the owner is “Yeah, I want a luxury car, but I don’t have the money to afford the original, so I got the cheap Japanese knock off.”
So if you have that in mind, you realize that Caddy made everything wrong. Because unlike Lexus it has a proud history and people in Europe would probably rather accept Cadillac than Lexus. But instead of building on their perceived image and offering a great S-Class fighter (fighting with quality, not price), they build the BLS. The only customers the BLS conquers (and there obviously ain’t a lot) come from GM’s own Opel brand who are willing to pay an extra 1k€ to get their Opel Vectra with the exotic Caddy badge.
At the same time, GM destroys the last remains of its once great image in Europe. This makes it virtually impossible for Cadillac to have any success in Europe anytime soon. It’s much easier to destroy the image you have than to rebuild it.
Another good Deathwatch- commentators will start with the “bias,” “GM sold more cars than Toyota in Fargo” and “hybrids are not the solution” comments soon.
What I can’t wrap my head around is how this stuff happens. How can GM pretend to be surprised that that gas prices would go up – because a lot of people figured it out 5 years ago? Where is their foresight in seeing that more than 75% of their product line does not even approach the competition?
I remember the 70s American cars my family drove up until 1982, when we purchased our first Honda Accord. That car felt so different than what we had up until that point. If GM (Ford, Chrysler) couldn’t see the writing on the wall then, why should they see it now. We’re asking a company that has been producing the same crap for 30+ years to suddenly change their course? How have they demonstrated they could do that in the past? They still favor that grey plastic that is so common to mid 80s Buicks.
Case in point is VW, dead for most of the 80s and 90s and they come out with the redesigned Passat and Jetta. Although VW isn’t perhaps the best example, that was a pretty quick turnaround. Even recently with a stale line-up, they have done a pretty quick refresh of their core models. Why can’t GM – it takes time to redesign cars and products, but if the other option is bankruptcy (which I think is where they want to go) everyone will work harder.
K.
i still think that american companies will die, if they are connected in any way that has to do with mechanisms, movements. their companies die in any segment that contains tech. Wristwatch industry is dead, tube industry dead( RIP Zenith. boeing mustered dreamliner after being close to agony with paper promises of building single deck jumbo liner, later sonic cruiser. their military plane diversity shrinks like p.. …okey just shrinks like hell. all their plane industry now prays for 787 or f22(late 80 proposed black widow 2 (f23 )competitor)Why american companies produce gillette razors but none of them have engines or moving parts? philips can. yankees will sooner add 5 more blades to mach razor than build an electric one. Us robotics doesn`t make robot as seen in I, robot they can`t move over wire harnesses. Usa is a country of ziplock plastic bags, zippo lighters, chewing gum , pampers, burger king and coke, but when it comes to technology – emptyness. no modern trucks, no modern trains, no modern motorbikes.space and military technology- x33 venture star was killed, where the hell is comanche chopper, crusader howitzer, dd-21 destroyer?. empty promises of a bubble nation.how long you are going to make kids toys with remote controllable chocolate-box size UAVs? any photo camera you make, if it deals with higher optical zoom than 3 times you just have to take it from abroad- for you can`t construct them. where are american brand stereo systems? you can`t get over speakers. if it has digitalsscreens and buttons – you fail. How come that a jumbo size company like microsoft can`t create anything tangible bigger than mouse or keypad? ditto the car industry- if it is emblems, mirrors tyres,then yes- if engines, gearboxes gadgetry with screens- then no.you fail to manufacture anything that has movements with high precision. thas is the mainproblem of your nation( and the problem of mega bulging national debt of 8,6 trillion dollars, that grows thanks to negative trade balance with countries who sell gadgets that people buy) prove that I am wrong! lunatics@inbox.lv Juris from latvia
When I was doing grad marketing work, I read a lot about why Lexus is only seeing modest success in Europe, while in the US they basically supplanted Mercedes (mid 1990s) as the gold standard for luxury and build quality. Are Europeans just stupid?
Obviously not–the market there just places more value on the heritage (length of time and diversity of success–eg, Audi’s rally successes to sell Quattro). Lexus, for all intents and purposes, is a contrived Western brand that is simply Toyota with a little more content. Not sure if it’s still the same today, but Lexus in Europe are/were usually sold in the corner of the Toyota dealer, further confusing the market (in the US, they’re rarely close to each other).
