So why is GM going down?

[Boba7523]

Just out of curiosity and the lack of knowledge, why is GM going down the drain? I know for a fact that the increase in gas prices has had a dramatic change in GM's truck and SUV sales... Oh and also the recent strikes. What else?

[Eliot Ness]

Not just one easy answer for that, but the following thread sure brings up a lot of the issues the big 3 are facing:

http://www.autopia.org/forum/member-...utomakers.html

It's a long thread but worth reading if you're interested in some different viewpoints.

[NCZ13]

i think its putting out inferior products compared to what is imported from japan.

Rebadging cars and trucks across there line is also probably wasting alot of money, and contributing to that cash burn.

[rwisejr]

To put it in the simpilist way possible. Bad Management !!!!!!!!!!!!!! Piss Poor Decisions !!!!!!!!!!

[longdx]

GM is producing quality cars with increasing reliability. That being said, the current problems with GM start with lack of foresight. What I mean. is that GM tended to be reactionary in their product planning. They based the bulk of their profit potential on SUV and large truck sales. That was fine when gas was relatively stable in the nineties . Without focusing on other segments (i.e. alternative fueled vehicles, smaller cars) for when the gas spikes occured, GM was left in a lurch. GM also aggressively bought other car companies without really utilizing them in the marketplace. They bought Fiat only to sell them back to Italy at a $2B loss. They purchased a large stake in Subaru only to never use their expertise in AWD and boxer engines. They bought Saab and upset the loyalist by using GM ecotec engines in these vehicles (very nice engines , but diluted the spirit of Saab cars) They purchased and expanded Hummer. These were niche vehicles during good times but look like dinosaurs in today's market.

Until recently, they had the highest employee cost (insurance, wages, retirement) that ate profit potential of smaller vehicles (thus GM's aversion to small car production: until recently why the Cavalier was on the market for almost 20 years with only one major redesign). Couple that with almost 2 decades of shoddy workmanship (1970-1990-s) that alienated an entire generation of potential buyers ( and eroding GM's share of the US market) with lackluster dealer support and you have GM realing right now. GM also has too many redundant vehicle lines that fight for the same piece of the market.

[Cleaning Fool]

When Toyota and Honda started on the rise in the early 80's, people began to buy there product and once they realized how good it was, the became repeat buyers. GM sat and did nothing or didn't know what to do. As repair bills on automobiles continued to rise, people became fed up with $1000-$2000 dollar repair bills and jumped ship to the competition. While GM might be producing better, more reliable cars in 2009, it should have figured this out 30 years ago and they wouldn't be in this mess. Now 30 years later, they are paying the price for there poor decisions. Many ,many reason why GM is in trouble, this is a piece of the puzzle.

[Lumadar]

Originally Posted by longdx

GM is producing quality cars with increasing reliability. That being said, the current problems with GM start with lack of foresight. What I mean. is that GM tended to be reactionary in their product planning. They based the bulk of their profit potential on SUV and large truck sales. That was fine when gas was relatively stable in the nineties . Without focusing on other segments (i.e. alternative fueled vehicles, smaller cars) for when the gas spikes occured, GM was left in a lurch. GM also aggressively bought other car companies without really utilizing them in the marketplace. They bought Fiat only to sell them back to Italy at a $2B loss. They purchased a large stake in Subaru only to never use their expertise in AWD and boxer engines. They bought Saab and upset the loyalist by using GM ecotec engines in these vehicles (very nice engines , but diluted the spirit of Saab cars) They purchased and expanded Hummer. These were niche vehicles during good times but look like dinosaurs in today's market.

Until recently, they had the highest employee cost (insurance, wages, retirement) that ate profit potential of smaller vehicles (thus GM's aversion to small car production: until recently why the Cavalier was on the market for almost 20 years with only one major redesign). Couple that with almost 2 decades of shoddy workmanship (1970-1990-s) that alienated an entire generation of potential buyers ( and eroding GM's share of the US market) with lackluster dealer support and you have GM realing right now. GM also has too many redundant vehicle lines that fight for the same piece of the market.

Well said.

If only people realized it isn't as simple as "Japanese cars are better." Times are changing, and just like when we saw a paradignm shift away from American quality into Japanese cars, I believe we will see a similar (smaller? same? bigger? Who knows.) shift in the near future.

From a business perspective, it is common knowledge that innovation doesn't come from the number 1 and 2 guys, it comes from the back of the pack...

[MBenz]

For what i have been told, GM got screwed was their own dealerships.

GM has about 10 times as many dealerships as toyota and honda. The owners of these dealers thought they were smart and all got legislation passed that made their contracts with GM locked. Basically GM would have to meet the demands of the Dealership or face the government. GM hit some tuff times and could not afford to supply x number of required cars to the dealerships and so they had to lay off workers in an effort to avoid chapter 9. Meanwhile, the dealerships are able to maintain enough sales to stay afloat while the hand that feeds starts to sink.
Poor Management, Quality control, and rising popularity of imports were also big factors.

[MBenz]

Just found this out
Gm has over 12,000 dealerships in the USA, Toyota has 2000.

[MSOsr]

What has hit the Big 3 is their legacy costs: insurance and retirement benefits for thousands/millions of retired workers (that lived years and years longer than what was projected when contracts were signed). The sad thing is that in 2010, those costs are absorbed by the UAW and the Big 3 should be in good shape going forward.

Toyota, Nissan and the other manufacturers that have built plants in the US have no "legacy" employees and can therefore profit with fewer units being sold.

The problem is GM, without a "bridge loan" from the government, will run out of cash before 2010, because it didn't borrow up its credit limits when credit was available.

The automobile industry runs off credit and those lines have been closed.

Mike

[wfedwar]

Legacy costs, inferior products (over several decades), CAFE, poor management...

[MSOsr]

Originally Posted by MBenz

For what i have been told, GM got screwed was their own dealerships.

GM has about 10 times as many dealerships as toyota and honda. The owners of these dealers thought they were smart and all got legislation passed that made their contracts with GM locked. Basically GM would have to meet the demands of the Dealership or face the government. GM hit some tuff times and could not afford to supply x number of required cars to the dealerships and so they had to lay off workers in an effort to avoid chapter 9. Meanwhile, the dealerships are able to maintain enough sales to stay afloat while the hand that feeds starts to sink.
Poor Management, Quality control, and rising popularity of imports were also big factors.

I've never heard about these "guaranteed contracts". In fact, manufacturers make sure they are independent of the dealers, so they can't be held liable for any misrepresentations by dealerships and the dealerships keep from being liable for manufacturer warranty issues.

Do you have a cite for the legislation?



Mike