By on July 17, 2008

A victim of his own devices.GM's CEO heir-apparent and current COO Fritz Henderson revealed GM's latest product-planning philosophy in an interview with the AP (via CNN Money). "Let's do cars that people love, even if they're small." And WTH, let's make some money doing it! Fritz's recipe: "close the price gap versus the market segment leaders and drive more volume. You're significantly improving aggregate profitability." The former CFO [who isn't Rick Wagoner] wants to aggregate profitability "one or two models at a time." But Fritz realizes "one product launch does not a success make… if we get the car right and we get the promotion right, we can make progress and we can actually bring people back to the car." Uh, what about all those cars GM's already launched? Fritz's remarks bring to mind an image of Wile E. Coyote, realizing he screwed up one of his Road Runner traps, racing the burning fuse to get to the dynamite before it goes off. And anyone who has ever seen a Road Runner cartoon knows how that scene plays out.

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46 Comments on “GM COO: “Let’s do cars that people love, even if they’re small”...”


  • avatar
    86er

    Fine, but let us have big cars too, GM.

    Big cars that aren’t terrible, that is.

    (That request extends to other automakers as well).

  • avatar
    sean362880

    …to close the price gap versus the market segment leaders and drive more volume.

    Sell more cars for more money? Now there’s an novel idea for making money!

  • avatar
    KatiePuckrik

    “It brings to mind an image of Wile E. Coyote, realizing he screwed up one of his Road Runner traps, racing the burning fuse to get to the dynamite before it goes off. And anyone who has ever seen a Road Runner cartoon knows exactly how that scene plays out.”

    There’s one crucial difference. I LIKED Wile E. Coyote and I wanted him to get Road Runner!

    So let me see if I’ve got this straight. GM management’s NEW philosophy is:

    Let’s build cars people want.

    I suppose it’s better than their old mantra:

    Let’s build cars which WE like.

  • avatar
    John Horner

    What a moron. Do you have to go to Harvard to learn this kind of double speak? Check out Fritz’s bio for another dose of ut-oh, here we go again:

    http://www.businessweek.com/magazine/content/04_46/b3908066.htm

  • avatar
    AKM

    And how much does that guy get paid for those pearls of wisdom? I knew that even before I got my MBA, and I’m certainly not paid as much as him.

  • avatar
    kericf

    But didn’t Lutz just say the Cobalt is “no where near the end of its life-cycle” and it’s “finally coming into its own”? And didn’t they just cancel the Beat for “engineering reasons” (aka gross incompetence). How can they say they are trying to develop competitive small cars after making such contradictory statements a few days ago.

    How these people still have jobs boggles the mind.
    That they make millions of dollars a year is unbelievable.

  • avatar
    SherbornSean

    GM should just embargoe execs from speaking publicly. This – combined with the weekly boner from Lutz – is just plain sad.

  • avatar
    ash78

    By wording it like this, he’s implying that small cars can’t be good (or are less likely to be good). That’s sort of like saying “We need to hire some good managers, even if they’re black!”

    It inherently denigrates the qualities of the group. I see what he’s getting at, but still feel it’s poor word choice. Just like that analogy would call someone out as a racist, this sort of thing does the same for GM’s attitude toward small vehicles.

  • avatar
    Redbarchetta

    “Let’s do cars that people love, even if they’re small.”

    What a novel idea, I’m so glad GM was the first manf. in the world to come up with this idea now we can be liberated from from all these crappy small cars. Do those guys live in an alternate universe.

    If this is the guy next in line to replace Rick GM is DOOMED. $15, 50 or 100 billion in loans or bailouts wont save them with thinking like that at the top. How far down the executive ladder do you have to go to get some fresh, out of the box thinking.

  • avatar
    P71_CrownVic

    86er:
    Fine, but let us have big cars too, GM.

    Big cars that aren’t terrible, that is.

    (That request extends to other automakers as well).

    Um…G8 GT???

  • avatar
    86er

    P71_CrownVic:

    I’m sorry, you’re right, I should’ve qualified my “terrible” statement.

    As an (I’m going to guess) owner of a P71, you might appreciate this statement: I basically want a modern iteration of the Crown Vic. Or Caprice, for that matter, if we want to keep it in a GM vein of discussion.

    Hot Wheels-look with non-functional hood scoops and a single choice of interior colour (black, ugh) is not prompting me to run to my nearest PBG dealer.

  • avatar
    SupaMan

    Good one Frank.

