Agree with most of your comments. The point is the pricing strategy is lame. AFAIC, the options are an integral part of the value proposition. A CTS should be a CTS not 10 different iterations of one model with additional options on each.
Huh?
So I guess you have a problem with how almost all manufacturers price their vehicles.
BMWs come standard with nothing and then offer everything as an option. Sure you can techicanally get a 3 series for under 30,000 under 35,000 but it won't have a sunroof or an automatic and only have a 230 hp six cylinder.
The top of the line CTS only has one significant option which is AWD.
There is nothing wrong with trim levels. BMW has five different trim levels for the five series and then you can add 10,000 plus dollars of options to each one. Infiniti has four different trim levels for the M with several thousand dollars in options for each vehicle. Only lexus really has limited trim levels and limited options since they don't offer many powertrain choices on the GS. You can't get AWD on the V8 and there are only really a couple of option packages.
You must hate the way Honda and Acura set up their model line pricing.
You need to offer a decent number of trim levels to support the sales of a model. You can't just offer one or two trim levels in the mid 40,000 range because you will be giving up sales of the people who can't afford or won't spend 40,000 plus but would spend mid 30,000.
There are option packages and individual options but the number of trim level choices is not efficiency pricing afaic.
Bundle the options for a low price base model and a premium model and allow options a la carte. GM is following as usual and no better than the competition. The way they price is not conducive to building market share.
It wont even offer a 6 cyl. which is generally the Malibu's bread and butter sales.
I am under the impression that the '11 Sonata will offer 200hp 4-cly and a new 3.5L V-6 with 275hp, both are most powerful in class, but I could be wrong about the V-6.
I do know Hyundai does indeed have a new 3.5L coming with 270+ hp. It will be installed in the 2010 Santa Fe, the 2011 Kia Sorrento, and possibly the Sonata as well. It will eventually replace the current 3.8L engine.
It wont even offer a 6 cyl. which is generally the Malibu's bread and butter sales.
The V-6 models might be the bigger money makers for GM, but I think the 4-cyl version is still the biggest seller. At least, that's what I've found searching online. I've checked the inventory of a few dealers, to see what slightly-used Malibus are going for, and the vast majority of them are the 4-cyl models. But then, that could just be all the cars coming off of short-term leases, or being sold off by rental fleets and other bulk buyers.
What the heck is so special about it? It looks like a Camry clone with a still ugly grille. What's with the furniture casters on the white appliance? Looks like an elephant on a skateboard.
I guess those Cherry Hill Triplex commercials they air between Jerry Springer and Maury Povich are very effective at reaching Hyundai's demographic. "$99 down! $99 a month at the Cherry Hill Triplex! No Credit? Bad Credit? Bankruptcy? Sex Offender? No Problem!" I guess there are more poor and disenfranchised people than ever and they're all looking to buy a car real cheap real fast.
The V-6 models might be the bigger money makers for GM, but I think the 4-cyl version is still the biggest seller
It's that way with the Camry, Altima, and Accord too. I think maybe the Fusion may sell more v6's but that may not even been true. I see quite a few Malibu's on the road and I'd guess 70% only have single exhaust which I believe indicates a 4 cyl model.
Going back a few years, GM may have sold a higher percentage of v6's because their 4 cylinders sucked (in terms of NVH), plus the v6 model could probably be had for less than a 4cyl Cam/Cord.
What the heck is so special about it? It looks like a Camry clone with a still ugly grille. What's with the furniture casters on the white appliance? Looks like an elephant on a skateboard.
And how is that different from the new Lacrosse. I've seen a few on the road and it reminds me from several angles to an ES350, which is a cloned Camry right? At least the Hyundai doesn't have stupid fake portholes stuck to the sides.
FWIW, I like the looks overall of the new LaCrosse, but from a few angles it has some odd proportions IMO. But compared to the previous LaCrosse it's a huge improvement as that was one of the homeliest looking cars on the road.
The new Malibu is at MINUMUM on par to either and in many ways better.
You may be blinded by your loyalty to the dealer you work for, but I have done just the comparison you suggest, and I find them all to be boring, but with the Accord head and shoulders above the other two in terms of driver involvement, interior design and build quality.
Certainly, the Malibu deserves to make big inroads into Camry's sales, as it is at least its equal now. But it probably won't for a few more years, because of the momentum the Toyota name has coming off 20 good years (and now close to 10 mediocre ones), while the GM name is coming off 25 bad years and 5 decent ones.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
With increasing fuel economy standards, I'm sure more vehicles will go to 4cyl with DI and turbocharging. As for Hyundai, they mention in that article only like 15% buy the v6 model which seems low, but considering how many are sold to fleets probably skews the results. Regardless, if the car has a smooth and powerful 4cyl, not having a v6 probably won't hurt them to much. I'd imagine Camry and Accord v6 sales are not much over 20% I'd guess.
Last months' big winner, again, was South Korea's Hyundai, which posted double-digit sales growth. Sales at the top three U.S. sellers -- General Motors, Ford and Toyota -- held steady, while Chrysler struggled for another month.
Aren't we going in circles? The CTS is sized as a midsize, but classified to compete with the smaller class. The same can be said of Infiiniti G and Acura TL.
At more than $45k the CTS totally loses it's advantage over competitors (the less loaded $40k models make more sense). Forget BMW 5 or Lexus GS, they're not the designated competition. The simiarly sized (and also class competitor) Infiniti G can be had for roughly $40-43k loaded, and apart from interior quality I see zero advantage in buying CTS.
This is another reason why I won't buy GM, none of the cars I'm considering trump the competitors.
To make a fair comparo with 5-series and E-class we need the STS, then the Cadi will lose again.
