By on November 8, 2007

goldilocks.jpgNow that the dust has settled on the last of the United Auto Workers’ (UAW) contract negotiations in Motown, the other shoe has dropped. All three domestic automakers have announced new lay-offs and plant closings, atop already extensive cuts. Chrysler killed half-a-dozen models. Ford has shuttered plants and signaled that “things might change” if “things get worse.” GM has eliminated several third shifts. So what’s next? Basically, we’re looking at an auto industry version of “Three Bears.” GM wants to stay big, Chrysler wants to get small, and Ford wants to be “juuuuuust right.”

Chrysler's cupboard is bare, there's nothing much in the pipeline and they have nothing to speak of overseas to lean on. All they have is a few decent entries in a handful of profitable niches. In line with their new owner's philosophy (a.k.a. strip and flip), Chrysler will continue to reduce production and kill products. They want to cut Chrysler's product line down to the vehicles they can sell profitably at the volumes they can move and then get acquired or go public. Done.

Look for Chrysler to try to get the 300s, the minivans and Jeep down to profitable volumes. The Ram and the Sebring/Avenger will survive even if they have to give them away; owning a volume product in a major market segment looks good to a buyer, profit or no. The multi-billion dollar question is how much is Chrysler spending on developing new products? The answer would give us a better idea of when they’re planning on selling their stake.

Meanwhile, Ford's market share has been dropping like a stone– which is no surprise to anyone. The fall from grace isn't “good,” just expected, as Ford has vowed to cut way back on their fleet sales. Clearly, Ford’s strategy is to downsize to a profitable volume and call it good. To this end, they’ve emphasized the need to improve flexibility in manufacturing. Details are sketchy, but part of the UAW agreement mandated/allowed for just such an investment. Hopefully implementation will involve multiple body types on one line, Honda-style, rather than just vomiting forth the usual badgeneered clones from one factory.

Shrinking down to a profitable volume– and trying to hold the line on price– looks like a winning strategy for The Blue Oval Boyz. But the question everyone is asking– and no one can answer– is “will it work fast enough?” There’s nothing left to hock. If shrinking doesn’t work, and work soon, Ford will be booking some federal court time for a Chapter 11 petition.

While The General didn’t wrest the concessions from the UAW that the later-negotiating pair secured, GM still got most of what it wanted– offloaded health care benefits, a new two-tier wage scale– without having to promise much. That said, GM has been doing its utmost to hold onto market share: upping incentives, investing in terminally ill brands, putting-up with duff dealers, etc. Why? 

Is GM pushing sales to keep their bloated dealer network afloat, or simply attempting to drive one or both of their domestic competitors to the wall? Chevy is rooting for biz down-market (trading punches with Hyundai/Kia), well below where Ford seems to be aiming their name brand. GM’s leaving the competition with the Dai-san (Honda, Toyota, Nissan) to the old “premium” brands, and Saturn. Cutting brands and dealer networks has been back-burnered until the profits return– when the problem can be ignored.

GM looks the closest to healthy right now, which is both good and bad. They are the least likely to run onto the financial rocks, but if one of the other two reinvents themselves or survives a trip to bankruptcy court, GM will be playing by the old rules in a new world.

While these are confusing times, a few things are certain. First, The Big 2.8 are going to lose more market share. A fair amount of their current share is created by fleet and fire sales– that have devastated profitability without driving back the competition. To make money going forward, these have to go. 

Second, The Big 2.8 are off the radar for roughly half of the American new car market. The Motown manufacturers hope that profits can be made from the half of the US market still “in play.”  It's a viable stratgey; half of the US market is still a huge pool. But it leaves the Detroit boys playing a zero-sum game. Any increase in sales for one comes out of the hide of another.

This is a problem; the sum of the shares that the 2.8 are counting on grabbing literally will not add up. If 50 percent of the market is considered “in play,” the total of the 2.8s’ expected shares is likely closer to 60 percent. Somebody’s going to come up short.

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68 Comments on “Goldilocks and The Big 2.8...”


  • avatar
    GS650G

    Chrysler eats it first, with chinese small cars and little else to offer they are going to be carved up like a turkey. Ford might make it, but only if they can cut the fat and build overseas. Bringing euro models in, and I don’t mean Jill Wagner types, might work.

    GM is the largest and hardest to change. Whomever gets to bankruptcy court first will clean GM’s clocks with lower prices and better bond ratings.

  • avatar
    postjosh

    if ford goes chapter 11, that doesn’t leave much if anything for the stockholders. since the the ford family still controls the company by way of said stock, why would they go that route?

  • avatar
    KatiePuckrik

    This might sound harsh, but here we go…..

    The big 2.8 are in no shape to take on Japan’s big 2.56. The Japanese are too lean, aggressive and profitable to compete with at this juncture. However, Detroit can compete with other Detroitians (is that a correct term?). Ford, GM and Chrysler are all on the ropes, so what’s to stop, say Ford, regrouping and start taking market share & generally beating up on GM and Chrysler? If Ford (for illustrative purposes) could snatch enough market share from GM and Chrysler (and they can, if they ship their Euro models over) the Ford could strengthen themselves into company which may have a fighting chance against Japan’s big 2.56?

    Naturally, this would mean one of the Detroiters would be consigned to the history books, but I’ve always believed that in this period of history, one of the 3 will go down. Personally, I hope it’s Ford.

    Times have changed and I don’t think the world economy is big enough to sustain all these car makers, not just Detroit. We’re seeing consolidation between VW & Porsche and Renault & Nissan. Not to mention, the Chinese and Indians will start coming out to play and with all the littler manufacturers who can’t keep up (i.e Volvo, Jaguar, Land Rover, FIAT) will gobbled up by these manufactuers making their portfolios stronger and that’s bad news for Detroit, Tokyo and Europe……..

  • avatar
    y2kdcar

    KatiePuckrik:
    Naturally, this would mean one of the Detroiters would be consigned to the history books, but I’ve always believed that in this period of history, one of the 3 will go down. Personally, I hope it’s Ford.

    Ford is the only one of the Detroit 3 that didn’t land a vehicle on this year’s TTAC Ten Worst Automobiles list, Katie. Why are you wishing them ill when they’re fielding fewer truly lousy products than Chrysler or GM?

  • avatar
    Thomas Minzenmay

    Chrysler: Cerberus will turn Chrysler around, no matter what even if it means that Chrysler has to shrink to midget size. The question is, what will happen afterwards. Cerberus will definitely cash in on Chrysler, but who’ll pay for it? The guys from Magna couldn’t even afford it last time and it won’t be that cheap ever again. So that basically leaves our Chinese friends who could use it as a door opener to the American market.