    They’re just now realizing that there are profits to be made in small cars….something the Japanese have been doing for decades.

    Such short-sightedness defines Detroit.

  • avatar
    psarhjinian

    86er,

    Well, if you consider the the Malibu is actually quite sizable(and has more effective space than the Impala, too!) they have at least one decent large car.

  • avatar
    brettc

    Wow. So they’re just now figuring out that building a decent small car that people might actually buy is a good idea? Is the RenCen built with lead walls or some other material that doesn’t allow the realities of the outside world to get inside the GM executive offices? Good god.

    Please just die GM, there’s no use for such a short-sighted, crappy company any longer. Bob and Rick have spent too much time whackin’ it in the tool shed to a mental image of dumptrucks full of SUV profit cash. Too little, too late.

  • avatar
    Stingray

    Someone should tell the GM executives: Wagoner, Henderson and Lutz to STFU. And work to save that thing dammit.

    The more they talk, the more shit they throw to the fan.

    And since they’re swimming on shit, it’s obvious they need more.

  • avatar
    offroadinfrontier

    Let’s focus a little on the psychological impact of what this man said, mainly focusing on the last part, “… even if they’re small.”

    Including “even if” in that sentence belittles small cars and small car owners/future owners right off the bat. Either this man is a genius and is (still) trying to portray and convince that Bigger is Better, or he is a complete fool and doesn’t realize how insulting that comment is.

    Discussing the pros and cons of a small car is beside the point as of now, since most people on this site seem to recognize the importance of small vehicles, while still respecting the placement of larger vehicles and the need for a diversity of vehicle types. And we’re just the consumers. Tell me, why has it taken so long for this man to realize this himself?

    Is it really that hard to grasp that some of us don’t want/need big engines? Some of us realize that a small car can sit 4 comfortably for 2 hours at a time, so why get a car twice the size with half the gas mileage that can.. sit 4 comfortably for 2 hours at a time… Sure, the bigger cars tend to be more comfortable, quieter, and more refined, but this can easily trickle down to a small car if even the slightest effort is applied.

    In summary, STOP with the Bigger is Better, Smaller is Cheaper B.S.!! Give us a range – give us cheap, entry levels for starters or low income cars, give us luxury small cars that ride as well as the next best thing and dampen out sound like a high-end, and give us some in-betweens. Hell, throw some forced induction and 6-speeds for some “sport models.” It isn’t that hard to come up with ideas!!

  • avatar
    Axel

    So GM is finally wising up to what they should have realized way back in… oh, I don’t know… 1973?!

  • avatar
    Axel

    offroadinfrontier :

    In summary, STOP with the Bigger is Better, Smaller is Cheaper B.S.!!

    Hear hear! Our family of four used to go on vacations from Maryland to Wisconsin in a freakin’ Cavalier Wagon. We fit all our stuff. We didn’t die. The car fell apart in five years’ time, but that’s besides the point.

    Americans have been sold the myth that you have to have a three-row behemoth (SUV, CUV, Minivan) that gets 15/21 to be able to raise a family. It’s time to go back to vehicles that we actually NEED that use amounts of fuel we can AFFORD.

    If I were in charge of GM product development the first thing I would do is pull out the old Malibu Maxx, give it a styling refresh, fit it with a 6-speed auto, rechristen it the “Chevrolet Maxx” and start an ad blitz stressing the fact that Chevy has a 30 MPG vehicle that can comfortably fit four NFL lineman and all their luggage.

    Second, I’d nix the HHR and create a REAL Cobalt Wagon.

  • avatar
    windswords

    Two revealing quotes from the article:

    “GM has big plans for cars and car-based crossover vehicles. Nearly every brand, including Cadillac, will be getting a small car soon.”

    “Nearly” means EVERYONE but Hummer. Here we go with brand dilution again. You can’t give everyone a small car unless you give them the same car – Cavalier/Cimmaron here we come!

    “John Wolkonowicz, an auto analyst with the consulting company Global Insight, said GM could easily command $22,000 for the Cruze because of its sophisticated, European-style suspension and its nice styling and amenities. But it will only cost GM about $2,000 more to make those changes over the current Cobalt, leaving substantial room for profits, he said.”

    This is part of their other problem – no incremental improvements to existing cars and (more importantly) existing nameplates – it’s always the “next big thing”.

