By on October 5, 2012

We’ve been told again and again that pooled parts purchasing produces profits. Baloney, Opel interim-chief Thomas Sedran will say in an interview that Germany’s Tagesspiegel will publish tomorrow. He says something GM customers have known for a while: Parts from GM’s bin often are too expensive, and by sourcing them elsewhere, one can save a lot of money. “We are talking a significant order of magnitude,” Sedran will say tomorrow.

According to Reuters, which received an early copy, Sedran will say:

“GM has global requirements for parts and components that are unusual in the industry. A starter is tested at 40 degrees below zero, just as would be needed in Alaska, otherwise it fails the test.”

Sedran hasn’t been Opel chief for long. With a little more experience, he would know that he is on the right track towards the rest of the story.

“The profit is in purchasing,” is an ancient rule in the business, and not all profits generated by Purchasing in Detroit are passed-on to Rüsselsheim. Internal parts sales are a favorite way to shift profits elsewhere. Maybe that’s what Sedran is trying to say. But I doubt it will further his career.

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20 Comments on “Opel’s Interim Chief: GM Parts Are Way Too Expensive...”

  • avatar

    GM Shrugged: Who is Inaki Lopez?

  • avatar

    The whole idea of subsidiaries sometimes is to provide a market for products.

  • avatar
    DC Bruce

    This looks exciting. It sounds like, if Sedran has his way people who own GM products in, say, Canada, the Dakotas and the higher parts of Colorado, Wyoming may or may not be able to crank their new GM cars on some extraordinarily cold mornings, not to mention the people in Alaska, who are too few to matter.

    Is there a case to me made that Ignacio Lopez, by cheaping out on VW’s parts laid the groundwork for years of lousy VW quality?

  • avatar
    Austin Greene

    I live in Canada, and thank God my GM vehicles are capable of starting in 40 below.

    This way I can give a lift to my German-driving neighbors who’s ultimate driving machines couldn’t take a little bit of cold.

  • avatar

    Doesn’t it get cold in Scandinavia? The record low in Finland is -27.

  • avatar

    So Mr. Sedran will give the game away and announce that Opel’s losses are due to accounting, not operations. He’s either trying to tell Akerson something he needs to know, or he is truly looking for an “out”, maybe both. Somehow, I suspect “fired by Dan Akerson” is going to be a plus on many a resume.

  • avatar

    Bob Lutz made a similar point in his last book, but more broadly; that components were being designed to, and engineers rewarded for achieving, hoary old standards for circumstances that almost never happened, and which nearly no customers cared about. Of course, Lutz wasn’t still working for the General when he said it out loud.

    • 0 avatar

      I think this was also mentioned in DeLorean’s and Keller’s expose books on GM written decades ago. Pontiac was paying more for spark plugs internally than a retail customer paid for the same AC spark plug at PepBoys.

    • 0 avatar

      Than somebody has failed. Look at all of the plastics that aren’t UV tested. Why are the bumper fillers on all of my 70s-80s GM cars missing. Drive down the street anywhere in this country and look at all of the fogged up headlamps.You import snobs are always bitching about “too plastic interiors”. Maybe certain grades of plastic work better in all enviorments and it’s a compromise whick explains why it’s too plastic….y? Ain’t pride in ownership one of those qualities that bring back repeat buyers? Hey I’ll be glad to spend that extra dollar at the point of purchase if I know I won’t have to spend it later down the road.

      Actually that brings up another point. OK you can buy just about anything for your car cheaper than ordering it through the OEM dealer. Ever compare a piece of OEM sheetmetal, say a quarter panel for a 1970 Chevelle compared to the aftermarket overseas stamped part? No comparison IMO. I wonder if this guy is bitching about the labor end of parts making? No that doesn’t make sense if everything is made overseas, does it? You know we still make a lot of stuff here in the USA. Which is my point.

  • avatar

    Is this some ingenious reverse marketing?

    “Our parts cost too much because they are too high quality!”

  • avatar

    I’m not sure I see any issues with testing to -40C. Do they not sell any cars or have any European customers who travel to the Scandinavian countries?

  • avatar

    “He says something GM customers have known for a while: Parts from GM’s bin often are too expensive”

    Substitute any other auto manufacturer for “GM” and it’s the same story. OEM parts are always too expensive and rarely purchased when there is a competitive third party supplier. This is nothing new.

  • avatar

    What is this guy talking about? GM parts are already being made in low-cost countries. I have been ordering a slew of “genuine” GM parts lately and I was shocked to find that the turn signal and cornering lamp lenses were made in China. Alfred P. Sloan is turning in his grave somewhere.

    And even Hella has moved production to China (to compete with all of the counterfeit Hella parts already being made there!).

    • 0 avatar

      Ditto Ford. Many of the parts for my Ranger were tagged Hecho en Mexico. Though a friend claims the individual components were from China and only put together in Mexico. Regardless, neither country is known for high production costs.

  • avatar

    he is saying that GM is milking Opel by selling them parts at higher than market price.

    • 0 avatar

      You’re right. It’s simply victimisation through cost-centring. I’ve read some fairly convincing statements that suggest Detroit has been doing this to Opel for a long time. Even now, I’ve heard a rumour that Buick is taking Regals from Opel at cost to Opel….

      I’m not saying it’s certain, but I’ve heard whispers.

  • avatar

    Now wait a minute. Doesn’t Opel sell vehicles into Scandinavia and Russia? I smell hyperbole when the Opel person is saying that corporate parts are too expensive because they are “better than they need to be”. My BS detector is going off.

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