    Ford: Ford is secure in so far as it’s still in the hands of the Ford family. It won’t help them get out of the red ink though. They need to stop losing money fast, soon there’ll be nothing left to sell or to mortgage and then what? Chapter 11 of course.

    GM: While GM looks good atm, I’m not sold yet. GM’s main advantage is that Chrysler & Ford are doing so bad right now but I don’t see them winning back customers who turned to imports. And if Volkswagen under its new master will finally work harder to get onto the American market, things will get even more crowded. I don’t see the Chinese or Indian companies being a real threat any time soon, but we shouldn’t forget about them either.

  • avatar
    cfisch

    As far as 50% of the market will not look at Detroit iron. If the right product is shown it’s amazing! The new Buick Enclave at my location is sellinf 58% conquest sales. Almost entirely of Lexus,M-B, Infiniti and Mazda! This is also true nationally. GM’ products just keep getting better. The older products are replaced with some amazing ones!

  • avatar
    tankd0g

    y2kdcar :
    November 8th, 2007 at 2:45 pm

    KatiePuckrik:
    Naturally, this would mean one of the Detroiters would be consigned to the history books, but I’ve always believed that in this period of history, one of the 3 will go down. Personally, I hope it’s Ford.

    Ford is the only one of the Detroit 3 that didn’t land a vehicle on this year’s TTAC Ten Worst Automobiles list, Katie. Why are you wishing them ill when they’re fielding fewer truly lousy products than Chrysler or GM?

    I’m not exactly sure how the cars are chosen for the awards, but I would think Ford would have to have come out with something new to qualify, and rebadging the 500 really doesn’t get you in the top 10 given the alternatives. Not to mention no one is talking about Fords or test driving them so they are kind of off the radar.

  • avatar

    tankd0g : I’m not exactly sure how the cars are chosen for the awards, but I would think Ford would have to have come out with something new to qualify, and rebadging the 500 really doesn’t get you in the top 10 given the alternatives. Er, no. Any car for sale as new in the U.S. up to the period of the nomination date was eligible for an award as one of America’s Ten Worst Automobiles. IMHO, Ford has at least one turkey that deserved inclusion: the “new” Focus. But in this battle for abomination Ford simply didn’t have vehicles that were AS BAD as Chrysler and GM. In about six months, we’ll be looking to our readers for our Robb Reportian best of the best awards. I wonder how many Ford products will make THAT list?

  • avatar
    tankd0g

    Depends if you let them nominate the EDM Focus or not :)

  • avatar
    jaje

    TTAC – Can you set up an top ten award for most empty promises by an automotive MFGR?

  • avatar
    guyincognito

    Ford is definitely in the biggest trouble. They aren't going to get squat for Land Rover/Jaguar, and I doubt they'll fully sell off Volvo in the short term and they only partly own Mazda. Whats left after that? Meanwhile, changing plants into flexible manfucturing facilities, like they already did to some of the ones they are now closing, isn't going to let them build multiple vehicles on one line, not any time soon anyway. And where is the money for that gonna come from? They need heavy investment in product which can't possibly be happening in light of the new Focus, which is eminently TWATworthy IMHO. Ford says retail market share has stabilized, which (even if true) is with a bunch of new product releases. As demand for those models inevitably trails off so will market share. With rapidly falling truck revenue and nothing to replace it, profitability by 2009 seems far fetched at best, and they've already stated the secured loan will be burned up by then. Meanwhile they are likely to be targeted by GM and Chryslerebus and, chapter 11 isn't an option as the Ford's know the I-banks'll strip and flip it right out of their hands if that happens. I don't see any path for them to escape death.

  • avatar
    umterp85

    tankd0g "Not to mention no one is talking about Fords or test driving them so they are kind of off the radar" Just what do you mean by nobody is talking about or test driving Fords ? I know you do not mean this so literally but the statement does go a little too far. I admit Ford is not doing great—but every product they have come out with recently (sans the 500 / Taurus) has done well enough to stabilize the retail hemmorage.

  • avatar
    tankd0g

    Have any of you test driven a Ford lately? I’m not in the market for a new car but even I do check out the car lots on a regular basis, nothing has come out of Ford in the last year to make me even go take a look. I would go take a look at a v6 Ranger as a cheap tow vehicle if Ford would price it like the horribly outdated utility box that it is.

  • avatar
    Steve-O

    tankd0g:

    I have. And I came away pretty impressed with the Fusion and Edge. I have always loved the Mustang, so no need to twist my arm to test drive that…

  • avatar
    tankd0g

    I suppose I should drive a Fusion to compare it to the Mazda 6, despite being uglier it might be as good to drive?

  • avatar
    umterp85

    According to our own Robert Farago—the Ford Flex will be something to talk about in ’08 (in a positive way !)

  • avatar
    Dynamic88

    Ten worst, ten best, ten whatever. It’s all meaningless. The only top ten list that matters is the top ten sales list.

    In ’06 that was

    1. F150

    2. Silverado

    3. Camry

    4. Corolla

    5. Accord

    6. Ram

    7. Civic

    8. Impala

    9. Cobalt

    10. Altima

    So, the D3 are all represented in the top ten, and collectively have half the spots on the list. IOW they aren’t dead yet.

    The transplants aren’t beating Detroit on price, so this idea that whoever files chapter 11 first gets a cost advantage and market share probably doesn’t hold. If the post-11 company doesn’t build quality, their cost advantages won’t save them. People don’t buy Toyohondissan because they make the cheapest products.

    In some market segments, Detroit is making a good showing. We know they are capable of building at least a few products the market wants.

    Despite the long running argument (er, discussion) on another thread, most import buyers are open to buying from Detroit. Detroit just has to improve product, and wait for the market to discover the improvement.

  • avatar

    Dynamic 88:

    The transplants aren’t beating Detroit on price, so this idea that whoever files chapter 11 first gets a cost advantage and market share probably doesn’t hold. If the post-11 company doesn’t build quality, their cost advantages won’t save them. People don’t buy Toyohondissan because they make the cheapest products.

    In fact, Detroit sets the price floor for new cars. If a domestic went Chapter 11 and came back, they could undercut the transplants and pose a real threat to their U.S. profits. Hence Toyota’s Chairman’s statement about a year ago that he might even lower U.S. prices to help GM. Seriously.