  • avatar

    My mom bought a Focus to replace her minivan a few months back, a decision I applauded heartily. She’s taking a trip up to see me this weekend (5 hours) and when I asked if she was taking the Focus, she said, “No, it just doesn’t have enough space…” because in her 80’s-lady, hyperconsumerist world, 2 people need more room than a 4-door sedan offers to make a 5-hour drive on a weekend trip.

    It’s annoying, because the Focus can achieve around 37+ mpg on a trip like that. My parents are the products of a generation of boomers that can’t seem to travel anywhere without 5 suitcases of crap and a cooler. These are the people that GM successfully convinced that you need a mega-massive, 4WD 3-row body-on-frame 7 passenger SUV if you have 2 kids. Americans are suckers, and I’m damn glad gas prices have come to a point that is forcing people to make more reasonable decisions and gobble up less of the world’s diminishing resources. Minimalism FTW.

  • avatar
    mel23

    What impressed me watching the press conference a few days ago in which GM announced their “plan” was the camaraderie. When a “journalist” would be called on, he’d say something like “Hi Rick”, and then get to his softball question. I was expecting some fireworks or at least some discomfort. (Guess Buickman was kept outide). It’s not a real corporation so much as a damn club. I remember Henderson commenting a few months ago that “they” didn’t see the housing collapse coming. Hello? I suppose they figured prices would continue increasing faster than income indefinitely. Is it too much to expect the CFO to have a clue about the overall economy? Too busy tending to the material weak accounting procedures they have apparently.

  • avatar
    Axel

    86er:

    As an (I’m going to guess) owner of a P71, you might appreciate this statement: I basically want a modern iteration of the Crown Vic. Or Caprice, for that matter, if we want to keep it in a GM vein of discussion.

    While there is a audience for the 20-foot-long BOF RWD underpowered land yacht with bargain-basement interior genre, it’s too small to justify developing a model for.

    Though there are probably a lot of TrailBlazer and Durango owners right now looking to move into something with roughly the same interior space but gets mid-20s fuel economy.

  • avatar
    SherbornSean

    Axel,
    Sure, lots of Durango and Trailblazer owners would love a similar vehicle that gets 25 MPG. The only problem is they owe $20K on a vehicle worth $8K. That’s a problem that isn’t going away for a few years.

  • avatar
    86er

    Axel: While there is a audience for the 20-foot-long BOF RWD underpowered land yacht with bargain-basement interior genre, it’s too small to justify developing a model for.

    You missed my point entirely, sir. You are describing the vehicle that withered on the vine for decades with little appreciable changes. I’m advocating for a wide range of vehicle choices as other posters above have stated, that keep getting updates as needed.

    It’s too easy to deride a platform that was developed in the late 70’s, but what I am saying is that there should be a choice for consumers who want a modern full sizer, along the lines of an S-Class or 7-Series, but, oh, 50 grand cheaper? Your point about the people moving down from SUVs is apt; why do you think many people moved into SUVs in the first place? Small genitalia? Hardly. It was the most advanced iteration of a full size vehicle, it just happened to be truck, not car-based.

  • avatar
    indi500fan

    @ Horner

    What don’t you like about his bio?
    Playing D1 sports while going to a top biz school is a pretty rare accomplishment in my experience.
    And doing well enough in undergrad to make Harvard…..

  • avatar
    dadude53

    An old saying goes: Any day you lost you will miss at the end of the year, and you cannot bring it back no matter how much money you are going to spend.(Heinrich Nordhoff)
    Why should someone with those paychecks worry about anything. If revenue is right, why worry about your model lineup.They don’t live GM they suck it dry.And right, there is room for big cars and trucks. As long as you spread your portfolio right a la Dr.Toyota.

  • avatar
    Andy D

    Wabbout a remake of the Dart, ChevyII. or gulp, Falcon? Modernized with Power disc brakes, EFI, over drive, and the bare bones of federally mandated safety stuff?

  • avatar
    Areitu

    # Andy D Says:
    July 17th, 2008 at 1:29 pm

    Wabbout a remake of the Dart, ChevyII. or gulp, Falcon? Modernized with Power disc brakes, EFI, over drive, and the bare bones of federally mandated safety stuff?

    Easy, they’ll just bring them over from China.

  • avatar

    Sung to the tune of Roadrunner

    If you’re on the highway and GM goes beep beep.
    Just step aside cause they’ll end up in a heap.
    GM, GM running out of gas today.
    Even Toyota can’t make them change their ways.

    GM, the Toyota’s after you.
    GM, now they passed you now you’re through.
    GM, the public’s on to you.
    GM, no money left you’re through.