So if Lexus can do so well in the US luxury segment, but not so much in Europe, what makes Caddy think they can have a few years of hits and misses here and suddenly show up across the pond? To go back to the heritage idea, I just don’t see Europeans (or many older Americans) associating Caddy with nouveau styling and small/sporty cars.
This is slightly off topic, but if companies like Prosche, BMW and MB want to avoid the fate of the 2.5, they need to heed the lesson that people will only pay so much for a nameplate. After that, the value must be there.
Porsche is poised to learn that lesson the hard way. The ‘08 Audi TT has been compared with the Cayman. General concensus is that the Audi is close, but no quite ready to unseat the Cayman. But viewed another way, the TT already has. Projected price for the TT 3.2 is around $40k, the Cayman starts at $50k. Given the obsecenely expensive pricing of Porsche options, the price gap between these two cars will probably average around $15k. Close is AOK with me if I get to keep $15k in my pocket.
The Cayenne sales are down around 30% and I doubt that any rebound in sales is in the offing. Customers in this market segment seem to finally be coming to their senses.
And will the Panamerica save the day? Will this car be so much better than the BMW 335i to justify the premium Porsche will ask over this car??? Or perhaps over Audi’s RS4??? Porsche may have the rabbit to pull out of the hat, but I’ll need to see the furry fellow first.
Claude Dickson:
I couldn’t disagree more. If there is any company that knows how to make money it’s Porsche. They somehow know how to always keep supply slightly below demand.
Also, you can’t compare the Panamera with either the 335i or the RS4. If there’s anything you can compare it with it’s the Aston Martin Rapide which at this point still is a concept. The closest thing on the market right now is the Mercedes CLS.
Finally, to even compare Porsche to GM is a far stretch. Porsche is exactly the opposite, since it doesn’t depend on volume. Just look at their numbers from yesterday. They earned 2.1 Billion € last year by selling less than 100,000 cars world wide.
The SAAB 9-3 is a small, but not bad car. Above all, it’s relatively safe, if that is an issue for American buyers. But the 9-3 should remain a SAAB. Who do they think they’re fooling with the BLS?
Claude,
If the argument is that an updated, squashed New Beetle is as much a sports car as the Cayman, I think the ice is thin where you’re skating.
If the argument is that the TT is an attractive, sporty car that is fun to drive and be seen in, you’re on solid ground.
If you want an actual sports car for $10k less than a Cayman, you’re looking at a base ‘Vette or Z4 or Elise. If you want to save $20K, buy an S2000, Evo or WRX.
Vw Eso turned my head in SOHO this past weekend,
really sharp small car- have to check the stats on that one
Bob Pisani Just out and out LIED on cnbc, about Ford-
saying “I really doubt that the execs thought that a 4.5 billion dollar convert deal would caue such pressure ont he stock”
ahaaaaaaaaaahahahah
Kasumi,
People predicted $75 Oil five years ago? Who? Certainly not the oil industry (you know, the people that actually have a stake in projecting future demand in order to ramp up exploration, extraction and refining) and those that subscribe to the “near/past peak” oil notion have already been proven wrong as more oil deposits are being found.
Most industry experts were predicting a rise based on increased demand from China, India and other emerging industrial powers. Even today, most analysts figure oil will stabilize at around $60 per barrel and not because of demand but supply.
OPEC nations, principally Iran and Venezuela have become dependent on high oil prices to “fuel” enlarged social programs (and in the case of Iran, other nefarious activities). They will always vote with the cartel to keep oil high.
However, OPEC made that mistake in the 80’s. High cost equals the tempation to cheat on production quotas. Other, non-OPEC sources of oil (Russia, Norway, Canada, etc) will also see increased production.
Oil costs over the last few years have been based on market speculation (according to a few guys I know in the business, market speculation has added anywhere from $15-25 cost to a barrel). Many of the energy futures traders had their shirts handed to them this fall when inventories kept steady or even rose. We had one guy (and I mean one guy) lose $3 billion in hedge fund money here in town (in three weeks!).
That’s why OPEC had three emergency meetings this Fall to slow down production.
Anyway, the rest of your rant pretty much said “everything GM and the domestics make is garbage”. Spare me!
Csjohnston- Take your argument over to theoildrum.com your not going to get traction with that non-sense here, or there
GM should stick to it’s knitting and put their faith in Saab in Europe as their “near luxury brand”.
