How will new GM compete?
Experts agree reliable cars, agile leadership among keys
DETROIT — General Motors completed an unusually quick exit from bankruptcy protection Friday with ambitions of making money and building cars people are eager to buy.
Once the world's largest and most powerful automaker, new GM is now leaner, cleansed of massive debt and burdensome contracts that would have sunk it without federal loans.
But the new GM, now 61 percent owned by the U.S. government, still faces some of the same troubles that haunted the old one, which piled up more than $80 billion in losses during the past four years and still needs government aid to survive.
So how does a company that has not made money since 2004 get back to turning a profit? The top five things GM needs to do to be successful:
1. Win back customers from Toyota and other competitors by making cars that are more reliable than rival brands.
--Why it's important: GM has the image of building shoddy cars, mainly because that's what it did in the 1970s, '80s and even '90s. GM neglected its cars in favor of higher-profit trucks and SUVs until five years ago, and the stigma remains.
--How soon can this be done: It's already in progress. GM's Buick brand was tops in J.D. Power and Associates' three-year quality rankings, and several individual models have won their segments. But all of GM's new cars must have above-average quality and remain that way throughout the first five to six years of ownership. Problems early in a vehicle's lifespan discourage repeat customers.
--What the experts say: Many people will forgo style for reliability because they don't want to worry about costly repairs, said David Champion, director of automotive testing for Consumer Reports magazine.
Said GM Chief Executive Officer Fritz Henderson: "I'm a believer that this is a cumulative game. GM is not a company that can be changed by one product. We need to have a continuous cadence of fantastic products."
--GM is succeeding if: Vehicles introduced in the next 18 months have above-average reliability, Champion said. The forthcoming Chevrolet Cruze compact, for example, must not only be stylish, but perform over time.
--GM is failing if: People have to take their cars in for repairs during the first few months of ownership.
2. Raise gas mileage on every vehicle and bring out electric cars.
--Why it's important: Experts agree that gas prices will stay volatile. Supply is limited, and when the world economy recovers, demand will rise. That means a possible return to $4-a-gallon gasoline.
--How soon can this be done: It's already under way. A four-cylinder version of GM's midsize Chevrolet Malibu, for instance, gets 33 mpg on the highway, and it can carry a small family.
--GM has promised to put the Chevrolet Volt rechargeable electric car in showrooms by late next year. It can go 40 miles on a single electric charge and has a small gas engine for longer trips.
--GM is succeeding if: Every new model (GM plans to roll out 10 in the U.S. and 17 in other countries in the next 17 months) has dramatically better gas mileage in government testing than its predecessor.
--GM is failing if: The mileage of its new cars is the same or only a mile or two per gallon better than the models they replaced.
3. Draw younger buyers into showrooms.
--Why it's important: Impressing buyers when they're young makes it more likely that they will stick with the same brand in the future. Yet GM's customers are typically older, said John Wolconowicz, auto analyst at IHS-Global Insight.
The brands with the most appeal among younger buyers are Volkswagen, Mitsubishi and Honda, he said.
--How soon can this be done: Building a customer base among young buyers is a long and expensive process. And many small cars that GM has geared toward young buyers, like the Chevrolet Cobalt, have fallen short in quality and popularity.
"It's going to be years to turn it around," said Karl Brauer, editor in chief of the automotive Web site Edmunds.com.
--What the experts say: Wolconowicz said GM was right to bring back Bob Lutz, the legendary industry executive and auto designer who will head the creative elements of GM's products and marketing.
Said Brauer: "The Escalade kind of reacquainted a younger generation with Cadillac. That was the young, rich, hip person's car. They need to appeal to more than that."
--GM is succeeding if: GM products are appearing in hit movies, music videos, TV shows and other media. "If GM is smart, they'll get that car out in all the right places with all the right people," Brauer said.
--GM is failing if: The perception persists that a Buick is a car only grandpa would drive.
4. Cut GM's bureaucracy so it can make quick decisions in response to market shifts.
--Why it's important: Even top GM executives concede that for years the company's multiple committees and stodgy divisions slowed decisions and watered down car and truck designs.
Now, with swinging gas prices, economic uncertainty and demographic changes, automakers have to change models quickly.
--How soon can this be done: Henderson, GM's chief executive, said the company will cut 35 percent of its executives and 20 percent of the white-collar work force this year. He's also taking charge of North America, GM's key market. But many people who make up GM's old culture remain, and Henderson has to make sure they do not control the company.