OK, the 2 CHEAPEST models, the Accent and Elantra doubled in sales. Could be people are leery of spending $20K on a new car, or if they are to spend $10-12K on a used car, why not sacrifice a little and get a new car.
BTW, after selling a grand total of 15,095 cars in Japan, Hyundai is pulling out w/ it's tail between its legs.
"..... Perhaps only one reason why Friz resigned today.
:surprise: Didn't see that coming :surprise:
As far as car sales in that price range, the ONLY reason Hyundai makes a profit on those models is that they are built in KOREA, not Alabama.
Hyundai corp sold a grand total of 46,000 cars and trucks here last month. Less than half what Chevrolet sold alone. ALL 4 of GM's 4 core brands posted gains last month greater than that of Toyota, Honda, and Ford. The only thing that dragged their sales down as a whole was that of the shuttering brands. The 4 core brands were up about 5.6%. Chances are this is because of the new models; LaCrosse, SRX, Terrain, and Equinox.
Whats also interesting is that when you take into consideration the daily sales rate (there were 2 less selling days this year), the 4 core brands were up 15%
"This marks the second changing of the top guard in less than a year. Henderson replaced Rick Wagoner, who was ousted March 30 as part of the U.S. government's bailout of GM via Chapter 11 bankruptcy.
Speculation had always been that the government's Automotive Task Force was lukewarm about Henderson, in part because he is a career man at GM -- the son of a Michigan Buick dealer -- that is looking for a cultural makeover. Observers had questioned whether a GM lifer at the top, surrounded by many other executives who had spent their entire careers at the auto company, could truly make the cultural transformation that is required.
Further, while Henderson -- a finance man -- was the right man to maneuver GM through Chapter 11 bankruptcy at breakneck speed, he may not be the right person to grow GM's four remaining brands into a profitable automaker that can pay back government loans to the U.S. and Canada."
Hyundai corp sold a grand total of 46,000 cars and trucks here last month. Less than half what Chevrolet sold alone. ALL 4 of GM's 4 core brands posted gains last month greater than that of Toyota, Honda, and Ford. The only thing that dragged their sales down as a whole was that of the shuttering brands. The 4 core brands were up about 5.6%. Chances are this is because of the new models; LaCrosse, SRX, Terrain, and Equinox.
Whats also interesting is that when you take into consideration the daily sales rate (there were 2 less selling days this year), the 4 core brands were up 15%
But even after all that, the board decided Fritz had to go as GM was not changing fast enough. Good for the board in getting really involved this time.
The issue is not whether GMs sales are increasing slightly. The issue is whether they are ever going to do well enough realistically (at least within 2-3 years) to make a profit, much less really pay back all the money we lent them.
You've got to wonder if they aren't making changes too fast at GM. Henderson had a good track record at his previous jobs, including major European restructurings. There is an awful lot of turbulence at GM. I agree it needs cultural changes, but you need some stability as well in successfully restructuring a large beauracracy. Mullaly didn't bring in all new leadership, he only moved tactically where necessary. You can't turn an aircraft carrier like a speedboat and Henderson had a lot of inherited baggage that needed to be cleaned out. I'm not sure they gave him a fair chance, but the real issue may have been that some are indicating he and Whitacre didn't hit it off which may be the real reason behind it all? Didn't something like this happen to Stempel right after the Roger Smith debacle in the 80's?
As one example - any gravy train Chevrolet was getting from the Camaro is coming to an end, with the introduction of the more powerful and fuel efficient 2011 Mustang.
I don't see vehicle sales reboundding anytime soon with unemployment above 10% and the stock market not having gained in 7-8 years (counting inflation we've lost money), and the weakness of our $.
I agree it needs cultural changes, but you need some stability as well in successfully restructuring a large beauracracy.
With that sort of thinking the Germans might have won the Battle of the Bulge. I believe a man like George Patton would be useful to GM now. When the crisis occurred he ordered his subordinates to change direction 90-degrees, move 100 miles thru the snow, and begin a counterattack within 24 hours.
Precisely, just like Ford and Mullaly. He didn't throw out all of his officers, he just made necessary tactical adjustments. I've got to wonder if Whitacre set up Henderson with the Opel fiasco? I can't see Henderson pushing to offload it after he restructured it and GM got a number of new model vehicles from it.
Also, its easier to move a Division than an entire Army. GM is much more complicated than Patton and the Battle of the Bulge. I'm certainly not taking away anything from General Patton's brilliance as a Division commander and tactician, but this is more like Eisenhower and Montgomery trying to get all the allied armies to make necessary moves and changes during WWII. In fact, if you want to be honest about it, the primary reason Germany lost the war was probably Hitler's stupidity in pushing his generals beyond their logistcal support limits. Much of Germany's equipment was advanced over the Allies and Germany had many brilliant generals as well. Similarly, I think that while GM had some poor leadership, it also has some excellent talent, You can't change culture overnight, but if GM is successful in change I think they definitely have the talent to survive and thrive down ther road. One of the dumbest things an organization can do is to hastily throw the baby out with the bathwater in the name of change.
Hyundai is in a Global market. GM needs to get in the game. Understand about the Chevy sales which are 60% of GM. But here is the bottom line:
But on Tuesday, GM released November sales figures that were 2 percent below the same month last year, when sales hit a 26-year low. The decline came after Whitacre began pushing for increased sales and market share.
".....I can't see Henderson pushing to offload it after he restructured it and GM got a number of new model vehicles from it."
That's odd, because a lot of the articles make it sound as if management (Fritz) negotiated the deal and the board rejected it;
".....Henderson had clashed with the board over the decision to sell the company's European unit Opel and Vauxhall. The board rejected management's proposal to sell the unit."
That's from the Detroit News.