As for Lexus in Europe, well, Toyota are very very smart. Perhaps, just perhaps, they will purchase an esteemed, old line German marque name (such as ADLER 1900-1940), hire some German engineers (plenty are laid-off right now), have them develop some specific designs for production which are closer to what northern Europeans (especially Germans) want, and build the cars in Europe (Toyota have plants in Portugal, Turkey, France and the UK), or even at the TPCA joint venture plant in Czech Republic.
ADLER means “Eagle” in German, by the way.
A mentor of mine, now in his early 80s, has had 11 Cadillacs in his time; one of his six daughters owns a 1966 Cadillac convertible. Shortly after I met him (when I was a freelancer for a local business newspaper and he was the regional director), he went to work for the State of Washington, heading up a department created to bring foreign business – think Japan – to Washington. On one of his many trips in that regard, he rented a Cadillac Cimarron. Anyone remember those? It was a tarted-up Chevrolet, the first generation Cavalier as I recall, with some slight modifications to the suspension. The General and its Cadillac division touted it as competition to BMW’s then new 3-series. Even Car and Driver wrote something about the car, and as I recall, said, “It is a worthy competitor to the 3-series.” It last maybe two, three years? My mentor told me that killed it for him and Cadillac. When the Allante came along, he was intrigued; but didn’t go back. And now, perhaps because he is indeed older, he drives the Lincoln Town Car that had been his wife’s; she drives a used Toyota Camry. I don’t think it necessary to ask him what he thinks of the BLS. Putting this car into the rental fleets is probably the worst thing Cadillac could do. They’ll probably just recreate the same scenario my friend Bill went through. In the time I’ve known Bill, I started to cover collector car auctions, I have seen the V8 and V12 Cadillac he grew up with. (I can’t recall a V16, even at a concours.) Then too, the magnificent overhead valve V8 Cadillacs of the period 1949 through 1967 (roughly) also show up at these auctions and draw appropriate bids. The answer may not lie in building something like that Cadillac 16 (sent a clip on that to Bill and he was amused). But putting Cadillacs into rental fleets to keep a model alive? That’s pure nonsense. And please General Motors, quit rebadging cars. SAAB was once a proud marque too, and now, it has just about lost whatever cache it had.
Back to the topic: GM and the Caddy BLS
The point to me is that GM is wasting resources on a car that only steals from their own Saab brand. In Europe, Cadillac means nothing, certainly not some teeny little box.
Why is GM wasting its time trying to bring Cadillac to the Euro market? They need to concentrate on the home front and winning back sales from M-B and Lexus. That means putting money into updating the NorthStar engine (Been around for what, 10 years now?), and in improving the quality and chassis dynaqmics of it’s current lineup. The interior of a CTS is horrible, and while the STS is good, it’s nowhere near a Lexus.
And if I can add one more rant, Caddilacs should have NAMES. DeVille, Eldorado, Fleetwood, not this Alphanumeric crap. What does STS, DTS, SRX, or CTS stand for?
By the way, the reasoning behind my opposite ‘advice’ for GM and Toyota, is the clear and pertinent fact that Toyota can easily afford to do something like set-up a Euro-centric luxury marque if they chose to do so, while GM tring to sell bastardized and reskinned Saabs as Cadillacs only smacks of total desperation. Look at Scion in the US, for the youth. Toyota could pull that off and make a profit. Saturn, for GM, has been a continous money-loser and has not earned a dime. Ever.
Of course what Toyota will probably do is just be patient with the slow-learners in Europe and gradually tailor the Lexus brand for Euro-tastes, differentiating the cars from US-tastes. Just like Toyota cars in Europe differ from US and Asian Toyota cars.
CSJohnston-
Thanks for the OPEC explanation, however I was basing my argument more on the fact that looming crises in the Middle East could lead to increase in oil prices. That may or may not be the cause – but it was a signal that prices may increase.
We can talk about reasons behind the rise or fall in prices all you want, but manufacturers should have been able to tell, that gas prices may increase leading to people wanting more fuel efficient cars. This isn’t that much of a stretch – didn’t the success of small cars demonstrate this after the gas crises in the 1970s?
Even more recently, Katrina’s effect on supply should have made them think – people might get scared pulling into a gas station with the “NO GAS” signs.
As for my “everything GM and the domestics make is garbage” this argument has been rehashed over and over again on these boards. Based on the TWAT awards – at least the voting TTAC readers think a lot of it is.
K.
Csjohnston- Take your argument over to theoildrum.com your not going to get traction with that non-sense here, or there
Sleeping Bear
I followed your advice and checked out the site. Absolutely no built in bias there!
