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6/19/05, 10:36 AM
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" General Motors may soon extend the generous discounts on new vehicle purchases it provides as a perk to GM employees to the general public, the latest effort to prop up flagging sales and declining market share.
The discount, approximately 3-4 percent off the dealer invoice price of a new vehicle, could amount to savings of thousands of dollars per vehicle.
The problem for GM, though, is that new and deeper discounts for buyers mean even less profit for GM. And cutting profits won't dig GM out of the hole it's in.
First-quarter losses are much larger than expected--$846 million, according to GM CEO Rick Wagoner, the largest quarterly loss since 1992. And GM's overall market share has dropped to about 25.4 percent, a dramatic downturn. The value of GM shares has fallen through the floor to junk bond status, vitiating nearly $13 billion in shareholder equity.
Things are not looking good for the world's largest automaker. Inventories of vehicles are piling up on dealer lots, sales of high-profit large SUVs have fallen off as gas prices have gone up and several GM divisions (notably Pontiac and Buick) are close to being on life support.
In response, GM has cut production by 12 percent (with future cuts and plant closings in store) and resorted to extraordinary incentive programs that amount to fire sale prices, while competitors, most notably Toyota, the world's No. 2 automaker, are selling cars at full markup and are awash in profit.
Toyota reportedly has enough cash on hand to buy GM's entire automotive operations outright and is gunning to replace GM as the No. 1 automaker within five years.
So what will happen to GM?
Morgan Stanley auto industry analyst Stephen Girsky says GM's declining market share "doesn't support its size. They have too many plants, too many workers, too many models, too many dealers, and their employee benefits are too high."
In other words, barring a major turnaround in profitability, the odds are that GM will retire its poor-performing Buick and Pontiac divisions, each of which has dwindled to less than 3 percent of the market. The remaining GM divisions will be consolidated and streamlined with the number of models reduced. More U.S. assembly and manufacturing facilities will be shuttered and more jobs moved overseas to take advantage of cheaper labor and lower regulatory compliance costs.
The sad part is that GM is producing some of the best vehicles it has ever built, with several models ranking as well as top-scoring Toyota/Lexus and other import vehicles in terms of customer satisfaction and the low number of problems reported during the first 90 days of ownership. The 2005 Corvette comes standard with a 400-hp engine and equals or beats the performance of cars costing two to three times as much. Cadillac is once again a hip brand, and the new Chevy Cobalt is an excellent small car as good as anything from Honda or Toyota.
Unfortunately, it may be too little, too late. The iceberg looms large in the lookout tower, and it may impossible to steer away in time.
For consumers, GM's woes mean some great cars are available at even better prices, especially if the new employee discounts become available across the board."
The only downside is there may not be a GM around in five or 10 years.
Comment on this article in the Automobile Forum.
COPYRIGHT 2005 ERIC PETERS
I think this is just sad. I know this is probably the wrong forum to post this, but we are all American and I think that without this PowerHouse of auto manufacturers American cars are going to be "poo". I'm concerned because I also own a Pontiac and to see this name possibly off the market in 2-3 years is pathetic and Buick, one of GMs' most reliable cars is getting the she just like Oldsmobile did last year
I love my Ford, but i know they have their problems too. Just thought I'd post to raise some discussion.
Matt
The discount, approximately 3-4 percent off the dealer invoice price of a new vehicle, could amount to savings of thousands of dollars per vehicle.
The problem for GM, though, is that new and deeper discounts for buyers mean even less profit for GM. And cutting profits won't dig GM out of the hole it's in.
First-quarter losses are much larger than expected--$846 million, according to GM CEO Rick Wagoner, the largest quarterly loss since 1992. And GM's overall market share has dropped to about 25.4 percent, a dramatic downturn. The value of GM shares has fallen through the floor to junk bond status, vitiating nearly $13 billion in shareholder equity.
Things are not looking good for the world's largest automaker. Inventories of vehicles are piling up on dealer lots, sales of high-profit large SUVs have fallen off as gas prices have gone up and several GM divisions (notably Pontiac and Buick) are close to being on life support.
In response, GM has cut production by 12 percent (with future cuts and plant closings in store) and resorted to extraordinary incentive programs that amount to fire sale prices, while competitors, most notably Toyota, the world's No. 2 automaker, are selling cars at full markup and are awash in profit.
Toyota reportedly has enough cash on hand to buy GM's entire automotive operations outright and is gunning to replace GM as the No. 1 automaker within five years.
So what will happen to GM?
Morgan Stanley auto industry analyst Stephen Girsky says GM's declining market share "doesn't support its size. They have too many plants, too many workers, too many models, too many dealers, and their employee benefits are too high."