    While it’s nice to make that chart, remember it’s corporate profits, not sales, that really count. In this, GM is getting creamed. And Ford. And Chrysler. You could heat Europe with their collective cash burn.

  • avatar
    tankd0g

    Actually the only thing that matters is how much profit was derived from those sales.

  • avatar
    Bunter1

    Dynamic88-
    Ditch the Imp and Cobalt from the list. Without fleet sales (55% and 40% respectively through June) they are nowhere.

    Tankdog-Good point, anything on the list that is losing money for it’s builder is just “purchased” market share.

    I wonder what the “Profitable, Retail top 10” looks like.

    Cheerio,

    Bunter

  • avatar
    Lumbergh21

    jaje :
    November 8th, 2007 at 3:56 pm

    TTAC – Can you set up an top ten award for most empty promises by an automotive MFGR?

    Among current manufacturers, I think GM would win in a landslide.

  • avatar
    tankd0g

    If the Volt is on sale within 2 years, I may have to eat my shorts.

  • avatar
    Dynamic88

    “I wonder what the “Profitable, Retail top 10″ looks like.”

    Rolls, Bently, Aston Martin, Merc-AMG, um, maybe a Lexus – you get the idea.

    “In fact, Detroit sets the price floor for new cars. If a domestic went Chapter 11 and came back, they could undercut the transplants and pose a real threat to their U.S. profits. …”

    Maybe, but that assumes they’re building quality. Competitive quality. Would it matter if Ford could build a Focus 2-3K cheaper than at present? Wouldn’t people still prefer a Civic? Sure Ford would pick up some sales to people who suddenly can afford a new car, but would they really take share from Honda or Toyota ? I don’t know, I have my doubts.

    I just took a Focus for a test drive a couple hours ago. It’s never been a bad car, and despite the redesign that looks like an exercise in Japanese anime, it still isn’t a bad car. (And the tape on the wiring harness didn’t bother me), but that said, it’s still not a Civic either. I’d happily pay the Civic’s current price, even if I could have a similarly equipped Focus for thousands less. I suspect a lot of people would. Or maybe it’s just me.

  • avatar
    Brewster123

    Speaking of Robert’s note on the “collective cash burn” this from Business Week today:

    “Toyota now expects to make operating profits of $20.2 billion this financial year, $440 million higher than earlier stated and a figure still considered conservative by analysts. By the end of Wednesday trading, which saw GM’s stock price plunge 6% to $33.95, the market valued the world’s biggest automaker at just $19.21 billion.”

    Spin that one for me Fritz!

  • avatar
    casper00

    “GM looks the closest to healthy right now” Let me get this straight, GM just posted a whopping third quarter loss of $39 billion and they look healthy out of the 2.8? Am I missing something here? Another thing, Union workers want better pay, insurance and etc, but Ford, GM and Chrysler is shutting down plants,laying off workers and ending model lineup…..interesting to see what will happen next.

  • avatar
    bleach

    Dynamic88,

    You are probably right that a lower priced focus may not steal civic sales, but a focus sale could be priced so much cheaper it forces the competition to cut prices. Or it could just be profitable for a change.

  • avatar
    Dynamic88

    “You are probably right that a lower priced focus may not steal civic sales, but a focus sale could be priced so much cheaper it forces the competition to cut prices. Or it could just be profitable for a change.”

    My whole point is that if it doesn’t take significant sales from the competition, there is no reason for the competition to drop their prices. This whole idea that a post-11 Focus makes Honda drop it’s price can only hold if a lot of customers who’d have bought a Civic are going to go for the Ford to save money. I’m doubtful that will happen in a big way – but maybe I’m wrong.

    You walk into a Honda dealership and ask to see a car, they show you the car. You walk into a D3 dealership and ask to see a car, and they start telling you about all the discounts that are available. That’s telling me people already pay a significant premium to own the transplant cars. How low can the D3 go? When, if ever, do we reach a price point at which Civic/Corolla buyers jump on Focus/Cobalt? I don’t have definite answers, I simply suspect that the price can’t be brought down far enough to get many conquest sales. Again, perhaps I’m wrong.

    I do agree with you that Ford could simply make more profit per unit, and that might be the better way to go.

    I don’t see how a post-11 Ford (or GM) would emerge with significantly lower costs than the transplants. How cheap are people going to work?

  • avatar
    Sanman111

    It might not steal civic sales, but it would murder the other D2 sales and perhaps hyundai, kia, etc. Stealing those sales may be enough to make it healthy. Not to mention, they could kill GM if they undercut their prices to fleets.

  • avatar
    yankinwaoz

    I don’t think of the Detroit discounts being used to increase sales. They are simply a method of adjusting the price to reflect the market reality.

    Cars are not commodities. Most people don’t view Hondas, Toyotas, BMW’s, Fords, et all as interchangeable transportation devices. Most people would rather pay more for better quality.

    Discounting a car that is perceived as sub-standard doesn’t make it any more appealing to a buyer. On the contrary, it simply reinforces the perception that US cars sucks.

    When a buyer wants a quality car, they can suck it up on the price by focusing on the monthly payment, or leasing. In other words, they find a way to buy the more expensive car because when they drive it home, they feel like they have a quality car.

    On the contrary, if they by into the discounts a buy a 2.8 car, they are going to get raised eyebrows from family, friends, and co-workers. They are going to feel like they were just suckered into buying a piece of crap, even if it was cheap.

    My point is, if 2.8 thinks they are going to grow by going cheap, then they will loose.

  • avatar
    Phil Ressler

    The numbers are scary all around. Market share erosion, cash burn, reserves…you name it. The wait for new products is just too long.

    However, facing facts and settling is a defeating psychology. If the Detroit 3 assume they are confined to the half of the market considered in play, they won’t even keep that.

    No auto manufacturer has found salvation in shrink. Even Porsche yielded to the imperative to expand. “Shrink your way to success” is the pipe dream of operating executives lacking imagination, and it usually fails, especially in consumer and emotion-driven markets. Typically, you can’t cut costs as fast as you lose market share. Why? Most people don’t want to join a club that’s dying. Even in our drive for mass customization, there’s more mass than customization. You can offer 1,367 combinations of a Mini but it’s still a Mini. And once people buy in, they want more people to join them.