If TTAC was built on a similar premise, then Mr. Farago would be a Porsche sales and marketing exec, Jonny Lieberman would be a brand manager for Mercedes, and Sajeev Mehta would be a ninja warrior trying to resurrect Mercury.
(uh, you’re not, right guys?)
I’ll read that site and then temper the opinions I read there with the industry analysts, engineering PhD’s and oil company CFO’s I live next to, OK?
Try doing the same sometime.
Kasumi,
You’re right, producers should take into account all variables that may affect their business. It isn’t the first time domestic producers missed the boat on a sudden rise in oil prices!
As for the good domestic product arguement. I am a (semi)lone voice in the TTAC wilderness.
Gotta stand up for what you believe in!
BLS looks like those Rolls-Royce New Beeltes (http://www.retro-designs.com – don’t laugh too hard). The front is there, but it is as far away from matching as it can possibly be.
As Porsche has rightfully decided (despite their enormous success with 924/944 series), an entry level Porsche is a used one. Why should it be different for Cadillac – I don’t know.
Apropo of not much: to those of you that format comments in paragraphs, thank you. To those that don’t, please do. I doubt I’m not the only one not reading them, and it would be a shame if valid arguments were being lost for the non-use of the enter key!
I really do hope GM (and Ford) can turn the ship around. But when you constantly see the same old poor decisions being made and re-made (anyone familiar with the concept of “escalation of committment?”) it is difficult to be optimistic.
The new Lambda vehicles look like a positive (the Enclave may even be beautiful) but they still seem awfully big and heavy in this era of $60+ oil.
Now that GM and Ford have abandoned minivans, they’d better hope like hell that one of remaining players doesn’t find a marketing whiz that can re-invent them as the next big thing.
I’ll read that site and then temper the opinions I read there with the industry analysts, engineering PhD’s and oil company CFO’s I live next to, OK?
The oil companies will do fine no matter what, unless demand really drops, so the only thing that will happen if/when peak oil arrives is that they make even more money. They still have the infrastructure and distribution to take advantage of other sources such as oil shales, and will do just fine.
The Det 2.5 executives, on the other hand, didn’t have an adequate worst-case scenario plan. Executing it properly would have made a huge difference. And now they’re in a world of pain, Ford just having to take out additional dough on their mortgage, DCX about to go through some management upheaval, and GM with its unfavorable balance sheet.
SherbornSean:
I haven’t driven the car as it will not appear in the US until the Spring, but the reviews seems to pretty uniformly indicate that the new TT is a legit sports car, not a sporty car to look good in. Your comments, though a bit harsh, probably fit the outgoing TT better than the new TT. R &T did a comparo in the 1/07 issue (TT 3.2 vs. Cayman) and they were quite close. Of course, we need TTAC take the TT for a whirl and see if it is the real deal.
Not sure if it’s still the same today, but Lexus in Europe are/were usually sold in the corner of the Toyota dealer.
If they were they aren’t now, they’re sold in seperate dealerships, repeatedly rated the highest in service of all brands in the Netherlands and still sales are less then impressive.
The luxury market in Europe isn’t that complicated as some here picture. The cars that are perceived the best packages allround in their segment fetch high premiums, cars that just don’t make it but are marketed as premium aren’t sold.
Brand value is important but I think for cars at least it can be lost and won even more quickly in Europe then in the USA, as long as the products are very bad or very good respectively. We’ve seen that in the Netherlands with Mercedes. So if Caddilac makes a class leading car Europeans will happily buy it (as long as they keep the brand name seperate from bankruptcy threat).
As far as the BLS and fleet sales for leasing go; it’s true that this is quite common in Europe for big groups of employees, because it’s a way to mitigate some of the often fierce taxes on private transportation. The BLS does operate in one of the segments in which the majority of cars are leased, so it makes some sense, however for a company lease car I think it will not be very succesful competing against the A4, 3-series, Alfa 159, Peugeot 407, new Mondeo, Passat and even its siblings Vectra and 9-3.
RF,
Is a rebadged, obscure model peddled in Europe one more sign of the impending apocolypse, or just another opportunity to rehash all your tired arguments about your DW assertions? I’ll leave that to time and other TTAC readers to judge.
As for cap’n kirks bailing out, Bank of America bought 28 million shares of GM on Nov. 30, roughly equal to the most recently disclosed stake of Tracinda.
