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The 335, 135, G35 and IS350 are the top of the class in road worthy steel and watch out for Audi next year. Merc is still more luxo but is getting it.
When you appreciate a good tool you start to understand why there is a market for lower delivery product. Most people want reliable transportation and could care less about proper driving dynamics. But more and more people are signing on to appreciate the drive-ability vs. living-room-ability. Hence, Caddy woke up and finally produced a good road car. Now they need to smooth out the A&S. I see a great deal of q-tips driving a CTS in NJ. Is there a Pasadena, NJ??
The previous CTS-V is a great example of the old philosophy of drag racing technique, only the professional drag guys and now gals do it much better after market. The new V is a top class road sedan contender just like the current generation 'vette is for sports coupes. Only now, has GM returned to competitive metal, IMHO. But halo cars are not the answer. Great cars are the answer, like in the past.
CTS, Malibu, G8...that's it for now.
Took long enough. So slow, it hurts!
Problem is, no more money, HONEY! Where do we go from here?
Regards,
OW
GM seems to finally be listening to consumers....Afterall, they are adding more sub-compacts to the lineup. Can Cadillac make a comeback.....Possibly, however other manufacturers offer some stiff competition. The definitely need to work on some major reliability issues across the manufacturers lineup.
Is GM listening? Yes, finally, and incredibly they've started to listen to both sides of the field, sending G8s and CTS for performance oriented buyers, and still deliver DTS for comfort seekers.
Is GM moving too slow? Regarding products, yes. But they're expecting too much on profit, making ridiculous pricing on CTS, SRX, and STS. So in terms of expectation, GM is setting its expectations too high. For now...
I hope they finalize the smaller car that was in the works and use the GOOD PARTS to build it!
Regards,
OW
The savings GM is likely to see with this offer are substantial. The Center for Automotive Research estimates that by 2011 GM's hourly workforce will be only 8% smaller than current levels - but more than four out 10 of those workers will be new hires being paid a lower wage rate.
Here is the full article. Auto giant aims to replace much of U.S. workforce with lower-paid new hires, dangling $140,000 buyouts to UAW members to stem North American losses
Of course, this does not mention the bland products they sell and the incentives needed to move non-fleet sales in North America. That's what happens when you are a CAR company and make only trucks during rising inflation of fuel and sales tanks. You can't stay competitive with second class product and highest labor costs. Bad model.
Regards,
OW
The basic reason that GM is not making a profit is that it costs more to build the vehicles that they can sell, than the price that they can sell them for. The price that GM can charge depends on the market place (or the competition). The cost of building cars depends on a number of things over which GM has limited control.
My opinion on the Cadillac prices for the sigma platform vehicles is that they would be worth the price if they had nicer interiors and perhaps if some options were standard. The CTS is selling very well at the price, so I don't think it is too expensive. The STS I think is overpriced with the full range of options, but the interior is not what it should be for the price.
No, bad business model is the reason at the end of the day. Competition has good business model. That's why they over price their cars and wind up with deep incentives to move inventory that is pegged to a certain level of projected sales.
I assume you forgot to look at sliding market share. The model is not working.
GM has limited control why? They did not change when change was needed.
Now they are forced to downsize real fast.
Remember what Jack Welch said: "Change before you have to."
GM was arrogant and did not want to change. :P
Regards,
OW
Now, I'll admit that this year profits have been tough to come by because of high gas prices that have decimated truck and SUV sales. But, as gas prices have stabilized in the last several weeks, the lost truck and SUV sales have plateaued. Most of what GM needs the cash for now is retooling and R&D for the new products that will hopefully bring people back into the showrooms for a looksee (and hopefully a purchase).
I think GM would be profitable if they were selling 5 to 6 million vehicles per year in the north american market.
One problem that the domestic auto makers have not been able to control is the UAW. The auto workers can collaborate with each other, but the auto makers can't get together to offer a uniform contract.
In other words, when costs force you to make products that "cost more" than your competition, you do not make a profit.
Of course the UAW was/is a problem but greed and arrogance of management is also a problem that forces labor costs to rise. I liken GM to the credit mess fostered by greedy financial institutions. Now, they are forced to change.
Not too meaningless when market share continues to tank. For more meaning, Gm will run out of cash next year and need a bailout to change the product mix. What else will convince you the model is broken? Bankruptcy?