This, from dailyfinance.com;
".....The two men reportedly clashed over the future of the company. Whitacre led a board revolt over a plan to sell GM's German subsidiary, Opel, to a Canadian parts company, a deal that Henderson helped to shepherd through."
It's beginning to sound as if Henderson quit in frustration, which concerns me, as I thought he was doing a good job.
That's NOT the bottom line. The fact is they lost more sales from the shuttered brands than they gained from the core brands. That may have a lot to do with a lack of quality inventory on the Saturn and Pontiac lots, as well as the fact that there are a lot of bargain hunters out there.
".....Henderson had clashed with the board over the decision to sell the company's European unit Opel and Vauxhall. The board rejected management's proposal to sell the unit."
But was Henderson really deciding on this alternative, or was he carrying out orders from above or the government? Politics?
The fact is they lost more sales from the shuttered brands than they gained from the core brands
Makes sense to me. If you are downsizing you are going to at least initially lose revenue to improve profitablity (after one time restructuring related costs are removed) .
I do think both GM and Chrysler may have shut down too many dealers though. Neither is currently blessed with many products that buyers will travel a longer distance to buy, so they may have overdone it with the smaller market size dealers they shutdown. Works to Ford's advantage I think.
".......Neither is currently blessed with many products that buyers will travel a longer distance to buy, so they may have overdone it with the smaller market size dealers they shutdown."
That may very well be true, as I had to go 35 miles to get my Lacrosse, as opposed to the 11 miles it would've been 2 yrs ago. But, one would assume that the transaction prices should creep up, as there are less dealers vying for the customers $$$$.
But, one would assume that the transaction prices should creep up, as there are less dealers vying for the customers $$$$.
Maybe in the old days of a D3 oligopoly. However, today is a very competitive market. Most buyers are flexible on producer, so if a GM transaction price goes up compared to the competitors, most will just buy something else. You'll notice for example that a Camry hasn't gone up in price all that much over the past couple of years despite more equipment and features. If you are a loyal GM buyer you may swallow transaction price increases, but you'll pay for it at trade in time if other similar vehicles didn't jump up as much.
I'm thinking GM shed dealers to try and lower their marketing and distribution costs, but you've got to make sure the cost savings exceed the lost revenues from fewer dealers. As usual in a crisis mode, they probably went too far and handed Ford some sales volume gains. Increasing sales volume is another way to reduce unit fixed cost absorption.
Aren't we going in circles? The CTS is sized as a midsize, but classified to compete with the smaller class. The same can be said of Infiiniti G and Acura TL.
That's 100% false. According to GM's own responses and marketing on the matter, the CTS is built to be a 5-series competitor. They purposely skipped over the 3 series and small sedan segment in the U.S. because they knew there was no point in competing there.
That the U.S. auto magazines and public can't get it out of their thick skulls that "cheapest model is always the smallest one" is their problem. In Europe, Cadillac already has a smaller model, the BTS. It doesn't sell well at all, but over there, nobody makes the mistake of comparing the CTS to a 3 series or IS350 or other smaller vehicles.
And as a competitor to the 5 series, it's a very good and frugal alternative, much like how Hyundai is to the typical econoboxes and basic vehicles out there. Why pay $20K for a Civic when the Hyundai does 95% as well for 4K less?
**note** GM is bringing the BTS over next year for this reason - because even if it doesn't sell a single one(it probably will, though), it needs to get this idiocy out of the public's minds - so it will sell more CTSs as 5 series and E Class alternatives.
Mullaly didn't bring in all new leadership. He didn't throw out all of his officers
(I cut that from two of your posts).
Mullaly has another dynamic to consider, that being the controlling stock holders who are all Fords in one way or another. Lots of Henry's heirs probably hold jobs in the corporation, plus they probably are trying to protect their fiefdoms and friends.
But not to the extent of bankrupting the company, although that almost happened with Bill was running things. Otherwise they never would have faced the music and hired Mullaly and hocked everything.
The Opel, Hummer, Saturn and Saab deals probably did weigh heavily on the GM board's decision.
And I could understand someone getting tired of butting heads and moving on to different pastures, which may be the case here.
Is the BTS just going to be a reskinned Saab like the BLS? If so, that's not going to change anyone. I remember something about it being new...but no specifics.
In my few weeks in Europe, I saw just one modern Caddy that I remember, an SRX...saw a few old ones though. Didn't see a single BLS that I can remember, and there'd be no reason to buy a CTS or STS there with the amazingly diverse selection of cars in that range on the continent.
Caddy has some courage to build on size vs price...but I think it still overestimates its brand cachet. That's the key. Saving 10K off a 5er or E isn't going to woo the demographic unless they see something desirable in the label. More distance is needed from the landau tops and Vogue tires/wheels.
Precisely, just like Ford and Mullaly. He didn't throw out all of his officers, he just made necessary tactical adjustments.
GM needed radical change NOW! At least at Ford the *top guy* was an outsider. Not so with Henderson. He might have been a good guy, but he was still an insider. After all those years some new blood is critical at the top, like at Ford. Look how much better Ford is doing with Mulally at the helm.
Also, its easier to move a Division than an entire Army. GM is much more complicated than Patton and the Battle of the Bulge.
Exactly, which is why they need radical changes. The UAW is still there, they still have a lot of junk vehicles. And I still say they should have modified their name to tell us things are different: "The new GM" or "General Motor Vehicles (GMV)" or something like that.
You can't change culture overnight, but if GM is successful in change I think they definitely have the talent to survive and thrive down ther road...
One of the dumbest things an organization can do is to hastily throw the baby out with the bathwater in the name of change.
Yes, but the incrementalism of Wagoner in particular was like a snail running a marathon. They were going to dry out and die long before the job was done. Even though GM is out of BK, they are still very much a patient in grave condition, and heroic measures must be continued if they are to survive. Haste may be risky, but death is a certainty otherwise.