In other words, barring a major turnaround in profitability, the odds are that GM will retire its poor-performing Buick and Pontiac divisions, each of which has dwindled to less than 3 percent of the market. The remaining GM divisions will be consolidated and streamlined with the number of models reduced. More U.S. assembly and manufacturing facilities will be shuttered and more jobs moved overseas to take advantage of cheaper labor and lower regulatory compliance costs.
The sad part is that GM is producing some of the best vehicles it has ever built, with several models ranking as well as top-scoring Toyota/Lexus and other import vehicles in terms of customer satisfaction and the low number of problems reported during the first 90 days of ownership. The 2005 Corvette comes standard with a 400-hp engine and equals or beats the performance of cars costing two to three times as much. Cadillac is once again a hip brand, and the new Chevy Cobalt is an excellent small car as good as anything from Honda or Toyota.
Unfortunately, it may be too little, too late. The iceberg looms large in the lookout tower, and it may impossible to steer away in time.
For consumers, GM's woes mean some great cars are available at even better prices, especially if the new employee discounts become available across the board."
The only downside is there may not be a GM around in five or 10 years.
Comment on this article in the Automobile Forum.
COPYRIGHT 2005 ERIC PETERS
I think this is just sad. I know this is probably the wrong forum to post this, but we are all American and I think that without this PowerHouse of auto manufacturers American cars are going to be "poo". I'm concerned because I also own a Pontiac and to see this name possibly off the market in 2-3 years is pathetic and Buick, one of GMs' most reliable cars is getting the she just like Oldsmobile did last year
I love my Ford, but i know they have their problems too. Just thought I'd post to raise some discussion.Matt
6/19/05, 10:40 AM
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Can't get into the site.
I could go into this in great detail, but I will say this. We will see some major changes with the big 3 in general. No one of them is going away, lets just say that things will look different in 5 years.
I could go into this in great detail, but I will say this. We will see some major changes with the big 3 in general. No one of them is going away, lets just say that things will look different in 5 years.
6/19/05, 10:54 AM
#4
Thanks for the write up Matt but the colbalt up here got a bad rap for its bumpers seems that from what I heard is that they are made of P.V.C type of material and anything lower that -10 celcus the bumper shatters like broken glass if you bump into a snowbank ,at 8 or 900 dollars a pop it adds up.
This was found out from the local driving school that trains drivers for panic situations .Athough they have used many types of cars (mostly GM's ) the colbalt they said they would never use again.
This was found out from the local driving school that trains drivers for panic situations .Athough they have used many types of cars (mostly GM's ) the colbalt they said they would never use again.
6/19/05, 10:58 AM
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as much as i do not like GM i truely hope they do not go away. its very sad that American made automobiles still have the stigma as been lemons!
my in-laws only buy toyotas and/or hondas, its really sad, they had me converted as well until the 05 Mustang came out..
my in-laws only buy toyotas and/or hondas, its really sad, they had me converted as well until the 05 Mustang came out..
6/19/05, 11:36 AM
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Originally posted by 05WindveilGT@June 19, 2005, 10:39 AM
but we are all American
but we are all American
Seriously though, if GM does fold it would put literally millions of people out of work worldwide. Think about all of the suppliers, distributors, dealers, rental car agencies, employees, administration staff, etc that would suffer if the giant passed away. I agree that GM needs to streamline and junk the majority of its brands. Who needs more than one car line for luxury cars (Cadillac is doing great!), one for everyday cars (Think: Saturn or Chevrolet) and one for trucks? Everything else is just superfluous! GM has so many divisions that their worst competitor is themselves!
Also, killing the upcoming new RWD platform was a horrible decision... GM needs a Chrysler 300 beater in the worst way.
6/19/05, 11:53 AM
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Originally posted by MustangDan@June 19, 2005, 11:30 AM
The big 3 isn't 3 amymore, it's just GM and Ford now. My fear is one of them being sold, like Mopar.
The big 3 isn't 3 amymore, it's just GM and Ford now. My fear is one of them being sold, like Mopar.
But anyway, even though GM's sales are down in the States, in the rest of world they are pretty good. For example, in Europe sales of Chevrolet are up by 24.5% and cars like Chevy Kalos and Chevy Aveo are really good sellers. In South America and Africa sales of Daewoo (owned by GM) are up by more than 50%. In Asia Daewoo's sales are also up. I'm not sure about Australian Holden.
6/19/05, 12:13 PM
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WEll it talks as if employee discounts to public hasnt started. Well it has here in missouri. Employee discount is available to anyone. Good luck to those that want a gm. I actually wanted a chrysler before the mustang, but not a gm as the only one was a gto, but looked like a fancy cavalier. If chrysler came up with the same deal tho, I would have definitely been looking at the crossfire, which I think looks awesome, and definitely is a sweet looking ride, just as the mustang is. Of course I wouldnt trade in my mustang for one, but sure like the styling of the crossfire.