    Detroit has to play for the whole market, or at least behave in a way they can be perceived as fighting for it. When Ford was at 24% market share and threatening to overtake GM not so long ago, Nassar & Fields and then Bill Ford & Fields shifted gears and said “We’re not going to chase market share anymore. We’re prioritizing profitability.” It was at that moment that I predicted and knew Ford’s share would crash quickly in the coming years. GM went down this path too though less wholeheartedly, with similar results. In the 1990s Ford killed models they claimed were too expensive to keep. What they really meant was, those models weren’t *as profitable* as trucks and SUVs. Chasing profits exclusive of market share creates vulnerability. The F150 and its variants is a one-legged stool after all.

    You can bet that the Chinese and Indian companies up and coming understand the imperative of market share. The Koreans get it, in part because they know having been squeezed on the way up by Japan and about to get crunched by China, their day in the sun is going to be brief. Japan worked relentlessly for market share for 50 years. This is what businesses — and by extension countries and cultures — do when they are driven entrepreneurially. In other sectors, American business still operates this way. Whether it’s Starbucks or McDonalds franchising the world, Microsoft fighting to extend old dominance into new sectors, Google’s relentless roll-up of “functional media” on the web, Larry Ellison’s battle for market share with SAP, the way of the great business sectors is Grow Or Die. Or as Bob Dylan wrote, “He not busy bein’ born is busy dyin’.”

    The operating mechanics in our auto companies have to figure out the profit piece and beaver away at that, but the CEO, product, marketing and the revenue functions must maintain a posture that’s convincing in commitment to steal market share from others. When these companies put market share below profitability, the only question is, how long till they die.

    Only a portion of the market is data-driven. Car buying has a strong emotional component. Even the “appliance” segment is powered in part by the emotion of joining. People sense when their chosen vendor is settling for what they have, and they don’t like it. Apple Computer failed to win substantial market share, but the customers it got were energized by the company’s refusal to quit trying to pry more business away from the “Wintel” majority. One of the strengths Steve Jobs brought to the company both times he has run it as CEO has been an unbowed attitude, even when his stock was weak and cash was tight. Apple was always trying something. The customers knew the will to grow was still a lighted flame. And when Apple saw an avenue to growth by taking on Sony in portable music, the audacity of their thrust was as much a factor in their marketing and the support they got from the influencer community, as was the product itself.

    When Airbus pushed Boeing’s back to the wall, Boeing’s sales staff turned up the wick and along with a product bet in the 787, battled their way back. Unfortunately, Mullaly isn’t charismatic enough to energize a consumer sector and its huge channel. The closest thing he has to charismatic is Mark Fields, and he’s just not smart enough nor honed for global and market cred. Plus that haircut undermines him. Seriously.

    There’s a lot to be done operationally to make the Detroit 3 viable, but all that has to be perceptually subordinate to the public posture for gaining market share. Detroit has to commit to (at least act like it) expanding the half of the market currently considered in play and leave it to someone else to die.

    Phil

  • avatar
    KBW

    When Airbus pushed Boeing’s back to the wall, Boeing’s sales staff turned up the wick and along with a product bet in the 787, battled their way back. Unfortunately, Mullaly isn’t charismatic enough to energize a consumer sector and its huge channel. The closest thing he has to charismatic is Mark Fields, and he’s just not smart enough nor honed for global and market cred. Plus that haircut undermines him. Seriously.

    I doubt Ford is doomed because of his bad hair. The 787 is winning market share because it represents a leap forward with its carbon fiber construction and high efficiency engines. Its head and shoulders above the competition with better fuel economy, comfort, lower maintenance costs and low operating costs due to its smaller size. Its everything a US Ford product isn’t. One wonders if Ford can become a profitable operation by simply shutting down its US operations outside of its F series trucks.

  • avatar
    Phil Ressler

    I doubt Ford is doomed because of his bad hair. The 787 is winning market share because it represents a leap forward with its carbon fiber construction and high efficiency engines. Its head and shoulders above the competition with better fuel economy, comfort, lower maintenance costs and low operating costs due to its smaller size. Its everything a US Ford product isn’t. One wonders if Ford can become a profitable operation by simply shutting down its US operations outside of its F series trucks.

    Yes, 787 is a great design. But Boeing had to get aggressive while the product decision was made, and then bridge while the 787 was developed and built. After a period of wavering confidence, the company’s posture was that settling for #2, which could easily have won the internal battle, was as good as dying. They refused to yield to Airbus’ surge. With money for only one big developmental bet at the time, they put the chips on advanced materials, efficiency and “rightsize” on assumption air travelers want and will gravitate to more direct flights. Airbus bet on huge capacity for long feeder flights and continuing growth of hub-and-spoke.

    Could Ford return to profitability by shutting US carmaking? Maybe. But it would be a short-term bet that would hand more cash to winners in the huge but brutal North American market and embolden the hyenas seeking destruction of whomever is weak.

    No, Ford won’t die because of Fields’ haircut, but his lack of taste in an image culture contributes to his audience’s inability to take him seriously. Communications are strategic and Fields is a dope in this regard and in his public representation of his company.

    Phil

  • avatar
    Thomas Minzenmay

    @Phil:

    Obviously shrinking alone is not the way, but it’s an important first step, because even the biggest market share won’t help you if you don’t make any money.

    You used Porsche as example, but if you look at it, when Wiedeking took over Porsche as CEO in the early 1990s, Porsche was doing really bad and so he killed off every car except the 911, the one that was still making money. That was the healthy basis from which Porsche managed to grow again.

    Also the Asian manufacturers don’t just grow at all costs, they do it with products that actually make money.

  • avatar
    1996MEdition

    Am I missing something here? The take on this site has always been that the D3 need to get competitive, right. I have read tons of editorials and posts that say the D3 need to jettison unprofitable cars, plants, and people. It looks like they may be taking the first baby steps in this process. Granted, the product needs to improve (in some cases drastically), but you have to start somewhere, right? Cut out the dead wood so that the live branches can get the sun and nourishment.

    In shopping for a new car for my Mother, I looked at the Fusion against the Civic and Corolla. It was definitely competitive and would have been my choice if I was buying the car (Mom liked the Corolla, the Fusion was too big for her, the dash on the Civic was too video gamish).

  • avatar
    OverheadCam9000

    “GM looks the closest to healthy right now…”

    Does this mean the GM Death Watch is over, RF?

  • avatar

    OverheadCam9000 :

    Does this mean the GM Death Watch is over, RF?

    No. But it does show that TTAC does not have a “party line.” In other words, I disagree with this statement. More specifically…

    GM actually no longer looks as healthy as it did just a few weeks ago. The Rescap problems are still a big unknown and the losses will flow through to GM’s financials (albeit a non-cash event).