When do we start the Bank of America Deathwatch?
csjohnston-
very nice- clearly no bias
ucanthandlethetruth:
Is a rebadged, obscure model peddled in Europe one more sign of the impending apocolypse, or just another opportunity to rehash all your tired arguments about your DW assertions?
Both, although I prefer to think of my arguments as "classic."
Those who prefer to consider/accept GM's company line on their financial challenges have a wide choice of media outlets which are happy to provide a more positive perspective.
But don't get to thinking TTAC is the Chicken Little of Detroit. Quite the opposite. All you have to do is read the numbers to know that the diseased chickens are coming home to roost after decades of American auto industry arrogance, greed and endless, epic mismanagement.
As for BoA's GM stock purchase, remember that they sell stocks on to their clients, who bear the risk. All BoA wants is a good story to tell– regardless of whether it's fact or fiction. Never understimate the power of pump and dump.
Rebadging is the problem, re-engineering is not… Even the poor Saab might have been better if they had done some real engineering to it… GM has been counting pennies for so long that they pretty much can’t do anything right anymore.
I, for one, will be happy to see them sink. They would be much better off spinning off each brand to let them compete with each other. Size is not always an advantage…
By my reckoning, GM started to come apart at the seams shortly after Bill Mitchell retired from the company. I think he imposed a design discipline that kept all of the car models in their proper places. Not long after his departure, Cadillac went off the rails when some genius at GM noticed that Cadillacs were being sold mainly to older people and panicked, thinking that the customer base was going to vanish into retirement homes, rather than drawing the correct conclusion that older people simply had the money to afford Cadillacs. In the throes of that panic (and to a lesser extent, the panic over CAFE requirements and BMW envy), they called on their badge engineering department to come up with a small car for “younger drivers”, which was of course the Cimmeron. Strike one. Fifteen years later, another GM marketing genius (or maybe it was the same one with a short attention span), jumped to the same wrong conclusion and called up the badge engineered Catera. Strike two. Now, eight years later, we see the “BLS”, another badge engineered small Caddy. Strike three. OK, so Rick doesn’t understand the car business very well, but doesn’t he understand baseball?
RF,
“Classic”, thanks for the giggle!
While it is certain that TTAC does not hold itself as an unbiased source (if those even exist anymore), why do you insist on countering every bit of positive news with some negative point you’ve (usually) made repeatedly?
You are certainly never going to be a GM cheerleader, but why the relentless campaign?
Here’s a softball for ya;
In the spirit of the season, why not say something nice about GM?
(more substantive and less smartass than “That was a nice tie Rick was wearing at his last press conference”)
Think of GM as a Employee/Retiree Benefits corporation who are trying to fund their liabilities by producing automobiles in a hyper-competitive (ever decreasing margins) auto industry.
Producing better/more competitive products in this environment will be a race to the profit margin bottom with ever dwindling market share.
In order to stay solvent (fund retiree benefits) GM will need to get out of the automobile production business and get into more profitable businesses like Global Finance perhaps. The finance industry may just produce returns that will fund GM’s nearly $200 billion liability (U.S.) structure. Maybe GM should literally declare war on the U.S. then surrender and let the Fed Gubmint (taxpayer) “rebuild” them. Sort of a Marshal Plan idea.
I dont think a lot of you comprehend the magnitude of 2.5’s problems. Or am I missing something?
Sleeping Bear,
I am totally biased! I love domestic trucks, cars and I still think the words Detroit Iron have meaning. If you accept your biases and prejudices as that then you have a better chance of seeing all sides of the debate.
I however, do happily accept that the Japanese companies have earned their market share through superior product and their process seems to be the way to build the right stuff at the right time.
I will read the oil drum site too and take its position to heart. My parents, teachers and university professors always taught me to be skeptical and question everything. The moment someone says they’ve got a lock on the truth (this site included) is the moment my antennae go up and say “what’s in it for you?”
ucanthandlethetruth:
Not to trot out another "tired" argument, but I believe GM has world-class design, engineering, production and yes, marketing talent locked up in its insanely bureaucratic structure. With the right leadership, post Chapter 11, a smaller and more agile GM will finally be able to compete against the transplants. Not in everything, of course. But they will be able to restore the lost pride in American automaking– provided they still build vehicles in America.
I fully admit– both here and in my reviews– that there are glimmers of greatness within GM, such as the Corvette, but they are the exception that proves the rule. Again and again, real creativity is extinguished by the crushing weight of corporate beancounting, irresponsible management, instransigent unionism and General mediocrity.