A little too late to turn one of the biggest companies around to the new era in business without terminal results
It's called less command-and-control and more flexibility to adapt to faster market deltas in a GLOBAL environment. It's called not having 7 divisions with copy cat models that compete against each other. It's about top dealer service and selling products that are top quality and highly desirable in a new value proposition for customers as market conditions change. It's about competitive design, engineering and manufacturing models that are in a flexible, continuous improvement mode. It's about sharing regional platforms to reduce costs.
Logic says that when your cash holdings exceed your entire valuation in the stock market, some Wall Street shark is going to swoop in, snap up the good parts, and toss the rest. Companies with bloated factories and workforces got religion the hard way 20 years ago, in the days of "Neutron Jack" Welch. And with today's more active boards, CEOs who consistently lose ground to the competition usually don't need Donald Trump to tell them they're fired. GM is extremely late to the table.
Hence, a broken business model that is very hard to change as fast as market forces dictate.
Regards,
OW
Pay particular attention to PRICING. As customers wise up regarding price vs. resale value in their purchase decisions, GM needs to really change pricing strategy.
"I really believe, as they refocus their fleets on passenger cars at the right price point, that Americans will start buying more of their cars," Psaros said.
An agreement GM reached with its labor unions last year to cut costs will be "transformative," said Psaros, whose firm owns auto suppliers that do business with GM.
GM's CEO Wagoner also said on Thursday that the automaker is looking to speed up a $10 billion program of cost cuts and was readying asset sales.
GM said last week it would draw down the remaining portion of a $4.5 billion revolving credit line to maintain flexibility for its restructuring.
Turnaround specialist Wilbur Ross told the summit on Monday that the move to pump up cash raises red flags for investors.
GM's decision to draw down its revolver was a prudent liquidity move, GM spokeswoman Rashid-Merem said.
Here is the full article. I don't write 'em. I am a current customer.
NYU's Altman sees 50-55 percent chance of GM default
Regards,
OW
That is totally meanless, all businesses are trying to make a profit. GM's market share in the north american market is more than their fair share. I think that the major auto makers should expect about 15% of the market - more than that is probably not sustainable in the long run. GM has had a very long run.
Its all well and good for YOU to say that GM needs to change its product line. But you don't say what they need to do. I really don't think you know what they should do. I don't know what they should do.
I think that GM could get out of the UAW contracts and the dealership franchise problems by going bankrupt and reorganizing as a completely new company with Chevrolet as the basic car line and Cadillac as a luxury line. This would make them similar to Toyota which has the basic line of Toyota's and their luxury line of Lexus. The longer that the current auto market downturn lasts, the more likely that GM will go bankrupt. I don't see GM's market share increasing before it decreases to the 15% level.
MAKE CARS PEOPLE WANT AND THAT THEY ARE WILLING TO BUY.
Oh yeah, AND MAKE A PROFIT AT THE SAME TIME!
Sound about right? No, you say? You want details?
Here is what one of the editors at the Motley Fool had to say:
As I see it, GM's biggest problem is a simple one: There's less consumer demand for its products.
Toyota and Honda (NYSE: HMC) both have market values far greater than $50 billion. GM and Ford (NYSE: F) are $6 billion and $10 billion, respectively.
What's wrong with that picture?
Detroit has not only been caught by its foreign rivals -- it's been lapped. Over the past decade, that's nowhere more evident than in the hybrid car space.
With its acquisition of Hummer in the late 90s, GM became what The Atlantic termed a "poster child of environmental irresponsibility," producing Hummers, trucks, minivans, and, of course, SUVs.
The story is obvious ... now. But because GM didn't focus on more fuel-efficient vehicles, Toyota became king of the hybrid. When GM finally caught on, it was too late. The Chevy Volt could be a lifeline, but the effect it can have on GM's bottom line is both uncertain and years away.
"We have to build cars and trucks that people want to buy," CEO Wagoner said recently. According to The Atlantic, GM's "public image got so bad that focus groups liked the company's cars better when the logo was removed."
Ouch.
That's not a problem that one vehicle (the Volt), one restructuring, or even one great quarter can erase. Of GM's many problems, its biggest may well be that there aren't many of its cars and trucks that people want to buy right now.
Regards,
OW
As all the people I know in the auto industry say, the devil is always in the details as a matter of course, and presenting those detail elements is what separates the shrewd observer from the shrill-voiced harpy of an egotistical critic...