Caddy has some courage to build on size vs price...but I think it still overestimates its brand cachet. That's the key. Saving 10K off a 5er or E isn't going to woo the demographic unless they see something desirable in the label. More distance is needed from the landau tops and Vogue tires/wheels.
Great post. It's not that Caddy isn't very good, but the brand doesn't have anywhere near the public perception of a Lexus or Mercedes. It's the same problem that Hyundai has when it builds a Sonata to compete with a Camry or a Genesis to compete with a BMW. It doesn't matter what Caddy wants to be perceived as, it matters how they are perceived. And they lost their good reputation that existed in the '60s during the next 3 decades. It's going to take some time.
I'm certainly not taking away anything from General Patton's brilliance as a Division commander and tactician, but this is more like Eisenhower and Montgomery trying to get all the allied armies to make necessary moves and changes during WWII.
Patton was an "army" (3rd Army) commander, which consisted of multiple divisions arranged in multiple army-corps. All told about 400,000 troops. During the beginning of the Battle of the Bulge when he left for a command meeting with Eisenhower and Montgomery he had his staff working on moving the bulk of this army 90-degrees from their current track. No going home at 5. No discussion groups. No meetings planned for wrapping up the planning next month.
GM needs someone in-charge who throws out the rules and the mentality of this is how it works, and it's okay if it takes years (that's the problem with bailouts in that it takes the crisis out of the mix, which otherwise would provide action). GM needs action! not making fun of Honda for making lawnmowers. And by action I mean not making the next 3,500Lb sedan that's slightly better than the one they were selling last model, to compete against Toy/Honda's improving 3,500 Lb sedan.
Here's some ideas right now for the next GM CEO:
- start making low-tech 3-wheel vehicles starting about $5,000, that everyone working can afford. 3-wheel exempts you from a lot of ponderous bureaucracy.
- eliminate incentives; just cut the MSRP thousands to attract people in.
- 1 last offer to the UAW to take wage and benefit cuts to an average U.S. worker. If that fails shutdown and hire non-union, or move the remaining U.S. jobs overseas. (hate to say that, but that is what the select greedy unions have forced companies to stay in business many times.)
- Push the government to let Chrysler fold and allow Ford and GM to benefit by picking up Chrysler customers. To heck with Fiat who is not spending 1 penny on the purchase or operation of Chrysler.
And as a competitor to the 5 series, it's a very good and frugal alternative Not at all. It doesn't drives like BMW. As soon as GM build car equal to BMW, I'll buy it. I love to drive, I hate to move in the car from point A to point B.
That's 100% false. According to GM's own responses and marketing on the matter, the CTS is built to be a 5-series competitor. it needs to get this idiocy out of the public's minds - so it will sell more CTSs as 5 series and E Class alternatives.
LMAO GM made that statement about competing with 3series itself and denied it later on? What idiocy? There's nothing idiotic in the public minds, they are just following what GM said itself, as GM itself was the one calling CTS a 3series competitor. :P
Plus, competing against a 5series or Eclass with such a so-so product isn't going to cut it. Price and value matter less in that level, making CTS' advantage not so useful. Sure, there are exceptions, but exceptions are minorities and making sales among minorities isn't the right path to profit.
It doesn't sell well at all, but over there, nobody makes the mistake of comparing the CTS to a 3 series or IS350 or other smaller vehicles
True. However, after various taxes the CTS end up costing as much as a 5series. Import tax and emissions tax hurt the price the most.
@Cooter: I tried checking the price for a 335i with all the boxes chcked and all I got was barely over $54k. :confuse: Even if it is possible to option a 3series to that price, many of those options aren;t avaliable for CTS at any price. So the only fair way is to compare them with equal (or at least close to it) options.
Comparably equipped 335i costs about $48-49k, not that much pricier than CTS. A similarly optioned Infiniti G can be had for about $3k lower than the CTS, how's that a competitive price? :confuse:
I agree with you, no Cadillac drives anywhere near BMW level. The only one to come close (and sometimes outshine) to BMW so far is Infiniti. Audi is slowly getting there (but won't progress much until they stop using FWD setting), so is Jaguar with it's XF.
In comparison with midsize sedans, the CTS feels heavy despite the size, a decent handler but lacks feel, interior quality below par against most competitors, and there's no space/room advantage. It's only weapon is price, which won't matter much in class.
3rd Army is still not the US Army and doesn't change my point. Its divisional and specific location oriented. A 3 star is like a corporate VP, while a 4 star is more a president or CEO. GM has a vast global footprint that needs reworking. I agree with you that change is needed, particularly leadership, but GM is not a small business with short span of controls. You can't purge every insider and likely come out a winner. An atmosphere of fear only leads to fear throughout the workforce stifling creativity and risk taking. The auto industry, like most industries, has certain uniquenesses that must be considered. Outsiders can be good for change, but they need to work with insiders as well. There seems to be a misconception that Mullaly came into Ford and turned it around by kicking people out and replacing leadership with all outsiders. In fact, he did bring in some where change was needed like Farley in marketing. However, he kept and worked closely with many insiders like Fields. You don't have to clean house and rule by fear to turn an organization around. The auto industry is not a technology type company. It is stuck with high fixed costs and long lead times. It will probably take 5 years to fix GM. You can't just step in change platforms and products, and do it all with limited resources. Heck, I don't think Toyota or Honda could change all of their platforms over a few years old in a short period of time. Even they would not have the leadtimes and financing. You also can't blame the insiders because they haven't been able to sell off the discountinued operations. The auto market is oversaturated and the Chinese can't buy everything. Saturn, Saab, etc. aren't exactly hot market players.