    But worse, GMNA’s cash burn continues apace. While GM still touts its ample liquidity, we know that its net liquidity is still negative to the tune of about $10b.

    With car sales likely to slow again in 2008 and higher gas prices, GM is most at risk of The Big 2.8 due to its ongoing (if unremarked) dependence on profits generated by its large trucks and utes.

    And while the UAW deal will help GM lower costs as they hire at a second wage tier for non-core jobs, the fact is GM committed to programs in a number of plants. It is possible that GM will still have too much capacity for the next few years should cars sales slow and consumers continue to abandon SUVs and ful;l-size pickups.

    Since you asked…

  • avatar
    umterp85

    Phil: Could not agree with you more on Fields. Empty suit deluxe. I will be interested to see if the new guy Farley has any “public presence” that can be leveraged as an offset to Mulally’s dry style. Clearly Fields is not the answer.

  • avatar
    jdv

    I'm always confused by the term 2.8. If Ford owns .3 of Mazda, wouldn't that make them The Big 3.1? Hmmm, or how do you account for Saab, Volvo, Jaguar? The Big 6.1 probably is overstating things. 

  • avatar

    Daimler owns .2 of Chrysler. Hence 2.8.

  • avatar
    KatiePuckrik

    Actually it’s “big 2.801”

    19.9% is owned by “das fatherland” and 80.1% is owned by the bloodthirsty hound.

    As for Saab Volvo and Jaguar, they are wholly owned subsidaries, effectively, just brands. So, they’d all fall under one corporate umbrella.

    Shall I shut up, now…..?

  • avatar
    Pch101

    “Shrink your way to success” is the pipe dream of operating executives lacking imagination, and it usually fails, especially in consumer and emotion-driven markets.

    Anyone who has done business turnarounds knows that cutting dead weight is a key first-step to halting the decline. Reducing the burn rate helps to buy time and pay for the recovery.

    Market share for the sake of it is not a wise strategy for businesses such as automakers, that have high variable costs. Unlike most manufactured goods, the most costly aspect of a car is the parts cost, not the labor.

    When the company builds cars that people don’t want, the company is forced to discount the price because people don’t want them. The end result of that strategy is piles of expensive parts, bolted together with costly labor, that are dumped at a loss en masse. The more you build, the more you lose. Welcome to the world of the Big 2.8.

    If you want models for profitability in the US market, look to Toyota, Honda, BMW and Porsche for your benchmarks. Of these, only Toyota seeks to utterly dominate the market. What they all have in common is that each dominates at least one or two segments within the market, and that leadership leads to considerable profits generated within that segment.

    The Big 2.8 suffer from diseconomies of scale, that combined with undesirable products, have led to badly damaged brands, bloated distribution networks (read: too many dealers), below-average revenues per unit and unsustainable burn rates. They need to get smaller before they get bigger. It’s not possible to grow market share if nobody wants your products.

  • avatar
    Seth L

    Ford Europe is doing so bleeding fantastic, it makes my brain hurt. Their Aussie line is also full of great niche vehicles that I would love to see here.

    Yet we continue to have mediocre product in the USDM.

    Chrysler though; horrible product drought, new models are awful, they still need to trim models like the article says, but they’ll be hitting bone soon.

  • avatar
    Phil Ressler

    Anyone who has done business turnarounds knows that cutting dead weight is a key first-step to halting the decline. Reducing the burn rate helps to buy time and pay for the recovery.

    Having spent about half of my professional life in turnarounds of various kinds, I accept the need to cut non-performing entities in the business as a first step. That’s tactical, necessary and insufficient. In organizational terms, that’s the COO’s job in concert with the operating executives who own the functional stacks. Strategically, however, the CEO must outline and communicate retrenchment as a means for regaining a footing for expanding market share, or the market itself.

    My prior posts were particularly in reaction to the last two paragraphs of the editorial. Turnarounds are fueled as much by managing (motivating) the psychology of the company as well as the market expected to support it. When Porsche was in trouble and in danger of losing its independence in the early 1990s, the company retrenched back to the 911, retooled its processes to make the car more profitably while containing price inflation, but it also began talking immediately about how that profitable base would be a launch pad for putting Porsche into vehicle categories it had never entered before along with a new entry-level sports car.

    Not against the wall, but realizing that lack of scale would catch up to them, Mercedes retooled and moved up market (AMG in-house and Maybach) and down (C-Class, A-Class, SUVs). In America, VW found itself with only the Jetta selling reasonably well, but they revamped Golf, doubled down on the New Beetle, made Passat more Audi-like, failed here with Phaeton. They kept at it. When Chrysler was on the ropes circa 1979, Iacocca economized around a single platform but told the market he was going to build an array of cars and compete across the board. Say what you will about the K-car roots of their ’80s lineup, but people bought in. All these companies, and you can add BMW, Toyota, the Koreans and the older versions of the Big 3 knew in their bones it’s Grow Or Die.

    I do not believe the Detroit 3 can succeed with a leadership holding the attitude that only 50% of the market is in play. This will influence their marketing, their product management and the bets they make. Customers and market influencers will notice and slough off to more dynamic brands. Sure, Ford could have an F150, SUV and Mustang business and it will continually lose share until all of them are no longer volume sellers. If we want an American automotive sector like the British, where we have Panoz, Saleen, Roush craft shops and perhaps Cadillac, Jeep and Corvette as modest volume independent operations, then a good way to get there is for the strategic leaders of our automakers to conceptually cede half the market to its foes.

    Focus is a good tactical tool for getting one’s house in order, and task-oriented workers need it. But focus is also a funnel for thinking small. It’s not in the American character to retrench as permanent objective. Public posture and operating strategy has to be lean forward. When people see that’s no longer the case, Honda will become spiritually the most American auto producer in the United States.

    Phil

  • avatar
    Pch101

    Strategically, however, the CEO must outline and communicate retrenchment as a means for regaining a footing for expanding market share, or the market itself.

    If an automaker makes well-built, well-packaged products that are well supported serving segments that the public wants at prices that are within reach, market share will naturally follow.

    Toyota and Honda have been building market share at the expense of the Big 2.8 because they build products that people want. The fact that the products are better than their rivals allows them to charge higher net prices, which improves their margins. The market share comes from the fact that they are able to sell more of them than can their rivals.

    If the Big 2.8 want market share, that’s how they’ll get it. Making a wide variety of vehicles that nobody wants, as does GMNA, just sucks cash out of the organization and creates costly burn.

    GM would be far better off it would sell one-third the nameplates, but at triple or quadruple the volumes. The other two don’t have the nameplate bloat, but do need to make better cars that will sell more copies so that their margins can improve.

