Last spring, reporters forced GM CEO Rabid Rick Wagoner to confront his company’s demons. At the opening of a Russian assembly plant, in the midst of US plant closures, sell-offs and buyouts; scribes raised the unholy specter of Toyota’s usurpation of GM’s “World’s Largest Automaker” crown. Wagoner told the assembled throng that GM would “like to stay number one” but it wasn’t the company’s "top priority.” New Year, new tune: "I like being number one,” Wagoner told Detroit auto show survivors. “I think our people take pride in it."
So Rick likes being number one. God knows he’s good at it; hanging onto power despite losing billions of dollars and overseeing a precipitous decline in the automaker's market share. And it's reassuring to hear that he “thinks” his people take pride in GM’s mantle (Vince Lombardi’s got nothing on Rick).
But RR's optimism couldn't counteract the bad news at yesterday’s automotive analyst hand-holding session. The beancounters had counted beans and concluded that the General's cash flow will remain negative this year– despite stripping out billions of dollars in fixed costs and plans to jettison sell even more of their remaining assets (e.g. $265m for GM's Arizona proving grounds).
Chief Financial Officer Fritz Henderson attributed some of the company’s predicted cash burn to a $1b increase in capital spending. The extra cash will pay for ongoing transmission upgrades (from four to six-speeds) and foreign expansion.
When pressed on the effect of this increased outlay on the company’s liquidity, Henderson said the company could take the hit, but admitted that GM’s cash flow was 'not anywhere near an adequate position’ (which is a bit like saying a person who’s lost is not as well-oriented as they could be). Equally ominously, Henderson spoke of “serious financial pressure” throughout ’07.
After this downbeat conclave, Rabid Rick launched yet another charm offensive. Schmoozing with Fortune Senior Editor Alex Taylor III, Rick revealed the home team’s latest defense: stop nickel and diming us! “People ask when is the business profitable and our objectives have to be much bigger than that. It is not an issue of can you make a nickel – that doesn't do anything for anybody. We need to get good profit and then it is very important that we generate good cash flow.” So now we know: making a nickel isn't much better than losing $10.6b.
Meanwhile, GM’s product mix continues its troubled evolution. While all eyes were on the plug-in Chevrolet Volt concept car, The Next Big Thing (Malibaura?) and the blingier Cadillac CTS, Henderson confirmed our suspicions that the the forthcoming US-spec Astra won't earn GM a single one of those not-so-precious nickels.
An unfavorable dollar – Euro exchange rate and European labor and transportation costs preclude the possibility of profit. Apparently, the Astra is merely a "bridge" product for Saturn, a temporary replacement for the Ion designed to "prove" Saturn’s new Euro-style handling/performance gestalt. Huh.
At the same time, Henderson said that GM’s recent sale of controlling interest in its GMAC finance unit was critical to lowering the subvention cost to GM. Translation: GM will probably use aggressive leasing tactics in the future– especially if it can boost residuals through lower rental fleet sales.
Of all its downsizing moves, the reduction in GM’s fleet sales is, perhaps, the most telling. It’s a sure sign that GM is fully committed to becoming a vastly smaller enterprise than it was at the beginning of Wagoner’s tenure. It’s a tacit admission that the company can no longer rely on sheer volume to make its crust.
In fact, it's increasingly clear that GM has a new, Delphinian survival strategy: stabilize the US market (at whatever percentage) and expand abroad. Even as it stands, GM sells more cars abroad than it does in the United States. Buick is dead here, thriving in China. GM is tightening its belt stateside, preparing to bid for Malaysia's Proton.
At this point, all Rabid Rick wants to do is stop the arterial spray on his home turf. That’s why he was so sanguine about Toyota’s rise back in June. He was breaking ground on the company’s best bet for survival: Russia, India and China.
Rick’s “bigger” vision could work– if GM has enough time. While GM may make some progress towards a healthier revenue stream in '07 with a better product mix and reduced incentives, the real gains will continue to be made on the cost side. And that’s just not good enough. GM’s weak balance sheet makes it highly vulnerable to setbacks and shocks, which are on their way.