You're right about GM pricing in that they seem to have overly inflated sticker prices. When I was looking for a 4 banger last year I was shocked at list for a Malibu verus a Camry LE. However, some degree of promotional pricing is unfortunately part of the American market. Even Toyota and Honda do it, although Honda prefers dealer money to consumer rebates. Chrysler was stupid Washington political correctness. They did not deserve to get tax money given their product and quality. I believe the only reason GM expressed some interest in parts of Chrysler was the government hammer hanging over them during their desperate need for a federal cash infusion. I don't think moving all GM operations overseas will work unless GM wants to become a foreign company. Even most large import car companies have set up US plants due to currency fluctuations, transportation and logistical costs, and operational and marketing difficulties from a long distance. However, expanding Mexico might work to some degree at least. But the upfront costs in setting up an auto manufacturing facility are huge.
My view is that GM is not just a bunch of losers. There is talent and I think it can be turned around. GM was an early and successful producer in China and Eastern Europe. GM is an early implementer of direct injection technology to popular priced vehicles. They have chosen to lead in electric plug in technology versus the Toyota and Ford leadership in Hybrid. Short term this may not be wise, but if you believe Warren Buffet, longer term this may be smart.
You can't just step in change platforms and products, and do it all with limited resources.
Yes, I agree - GM could not physically do that. But planning-wise they could give us a road-map after maybe a week, of where the new GM is going and how they would succeed. I can forgive GM for continuing to sell Malibus for another year or 2.
Where I don't cut GM and Fritz any slack is to not have said after 2 weeks or 1 month - "The senior execs. here at GM got together over the last few weeks and here is our new strategy. We have lost the war competing heads-up against Toyota, Ford, Honda ... Our new strategy is to move away from these market-areas where we have lost and continue to have higher costs and no competitive quality or desireability. We will keep producing our few profitable vehicles like the Corvette. Other than that we will be reinventing the type of vehicles that GM will build. We will be creating new markets."
To me little has changed in the direction GM is taking. It's slightly smaller running on the same paradigms and business strategies, with the same type prodcuts that led to their failure. The definition of insanity is "To continue to do the same thing, and expect a different result". GM is close to being insane. I think the majority of the GM Board realized that, and that's why they are again looking for someone to change this. Unfortunately the change should have started in 2005 or 2006 under Wagoner. All the time from then has been wasted.
I agree that GM should have moved sooner and faster, but I don't lay that on Henderson. He came in and was immediately saddled with a complex bankrutcy and heavy government involvement and politics. Maybe the result would be the same, but I feel they should have given Fritz a few more months since the BK was just finishing up and settling down. I also think the timing was stupid taking all of the attention off of their LA Auto Show introductions. I believe they lost a good talent in Henderson. Maybe they should have just had him as President and brought in a different CEO after Waggoner was dumped. Hopefully it doesn't end up like Boeing. After the Condit mess they passed over Mullaly for a young GE whiz kid. Well, the GE model of outsourcing and offshoring hasn't worked too well on the 787. I bet more than a few board members are thinking maybe they should have stuck with the older Mullaly right now. I'm more than a bit leery of possibly too much outsider at GM. I also find it hard to believe that there isn't still government interference with their recently appointed "outsider" board of directors. You are right that all too aften corporate execs are afraid of the PR in admitting problems. Same goes for military flag officers for that matter. Its all very political and image focused unfortunately.
The more I've read, it appears my feeling that Henderson was pushing to dump Opel due to higher level interference was wrong. But that's a bit scary. Henderson was well thought of in the industry for his financial and international smarts. If he felt it was wiser to dump Opel, despite its platform usage, and use the needed money elsewhere, I've got to wonder if the outsiders are smart in keeping it? Opel isn't exactly a European industry leader and Germany isn't an easy place to do business.
Comments
Huh?
So I guess you have a problem with how almost all manufacturers price their vehicles.
BMWs come standard with nothing and then offer everything as an option. Sure you can techicanally get a 3 series for under
30,000under 35,000 but it won't have a sunroof or an automatic and only have a 230 hp six cylinder.The top of the line CTS only has one significant option which is AWD.
There is nothing wrong with trim levels. BMW has five different trim levels for the five series and then you can add 10,000 plus dollars of options to each one. Infiniti has four different trim levels for the M with several thousand dollars in options for each vehicle. Only lexus really has limited trim levels and limited options since they don't offer many powertrain choices on the GS. You can't get AWD on the V8 and there are only really a couple of option packages.
You must hate the way Honda and Acura set up their model line pricing.
There are 13 different versions of the Accord.
Accord
There are 8 versions of the TL
You need to offer a decent number of trim levels to support the sales of a model. You can't just offer one or two trim levels in the mid 40,000 range because you will be giving up sales of the people who can't afford or won't spend 40,000 plus but would spend mid 30,000.
And the sludge and consequential handing (mishandling). And the shift lag/acceleration lag.
I didn't have time to follow up but it seems that they received a bailout.
Agree to disagree.
>"Japanese GM"....
2014 Malibu 2LT, 2015 Cruze 2LT,
Bundle the options for a low price base model and a premium model and allow options a la carte. GM is following as usual and no better than the competition. The way they price is not conducive to building market share.
Regards,
OW
I am under the impression that the '11 Sonata will offer 200hp 4-cly and a new 3.5L V-6 with 275hp, both are most powerful in class, but I could be wrong about the V-6.
I do know Hyundai does indeed have a new 3.5L coming with 270+ hp. It will be installed in the 2010 Santa Fe, the 2011 Kia Sorrento, and possibly the Sonata as well. It will eventually replace the current 3.8L engine.