    In other words, market share is a symptom, not a cure. Increased market share is the outcome of doing things right. Trying to increase market share for the sake of it without regard for product and service leads to badge engineering, name changes and all of the gimmicks that cost Detroit in the first place.

  • avatar
    Phil Ressler

    Also the Asian manufacturers don’t just grow at all costs, they do it with products that actually make money.

    There have been some years where all or nearly all of Toyota’s profit was earned in the US. We’ve been the lion’s share consistently. Our market has at various times subsidized Toyota’s losses in other markets, which were I suspect were willful drives to buy market share in mature markets, or to expand immature markets on an accelerated pace.

    Phil

  • avatar
    hltguy

    $4.00 plus a gallon fuel is coming, the housing mess is worsening, perhaps a recession. Before anyone says “what about those great job growth numbers in October” look at them closely and how the government calculates. This means fewer cars being purchased, and Detroit will be hit the hardest.

  • avatar
    Phil Ressler

    If an automaker makes well-built, well-packaged products that are well supported serving segments that the public wants at prices that are within reach, market share will naturally follow.

    Unfortunately, product isn’t enough. The world is full of best product also-rans. Toyota and Honda didn’t win market share on product alone. They grew market share even when their products weren’t exceptional, and they didn’t let dogs deter them.

    If the Big 2.8 want market share, that’s how they’ll get it. Making a wide variety of vehicles that nobody wants, as does GMNA, just sucks cash out of the organization and creates costly burn

    Which is not remotely what I’m suggesting.

    GM would be far better off it would sell one-third the nameplates, but at triple or quadruple the volumes. The other two don’t have the nameplate bloat, but do need to make better cars that will sell more copies so that their margins can improve.

    Maybe, but it’s not clear that it would be possible to sell quadruple of fewer vehicle models. Toyota found it necessary to add Scion and Lexus, and within its Toyota brand its vehicle nameplates have proliferated. Honda has stayed truer to a lean brand formula and they are being outsold by an inferior products.

    In other words, market share is a symptom, not a cure.

    Which does not mean market share can’t be an objective. More to the point I think it must be. Toyota wore its market share ambitions nakedly from the time they got started here. They do it in every market they enter. The Detroit 3 used to have that aggression. Great turnarounds come from companies that don’t let their current circumstances undermine their ambition.

    Trying to increase market share for the sake of it without regard for product and service leads to badge engineering, name changes and all of the gimmicks that cost Detroit in the first place.

    It only leads to those things if that’s the limit of vision and imagination among the company’s leadership. “Badge engineering” by itself isn’t bad. Like anything else it has to be done well. Those responsible for it got lazy and elevated a useful tactic into corporate strategy. That’s knuckleheaded. But, for example, when Ford derived the original Cougar from Mustang, that was badge engineering (that required a little real engineering) in a good way, and it increased unit profits from the platform in a way the market appreciated. Toyota has done the same thing extending some Toyota platforms into Lexus.

    Phil

  • avatar
    Thomas Minzenmay

    There have been some years where all or nearly all of Toyota’s profit was earned in the US. We’ve been the lion’s share consistently. Our market has at various times subsidized Toyota’s losses in other markets, which were I suspect were willful drives to buy market share in mature markets, or to expand immature markets on an accelerated pace.

    Selling a product below its actual costs might make sense if you want to get a foot into a new market. The problem for the Big 2.8 is that they’re not only having problems on their home market, but they also don’t have a market that could subsidize said home market.

  • avatar
    Pch101

    Toyota and Honda didn’t win market share on product alone.

    “Product” is a broad concept that includes service, warranty, reliability, residuals and whatever other benefits may appeal to the customer. And that is precisely what earned Toyota and Honda their market share, while deficiencies in product led to the decline of the Big 2.8.

    but it’s not clear that it would be possible to sell quadruple of fewer vehicle models.

    It’s not evenly applied, but for mainstream products such as compacts and mid-sized sedans to be successful, they need to increase their volumes in order to create efficiencies and to have made the R&D investment worthwhile.

    Honda and Toyota sell far more Accords and Camrys than GM sells Malibus, which makes the first two vehicles quite profitable for their makers. Those provide the bread and butter that pay for growing the company elsewhere.

    Toyota wore its market share ambitions nakedly from the time they got started here. They do it in every market they enter.

    Yes, but they earned it one sale at a time, by patiently turning customers into repeat customers who would evangelize the products. It took decades, not months, for them to get there. They did not enter the market with the expectation that market share would magically drop into their laps, and they purposely avoided trying to conquer all of the major segments simultaneously.

    Again, most of the profitable automakers in the industry do not attempt to dominate market share in all segments. Toyota does, but it is the exception, not the rule.

    There is no one optimal business model for automobile manufacturing. The successful companies do not all follow the same path.

  • avatar
    HEATHROI

    I vaguely remember in the fifties and sixties, a few guys from a group of islands off the coast of china that attached a motor to some sheetmetal and shipped to them to the US where people laughed and said people never will buy them – i wonder what happen to them.

    The 2.8 is nowhere near the position of early days Toyota, Nissan Honda….yet.

  • avatar
    jthorner

    “I do not believe the Detroit 3 can succeed with a leadership holding the attitude that only 50% of the market is in play.”

    Phil is right. I trace this attitude problem in Detroit back many decades to when the started talking about “import intenders” (not to be confused with Import Bigots tm) and how to make a product for “them”. In the 60s and 70s people were drawn to certain imported cars not because they were imported, but because they offered a type of product the domestic players didn’t really have. Personally I never liked the VW bug. It was noisy, slow and had absolutely horrible heat in the winter. But, nothing out of Detroit played in the small and cheap to run category and a best selling icon was born. To this day the US companies have mostly botched the job of competing effectively with the new young companies from Asia. Running from the fight now is a surefire trip to nowhere.

    Detroit has to play for the whole enchilada if it is going to survive. Why the **** shouldn’t there be GM, Ford and/or Chrysler products in every significant segment which is better than the competing offerings from Toyota, Honda and the rest? No excuses folks, just get it done. As the Brits might say, stop your whinging! I’m sick and tired of hearing excuses about health care, exchange rates, union contracts and the rest. These executives pay themselves like miracle workers, so let’s see some miracles.

    In business the truth really is: Grow, or Die. I cannot think of a single large enterprise which has thrived over a decade or more on a cut our way to success strategy. There isn’t a single success story for a company which said that it would chase profits instead of market share.