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Why don’t we start some sort of Toyota Ethics Watch, where we talk about all the blatant ethical boundaries that Toyota breaks on a regular basis? articles like “Toyota Ethics Watch 1: Toyota lies about MPG rating” and “Toyota Ethics Watch 2: Toyota has more cars recalled than sold in 2006, but still claims to be most reliable” etc. etc. etc.
I know GM and Ford are in trouble, but they are making a genuine effort to fix things (don’t know if I can say the same for Chrysler). Let’s support GM and Ford, after all, let’s not forget, they are the ones who really allowed for the car industry to exist as it does today.
Keep in mind, I say all of this being French, and driving exclusively German.
audimination:
You are invited to submit an 800-word editorial on any topic you choose, subject to the same editorial constraints as all our writers.
Please email it to: robert.farago@thetruthaboutcars.com.
Let’s support GM and Ford, after all, let’s not forget, they are the ones who really allowed for the car industry to exist as it does today.
If they had not done it, someone else would have.
Aside from wishing them well (or mailing a cheque to them!), the only way to support them is to buy one of their cars. A lot of people are not ready to do that preferring other makes that they can feel sure about quality-and-reliability-wise. GM relies heavily on loyalists who believe that if it does not have a Chevy badge (or Pontiac, Buick etc) it's not a car!
Living in the Oshawa, Ontario area I see GM products in vast numbers, easily outnumbering all other makes. You can put that down to employee sales and rightly so. But, as soon as you head west to Greater Toronto, GM's true market share shows clearly.
There are many people who have been burned by GM in the 80's and 90's and I am one of them. I have only owned 2 GM vehicles, and Olds Cutlass & a GMC Safari. Every few weeks I was putting new parts into them and in fact I nearly paid for the Safari twice over it's lifetime. Tell me why I should support them please?
So now we know: making a nickel isn’t much better than losing $10.6b.
I’d much rather see them lose billions to invest in product development than to break even and let the product contine to stagnate.
z31:
False option set.
Toyota, Honda, Nissan, Hyundai, etc. all invest in their future AND make a profit.
audimination–
I can’t seem to locate an article about a particular GM recall–or lack of it. My uncle is a GM goodwrench mechanic, and years ago there were many complaints about S-10/sonoma front end alignments. Rather than issue a recall on the ball joints, GM widened the alignment tolerance enough that the vehicles would stay within tolerance until the warranty expired. How’s that for ethics?
I’d rather buy a vehicle from a company that obsessively recalls everything and admits problems than one from a company that sells a pile of poo and sweeps problems under the rug.
As for the article, it seems that GM and Wagoner are getting some criticism for shrinking. I think this is the right thing to do–there are only so many people on earth, and cars last longer than they used to. Fewer new cars will be sold, so it’s best to “right size.”
I’m not sure why you would fault RW for stating that #1 was not a priority. What would have been the alternative? “GM is #1 and it will stay that way cuz I say so?”.
Also, you have said many times that “you can’t cut your way to profitability”. In essence the “nickel and dime” profit will not do… and I have to agree with that statement. Cutting cost and re-investing in technology and production methods is the correct decision for the long run.
1984:
Parse this: "If we are sitting here next year and I've lost, I'm not going to like that. [But] we're not giving this thing up just because somebody got a calculator for Christmas and punched in the numbers. This is going to be a dog fight. We're going to give up sales that don't make money, so we are not going to act like a company that is going to be drunk and disorderly. But it doesn't mean we have to lose the game because of one player. One year does not a battle make. If we lose, we lose, but we're going to keep fighting them."
Now imagine you work for GM, and you heard Rick say "fuhgeddaboutit" in Russia.
Why is that though RF, no legacy costs/commitments in the US?
False option set.
Toyota, Honda, Nissan, Hyundai, etc. all invest in their future AND make a profit.
