Bob Lutz Explains Why GM Ignored Small Cars

bob lutz explains why gm ignored small cars

CNN Money quotes GM Product Planner Extraordinaire Bob Lutz: "The reason we made no money on small cars is because hello! nobody wanted them. At $1.75 and $2.25 (per gallon), everybody was happy with full-size utilities with V-8 engines. Now that's shifting, so the profitability is going to go down on trucks and the profitability on cars is going up." Um. No. The reason you made no money on small cars is because hello! you didn't build small cars anyone outside of fleet buyers would even think about buying. Toyota didn't have any problem making money selling small cars. Honda didn't have any trouble making money selling small cars. If you had been as serious about building small cars as you've been about building trucks, if instead of adopting a "throw it against the wall and see what sticks" marketing plan, if you hadn't all but forgotten Saturn existed until last year and if you hadn't parts-bin engineered whatever you could throw together for the rental companies, you'd be well ahead of the curve now. But now you're playing catch-up while the competition forges ahead. Maybe you need to think about something the Marines should have taught you in flight school: to hit a moving target, you have to aim ahead of it.

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  • Pch101 Pch101 on Jul 18, 2008
    The Cavalier, S-Class, and Sunfire were subcompacts. Wrong. These were classified by the EPA as compacts. The Corolla and Tercel were both subcompacts, with the Tercel slotted below the Corolla. The Grand Am, Corsica/Beretta, Skylark, Cutlass, Malibu and Achieva (along with the Prism) were the compacts that competed head on with the Corolla. Also wrong. You are mixing together your car classes with this one. The Grand Am and similar were compacts. It was intended to compete with the Accord and the Camry, which were both compacts. The Prizm was a rebadged Corolla. Both were subcompacts. If what you’re saying is true then the Civic would have been limited by the same quota There's no comparison. During the 1980's, Honda had a three vehicle lineup (Civic, Accord, Prelude.) Toyota had several cars, a van, pickups and the precursor to what we now call SUV's, such as the 4Runner. Both had quotas based upon previous sales, but Honda had fewer models to sell. Toyota had to make choices about which of its models to prioritize. Honda obviously had an easier time with this.

  • Macarose Macarose on Jul 18, 2008

    Nope, on a price basis that's who competed with who. The Grand Am along with the other GM compacts were priced thousands less than the Camry/Accord. I'm sure you're aware of that. They were meant to compete with the Corolla and Civic models as were the other GM offerings. The Cavalier, S-Series and Pontiac Sunfire were priced to compete with the regular to high end versions of the Tercel and lower end of the Civic (for the most part, EZ models were definitely bargain basement). A few of the higher end versions of the Cavalier (Z24 & Convertible for instance) and the Sunfire did compete with the higher end Civic models. Those particular models were in a far different niche than the Corolla. The Tercel was never a hot model in the U.S. It was far too basic and pricey for this market. As we both already know, the Civic was a far different story.

  • Pch101 Pch101 on Jul 19, 2008
    The Grand Am along with the other GM compacts were priced thousands less than the Camry/Accord. Translation: The only way that GM could move inventory was to deeply discount it. Good to see that some things never change. The Cavalier, S-Series and Pontiac Sunfire were priced to compete with the regular to high end versions of the Tercel and lower end of the Civic The goal of the J-cars was to compete with the Civic and Corolla. The fact that they couldn't tells you that the cars were a failure. The Tercel was never a hot model in the U.S. I don't understand your fixation on the Tercel and your continued desire to ignore the Corolla. The Tercel was meant to be an entry-level youth car that would transition buyers into Corollas and higher priced vehicles. It was not intended to be the volume seller in the US, but a gateway vehicle that would lead to the larger cars with higher profits. The Civic and Corolla have been competing against each other for decades. Both lead the compact car class in the US. Honda and Toyota take different approaches to the market, with Honda acting as the rifle and Toyota as the shotgun. Honda is content with slower growth and tries to sell as few models as possible; Toyota sprays the market with product and divides the market into tighter segments.

  • Macarose Macarose on Jul 19, 2008

    Sorry, but the compact cars competed with compacts... not mid-sized. The Olds Cutlass Supreme, Buick Regal, Pontiac Grand Prix and Chevy Celebrity/Lumina were the primary competitors to the Camcords. If the Tercel was aimed for the young buyer, please give some type of evidence other than personal opinion. The Tercel's looks alone appealed towards a more mature and 'economical' focused crowd than the youth set... which were actually more catered to by the Cavalier variants. "Honda is content with slower growth and tries to sell as few models as possible" Yes, but they tend to offer far more variants of their model than Toyota. During the 1990's, the Civic continually had close to five or six variants throughout while Toyota offered only one to three for the Tercel. The Corolla seemed to have no more than three during that time. Honda was also far more ambitious with making different bodystyles for the same model. In my opinion, that's a good analogy for what you describe as a rifle approach. On the flip side, Toyota was more into the business of pushing the Corolla name onto more than one type of vehicle during the 1980's (as they did with the Celica). They also did try to copy Honda with bodystyles and variants during the early 1990's. But they figured out in time that most folks wanted something unique... even if it really wasn't so. Hence the souped up Tercel became a Paseo and a Camry with two fewer doors became a Solara. Overall, I don't think either Honda or Toyota have done a very good job of continuity outside the bread and butter models. It's a shame because if they had not retired or neglected CRX's Del Sol's, Celicas, Supras, NSX's, Legend's, Integra's and their related ilk, they probably would be in a far stronger marketing position right now. Lettered and alpha-numeric acronyms simply can't create the cache of a long established name. Just ask Menudo...

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