    Remember when Sears was gobbling up the US retail marketplace? Then they stopped growing and started managing their mediocrity. Then they went into decline, and are still in decline. Ditto for K-mart. Now Sears and K-mart are one, much like the marriages which once created American Motors.

    Remember Jimmy Carter? The American public showed him the door when he started preaching about the need for diminished expectations for America. Where is the Ronald Reagan of the US automotive industry? I’m pretty sure the current crop of CEOs in Detroit doesn’t fit the description. The whole lot of them are MBA manager types, not a real leader in the pack.

  • avatar
    Thomas Minzenmay

    I agree that the Detroit 3 shouldn’t be content with 50% of the market. But I still think that they need to get rid of everything that isn’t likely to return any money in the mid-term. You need a healthy basis in order to grow and right now this is just not the case. So shrinking could be a short-term strategy in order to finally make some money which could then be invested in better products (=> growth). Right now, all they do is cut labor costs, including R&D money (which is the worst thing you could do) and it still gets them nowhere near profitability.

  • avatar
    jthorner

    “Right now, all they do is cut labor costs, including R&D money (which is the worst thing you could do) and it still gets them nowhere near profitability.”

    There is a story about Donald Petersen’s time as then new president of Ford. I don’t know if it is true or not. Supposedly he came into a management meeting and everyone was laying out the next round of slash and burn cutbacks. Petersen said something like: “How about this, let’s close down everything and then we will really save a lot of money.” After the shock set in he then went on to lecture about how they had to build things people wanted to buy and that no amount of cost cutting would save the company. A few years later Ford came out with the game changing Taurus and went from being a big money loser to being a money maker.

    This article about Ford’s remarkable recovery under Petersen way back in 1986 is interesting:

    http://findarticles.com/p/articles/mi_m1316/is_v18/ai_4473382/pg_1

  • avatar
    Dynamic88

    jthorner

    Thanks for the link. That’s an interesting article.

    This part really got my attention –

    “Today Ford is back, both in money–in the second quarter of 1986 its profits surpassed GM’s, despite the fact that GM sells twice as many cars–and in product quality.”

  • avatar
    raast

    As a consumer in Canada, I personally would not buy Ford or Chrysler, at any price. If GM wants to move vehicles in Canada, the equation is simple: lower the prices to a point where they essentially match those in the USA – then they’ll see cars move. Spending money on all the Wish’n’Win hype assumes the consumer has the mentality of an 8 year old. Maybe we do. But if I have to pay a premium for a vehicle, then it won’t be to any of the above.

  • avatar
    Pch101

    This part really got my attention – “Today Ford is back, both in money–in the second quarter of 1986 its profits surpassed GM’s, despite the fact that GM sells twice as many cars–and in product quality.”

    That was an interesting article, and it supports the point that the pursuit of market share for the sake of it, without viable products to get it, is a mistake. Ford went from loss to profit by making a few products that were hits, which helped to amortize the fixed costs of the vehicle (R&D, plant and equipment, marketing and promotion) over more vehicles, effectively increasing margins. Plus, hit products can command higher prices, which improves margins further still.

    If you want the Big 2.8 to “play for more than 50% of the market”, then the products must be improved so that they can be competitive. In theory, they already play for 100% of the market — they are full-line automakers with at least one vehicle in virtually every segment. What eliminates them from half the market is the fact that the products are not as desirable as are those of the competition. Presence in the market is not the issue.

  • avatar
    Phil Ressler

    it supports the point that the pursuit of market share for the sake of it, without viable products to get it, is a mistake.

    No one is suggesting market share is best pursued without viable products. But it can and should be pursued with what you have. The point is that investments and decisions pertaining to products come from an executive commitment to fight for market share, not the other way around. In the early 1980s, Ford was on the brink of disaster. There were internal advocates of retrenchment, but despite a grave capital situation, management refused go that route. Instead, their determination to drive for market share resulted in a wave of products that debuted a new aero design theme: Tempo, Thunderbird (aerobird), SVO Mustang, V8 back in the Mustang, Bronco II, and of course Taurus and the Areo Minivan. Ford bet the farm and while profits returned the company to health, it’s market share that gave it 15 years of momentum. In recent years, it’s no coincidence that profit vaporized shortly after Ford management declared market share was no longer a priority. In fact I’ll go so far as to say that in a grow-or-die business like automotive manufacturing, attempting to be profitable without a commitment to growth renders sustained profitability more elusive.

    A management team that believes it is fighting for only half the market will be too cautious about products, services, R&D and marketing.

    If you want the Big 2.8 to “play for more than 50% of the market”, then the products must be improved so that they can be competitive.

    That’s fine if you have a seven year horizon. In the meantime companies have to sell what they have. Playing for the whole market with naked aggression affects what they do in the here-and-now with respect to marketing, services, near-term fixes and incremental evolution of existing products. There’s much more to being competitive than having a more perfect product. Inferior products have won and continue to win in every industry.

    In theory, they already play for 100% of the market — they are full-line automakers with at least one vehicle in virtually every segment.

    Their presence in some sectors is half-hearted with anemic support from marketing and too little internal support for incremental improvement.

    What eliminates them from half the market is the fact that the products are not as desirable as are those of the competition. Presence in the market is not the issue.

    Existence and presence aren’t the same. The Detroit 3 can sell more of what they have today. The market is not entirely product driven.

    Phil

  • avatar
    greenb1ood

    Re: Ford Chances for Recovery

    Mullaly has begun to cut through Ford’s bureacracy to instill some real changes. This may not seem like a big accomplishment, but the main thing holding Ford back since the Jac Nasser era was the toxic corporate culture. Now that Mullaly is winning hearts & minds internally (and he is), Ford needs to start doing the same with customers. Step 1: Continue to refine and roll out more competitive products (Fusion, Taurus, and Edge is a start) to begin chipping away at the coasts’ consumer bias toward Toyota and Honda, and Step 2: Make a big splash that will get consumers re-interested in considering Ford as a brand.

    What kind of splash? Re-invent the dealer network to make it a fast, friendly, painless experience. Then call in every media outlet possible to showcase the Ford’s breakthrough.

    The Apple store concept comes to mind. It doesn’t matter how competitive Ford’s vehicles are…making car shopping more interactive, fun, and non-threatening is the only way to lure enough new customers through the doors to see that Ford has made a difference.

    I’m not sure if this is on Mullaly’s ‘To Do’ list…although the hiring of Farley may be an indication that it is…but if he can change the company culture and horrible dealer experince, the products, quality, and success will come much easier to Ford than GM or Chrysler.