Any suggestions how to make money without spending it? I would like to know if you where RW how would you make that possible.
The cars will not morph into something else without development cash.
1984:
Obviously, GM needs to invest in new products. The problem here in NA is that there are just too damn many of them. AND GM continues to lag behind the transplants' development cycle.
GM needs to make deep structural change in the way it does business. There's just too much waste, fraud, inefficiency and bureacracy. Can they do it without filing for bankruptcy? I doubt it.
In some ways, I feel sorry for Rick. He inherited a broken business model. He's cut and pasted as best he can, but he's done nothing to change the fundamentals.
Well, there are companies spending billions on developing something that somebody else would develop in a few months and a few million dollars’ worth of costs. You can’t just throw money at your R&D department and expect a linear return.
NICKNICK
I was a mechanic in that time frame… The S/T truck ball joints where in fact recalled. Ball joints will not change the “alignment”.
NICKNICK
One thing to consider about Toyota’s recalls is that they are pretty sneaky about how they go about it. They don’t do official “recalls” like most companies. They’ll throw out a little “service bulletin” which is basically trying to get the Toyota owners to bring their cars in for repairs without making an official recall that will go public. That’s pretty sneaky, don’t you think?
oboylepr
I agree that the domestics have fallen behind. And I agree with your point that supporting them means buying their cars, and people just aren’t ready to take that risk just yet. I’m the perfect example. I want the domestics to do well, but I wouldn’t buy a domestic for a long time to come because it’s just not worth the risk of leaving Audi…
Robert:
I’d love to write an editorial. I’ll actually work on one and hopefully it’ll be something remotely relevant that’s publisheable…
So Rick likes being number one. God knows he’s good at it; hanging onto power despite losing billions of dollars and overseeing a precipitous decline in the automaker’s market share.
[And still getting top dollar for the effort!] This is the amazing part: giving hope to incompetent employees everywhere. Your job performance has nothing to do with your continued employment, if you can do what Rick does.
Perhaps RF can devout an article to the DW series entitled “Succeeding through abject failure”. Could serve as a blueprint for incompetents everywhere. The Peter principle at its apex.
1984:
I was a mechanic in that time frame… The S/T truck ball joints where in fact recalled. Ball joints will not change the “alignment”.
From:
http://www.michelinman.com/care/tip3.html
“How Wheels Are Aligned
Alignment involves adjusting the angles of the wheels so that they are parallel to each other and perpendicular to the ground. The three main adjustments made in alignment are Camber, Caster, and Toe.”
I’m not a pro mechanic but I’m pretty sure ball joints have a lot to do with that. Unless you’ve got a different defenition of ‘alignment’. Just sayin’.
audimination:
No, that's not sneaky. If it's a safety related thing, an actual recall has to occur. Basically, Toyota makes thier "secret warranties" public-which is a good thing, ladies and gentlemen.
And regarding MPG ratings-Toyota vehicles get the stated ratings if one drives them like the Federal test says to do so. In fact, it is illegal for Toyota to use any other MPG rating other the EPA government ones, even if they wanted to. Blame the Feds, not Toyota.
The Chevrolet Volt is dependent on taxpayers ponying up $500-million for research. No money, no juice, no Volt.
I’m not a pro mechanic but I’m pretty sure ball joints have a lot to do with that. Unless you’ve got a different defenition of ‘alignment’. Just sayin’.
The ball joints themselves are fixed, not adjustable. They can be part of of an assembly that has a threaded rod for adjustment, but loose tolerances in the ball-socket would affect the slop in the steering not the alignment to any great degree.
The ball joint does not have an adjustment for any of the things you have stated. At the point a ball joint would affect the vehicles alignment it would make a horrible noise and would be only a few miles from complete failure. You can’t mask a failed/failing ball joint with an alignment nor would it be possible to align the vehicle in the first place.
The ball joints where recalled because the press fit was failing between the control arm and ball joint. Not because of an alignment issue.