GM also will create a single, eight-member executive committee to speed up day-to-day decision-making, replacing two senior leadership forums.
--What the experts say: GM's bureaucracy and top-down culture have created a risk-averse atmosphere in which people are afraid to fail, said Robert Wiseman, a professor who specializes in corporate governance at the Eli Broad College of Business at Michigan State University.
Henderson has to replace those people and then change the culture. Otherwise, GM risks making more boring products.
--GM is succeeding if: Its new models have cutting-edge designs that sell well, and its quality rankings and fuel economy rise.
--GM is failing if: New product designs flop in the showroom.
5. Do a better job anticipating changes in consumer tastes.
Why it's important: If an automaker has vehicles on its dealer lots that no one wants, it is forced to lower prices to move them.
--How soon can this be done: It has to be done immediately. The trick is to have a wide portfolio of models to handle every situation, and flexible factories that can quickly change to different models. GM's factories aren't that flexible yet, but the company is working on the problem. Its Lordstown, Ohio, small-car plant soon will be able to build multiple models.
--What the experts say: People wanted GM trucks and SUVs, but it was weak in many car segments and wasn't ready when gas prices spiked and the market shifted.
Aaron Bragman, an automotive industry analyst for IHS Global Insight, said GM needs to improve its car lineup.
--GM is succeeding if: It can adjust when the market shifts because of gas prices or social trends.
--GM is failing if: It has dealer lots full of a single model that isn't selling well.
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Comments
desspec (anonymous) says...
All that was needed to same GM was to kill the union.
July 11, 2009 at 7:21 a.m. ( permalink | suggest removal )
scottmcx (anonymous) says...
I'll never buy another GM or Chrysler.
July 11, 2009 at 7:21 a.m. ( permalink | suggest removal )
yird (anonymous) says...
"But the new GM, now 61 percent owned by the U.S. government, still faces some of the same troubles that haunted the old one, which piled up more than $80 billion in losses during the past four years and still needs government aid to survive."
But the new administration taking a cue from the old administration has piled up more than $1.5 trillion in new debt and still needs the taxpayer to survive.
==========================================
-"-Why it's important: Even top GM executives concede that for years the company's multiple committees and stodgy divisions slowed decisions and watered down car and truck designs."
For years top party leaders refuse to admit that multiple committees and stodgy lobbyists have stifled American productivity and watered down the value of the American dollar.
It's all clear now!
July 11, 2009 at 8:24 a.m. ( permalink | suggest removal )
BlackReign (anonymous) says...
I will not buy a Government Motors/UAW car again.
I will go Ford.
Hey do the Chinese make an nice car?
July 11, 2009 at 8:45 a.m. ( permalink | suggest removal )
theronce (anonymous) says...
Lenin could not have done it any better.
July 11, 2009 at 9:06 a.m. ( permalink | suggest removal )
zekemire (anonymous) says...
I am so tired of this liberal B. S. that GM and Ford do not make vehicles that people want to buy! People want to buy F150s, Tahoes, Suburbans, Silverados and Sierras! If the stupid government would get the hell out of the way, clamp down on the EPA and ridiculous activists groups, drill and produce our own oil resources, they will both be enormously successfull!
July 11, 2009 at 9:25 a.m. ( permalink | suggest removal )
seneca264 (anonymous) says...
Americans are not able to compete. The imports have taken over due to their superior engineering, build quality, and price. American engineered and built cars are junk and getting worse everyday. You can blame this on greed, unions, poor engineering, and the lack of a decent work ethic. I recently purchased an import that is built in the U.S. as well as the country of origin for this make. I made sure that my car was built offshore to ensure some level of quality in my purchase. You know it is over the the U.S. auto industry when even Kia has surpassed the build and engineering quality of most domestic cars.
July 11, 2009 at 9:26 a.m. ( permalink | suggest removal )
BlackReign (anonymous) says...
sad but true seneca, at least in the auto industry. The UAW/auto makers became apathetic, thinking slogans like 'buy American' would gloss over their poor products.
July 11, 2009 at 9:29 a.m. ( permalink | suggest removal )
yird (anonymous) says...
I tend to agree somewhat with the assessment by Seneca, but not totally.
The Japanese and the Koreans benefited from the American engineering excellence of the pre-sixties era when we were at the top of our game so to speak.