  • avatar
    Dynamic88

    Re: Improving dealer experience

    It looks to me like Lexus has the best dealer experince as far as customers are concerned. I’d expect Toyota to captialize on this knowledge and apply it at it’s Toyota/Scion dealers before any of the others automakers get around to it. Just guessing.

  • avatar
    Dynamic88

    “Existence and presence aren’t the same. The Detroit 3 can sell more of what they have today. The market is not entirely product driven.”

    In the article, Peterson said he came to believe that the cars sell cars, rather than the marketing department.

  • avatar
    Phil Ressler

    In the article, Peterson said he came to believe that the cars sell cars, rather than the marketing department.

    Cars do sell cars…to a point. Eliminate marketing, and watch sales collapse. I’ll go so far as to say that a larger proportion of cars sales are instigated by marketing than by the cars — or word of mouth — themselves. The car only gets you perhaps the first 30% of market potential. Occasionally there is an “it” car that creates its own demand. The original Mustang is an example in its first two years. These phenomena are scarce.

    Phil

  • avatar
    KBW

    I do wonder about that, cars like the corolla have minimal amounts of marketing here yet they sell quite well. I can’t flip the channel for 2 seconds without seeing an ad for the new Malibu.

  • avatar
    Phil Ressler

    I do wonder about that, cars like the corolla have minimal amounts of marketing here yet they sell quite well. I can’t flip the channel for 2 seconds without seeing an ad for the new Malibu.

    I’ve only seen print ads for Malibu. Haven’t seen TV yet, so can’t comment on the quality of the marketing job. But the existence of marketing isn’t sufficient. It has to be good marketing execution. Also advertising is just one element. On the demand pipeline of awareness, consideration, evaluation and purchase, marketing my holistically plan, own and address each step as part of a entire cycle, with emphasis on knowing the conversion efficiencies between each step. What you’re seeing on TV for Malibu is simply trying to spike awareness there’s a new, perception-busting car, and showcase it enough to pull people to the website and into dealerships.

    Entry level cars in get the least marketing support. Corolla doesn’t get any TV, but it does get radio, newspaper and onsite marketing. Focus and Cobalt get more print than broadcast. Honda seems uniquely willing to use high-profile marketing for Civic, but with relatively few models, its iconic for the brand.

    Phil

  • avatar
    jthorner

    Real success in automotive products as well as many others requires both a compelling product and an good marketing program to gain mind-share. The problem comes when companies think that marketing is a substitute for a compelling product. There is always tension between the various disciplines of a business with each one sometimes asserting that they are the key and everyone else must simply play supporting cast roles, but really it all has to work.

    Short term promotional gimmicks like Everyone Pays The Employee Price can move the metal, but they don’t build a successful business. The most ingenious marketing program isn’t going to take a five year old uncompetitive car and make it an overnight sales success. You gotta have the product and the marketing program to win the game.

    There are some sectors where the competition is weak enough that brilliant marketing can cover for sub-standard product, but that is a charlatans game and certainly isn’t the situation in the US automotive market today. By and large the many, many models on sale in the US today are each getting about the market share they deserve.

  • avatar
    Dynamic88

    “…The problem comes when companies think that marketing is a substitute for a compelling product. ….”

    I think this is what Peterson was getting at. A good example is Civic vs Focus. Ford can get me into the dealership to look and drive, (which I did, a few days ago) but they better hope I’m ready to buy right then and there, and that I havn’t looked at anything else in the class.

    Focus isn’t a bad car really, it’s just not compelling when judged against the competition. Ford needs to drop some money on compact R&D and make a competitive small car. No amount of marketing is going to substitute for the car being dated and well behind it’s competition.

  • avatar
    Pch101

    There are some sectors where the competition is weak enough that brilliant marketing can cover for sub-standard product, but that is a charlatans game and certainly isn’t the situation in the US automotive market today. By and large the many, many models on sale in the US today are each getting about the market share they deserve.

    I agree with that, and there are numerous examples from the automotive that support this contention.

    Many of the automotive brands now on sale in the US are well established, for better or for worse. The public perception of those brands is based largely upon their exposure to the vehicles (which is constant — they are on the roads all around you), and the feedback of their friends, associates, and families. When they are ready to buy a car, they have numerous sources to conduct research, including some sources that are themselves well branded and therefore considered to be trustworthy.

    In many respects, the domestics have negative brand equity, and they have earned it. In the recent past, GM has sought to overcome that by inventing new brands (Geo, Saturn), but those efforts have failed. In the case of the former, it was betrayed by badge engineering, which the public tends to disrespect (it will not buy badge-engineered cars in the same volumes, nor will it pay the same prices); for the latter, the brand betrayed itself by turning on its own values and allowing its quality ethic to deteriorate, which created yet another reason to mistrust General Motors.

    At this stage in the game, Madison Avenue can’t do much about this, the public is too well informed and too cynical for this to work. To the extent that the public demands them, good advertising can be used to sell domestic pickup trucks and SUV’s, because the public still trusts the domestics in these segments. But for passenger cars, the public has learned to look elsewhere and will continue to do so unless given a good reason not to.

    This article is a bit long, slightly dated, and makes a few observations that are just wrong (describing the VW Phaeton as a success is about 180 degrees from the truth), but is generally on point. It essentially argues that brand equity in the automotive industry is an extension of brand identity, which is derived from the values that the brand communicates, which in turn comes from the products that carry that brand. You can’t simply seduce the public into buying Pontiacs simply by telling them that they are wonderful, the cars themselves communicate the brand values and will ultimately create (or destroy) brand equity. http://www.jyanet.com/cap/2002/0316fe0.shtml

  • avatar
    Dynamic88

    Interesting article. Thanks.

  • avatar
    Landcrusher

    If a company has a good product, then management doesn’t have to be half as good to execute a winning strategy.

    OTOH, if your product is sub par, your execution on everything else better be excellent.

    Good generals win the battle before it is fought, and good CEO’s would do well to do the same. GM seems to be at least trying at this point, but it will take avoiding the latest MBA induced, idiotic trends for enough years that the public catches on to a better product. I do not believe anyone near Detroit is capable of doing that.

    Someone will put some calculus on a spreadsheet and “prove” that they should cut quality, or that they can use some new management ploy to win faster. The only thing that will save the domestics is real leadership, not management mumbo jumbo.

    They NEED a better car, and the NEED leadership that will earn back buyers’ trust.

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