Let’s not go off on an arcane argument over ball-freakin’-joints!
The issue is how GM will survive. RF has been consistent in saying that GM must cut brands, dealers, and fixed costs to be competitive. He’s also been consistent in saying that GM’s bloated bureaucracy needlessly drags out proiduct development times so that they’re always a generation or so behind the competition.
The fact that GM is admitting that the Aura loses money due to exchange rates is part of the problem. “Yeah, we lose money on every one. But we plan to make up for it with volume.”
If you can’t sell ‘em at a profit, DON’T BUILD ‘EM!
Since GM’s slide began, the only real thing they’ve done is kill Oldsmobile (just as Olds had a good lineup of cars). They’ve continued to rearrange the deck chairs on the Titanic, but have done very little to really improve the company. Product continues to be spotty. With the exception of the Solstice/Sky, can you name one genuine hit they’ve had? The new crossovers look to be a hit, but they’re already talking about watering that down with a Chevy model. Here we go again…4 different models, ad budgets, tooling, management costs, dealers, etc., etc.
I suspect that Rick, Bob, etc., know the truth. They’re hoping they can outrun it to retirement.
There are no secret cover-ups or conspiracies about recalls. Toyota got OWNED on recalls for 2006 plain and simple. Arguing that any large corporation is overstating its recalls because you think they want to be “nice” is just retarded. Bad PR is avoided at all costs and it does not mater who it is… GM… Toyota…whatever.
There was a joke going around GM years ago.
A car full of GM execs are driving down the road and they get a flat. What do they do?
They pull over and rotate the tires.
Gardiner Westbound wrote:
“The Chevrolet Volt is dependent on taxpayers ponying up $500-million for research. No money, no juice, no Volt. ”
Absolutely true.
Now, could someone with a whole brain explain to me why on earth we taxpayers should put up money to General Messup for such a purpose?
Let’s recap. Does anyone recall “Blowjob Clinton’s” SuperCar effort to ‘help’ the then-big 3 develop an 80 mpg hybrid car?
We the people ponied up tons of money for that one, and hey, I haven’t seen one 80 mpg hybrid out of the big 3 yet, how about you?
However, I did go out and buy a 2005 Toyota Prius which gets about twice the mileage of our conventional 2002 Hyundai Sonata with similar performance, room and functionality. At least it’s progress, it’s real, it’s in my driveway and it didn’t cost me a bunch of tax money, either.
But Robert, I seem to recall a fairly recent DW that predicted 2007 might be the year for GM to go BK. So wouldn’t at least treading water (even a low some-$billion dollar loss) for the near term be a much better result than you predict with your deathwatch premise?
And some of the beancounters actually think GM is on the right course. David Healy at Burnham Securities said of GM’s predictions for 2007. “They’ve demonstrated they have had a dramatic improvement in their results. Anyone who’s spent any time looking at the actual results during the course of the year will be a believer that they will do better.”
And more good news, according to recent credit-default swap prices, General Motors Corp.’s risk of filing for bankruptcy was at the lowest since March 2005.
(Here is the whole article. http://www.detnews.com/apps/pbcs.dll/article?AID=/20070112/AUTO01/701120394/1148)
If anyone I know is even considering a GM vehicle, I make sure I talk them out of it with statistics and horror stories so they buy a good import. I have talked dozens of people out of a domestic and into an import over the past 2 decades. (I should have a second career as a Toyota / Honda sales person!!!)
The sooner GM and Ford go bankrupt the sooner we can all move forward and forget about these useless companies.
GM you screwed me over twice, but rest assured I’ve cost you dozens of sales over the past few years, and I will hopefully cost you dozens of more sales in the next few years.
I’m sincere with this question.If GM is in so much poo poo,
how come the stock is holding its own?
I know there is a lot of folks here that are better educated than I.
Can somebody post an honest answer?