The V-6 models might be the bigger money makers for GM, but I think the 4-cyl version is still the biggest seller. At least, that's what I've found searching online. I've checked the inventory of a few dealers, to see what slightly-used Malibus are going for, and the vast majority of them are the 4-cyl models. But then, that could just be all the cars coming off of short-term leases, or being sold off by rental fleets and other bulk buyers.
2025 Ram 1500 Laramie 4x4 / 2023 Mercedes EQE 350 4Matic
It's that way with the Camry, Altima, and Accord too. I think maybe the Fusion may sell more v6's but that may not even been true. I see quite a few Malibu's on the road and I'd guess 70% only have single exhaust which I believe indicates a 4 cyl model.
Going back a few years, GM may have sold a higher percentage of v6's because their 4 cylinders sucked (in terms of NVH), plus the v6 model could probably be had for less than a 4cyl Cam/Cord.
And how is that different from the new Lacrosse. I've seen a few on the road and it reminds me from several angles to an ES350, which is a cloned Camry right? At least the Hyundai doesn't have stupid fake portholes stuck to the sides.
FWIW, I like the looks overall of the new LaCrosse, but from a few angles it has some odd proportions IMO. But compared to the previous LaCrosse it's a huge improvement as that was one of the homeliest looking cars on the road.
You may be blinded by your loyalty to the dealer you work for, but I have done just the comparison you suggest, and I find them all to be boring, but with the Accord head and shoulders above the other two in terms of driver involvement, interior design and build quality.
Certainly, the Malibu deserves to make big inroads into Camry's sales, as it is at least its equal now. But it probably won't for a few more years, because of the momentum the Toyota name has coming off 20 good years (and now close to 10 mediocre ones), while the GM name is coming off 25 bad years and 5 decent ones.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
http://www.autoblog.com/2009/09/27/report-2011-hyundai-sonata-wont-offer-a-v6/
Same story, different month.
Regards,
OW
At more than $45k the CTS totally loses it's advantage over competitors (the less loaded $40k models make more sense). Forget BMW 5 or Lexus GS, they're not the designated competition. The simiarly sized (and also class competitor) Infiniti G can be had for roughly $40-43k loaded, and apart from interior quality I see zero advantage in buying CTS.
This is another reason why I won't buy GM, none of the cars I'm considering trump the competitors.
To make a fair comparo with 5-series and E-class we need the STS, then the Cadi will lose again.
Did it occur to you that the Corroller Skate sized 3 Series can be optioned out at over $57K (non M)????
At more than $45k the CTS totally loses it's advantage over competitors (the less loaded $40k models make more sense).
I'd say that at $45K, the CTS is STILL competitive.
BTW, after selling a grand total of 15,095 cars in Japan, Hyundai is pulling out w/ it's tail between its legs.
It's all about sales gain...not profit bleeding.
Regards,
OW
:surprise: Didn't see that coming :surprise:
As far as car sales in that price range, the ONLY reason Hyundai makes a profit on those models is that they are built in KOREA, not Alabama.
Hyundai corp sold a grand total of 46,000 cars and trucks here last month. Less than half what Chevrolet sold alone. ALL 4 of GM's 4 core brands posted gains last month greater than that of Toyota, Honda, and Ford. The only thing that dragged their sales down as a whole was that of the shuttering brands. The 4 core brands were up about 5.6%. Chances are this is because of the new models; LaCrosse, SRX, Terrain, and Equinox.
Whats also interesting is that when you take into consideration the daily sales rate (there were 2 less selling days this year), the 4 core brands were up 15%
Me neither.
"This marks the second changing of the top guard in less than a year. Henderson replaced Rick Wagoner, who was ousted March 30 as part of the U.S. government's bailout of GM via Chapter 11 bankruptcy.
Speculation had always been that the government's Automotive Task Force was lukewarm about Henderson, in part because he is a career man at GM -- the son of a Michigan Buick dealer -- that is looking for a cultural makeover. Observers had questioned whether a GM lifer at the top, surrounded by many other executives who had spent their entire careers at the auto company, could truly make the cultural transformation that is required.
Further, while Henderson -- a finance man -- was the right man to maneuver GM through Chapter 11 bankruptcy at breakneck speed, he may not be the right person to grow GM's four remaining brands into a profitable automaker that can pay back government loans to the U.S. and Canada."
GM's Henderson Resigns, Whitacre Takes Over (AutoObserver)
Whats also interesting is that when you take into consideration the daily sales rate (there were 2 less selling days this year), the 4 core brands were up 15%
But even after all that, the board decided Fritz had to go as GM was not changing fast enough. Good for the board in getting really involved this time.
The issue is not whether GMs sales are increasing slightly. The issue is whether they are ever going to do well enough realistically (at least within 2-3 years) to make a profit, much less really pay back all the money we lent them.
I don't see vehicle sales reboundding anytime soon with unemployment above 10% and the stock market not having gained in 7-8 years (counting inflation we've lost money), and the weakness of our $.
With that sort of thinking the Germans might have won the Battle of the Bulge. I believe a man like George Patton would be useful to GM now. When the crisis occurred he ordered his subordinates to change direction 90-degrees, move 100 miles thru the snow, and begin a counterattack within 24 hours.
Also, its easier to move a Division than an entire Army. GM is much more complicated than Patton and the Battle of the Bulge. I'm certainly not taking away anything from General Patton's brilliance as a Division commander and tactician, but this is more like Eisenhower and Montgomery trying to get all the allied armies to make necessary moves and changes during WWII. In fact, if you want to be honest about it, the primary reason Germany lost the war was probably Hitler's stupidity in pushing his generals beyond their logistcal support limits. Much of Germany's equipment was advanced over the Allies and Germany had many brilliant generals as well. Similarly, I think that while GM had some poor leadership, it also has some excellent talent, You can't change culture overnight, but if GM is successful in change I think they definitely have the talent to survive and thrive down ther road. One of the dumbest things an organization can do is to hastily throw the baby out with the bathwater in the name of change.