Ah, but you are the perfect example of why you ARE what you drive. You are not image conscious, you are resentful of ostentation, appreciate quality and understand mediocrity. Your car defines you perfectly.
Thing is, some companies get it right more times than others. The shrewd observers obviously do not work in the US auto industry.
Regards,
OW
I told you what I think. When GM makes desirable cars that people believe in, they will regain market share. IOW, people will again believe in their products after a successful ownership experience.
The product they put out and the pricing strategy is not working. Their products do not excite me and there are a lot of others voting with their wallets. A CTS vs. 3-series at the same price is a no-brainer. Drive both and see. 20% lower price and the CTS wins. Same with an STS and 5-series. The base price is identical so the better product wins.
Regards,
OW
Regards,
OW
The CTS is selling well, up for the year, not down. A BMW 5 series becomes very expensive with much in the way of optional equipment. The base 5 series does not have the power/performance that the DI 3.6 engine that is standard on the STS has. The STS is not going to be in production much longer, as both the STS and DTS are going to be merged on some new platform.
Constructively, they need to make cars better than their competition in each category. Currently, they don't. I like to make things easy. Simple as that. K.I.S.S.
Regards,
OW
I think the problem with the STS is that it is too much of a sports sedan, and not enough of the highway luxury barge that the old FWD 1992 STS was. But then the DTS is the luxury barge that it used to be, and it is not doing so well either. I think Cadillac has made the ride a bit firmer, along with better handling, which may explain the decline in sales. Perhaps a lot of deVille owners have bought Chrysler 300's.
The entire Caddy line are not inspiring. I think that has more to do with the decline in sales more than anything. Take a look at the next E-class Mercedes. The looks alone make Caddy seem destined to the Flintstones as customers. More chisel that art, IMO.
The 40 year old cars were better to inspire luxury...forget about performance until the '08 CTS was designed.
The market is changing. Only 1 model needs to be a living room on wheels. The market for luxury has changed globally. Even the US customers realize you need a blend of lux/perform. Other companies are far ahead.
Regards,
OW
The next E-Class will offer a wide selection of petrol engines ranging from a 4 cylinder 184 HP to an 8 cylinder with 544 HP and the diesel's ranging from 4 cylinder 136 HP to an 8 cyl. 354 HP.
Although I have to admit Buick quality far outshines the current E-Class.
Regards,
OW
Here's my take on your questions:
1) If GM's charging too much, why is GM not making profit?
- Because whatever profit they make with the CTS is simply blown away by their HUGE losses with other products. That includes cars within Cadillac itself, namely STS, XLR and SRX. No matter how popular they are in certain areas noone can deny that they're total money loser. How can one Cadillac model cover the losses of at least 3 Cadillac models? It cant. Add Buick, Pontiac, GMC, Hummer, and Saturn adding losses, and its easy to conclude that GM's chance of making profit is equal to George W Bush's chance of getting re-elected. Making products customers won't buy, the fisrt reason.
- Next, GM being pig-headed, arrogant, refusing to focus on developing mileage friendly cars (insisting on building new SUVs and trucks instead) makes more and more customers run away. What kind of R&D is that??? Like OW said, GM refuse to change exactly when it needs to!!! Poor R&D, the second reason.
- Another reason behind GM's losses is POOR MANAGEMENT (3rd reason). What is the point in keeping Pontiac and Saturn if they steadily lose money? Why should GMC remain existent when all it offers are badge jobs??? Why keeping so many plants open if the cars they're making arent selling? 7 divisions selling pretty much the same models (albeit with slight cosmetic alterations) is a poor decision financially, not to mention the possibility of cannibalizing each other. Are GM executives dumb enough not to notice that? Forgive my inhumane point of view, but if GM's expecting profit without having to rely on federal aid, the only way is to restructure the whole divisions, which will have to include shutting down plants and laying off more labors.
2) How much do you think it cost to build a CTS or STS?
- I dont know any exact figures, but considering Cadillac's use of globally shared platform and technology within GM's divisions, the use of 2nd grade materials, and tight budgets, I figure its not as high as many thought it is. Cadillac bragged about it's Nurburgring developed technology, but what else is there? Infiniti need no such devepment to make an even better G35.
3) What do you think the price tag should be?
- IMHO if Cadillac can lower its price expectations slightly, lowering it to G35's price range, the CTS will have higher chance of making more sales, possibly stealing TL and G35's customers. Remember "you get what you paid for"? Well with current CTS pricing, "You get LESS from what you paid for".