Thank you
Mikey
The picture and the title of the article say it all. It’s more of what Robert has noted before “Wait and see.” Here a kick ass (on paper) concept car – plug in hybrid. But, uh, we can’t produce it until someone else develops the batteries. Maybe the US government will throw $500 mil in funding at it and see what happens. (Anybody remember PNGV?)
Whereas the Asians show up with a truly kickass product and say “Here it is – you’ll be able to buy one within a year ready to rock.”
A note on recalls. Recalls are either emissions or safety. Period. There are no “recalls” for peeling paint. Or sludge in motors for that matter. Neither the EPA nor NTSB cares about peeling paint. Recalls are either forced or voluntary.
I think that the Detroit 2.5 have a long history of fighting a recall until it’s forced (Ford speed control fires anyone?) Certainly the number of Toyota vehicles recalled increases as their sales increase. I have no data but my gut feeling is that Toyota and Honda generally accept that they made a mistake, and more importantly, can afford to repair the cars. Therefore they issue the recall as voluntary, before being forced to do so by the government.
Regarding market position and survivability: When you step back and look at all the FACTS (this is a great site for that) the big picture is simply depressing for the domestics. It’s all there to see in the press releases, financial statements and showrooms. Just tough to get a grasp on the enormity of it all.
Since the 1950’s I have seen the USA go from a manufacturing powerhouse to a “free market” service economy where we just sell stuff to each other made elsewhere…. or something like that. Recently I saw a stat that 70% of our economy is of the service persuasion. So, we sell peripherals to the other 30%?
come on Dixie Chix thinkers! Patriotism is not a bad word. It is not wrong to want your side to win! ( America is even expected, by her enemies, to take it easy in a war! Now that american cars are of equal or better quality, design and engineering the manufacturers are burdened by an unfair price disadvantage that could easily be made up with a proper tariff,( on the true import), or surcharge on the domestically assembled car. Try to sell Chevies in Tokyo! Seoul?
“Living in the Oshawa, Ontario area I see GM products in vast numbers, easily outnumbering all other makes. You can put that down to employee sales and rightly so. But, as soon as you head west to Greater Toronto, GM’s true market share shows clearly.” –
Makes you wonder what GM’s true retail sales are once they take out all of the discounted employee purchased (not to mention fleet sales). By cutting so many workers, They could be losing their biggest market!
“Henderson confirmed our suspicions that the the forthcoming US-spec Astra won’t earn GM a single one of those not-so-precious nickels. An unfavorable dollar – Euro exchange rate and European labor and transportation costs preclude the possibility of profit. Apparently, the Astra is merely a “bridge” product for Saturn, a temporary replacement for the Ion designed to “prove” Saturn’s new Euro-style handling/performance gestalt.”
Hopefully this same policy applies to the 2008 Pontiac G8, substituting Commodore SS for the Astra and Grand Prix for the Ion.
I WANT gm to make the case to me to switch from import to a G8.
Tracy wants to start ANOTHER Import vs Domestic hoe-down!
It’s waaaaay to early for that ;-)
jazbo123 & 1984,
I was only debating 1984’s statement, “Ball joints will not change the alignment”, not the degree of wear or the real reason for any recall. I know the ball joints have no adjustment – I’ve replaced a few myself. I miss grease zerks.
http://www.aa1car.com/library/ball_joints.htm
“A loose ball joint can cause misalignment, uneven tire wear, sometimes a steering pull to one side, and/or suspension noise.”
Autonomy. Hy-Wire. Sequel. Volt.
Sigh. It’s all Duke Nukem Forever to me.
Russia, India, China. All sound like good places to outsource the Tubes to. Heck, outsource Buick to China right now! At least the Indian version of Rick Wagoner won’t cost anywhere as much.
“There are many people who have been burned by GM in the 80’s and 90’s and I am one of them. ”
I’ve been left stranded “burned” by only two vehicles in my 36 years. One Corolla and one Elantra. I attribute these brands good quality rankings with good marketing and nothing more. Unlike GM or Ford owners, Toyota owners assume that if something goes wrong with their Camry, that they somehow did something wrong. “My Camry’s wheel wells are completely rusted-out… I shouldn’t have driven it in the rain so much!”
