GM Death Watch 88: Almost Doesn't Count
Motor Trend just reviewed the new Saturn Aura. Reading between the lines, it’s clear that GM’s mission critical mainstream motor is another in a long, not-so-illustrious line of “almost” cars. It’s “no sports sedan” with lots of “corner cutting” powered by a “crude” engine with “some looseness in the drivetrain.” The Aura is a “step in the right direction”– that leaves the badge-engineered Opel at least two steps behind the competition. Anyway, does it even matter? I reckon GM’s car business is beyond repair.
For the first time, the California Motor Car Dealers Association published new car registration data listed by brand. In the second financial quarter, Toyota captured 24.4% of the Golden State’s automotive market. Honda scored second place, at 12.4%. Then it’s Ford at 9.6%; followed by Chevrolet, at 8.2%. If national sales follow California’s lead, GM is toast. There is no way The General can support its vast infrastructure, overhead and labor costs, there’s no way the company can downsize quickly enough, to survive on that kind of market slice.
The automaker’s California conundrum: the resale market. There isn’t one. Hundreds of thousands of California immigrants, first-timer buyers, commuters and elderly consumers swear by used Hondas and Toyotas. Their preference creates a vicious circle: buyers shun new GM products because they can’t unload them. In the mass market, big depreciation is a kind of living death.
Never mind the BS about GM’s products being torpedoed by left-leaning, import-loving— I mean, “foreign-owned automaker”-loving journalists. GM shot itself in both feet and both arms for decades, building rental fleet fodder instead of competitive product. Even if you accept the dubious notion that GM now makes automobiles that match Toyota's and Honda’s (on some levels), even if you swallow the argument that GM is suffering from an indefensible “perception gap,” there’s only way to reverse this death spiral: "must have" products.
Not decent cars. Not reasonably competitive cars. Not cars that only make sense because they’re so damn cheap and no other new car dealer (except Ford) will give me a loan. Not the new Saturn Aura. I’m talking about cars like the Saturn Sky— only with room for four adults and a trunk.
Saturn’s new motto– “Like Always. Like Never Before”– says it all. Here’s a company, indeed an entire corporation that needs to sever its ties to its mediocre, vainglorious past and build spectacular products. It just… can’t… do it. I know; Saturn’s motto supposedly reasserts their user-friendliness. But what does “Like Always” say to people who dismissed Saturn as a boring, out-of-date brand?
By the same token, what does “Like Never Before” say? It’s a po-faced claim that Saturn is better than it was, not better than the rest. It’s that inwards-facing commitment to relative improvement that defines the vast majority of GM’s products and condemns them to also-ran status. Not that GM knows it. The General’s complete obliviousness to the average non-customer’s opinion of their products is one of the most disturbing aspects of GM’s fall from grace. Well that and their failure to acknowledge their competitors’ achievements and beat their best-in-class benchmarks.
Detroit’s unjustifiable arrogance towards the imports in the 70’s is well known. But few people appreciate the fact that this holier-than-thou attitude is still in effect, informing everything the company does– and doesn’t do. I recently received an email from a GM insider containing a memo from Ed Wellburn, GM’s Vice President of Design. After proclaiming “GM’s turnaround plan is truly working as witnessed by our 2nd quarter results”, Wellburn issued a new edict:
“Design Center is host to journalists, ‘celebrities’ and senior management up to and including the Board of Directors. The confidence we have in our products and people should be evident to anyone who drives on the Technical Center site, especially in the vicinity of the Design buildings and adjacent roads.
“As such, I am directing that ONLY GM products be parked on the roads around Design and in the parking area in front of our building. Any employees or suppliers/vendors who are not driving GM products may use the west and north parking lots.
“Effective August 15, 2006, this policy will be in effect. After this date, any non-GM vehicles parked on the roadways or in designated parking areas in front of the Design building will be ticketed. In the case of multiple offenses, the vehicle will be towed at the owner’s expense.”
And there you have it: GM management’s desire to shelter in their own little universe, quarantined from the realities of the outside world. Think about it: Wellburn's directive sends both employees and visitors driving non-GM vehicles to the back lots. It also means that GM-driving designers who enter the building upon which their company’s fate depends only encounter GM products. In short, what you can’t see… can kill you.
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- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
- Marvin Im a current owner of a 2012 Golf R 2 Door with 5 grand on the odometer . Fun car to drive ! It's my summer cruiser. 2006 GLI with 33,000 . The R can be money pit if service by the dealership. For both cars I deal with Foreign car specialist , non union shop but they know their stuff !!! From what I gather the newer R's 22,23' too many electronic controls on the screen, plus the 12 is the last of the of the trouble free ones and fun to drive no on screen electronics Maze !
- VoGhost It's very odd to me to see so many commenters reflexively attack an American company like this. Maybe they will be able to find a job with BYD or Vinfast.
Lumbergh: As a liberal arts major (Philosophy AND Religion) I would like to report that I took out student loans to pay for school, worked a bunch and had a bike. OK, well, when I was a Junior I finally got the Old Man's Pontiac Station Wagon with 190,000+ miles on it. And put another 80,000 miles on it before I donated it to charity after a failed engine rebuild. So, stop stereotyping.
Jonny, On behalf of BA holders everywhere, thanks for sticking up for us! I have seen plenty of Engineering Faculty where Bimmers, VW's and Audis are well represented (okay, ONE Engineering Faculty parking lot). On the bright side these guys and gals will have the basic knowledge to repair all of the complex electronics and components when they fail out of warranty! Regrettably, my History/Economics degree did not prep me for that... Come on up to Calgary Jonny, maybe we can find you a few cars to drive up here! CJ