Government mandates such as the idiotic CAFE standards place a helluva burden on engineers that are expected to design vehicles that will provide all the Nintendo looking goodies people demand, seat six linebackers and their gear, be able to negotiate mountainous logging roads, go from zero to sixty in six or less seconds and still get 35 MPG.
My present PU is Japanese made and a fine quality vehicle. My 86 and 97 trucks were both American made. The 86 was a good vehicle but the assembly (Fit and finish) was horrible.
The 97 was an improvement but still lacking.
I looked at the 07 models and found"some" of the American models to be close to the Japanese truck in all areas but opted for the one I bought because of a few particular features.
Remember when auto advertisements listed "options" like "R&H" which for those who don't know, stood for radio and heater?
It took a lot of engineering to upgrade that list of options to what we expect today.
It was primarily American engineering that gave us all the wonderful things that we now take for granted. The only real impediments to sustaining our way of life are those created (taxes and ridiculous mandates) or supported (catering to unions and other special interests) by the government.
July 11, 2009 at 10:46 a.m. ( permalink | suggest removal )
dawhetsell (anonymous) says...
Now GM has been CHANGED by obama the non-american. It is now a SOCIALIST car company. It will now build one car just like the Russian,s and Chinese build. One color(black),of poor quaility,you have to pay cash in advace and wait two or more years to get it. It will be called " the obanamobile". Good luck on American made cars. I own 5 Dodges from 1966 to 2003. These are the last American cars that I will ever buy. I will buy a Foreign made car or just keep repairing the older ones.I will never support or buy a union made product again.
July 11, 2009 at 10:48 a.m. ( permalink | suggest removal )
BlackReign (anonymous) says...
great post yird.
dawhetsell - I understand your passion and would agree on the socialist part and not buying anymore Government Motors cars, but I really dont think obama is a 'non-American'.
July 11, 2009 at 10:54 a.m. ( permalink | suggest removal )
tc1 (anonymous) says...
"4. Cut GM's bureaucracy so it can make quick decisions in response to market shifts."
DO THIS NOW THAT IT IS OVER 70% OWNED BY UNIONS AND THE GOVERNMENT?????????????
Please call EMS Quick!!! I am ROTFLMAO and can't stop!!
July 11, 2009 at 11:02 a.m. ( permalink | suggest removal )
gringolandia (anonymous) says...
Sound leadership from the White House is slowly getting this country back on track and cleaning up the mess left by the preceding administration.
I know it's hard to stomach that we are still digging out of the mess left by Bush and Cheney and their toxic leadership, but we will stay the course and make this country great again.
July 11, 2009 at 12:18 p.m. ( permalink | suggest removal )
BlackReign (anonymous) says...
- back as gringolandia!
former screen names that have been deleted;
TheFamilyValueParty
Readmylips
yukonsuggit,
Hehatemebro
getserious
TP
Donttasemebro
What a tool, get some new rants will ya. Still pathetic - LMAO!
July 11, 2009 at 1:10 p.m. ( permalink | suggest removal )
yird (anonymous) says...
BlackReign, Dat be da grimygringo, da goat.
July 11, 2009 at 1:43 p.m. ( permalink | suggest removal )
BlackReign (anonymous) says...
lol yird, the fool is back!
It wont be long till the foulness of his putrid mind & soul starts to flow from his stubby fingers.
LOL
July 11, 2009 at 2:46 p.m. ( permalink | suggest removal )
gringolandia (anonymous) says...
From this newspaper website I have leanred more about that the conservatives or republican supporters are unable to write about anything regarding how they would be leading us out of Bushes mess. Instead they throw around false accusations on the world wide web, maybe this makes them feel less sick?
July 11, 2009 at 3:59 p.m. ( permalink | suggest removal )
seneca264 (anonymous) says...
gringolandia- It is too bad that you did not learn proper grammer and syntax from the Republicans.
July 11, 2009 at 4:51 p.m. ( permalink | suggest removal )
buff_o_rilla (anonymous) says...
I will not buy a car from a Fascist Company. Those that comment about buying a foreign car over an American car better realise if you dont start buying American products there wont be anyone in this country to support your wages. You may justify you purchase in a foreign car because its assembled here, but the majority of the money you spend is transfered off American shores. Out of work? Out of money? Hungry? Better learn how to eat your import car.
July 11, 2009 at 7:50 p.m. ( permalink | suggest removal )
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