Toyota and Hyundai have learned that people are really gullible.
GM’s stock is improving because they aren’t in as much obvious danger as they were a year ago, and have gotten rid of a lot of thier union workers with buyouts. However, shrinking your way to profitability has never worked for any company on the planet, ever, at least not without a bankruptcy first. It simply doesn’t happen, because there are old fixed and legacy costs that began when the company was big, and don’t shrink when the company becomes small-plus, if a company’s sales are down (as GM’s are), they are obviously doing something wrong.
As Farago stated, thier only hope is on China and other emerging markets (first time car buyers don’t really know enough to know that Toyotas are more reliabile, nor do they really care-they are just glad they can afford a car), because thier domestic sales are going down quite steadily with no end in sight.
starlightmica-”It’s all Duke Nukem Forever to me.”
Heh. You can never have too many Duke Nukem Forever vaporware jokes. :)
Chainyanker, 1984 is correct that ball joints do not affect the alignment in the manner that you are speaking. You do not (and can not) adjust a ball joint during an alignment. They simply allow the front suspension to have a full range of motion.
On my 240z with McPherson struts, the ball joint attaches to the control arm. The ball join attaches to the steering knuckle on the bottom and the McPherson strut attaches to the knuckle on the top. My toe is set by the outter tie rods. I do not set caster or camber. However, camber can be set by slotting strut tower or adusting the lower control arm. I could set caster the same way (by slotting the shock tower).
The ball joint allows the control arm to pivot up and down. The McPherson strut is fixed at the top and is connected to the control arm via the ball joint.
Why should I pay more to american workers when someone else is working more efficiently for less money? It’s like narrowing the gates for the home team – it might help them on their own field, but over time they’ll play even worse outside. If you really want the American Phoenix to rise from the ashes, get an MBA, join the team, and kick ass. America needs you.
.chainyanker,
Common… Just let it go. Your uncle said he was covering up bad GM ball joints with alignments… As someone that has done alignments for years, the whole statement that an alignment can cover up a bad ball joint is bizzar on levels that defy description.
GM widened their spec on wheel alignments a few times and GM also had some bad ball joints. I think you are mixing up a few of your uncles stories together.
While I think you can bring up many good points you are starting to sound like sour grapes or a foreign car fan. I agree that some one needs to keep the 2.5 on their toes but I think you over stepped with some of your comments
Chief Financial Officer Fritz Henderson attributed some of the company’s predicted cash burn to a $1b increase in capital spending. The extra cash will pay for new model development, ongoing transmission upgrades (from four to six-speeds) and foreign expansion.
They are talking about spending 10 percent of what they lost in FY 2005 on capital spending, which while it hurts cash flow in short term is amortized over time is less than 200 million a year.
S-spec Astra won't earn GM a single one of those not-so-precious nickels. An unfavorable dollar – Euro exchange rate and European labor and transportation costs preclude the possibility of profit. Apparently, the Astra is merely a "bridge" product for Saturn, a temporary replacement for the Ion designed to "prove" Saturn’s new Euro-style handling/performance gestalt. Huh.
You got discussed cash flow; why spend capital converting a plant in the US until you know it will sell. You have excess capacity at your plant in Europe so break even for a year or two and spend the money where it is needed.
It was but 2 years ago everyone was talking about shuttering GM and it was a cooked goose. Their products were said to be unsaveable and no one wanted them, according to the press. Bankruptcy was the only option to save the ship. Now they just handed the foreign carmakers their butts and introduced cars that everyone is talking about. They made money in the last reported qtr and have dropped incentives by 700 dollars a car.
They are not out of the woods yet but GM got in trouble over a 20 year span and Rick Wagoner and Lutz have made a pretty big turn around in the last two years. So how about giving them a little more credit or it will start to sound like whining.