6/19/05, 03:16 PM
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IMO Ford and GM are facing radical changes in the next few years, somewhat like what the airlines are enduring. One financial program I saw said GM needed to cutback like 200,000+ emnployees. One can only imagine the potential hits to the employees, families and economy. We have a family member who retired from United and has lost his medical retirement and now probably up to 50% of his pension. Having said that, I have no idea what the answer is but I am sure if the companies continue with their problems, our good old politicians will have the "solution" and we will provide the $$$$.
6/20/05, 09:05 AM
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GM won't be going anywhere...
this discussion has been talked about over and over again. Simply put the US Government wouldn't allow it.
This year sales have been rough but expect to see a change and a rise in sales from all American companies soon.
Toyo is having numerous problems and has really backed themselves into a corner with their reliabilty and safety issues as of late. Not to mention the whole gimmick of wanting to raise their prices, its not looking good. The same can be said for Mitsubishi right now also. (but this is a whole other topic, so I'll be good
)
On the other hand Honda and Subaru (which GM owns 20% of) are on a great rise.
Zoran is absolutely correct, the international sales for GM are up and so are Fords I believe too.
Sales were up for Ireland at 37.4%, Indonesia 57%, and the Focus is the #1 seller in the UK.
The thing with these writers is that they don't look at the whole picture but just a small part of it. While sales could very well be better, you're not gonna see GM go anywhere.
But the other did a great job because he got you to read the story and think about it
Thats journalism 
this discussion has been talked about over and over again. Simply put the US Government wouldn't allow it.
This year sales have been rough but expect to see a change and a rise in sales from all American companies soon.
Toyo is having numerous problems and has really backed themselves into a corner with their reliabilty and safety issues as of late. Not to mention the whole gimmick of wanting to raise their prices, its not looking good. The same can be said for Mitsubishi right now also. (but this is a whole other topic, so I'll be good
)On the other hand Honda and Subaru (which GM owns 20% of) are on a great rise.
Zoran is absolutely correct, the international sales for GM are up and so are Fords I believe too.
Sales were up for Ireland at 37.4%, Indonesia 57%, and the Focus is the #1 seller in the UK.
The thing with these writers is that they don't look at the whole picture but just a small part of it. While sales could very well be better, you're not gonna see GM go anywhere.
But the other did a great job because he got you to read the story and think about it
Thats journalism
6/20/05, 01:12 PM
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If sales are so great with some divisions of GM overseas but not in America, then why pull such automakers off of the market in USA an in turn all over the world? Some of this doesn't make sense and in retrospect I think Gm is stabbing themselves in the foot. I would just hate to see companies (although not my favorite) like Buick, Oldsmobile, Pontiac, Hummer, etc. or model cutbacks in other divisions within Chevrolet, GMC, etc. As a whole picture for the economy itself, the Government will def. intervene if GM decides to claim bankruptcy just like they did a while ago when GM was in a hole before.
Matt
Matt
6/20/05, 02:08 PM
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Originally posted by Zc527@June 20, 2005, 3:53 PM
yaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay!!!!!!!! possibly no more gm? omg that would be awesome!
yaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaay!!!!!!!! possibly no more gm? omg that would be awesome!
Plus you need competition. Competition is what keeps Ford building better and safer vehicles. Competition is why you have SVT's. Competition makes a company strive to be better.
Basically, if you had to run a race against someone, you're going to run harder than running a race against nothing.
6/21/05, 08:55 AM
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You learn new stuff everday. I'm still learning my ABC's
6/21/05, 11:47 AM
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Originally posted by Red Star@June 19, 2005, 11:56 AM
Chrysler is only domestic car company that don't have loss this year. Sales of Chrysler are up by 3.5%. Sales of Ford are down by 5.7% and I don't know by how many % sales of GM are down.
Chrysler is only domestic car company that don't have loss this year. Sales of Chrysler are up by 3.5%. Sales of Ford are down by 5.7% and I don't know by how many % sales of GM are down.
6/21/05, 01:54 PM
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Originally posted by 1999 Black 35th GT@June 20, 2005, 10:08 AM
GM won't be going anywhere...
this discussion has been talked about over and over again. Simply put the US Government wouldn't allow it.
GM won't be going anywhere...
this discussion has been talked about over and over again. Simply put the US Government wouldn't allow it.
http://www.detnews.com/2005/editoria...A11-174553.htm
i don't think that's the article i was thinking of, but its about the same stuff.