But on Tuesday, GM released November sales figures that were 2 percent below the same month last year, when sales hit a 26-year low. The decline came after Whitacre began pushing for increased sales and market share.
Regards,
OW
That's odd, because a lot of the articles make it sound as if management (Fritz) negotiated the deal and the board rejected it;
".....Henderson had clashed with the board over the decision to sell the company's European unit Opel and Vauxhall. The board rejected management's proposal to sell the unit."
That's from the Detroit News.
This, from dailyfinance.com;
".....The two men reportedly clashed over the future of the company. Whitacre led a board revolt over a plan to sell GM's German subsidiary, Opel, to a Canadian parts company, a deal that Henderson helped to shepherd through."
It's beginning to sound as if Henderson quit in frustration, which concerns me, as I thought he was doing a good job.
But was Henderson really deciding on this alternative, or was he carrying out orders from above or the government? Politics?
The fact is they lost more sales from the shuttered brands than they gained from the core brands
Makes sense to me. If you are downsizing you are going to at least initially lose revenue to improve profitablity (after one time restructuring related costs are removed) .
I do think both GM and Chrysler may have shut down too many dealers though. Neither is currently blessed with many products that buyers will travel a longer distance to buy, so they may have overdone it with the smaller market size dealers they shutdown. Works to Ford's advantage I think.
That may very well be true, as I had to go 35 miles to get my Lacrosse, as opposed to the 11 miles it would've been 2 yrs ago. But, one would assume that the transaction prices should creep up, as there are less dealers vying for the customers $$$$.
Maybe in the old days of a D3 oligopoly. However, today is a very competitive market. Most buyers are flexible on producer, so if a GM transaction price goes up compared to the competitors, most will just buy something else. You'll notice for example that a Camry hasn't gone up in price all that much over the past couple of years despite more equipment and features. If you are a loyal GM buyer you may swallow transaction price increases, but you'll pay for it at trade in time if other similar vehicles didn't jump up as much.
I'm thinking GM shed dealers to try and lower their marketing and distribution costs, but you've got to make sure the cost savings exceed the lost revenues from fewer dealers. As usual in a crisis mode, they probably went too far and handed Ford some sales volume gains. Increasing sales volume is another way to reduce unit fixed cost absorption.
That's 100% false. According to GM's own responses and marketing on the matter, the CTS is built to be a 5-series competitor. They purposely skipped over the 3 series and small sedan segment in the U.S. because they knew there was no point in competing there.
That the U.S. auto magazines and public can't get it out of their thick skulls that "cheapest model is always the smallest one" is their problem. In Europe, Cadillac already has a smaller model, the BTS. It doesn't sell well at all, but over there, nobody makes the mistake of comparing the CTS to a 3 series or IS350 or other smaller vehicles.
And as a competitor to the 5 series, it's a very good and frugal alternative, much like how Hyundai is to the typical econoboxes and basic vehicles out there. Why pay $20K for a Civic when the Hyundai does 95% as well for 4K less?
**note**
GM is bringing the BTS over next year for this reason - because even if it doesn't sell a single one(it probably will, though), it needs to get this idiocy out of the public's minds - so it will sell more CTSs as 5 series and E Class alternatives.
(I cut that from two of your posts).
Mullaly has another dynamic to consider, that being the controlling stock holders who are all Fords in one way or another. Lots of Henry's heirs probably hold jobs in the corporation, plus they probably are trying to protect their fiefdoms and friends.
But not to the extent of bankrupting the company, although that almost happened with Bill was running things. Otherwise they never would have faced the music and hired Mullaly and hocked everything.
The Opel, Hummer, Saturn and Saab deals probably did weigh heavily on the GM board's decision.
And I could understand someone getting tired of butting heads and moving on to different pastures, which may be the case here.
Still wasn't expecting it.
In my few weeks in Europe, I saw just one modern Caddy that I remember, an SRX...saw a few old ones though. Didn't see a single BLS that I can remember, and there'd be no reason to buy a CTS or STS there with the amazingly diverse selection of cars in that range on the continent.
Caddy has some courage to build on size vs price...but I think it still overestimates its brand cachet. That's the key. Saving 10K off a 5er or E isn't going to woo the demographic unless they see something desirable in the label. More distance is needed from the landau tops and Vogue tires/wheels.
GM needed radical change NOW! At least at Ford the *top guy* was an outsider. Not so with Henderson. He might have been a good guy, but he was still an insider. After all those years some new blood is critical at the top, like at Ford. Look how much better Ford is doing with Mulally at the helm.
Also, its easier to move a Division than an entire Army. GM is much more complicated than Patton and the Battle of the Bulge.
Exactly, which is why they need radical changes. The UAW is still there, they still have a lot of junk vehicles. And I still say they should have modified their name to tell us things are different: "The new GM" or "General Motor Vehicles (GMV)" or something like that.
You can't change culture overnight, but if GM is successful in change I think they definitely have the talent to survive and thrive down ther road...
One of the dumbest things an organization can do is to hastily throw the baby out with the bathwater in the name of change.
Yes, but the incrementalism of Wagoner in particular was like a snail running a marathon. They were going to dry out and die long before the job was done. Even though GM is out of BK, they are still very much a patient in grave condition, and heroic measures must be continued if they are to survive. Haste may be risky, but death is a certainty otherwise.
Great post. It's not that Caddy isn't very good, but the brand doesn't have anywhere near the public perception of a Lexus or Mercedes. It's the same problem that Hyundai has when it builds a Sonata to compete with a Camry or a Genesis to compete with a BMW. It doesn't matter what Caddy wants to be perceived as, it matters how they are perceived. And they lost their good reputation that existed in the '60s during the next 3 decades. It's going to take some time.