Now that american cars are of equal or better quality, design and engineering the manufacturers are burdened by an unfair price disadvantage that could easily be made up with a proper tariff,( on the true import), or surcharge on the domestically assembled car. Try to sell Chevies in Tokyo! Seoul?
I hope this was sarcasm.
This statement depresses me because it is a tacit assumption that America CAN’T COMPETE unless we artificially rig the game. And spare me all the “not level playing field” crap about other markets.
Having read the Forbes article on Honda, is it fair that a company like that is penalized while the “business as usual” model in Detroit is given competitive breaks?
Why not just dispense with any free market illusions and force Americans to buy domestic cars?
I think the real issue here, aside from the lack of forsight by the domestics for so long, is that the asians have been playing on an unlevel playing field. They have been (legally) cheating the system for years to make their product cost cheaper, and thereby give them more leeway to sell either similar cars at a cheaper price or better cars at a similar price.
Dumping and currency manipulation in the 80s (does this remind anyone of China today?), trade imbalances, and most greivous of all, tax evasion by tricking poor counties into giving obnoxious concession have given the Japanese an unfair advantage that the domestics could never get. The UAW’s stranglehold on the domestics has harmed them a lot.
Of course, executives galivanting in private jets is not the right way to fix the problem, and, despite their recent improvements, the domestics still have a long way to go. However, we shouldn’t forget that, for quite a while, they have been playing on a field that was dramatically tilted to Japan’s benefit!
Glenn A,
I think each one of those Prius.. (I’m have a hard time thinking of the plural) Prii cost 3,150 from the rest of us tax payers.
And lets see, full tax credit for the first 60,000 (That’s credit Not deduction, mind you) and 50% credit for the rest sold… And toyota reports 106,971 Prius sales…
That’s 263 millions in tax subsidies.. Holy crap, did I do that math right!? I just double checked and got the same answer. Someone double check me on that one, because I had no idea we were paying the Prius drivers that much money to pollute America with their dangerous levels of smug.
“Now, could someone with a whole brain explain to me why on earth we taxpayers should put up money to General Messup for such a purpose?”
Glenn A., I am glad you asked!
IMO, we all would be well served if the US supported the domestic auto industry from a common solution investment perspective. A better battery solution would benefit the manufacturers and our reliance on foreign oil alike. I agree the money should not be handed over to any one of the automakers but rather made available for cooperative research. There would need to be some agreement as to the potential outcome. Think cleaner air, lower hybrid costs, etc. I would vote for this investment before I spend $1 more securing oil fields in Iraq. I mean, er, freeing the Iraqi people.
I think each one of those Prius.. (I’m have a hard time thinking of the plural) Prii cost 3,150 from the rest of us tax payers.
And lets see, full tax credit for the first 60,000 (That’s credit Not deduction, mind you) and 50% credit for the rest sold… And toyota reports 106,971 Prius sales…
That’s 263 millions in tax subsidies.. Holy crap, did I do that math right!? I just double checked and got the same answer. Someone double check me on that one, because I had no idea we were paying the Prius drivers that much money to pollute America with their dangerous levels of smug.
The subsidies cover other hybrids as well, not just the Prius.
And last I checked, it is available to ANYONE that chose to buy a hybrid, including YOU, if you wanted to buy one.
But why aren’t domestic manufacturers taking advantage of this tax loophole? Ah, possible they’re taking advantage of the tax loophole given to large SUVs calssified as “farm equipment”.
audimination, your statement would be true if you were simply talking price. Price is not the issue with the Big 2.5, it’s the years of passing off inferior products that has caught up to them.
IMO, we all would be well served if the US supported the domestic auto industry from a common solution investment perspective. A better battery solution would benefit the manufacturers and our reliance on foreign oil alike. I agree the money should not be handed over to any one of the automakers but rather made available for cooperative research. There would need to be some agreement as to the potential outcome. Think cleaner air, lower hybrid costs, etc. I would vote for this investment before I spend $1 more securing oil fields in Iraq. I mean, er, freeing the Iraqi people.