    That Toyota is really a crazy clown,
    When will they learn the public doesn‘t like small cars?
    Poor little GM picked on by everyone,
    Just makin’ giant SUVs is their idea of having fun.

  • avatar
    JuniorMint

    MEMO
    FROM: Fritz Henderson
    TO: GM, mid-1995
    SUBJECT: Let’s do cars that people love, even if they’re small.

    fixed

  • avatar
    truthbetold37

    Again, being a member of the Cobalt program, I kept saying that GM MUST benchmark the Civic. Instead they BM’ed the Jetta (close, but no cigar) and the Focus. At the time the Focus had been recalled 13 times, and the Jetta had dismal quality ratings and a dismal dealer service record.

    At Honda, the Project manager probably test drives competitor vehicles. At GM the Project Manager probably drives an Escalade.

  • avatar
    Axel

    It’s too easy to deride a platform that was developed in the late 70’s, but what I am saying is that there should be a choice for consumers who want a modern full sizer, along the lines of an S-Class or 7-Series, but, oh, 50 grand cheaper?

    There’s no way you can put together a modern full-sizer with RWD for under $35k, let alone the $25k price point that the target audience will want, without making serious compromises: we’re talking sub-250-horse engines, BOF construction, cheap interiors, lousy handing, retread platforms. In other words, a restyled Grand Marquis. The fact that GM could introduce the G8 for well under 30 Large is neigh miraculous (and grossly unprofitable).

    The Vics and Caprices of the 1980s were crap. The only reason they are remembered fondly is that they were less crappy than the even crappier small cars Detroit made. What you actually are talking about wanting is a modern iteration of the Roadmaster sedan: a car that, if sold today, would probably start at $45,000 and go up from there.

  • avatar
    Axel

    JuniorMint:

    MEMO
    FROM: Fritz Henderson
    TO: GM, mid-1995
    SUBJECT: Let’s do cars that people love, even if they’re small.

    fixed

    MEMO
    FROM: Fritz Henderson
    TO: GM, 1973
    SUBJECT: If you continually improve something, eventually it will be superior to the competition.

    Even better.

  • avatar
    50merc

    truthbetold37, that’s a great observation. How in the world can management choose to benchmark an also-ran?

    Andy D, I like your suggestion that they consider re-creating a Dart or Chevy II. Oh, there’d be a lot of modernizing to do. But the concept is sound. I had a base-level ’66 Dart, bought as soon as I could unload my Jag sedan. Repairing the Jag kept me broke. The Dart had no sex appeal but was reliable, efficient and fast enough. Good room inside and a capacious trunk.

    Of course, today’s designers would want to improve the Dart by lowering the roof to six inches above the beltline, and rounding the sides to the shape of an egg.

  • avatar
    86er

    Axel:
    What you actually are talking about wanting is a modern iteration of the Roadmaster sedan: a car that, if sold today, would probably start at $45,000 and go up from there.

    No, that’s not what I’m wanting, and this nonsense of full-size only being in the luxury/luxury sport segment is frustrating to say the least.

    Leaving aside whether or not “the Vics and Caprices of the 1980s were crap” as you say, which is tangential to my point at any rate, I remain unconvinced that a large RWD platform should have to command premium prices. Or has the development costs of such a platform atrophied to the point where this becomes uneconomical?

  • avatar
    Andy D

    50merc, funny, my XJ-6 was like that too. All the cars I mention were unibody construction and introduced as compacts to woo people away from the VW bug. The ’88 528e that I currently drive is as close to these cars as I can find.

  • avatar
    davey49

    I just don’t want GM and the others suddenly only making small cars and abandoning SUVs and large sedans.
    P71 Crown Vic- How about a new Cadillac Fleetwood or Eldorado?

  • avatar
    John Horner

    indi500fan Says: What don’t you like about his bio?

    It is my firmly held view that CEOs of technology based companies, which includes auto companies, need to have some strong roots in technology themselves in order to do the job properly. Business school undergrad training followed by a Harvard MBA gives us the likes of Fritz, Rabid Rick and GW Bush. All they have ever known in number crunching, posturing and “relationship building”. They invariably play a great game of golf and have school chums all over the place, but wouldn’t know if the R&D guys were blowing smoke or not on their best day. These are the kind of managers who think you can start, stop and restart development programs just by pushing numbers around on a spreadsheet. Contrast this management style with the people who come up through production and engineering to lead companies like Toyota, Honda, Boeing and Intel. Look at the areas where US based product companies continue to be highly competitive in the world and you will find people with a much deeper background beyond business school running the show.