Asked by CNBC about Detroit's woes in the week GM announced its worst quarterly loss in more than a decade, President George Bush said "they're going to have to learn to compete."
"In other words," Bush said, "if the consumer starts saying, 'We want a different kind of automobile,' they're going to compete once again with, say, the Japanese automobile manufacturers to ... keep their lion's share of market demand."
...
The Big Three seem to have less clout compared with a dozen years ago because the auto industry and power structure in Washington have changed dramatically. The American auto industry is no longer just three companies headquartered in Detroit. There are plants making Toyotas, Hondas, Nissans and Hyundais throughout the South, where the GOP congressional power brokers live.
"They're employing a lot of people right now, so they're getting more attention from Washington," says Bill Noack, an automotive consultant who served as GM's Washington spokesman for nearly 20 years. "That's just a symptom of the times."
"In other words," Bush said, "if the consumer starts saying, 'We want a different kind of automobile,' they're going to compete once again with, say, the Japanese automobile manufacturers to ... keep their lion's share of market demand."
...
The Big Three seem to have less clout compared with a dozen years ago because the auto industry and power structure in Washington have changed dramatically. The American auto industry is no longer just three companies headquartered in Detroit. There are plants making Toyotas, Hondas, Nissans and Hyundais throughout the South, where the GOP congressional power brokers live.
"They're employing a lot of people right now, so they're getting more attention from Washington," says Bill Noack, an automotive consultant who served as GM's Washington spokesman for nearly 20 years. "That's just a symptom of the times."
6/21/05, 02:23 PM
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[quote=mustang_sallad,June 21, 2005, 3:57 PM]
There was an article on autosinsider a number of weeks ago saying that the government might not come to the rescue this time, simply because so many foreign car companies are opening up more and more plants in the US.
http://www.detnews.com/2005/editoria...A11-174553.htm
i don't think that's the article i was thinking of, but its about the same stuff.
Meh... 
I think they would considering the amount of jobs that would be lost at GM. Ultimately I don't think it will come to that for GMC if they get their act together.
Right now the only asian companies not suffering from major reliability issues are Honda and Subaru. Toyota, Mitsubishi, Nissan... all are in a bind right now and will most likely see a decline in sales soon, mitsu already has and nissan is beggining. Toyo is next whether they like it or not. They've really backed themselves into a corner this time. But thats a whole other subject...
The compnay that really is surprising me lately is Hyundai. They have really come a long way from what they used to be. Good for them
There was an article on autosinsider a number of weeks ago saying that the government might not come to the rescue this time, simply because so many foreign car companies are opening up more and more plants in the US.
http://www.detnews.com/2005/editoria...A11-174553.htm
i don't think that's the article i was thinking of, but its about the same stuff.
Asked by CNBC about Detroit's woes in the week GM announced its worst quarterly loss in more than a decade, President George Bush said "they're going to have to learn to compete."
"In other words," Bush said, "if the consumer starts saying, 'We want a different kind of automobile,' they're going to compete once again with, say, the Japanese automobile manufacturers to ... keep their lion's share of market demand."
...
The Big Three seem to have less clout compared with a dozen years ago because the auto industry and power structure in Washington have changed dramatically. The American auto industry is no longer just three companies headquartered in Detroit. There are plants making Toyotas, Hondas, Nissans and Hyundais throughout the South, where the GOP congressional power brokers live.
"They're employing a lot of people right now, so they're getting more attention from Washington," says Bill Noack, an automotive consultant who served as GM's Washington spokesman for nearly 20 years. "That's just a symptom of the times."
"In other words," Bush said, "if the consumer starts saying, 'We want a different kind of automobile,' they're going to compete once again with, say, the Japanese automobile manufacturers to ... keep their lion's share of market demand."
...
The Big Three seem to have less clout compared with a dozen years ago because the auto industry and power structure in Washington have changed dramatically. The American auto industry is no longer just three companies headquartered in Detroit. There are plants making Toyotas, Hondas, Nissans and Hyundais throughout the South, where the GOP congressional power brokers live.
"They're employing a lot of people right now, so they're getting more attention from Washington," says Bill Noack, an automotive consultant who served as GM's Washington spokesman for nearly 20 years. "That's just a symptom of the times."
I think they would considering the amount of jobs that would be lost at GM. Ultimately I don't think it will come to that for GMC if they get their act together.Right now the only asian companies not suffering from major reliability issues are Honda and Subaru. Toyota, Mitsubishi, Nissan... all are in a bind right now and will most likely see a decline in sales soon, mitsu already has and nissan is beggining. Toyo is next whether they like it or not. They've really backed themselves into a corner this time. But thats a whole other subject...
The compnay that really is surprising me lately is Hyundai. They have really come a long way from what they used to be. Good for them