Well put.
However, isn’t it just a bit disingenous of GM to trot out a car trumpeting their “commitment” to energy efficiency and non-reliance on fossil fuel, when it depends on here-to-forth non-existing technology.
BTW, I’m coming with a new car that runs on AIR, but it will depend on the US government to come up with the technology.
FirstGuy: “… I’ve been stranded/burned by GM…”
SecondGuy: “… Well, I’ve been stranded/burned by Toyota…”
Well, SecondGuy, so what? The fact is, GM, Ford and Chrysler have a bad reputations for quality/reliability and the numbers from various sources (CR, JDPower, others) show that they got their repurations the old-fashioned way. They earned them. They were selling cars that were crappy.
Now, it could be that Toyota’s coasting on a reputation it no longer deserves and it could be that GM, Ford and Chrysler have turned it around and the new Impala or whatever is going to be a better car than the new Camry 10 years down the road but, if so, that’s too bad for GM, Ford and Chrysler. They made their bed; they get to lie in it.
If Toyotas is losing its way and their new cars are crap, 400,000 Camrys going into circulation this year will ensure that people will end up knowing someone with a bad Camry experience and Toyota’s chickens will come home to roost. But whining about misperceptions of Toyota isn’t going to accelerate the process of making Detroit look better than Toyota.
If GM, Ford and Chrysler are committed to getting a good reputation for reliability, they’re going to have to act as though the cars are reliable. There’s three approaches to achieving this and all are necessary:
1. A really good warranty. If there’s somebody out there with a better warranty, yours isn’t good enough.
2. Making sure the dealer network understands that the vehicles under warranty are to be fixed, correctly, at no cost to the customer, without argument or delay.
3. Get proactive on problems. Keep careful track of what’s going wrong with the cars and, when you notice anything statistically significant, get ahead of things with “service bulletins” or whatever you care to call them but bring the d@mned cars in and fix the problems BEFORE the customer is inconvenienced. Extend the warranty on troublesome parts, so the customer feels that the situation gets made right.
that part about GMAC bears closer scrutiny. Perhaps their strategizing “gee we can’t make money building cars, but there’s good money in the loansharking trade!” I always hear ads for a particular Toyota dealer “Bad Credit? No Credit? Noooo Problem!” well no problem as long as you don’t mind repo men showing up in a year or so. there was an interesting news item today that Toyotas planning on building a bunch of car manufacturing plants here in the US. hmmmm… they will be non-union I’m sure, but probably won’t be paying slave wages. I also read that only a small percentage of US auto workers are unionized right now. are the unions really as big a problem as the union-bashers make out, or is it the management?
I’d rather pay tax dollars for an existing solution that works. At least it will encourage others, as opposed to bribing them.
As for paying half a billion for better battaries… Sounds like a scam to me. Such batteries already exist – A123 makes an AA (almost) sized cell that lets you pull 70 amp continious and 130 amp burst. That’s about a quarter to a half of a kilowatt out of a 40g cell, at 3.6v. Model airplane builders and cordless power tool manufacturers have been using them for almost a year now.
If you want to power a 100 kilowatt (133hp) electric motor, you need about 400 cells, or 35 pounds. Most regular car batteries weigh more.
Now, the issue is that it’ll give you a range of about 20 miles – enough for most daily commutes, but too small for longer runs. But GM solution already has a built-in generator, that will give you nice 60mpg even in pure gas mode. So what else do they need? I’ll tell you. YOUR MONEY ;)
Retail, these batteries cost about 10$ a pop, and they will be the single most expensive part of the car. No way in the world will GM be able to compete on such a level field. Hence, they want to scare politicians into “no cash, no electric car” tactic.
There’s nothing that prevents GM from building Volt-like vechicle. Battaries are there, motors are there (heck, they have their own very nice in-house motor and controller), and proper generators have been there for the last hundred years or so.
I think I should start a Piston Deathwatch Series.