    BTW, Getting straight “A”s as a business school undergrad is a piece of cake compared to doing the same as a science or engineering major.

  • avatar
    50merc

    AndyD: “The ‘88 528e that I currently drive is as close to these cars as I can find.”

    Yep, and at 189 inches long the 528 (like my ’88 929) falls in–actually a half-foot shorter–than those ’60s Detroit compacts. Big enough, with some attention to efficient packaging.

  • avatar
    nino

    Your point about the people moving down from SUVs is apt; why do you think many people moved into SUVs in the first place? Small genitalia?

    Well, going by those I know who own SUVs, it was the idea of having a car that other people knew cost around $38,000/$40,000 dollars for $349 a month. These same people wouldn’t be caught dead in a Crown Vic or Caprice no matter how modern they made it.

    Oh, and small genitalia is a pretty close second as a reason.

  • avatar

    The cars or the people?

  • avatar
    factotum

    “Automakers reverse engineer their opponents’ newest and hottest vehicles in what’s called a competitive teardown.”

    Even GM, at their chop shop, is able to not only benchmark but know everything about their competitors’ cars. So to BM a Focus over a Civic (if that is actually true–would like a source for this) would indicate a “that’s good enough” attitude. I have a feeling this is another accounting department mandate.

  • avatar
    Adamatari

    factoturn:

    That was probably one of the most unintentionally hilarious articles I’ve read recently. Undoubtably the Prius’s success is partly circumstance (rising gas prices) but GM’s take on the Prius was so woefully out of step with reality that it looks like a bad joke, two years down the line. Especially fun is that quote at the end – if that’s the attitude of GM people to new technology, that explains 80% of GM’s problems.

    In the modern world, you snooze, you lose. GM is still half asleep.

  • avatar

    GM needs to put quality parts in any vehicles they make, a friend has a two year old Malibu,the Tie rods are shot, its out of warranty,(70,000kms)so no help from GM,only recourse here in Canada is to take them to Small Claims Court as Tie rods should last longer than two years eh! Needless to say she wont be buying anymore GM Vehicles either.

  • avatar
    Busbodger

    Yeah tie rod ends ought to last decades. In fact my four imports range from 120K miles to 200K miles and none have ever needed tie rod ends. I’ve got a friends with a 3/4 ton AWD GMC truck that sees light duty and the steering is already going bad with loose joints in it. I crawled around under it and there is significant slop in the steering. THIS is heavy duty???

    For a while I was wanting to buy a domestic next time around but it’s comments like “even if they are small” shows me that they might build a small car but the company’s heart is not in it. As long as the company’s heart is not in it – we the consumers are not going to get a good, soild product.

    I’m not going to point the CEO, the beancounters or the engineers. They all take the blame and they will all go down together. What agravates me is that the CEO is the lead guy – they guy that can make the changes they need to be competitive but this same mentality has been evident since I was a kid in the 70s. What bothers me is how many signs do they need to see that these car makers need a comprehensive product line that gets maintained ALL the time decade after decade.

    Make a car. Keep improving it. Don’t throw everything including the name out every 8 years and start over. Design it, build it, and sell it. Then drive the competition and older examples of your own cars to see what has aged poorly. Learn from them.

    I want a Saturn Astra 3-door next time or a Focus hatchback nex time but I’m not sure I’ll risk the cash. My current daily-drivers are still going along and not costing too much.

  • avatar
    Busbodger

    And reading the article about the teardowns – very interesting.

    Instead of tearing down brand new examples of the competition’s products – GM ought to be tearing down 150K mile / 10 year old examples of their own vehicles for close examination. I can tell you a laundry list of items that I think the manufacturers of my daily drivers should have improved – like flimsy plastic body tim clips, door panel coverings that shrink, swaybar bushings that rattle, wheel center trim that peel, plastic trim that fades, windows that rattle in their guides when the doors are closed, etc.

    Test mileage doesn’t just age a car properly – you need two little kids in the backseat, ten years of door slamming, etc. A new suspension bushing cycled 500K times is not the same as a bushing that has cycled 500K times with 10 years of age, weather, and contamination with greases, salts, and dirts…

    The Cobalt product member comment was a good one about the Cobalt production manager maybe not even driving what they are building. Anybody able to confirm things like this? I firmly believe that the best cars are the ones that are driven by the people who engineer and build them.

    I think this is why GMs large vehicles are plenty good…

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