GM's On the Way… to Somewhere

by Frank Williams

August 14th, 2008 9:39 AM

Disney's Magic Kingdom has nothing on GM, the new Happiest Place on Earth. Why, things are so good there that CFO Ray Young told Bloomberg they may be able to reap a larger chunk of their projected $10b savings this year, instead of waiting for next year. Speaking at at the Traverse City auto management lovefest yesterday, Young said The General may have "as much as $17 billion" cash to get them through next year. And it's all because they're "accelerating all of [the] stuff" in Rick Wagoner's July 15 magical "Cut Your Way to Prosperity" plan. Of course, their model mix is still out of kilter for the market. And they have to look at "how strategic" GMAC will be as they enter "another stage" of their relationship with the floundering finance company (read: find some sucker to buy their share of that turkey). Oh, and they may have to "reconsider" their "contractual obligation… with the UAW" on retiree health care even before they make the first payment into the union-run superfund. And they'll do all this while "reinventing the automobile and GM," according to Young's slideshow. GM Deathwatch later today.

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Geeber on Aug 14, 2008
M1EK: They sorely deserve it for what they’ve done to this country by seeking preferential treatment for SUVs and pickups (as do Chrysler and Ford; but Ford at least never outright loathed people who wanted to buy small cars, so I kinda hope they’re the last one standing). The exemption was put in because at the time CAFE was passed, trucks were largely used by farmers, small tradesmen and contractors. They needed the capabilities of those trucks, and the technology did not exist to greatly improve their mileage without compromising their capabilities. CAFE basically forced Detroit to end the production of full-size cars with large V-8 engines. Those customers therefore migrated to trucks and full-size SUVs, which were the closest thing to the old full-size and mid-size rear-wheel-drive cars available. The Ford F-150 was already the best-selling vehicle in the early 1980s. Some people want large vehicles. They like the way they drive, and are willing to accept the trade-offs that come with size. Closing the CAFE loophole for mileage would have basically spelled the end of CAFE. It's the same as those who wail about people exceeding the speed limit on the interstates and demand "strict enforcement" and "zero tolerance" for speeding. Which, if enacted, would have most drivers up in arms, and result in either the limit being raised, or scrapped. Take away the light-truck exemption, and CAFE would have been scrapped. M1EK: and a drop in the bucket compared to the subsidies and regulatory assistance the Big 3 got for the monster trucks that made us all less safe, less secure, and more polluted. Given that air quality across the country has improved dramatically over the past 20+ years, I'm trying to figure out how pickups have increased pollution. You do realize, for example, that a 2002 Ford Explorer emitted fewer emissions RUNNING than a 1969 Ford Galaxie did while standing still, with the engine turned off? ALL cars and light trucks sold within the last 15 years have been remarkably clean from an emissions standpoint. I'd also like to know how trucks are making us less safe, considering that the fatality rate per 100 million vehicle miles traveled is at a record low figure, even with more light trucks on the road than ever before. And the biggest threat to small car drivers, judging by actual fatalities, is...other cars and stationary objects. M1EK: That car, of course, was the original Saturn (I bought and liked one); but the regular GM guys couldn’t wait to kill it on the theory that if they went back to making awful small cars, they could convince the buyers to go bigger. The original Saturn wasn't any better or even more reliable than a 1990s Escort. It was a mediocre car with one main advantage - a customer-friendly retail experience. That no-haggle philosophy was outmoded by the rise of the internet (which made it easier for people to figure out invoice price, trade-in values, etc.). Other manufacturers began to upgrade their dealer networks, too. Saturn's main advantage didn't last too long. The reason GM didn't develop Saturn further was because it had too many divisions, almost went bankrupt in 1992, and Saturn was diverting money from the other divisions. Saturn has been profitable for exactly ONE YEAR since it was formed. Hardly a great record that encourages further investment. GM failed to put money into Saturn because it didn't have that much money, and it didn't make sense to invest it in a money-losing division, not because it wanted to encourage people to buy bigger cars. If you want to blame GM for anything, blame it for sticking with its old-line divisions for too long, but the formation of Saturn, if anything, only exacerbated this core problem. Even in the late 1980s, the LAST thing GM needed was another division.

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Needforspeed007 on Aug 14, 2008

Thank you geeber. That was the truth I was looking for and it should explain what others have been misinformed about. But I also think in one of M1EK statements there about trucks. He might not be aware, but Toyota, Honda and other manufactures build them to. But they are less effienct than what the Big 3 have out now. I guess he gives Toyta and Honda a blind pass for doing the same thing and blaming the Big 3 for making that move to. Either way, the domenstics will make it. They just got to get past their old perception and the lame doom and gloom the media feeds us.

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Pmd1966 (of GM) on Aug 15, 2008

If pick-up trucks are "monsters" what are dump trucks and 18-wheelers?

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M1EK on Aug 15, 2008

geeber, you are dead wrong: 1. Fuel taxes, instead of CAFE, and then those who needed the big trucks could have had them. No CAFE loopholes would have worked fine, too, since the big automakers would have made damn sure not to try to promote SUVs as passenger vehicles or it would ruin the overall fleet average. 2. The parts of this country that have been growing (Sunbelt) rather than shrinking (Detroit) have indeed seen a dramatic increase in pollutants from automobiles - in most cases for those cities, overwhelming the decrease in industrial pollution. And today's SUV is far dirtier than today's car - and there's a hell of a lot more of both being driven a hell of a lot more miles, so the comparison to the 1970s car is irrelevant. 3. The Saturn was far more reliable than the Escort, and was the only US compact car that CR ever thought competitive with the Corolla/Civic on that metric.

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