4) If GM's charging too much...
- IF??? No my friend, GM IS charging too much. Imagine getting a CTS at an Audi A4's price, then compare both products in technology, development, refinement, luxury appointments. I see an A4, its price, and I can see how much money they put into developing the car. I see the CTS, its price, and I wonder why it cost the same when they throw less money into its R&D.
Now before you start calling me heartless, let me remind you that I'm just keeping it real, pure, cold hard reality. I have nothing against GM, but I have to reason to support it either, "Buy American" is a term I honestly dont care for. I may not know much about GM's product engineering, but I can easily figure out it's financial blunders. Heck given the right language, I bet even highschool kids can understand that.
Lemko, dont get me wrong. I had a ride in 2003 DeVille, and for such a huge FWD its handling is remarkable. Being used to smaller, nimbler handlers like 3series and TSX makes DTS' handling feels obviously trucklike in comparison. But for such a huge car its awesome, particularly considering its a FWD. No, no my friend, the award for Tanker-like Handling imo goes to TownCar. Being a RWD it's handling is still miserable compared to the front-wheel DTS. Try one and you'll understand
However, the CTS, STS and SRX are built on the same assembly line, so it does not matter which car sells, as long as the assembly line is busy, it should be profitable. Both the STS and SRX sell at about 25,000 per year, which should be enough to offset the cost of putting them into production.
The DTS sales have been dropping, and while the Lucerne sales also help offset costs, the Park Avenue used to sell well over 50,000 annually, and the DeVille sales were upwards of 200,000 once upon a time. At the turn of the century, the deVille sales were around 100,000 with Park Avenue's around 50,000. Now they are selling about 50,000 DTS's and nearly 100,000 Lucerne's, but the Lucerne includes the LeSabre, which sold at 150,000 rate. The one thing that can be said is that the G-body platform should be cheap to build at this point in time, since it is over 10 years old.
I don't think Cadillac is GM's profit problem. If Cadillac can sell the CTS at higher prices, and they are, why should they charge less?
The key to profits are to keep costs lower than the price, this is not simple though, because the cost per unit is less if more units are produced. However, selling more units requires a lower price. Even if the price drops off to zero, you probably can't sell an infinite number (which would reduce the cost to zero). So the trick is to price the vehicle low enough so that customers will buy enough to keep the costs low. But the price tag has to be high enough to still make a profit. The CTS did much better than Cadillac expected, so this second generation model has been moved up the price range. But Cadillac has indicated that a smaller RWD sedan may be in the development stage to fill in the lower priced sports sedan end that you seem to think that they need.
Meanwhile, CTS may sell strong, but with SRX and STS selling for invoice or less in many areas. I believe the piling leftover stock (since nobody wants them) is what adds the loss in Cadillac, not the development cost. Like I said before, the global shared technology means the car is actually cheaper to build, so if Cadillac can sell many more CTS, balancing the volume-profit they may profit even more.
Now if Cadillac can kill the money losing divisions, they may survive and start getting money instead.
There are so many ways to save GM from going under like now, but unfortunately that involves the use of drastic moves (your idea about declaring bankruptcy, for instance). I may be saying this too many times, but Nissan shows how it can revive from near death experience in 10 years, not bad imo, though I expect GM to take a bit longer to do the same, due to the sheer size of the company.
Regards,
OW
I also think that the Pontiac and Buick models are basically clones of either the Chevies or in the case of the Buick Lucerne, the Cadillac DTS, so I don't know that these divisions are really the root cause of red ink or lack of profits.
My opinion is that GM may not have a particular business model any more, which may be the real problem. I think that after WWII the business model was that Chevy was the low end and Cadillac the high end. Now, Cadillac seems to be moving into the low end where it should not be, and the rest of the GM line seems to be a mix of stuff that does not really make much sense. I think the basic business model exploded in the sixties, and has never been fixed.
The most important reason is the lack of salable products in North America that is necessary to support the business model of having those same divisions and then Saturn and Hummer. The old model just will not lend to making enough money in this region.
Regards,
OW
Very true. If the products are good enough, then it wouldn't matter if they had 50 divisions, the products would sell themselves. I wouldn't doubt that they lost customers when they killed Olds. Ironically, after they sounded the death knell, some of the products like the Intrigue and Alero were getting good remarks from the rags and customers.