GM Responds to Production Plan Concerns

by Edward Niedermeyer

Published: October 12th, 2009

Spats between automakers and the Detroit press are a rare thing. But spats between GM and the Detroit Free Press? Let’s just say few things last longer in this world than lapdogs that nip. So GM is going after the Freep with a spray bottle for daring to suggest that a 2.8m unit production plan for 2010 might be reminiscent of old, bad GM. Apparently the Freep only got it wrong on one point: unfounded optimism, self-sabotage and disfunctional communication are still very much part of New GM. Oh yeah, and CAPS LOCK is along for the ride. Mike DiGiovanni, GM’s Executive Director of Corporate Planning and Alliances reponds at Fastlane

GM had indicated in a media call that it could produce upwards of 2.8 million units in North America — this is a number we COULD do…it’s not the number we necessarily WILL do. We only plan and report production estimates by quarter to reflect the current economic climate.

So, what are GM’s actual production/sales breakeven plans? You only find out later in the comments, when Chris Preuss of GM Communications finally clarifies:

2.8 was not the actual firm number we are planning the business on…it’s simply the upside of what we could see developing. We’ve made clear in the viability plan that 18.5 percent share of a 10 million market for the US…or 1.85 million US, is the plan.

So why the extra million worth of production in the plan? DiGiovanni again:

The bottom line is that we manage production on a quarterly basis, and we are aggressively managing our business. We will not revert to bloating inventories for short term revenue gains as we begin the slow recovery from this horrible economic environment. We are cautiously optimistic that 2010 will be better than 2009, and we will plan and manage our business with the same “glass half-full” cautious optimism.

What do you say to that? I mean, besides what Fastlane commenter “Randal H” already said:

Quote “We are cautiously optimistic that 2010 will be better than 2009, and we will plan and manage our business with the same “glass half-full” cautious optimism.”

Well, I’m “ecstatically depressed” that you are “cautiously optimistic” and I hope you don’t get “confidently unsure” about your future because that would be a “triumphant tragedy” and you might become “clearly vague” about your “successful setbacks”.

Edward Niedermeyer

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2 of 9 comments

Anonymous on Oct 13, 2009

I thought new GM said that they rid themselves of their over capacity as part of the bankruptcy? Seems to me if they have the capacity to produce 2.8 million vehicles but only project 1.85 million in sales that they have a serious amount of excess production capacity.

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Pch101 on Oct 13, 2009
It’s bullshit, but it’s a healthy bullshit. It is quite the opposite of healthy. The higher sales forecasts lead to greater spending so that there is capacity to create the expected output. Costs go up. But the revenue doesn't come in the door. That means two things -- -There are losses, because the costs increased but the revenues did not -Incentives and fleet sales have to increase in order to move the unwanted inventory, which harms resale value and hurts their ability to sell cars in the future. In addition to the financial problem this creates, it also feeds the dysfunctionality of the culture. Instead of focusing on getting things right and being profitable, they focus on perpetuating BS and aiming to stay large, as if market share without profits is a desirable, worthy objective. What you are advocating is not healthy at all. It's a corporate death spiral. GM is in trouble today precisely because it does business this way. Planning should be realistic, and focus on customer satisfaction and profitable. The fixation on market share has put GM in this situation.

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