Patton was an "army" (3rd Army) commander, which consisted of multiple divisions arranged in multiple army-corps. All told about 400,000 troops. During the beginning of the Battle of the Bulge when he left for a command meeting with Eisenhower and Montgomery he had his staff working on moving the bulk of this army 90-degrees from their current track. No going home at 5. No discussion groups. No meetings planned for wrapping up the planning next month.
GM needs someone in-charge who throws out the rules and the mentality of this is how it works, and it's okay if it takes years (that's the problem with bailouts in that it takes the crisis out of the mix, which otherwise would provide action). GM needs action! not making fun of Honda for making lawnmowers. And by action I mean not making the next 3,500Lb sedan that's slightly better than the one they were selling last model, to compete against Toy/Honda's improving 3,500 Lb sedan.
Here's some ideas right now for the next GM CEO:
- start making low-tech 3-wheel vehicles starting about $5,000, that everyone working can afford. 3-wheel exempts you from a lot of ponderous bureaucracy.
- eliminate incentives; just cut the MSRP thousands to attract people in.
- 1 last offer to the UAW to take wage and benefit cuts to an average U.S. worker. If that fails shutdown and hire non-union, or move the remaining U.S. jobs overseas.
(hate to say that, but that is what the select greedy unions have forced companies to stay in business many times.)
- Push the government to let Chrysler fold and allow Ford and GM to benefit by picking up Chrysler customers. To heck with Fiat who is not spending 1 penny on the purchase or operation of Chrysler.
it needs to get this idiocy out of the public's minds - so it will sell more CTSs as 5 series and E Class alternatives.
LMAO GM made that statement about competing with 3series itself and denied it later on? What idiocy? There's nothing idiotic in the public minds, they are just following what GM said itself, as GM itself was the one calling CTS a 3series competitor. :P
Plus, competing against a 5series or Eclass with such a so-so product isn't going to cut it. Price and value matter less in that level, making CTS' advantage not so useful. Sure, there are exceptions, but exceptions are minorities and making sales among minorities isn't the right path to profit.
It doesn't sell well at all, but over there, nobody makes the mistake of comparing the CTS to a 3 series or IS350 or other smaller vehicles
True. However, after various taxes the CTS end up costing as much as a 5series. Import tax and emissions tax hurt the price the most.
@Cooter: I tried checking the price for a 335i with all the boxes chcked and all I got was barely over $54k. :confuse:
Even if it is possible to option a 3series to that price, many of those options aren;t avaliable for CTS at any price. So the only fair way is to compare them with equal (or at least close to it) options.
Comparably equipped 335i costs about $48-49k, not that much pricier than CTS. A similarly optioned Infiniti G can be had for about $3k lower than the CTS, how's that a competitive price? :confuse:
Audi is slowly getting there (but won't progress much until they stop using FWD setting), so is Jaguar with it's XF.
In comparison with midsize sedans, the CTS feels heavy despite the size, a decent handler but lacks feel, interior quality below par against most competitors, and there's no space/room advantage. It's only weapon is price, which won't matter much in class.
You're right about GM pricing in that they seem to have overly inflated sticker prices. When I was looking for a 4 banger last year I was shocked at list for a Malibu verus a Camry LE. However, some degree of promotional pricing is unfortunately part of the American market. Even Toyota and Honda do it, although Honda prefers dealer money to consumer rebates. Chrysler was stupid Washington political correctness. They did not deserve to get tax money given their product and quality. I believe the only reason GM expressed some interest in parts of Chrysler was the government hammer hanging over them during their desperate need for a federal cash infusion. I don't think moving all GM operations overseas will work unless GM wants to become a foreign company. Even most large import car companies have set up US plants due to currency fluctuations, transportation and logistical costs, and operational and marketing difficulties from a long distance. However, expanding Mexico might work to some degree at least. But the upfront costs in setting up an auto manufacturing facility are huge.
My view is that GM is not just a bunch of losers. There is talent and I think it can be turned around. GM was an early and successful producer in China and Eastern Europe. GM is an early implementer of direct injection technology to popular priced vehicles. They have chosen to lead in electric plug in technology versus the Toyota and Ford leadership in Hybrid. Short term this may not be wise, but if you believe Warren Buffet, longer term this may be smart.
Yes, I agree - GM could not physically do that. But planning-wise they could give us a road-map after maybe a week, of where the new GM is going and how they would succeed. I can forgive GM for continuing to sell Malibus for another year or 2.
Where I don't cut GM and Fritz any slack is to not have said after 2 weeks or 1 month - "The senior execs. here at GM got together over the last few weeks and here is our new strategy. We have lost the war competing heads-up against Toyota, Ford, Honda ... Our new strategy is to move away from these market-areas where we have lost and continue to have higher costs and no competitive quality or desireability. We will keep producing our few profitable vehicles like the Corvette. Other than that we will be reinventing the type of vehicles that GM will build. We will be creating new markets."
To me little has changed in the direction GM is taking. It's slightly smaller running on the same paradigms and business strategies, with the same type prodcuts that led to their failure. The definition of insanity is "To continue to do the same thing, and expect a different result".
GM CEO Search Could Take a Year, Report Says (AutoObserver)
As the news shows, the in fighting will keep this company from gaining market share for the foreseeable future.
Regards,
OW
The more I've read, it appears my feeling that Henderson was pushing to dump Opel due to higher level interference was wrong. But that's a bit scary. Henderson was well thought of in the industry for his financial and international smarts. If he felt it was wiser to dump Opel, despite its platform usage, and use the needed money elsewhere, I've got to wonder if the outsiders are smart in keeping it? Opel isn't exactly a European industry leader and Germany isn't an easy place to do business.