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Why GM is in trouble

2009-06-02 14:52:39.870843+00 by Dan Lyke 29 comments

SFGate has an article about a GM dealership out in Tracy:

"People don't look at Chevys for hybrids," he said. "They want something big and muscular. Personally, I wouldn't drive a hybrid if it was the last car on Earth. To save fuel, I'd push my El Camino before I'd drive a hybrid."

When your primary market and fan base is driving a car that hasn't been made in over two decades there's not a whole lot of room for new car sales.

[ related topics: Automobiles ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2009-06-02 17:52:22.596052+00 by: ebradway

My father was raving about the new GM/Chevy hybrid trucks that were somewhere in the pipeline. They were using a V6 coupled with a hybrid to increase torque (get that trailer moving) and increase fuel economy. Further, the truck had a built-in AC converter drawing off the hybrid batteries so you could use it as a big generator. That seemed really golden - but like so many things GM, it never seemed to materialize. Maybe they were only available to fleets.

What GM does have is strong brand loyalty. Each of the US manufactures enjoy a certain level of sales because of this. GM should leverage this loyalty by making exactly the vehicles their best customers want.

#Comment Re: made: 2009-06-02 21:31:47.060906+00 by: Larry Burton

GM spent twenty years making crap and running only on momentum. Prior to 1969 GM had some of the best advertising going and did everything they could to make people from every walk of life want badly one of their products. By 1979 their momentum had faded for me. I still looked to them to supply me with a car but even their Corvettes, Camaros and Trans Ams no longer had me salivating. It wasn't until 1990 that I started looking at GM with a little pride again. I had a 1989 Chevy Lumina Eurosport Coupe that impressed me with performance, gas mileage, comfort and dependability. I was getting above 20mpg in town and had gotten as high as 32 mpg on a trip and that thing would fly. I never had a minutes problem with the car up until my wife flipped it by City High School. I bought another one, a 1992 Lumina Eurosport Sedan, that gave me every bit of what the 89 had given me and more.

But still there was no flash. Nothing coming from GMs marketing to cause my heart to flutter. Maybe growing up in a Chevrolet dealership where every fall during the unveiling of the new car models spoiled me. I was use to a carnival atmosphere used to drive interest in the new models. AFter 1970 there wasn't a whole lot to even make one aware that the new models were out.

The shame is that after twenty years, I know that GM began making quality cars again and the quality has only improved since 1990. That's almost twenty years of quality cars that no one will admit to. The new Cadillacs and Corvettes even offer mind blowing performance but who knows about it? And don't get me started on how GM just wasted a brand, Saturn, by not knowing how to manage keeping their labor model going through a downturn.

A friend of mine bought one of the Chevrolet hybrid Trailblazers. I can't remember the exact mileage he was getting but it seems like he was getting in the high twenties if not in the low thirties. This was with a full sized SUV.

#Comment Re: made: 2009-06-02 21:51:20.073578+00 by: ebradway

When I first heard that Saturn was one of the brands on the chopping block, I was seriously puzzled. I remember when Saturn first started selling around '92, used Saturns were selling for more than they did new. How the heck did GM manage to drive it into the ground?!?

#Comment Re: made: 2009-06-02 22:51:34.121995+00 by: Dan Lyke

Larry, I've got a friend who recently bought a Corvette. He did so because as much as he loved his Audi RS4, he felt uncomfortable with that much money on a track with other cars. The Corvette has a heck of a lot of what he wanted at a bargain price; it isn't as much car as the RS4, but it cost a whole lot less. Enough less that he's comfortable taking this out on the track often.

However, he had to go through a whole lot of the "what am I saying about myself if I'm seen in a Corvette?" vibe. Obviously this is someone who likes cars, who feels strongly about cars, and the Corvette brand has been so badly managed that despite the performance and drivability per dollar he felt uncomfortable in this car, and all the vanity plates were were coming up with for him were gags on midlife-crises, chest wigs and gold chains.

I do hate to lay the current state of Cadillac on modern management, though, that brand was pretty hammered with the whole Cimarron fiasco.

Saturn was just a matter of thinking the brand could be milked rather than sustained. There was a time when Saturn hit the same buttons as Prius did, and rather than following that market upwards (as the Japanese cars have been doing with their various lines for years now) and maintaining the quality as their first-time buyers aged, they decided to just make it the entry level brand. Doh. It'll be interesting to contrast that to what Toyota does with the Scion, a similarly positioned brand.

#Comment Re: made: 2009-06-03 16:09:37.273199+00 by: Larry Burton

Eric, I asked you not to get me started. ;) Saturn became Saturn because GM tried an experiment that worked, take away competition between labor and management and empower every worker to be able to stop the line if a quality problem becomes apparent. I don't remember all the particulars of the original contract but part of it was that everyone shared in the bounty from the good times and every one would share in the pain of the bad times there would also be no layoffs... ever. Things changed with the recession following the events of September 2001. In 2004 the Saturn employees voted to dismantle their twenty year old labor contract and accept a contract identical to the one in force with the UAW at every other GM plant in the country. That changed Saturn forever.

Dan, the image problem that Corvette had/has is exactly what I'm talking about. As much as marketing dweebs are made the butt of jokes without an aggressive marketing plan it doesn't matter how good of a car you build no one is going to really know it. It seems like the whole US car industry went from active advertising for their brands in the 60s to depending totally on product placement of their brands in movies and TV shows in the 70s. It worked for the Trans Am (Smokey and the Bandit) and for the Dodge Charger (Dukes of Hazzard) and even for the Ford Torino (Starsky and Hutch) but only for the cars with the exact same paint scheme as what was seen in the movies.

With the Corvette the only people that really knew what was going on with the program were Corvette afficianados. Again, the crap GM was building in the 70s and 80s screwed up the brand and their lack of marketing allowed the momentum to come to an end. The truth be told the Corvette became a world class sports car in 1997 with the introduction of the C5 and really came into its own in 2004 with the C6. Depending on the options the Corvette you buy today is either a fantastic boulevard cruiser or an all out race car. From a price/performance perspective the current model Corvette has every European high performance sports car beat hands down. The problem is that no one knows it and when I say that to a group of people who haven't kept up with what GM has been doing with the car they won't believe me.

#Comment Re: made: 2009-06-03 17:43:25.873554+00 by: jeff [edit history]

Sadly, according to the Canon camera ads in the early 90's (featuring Andre Aggassi), "image is everything..." Indeed, we do live in a society where "perception can become reality..."

I've never even driven a Corvette, but I've always been intrigued with the thought of eventual ownership of one. It's an American icon (my favorite model year is 1958). In 2001 I watched a friend autocross his 400 hp Porsche Turbo Carrera, and the only car which beat him that day was a Corvette. I honestly don't know how the Corvette is being marketed in these times.

The American muscle-car scene really only had a strong run of six or seven years, from about 1964 (with the introduction of the Mustang) to 1970, when emission standards started taking their toll. The movement probably peaked in the late sixties, but we're starting to see some retro models appear (Challenger, Camaro, etc.). It will be interesting to see where gas prices go, and whether these icons will disappear completely. Of course, I didn't help with my decision to get a Volkswagen CC last weekend.

#Comment Re: made: 2009-06-03 17:55:12.086854+00 by: Larry Burton

>> I honestly don't know how the Corvette is being marketed these days.

:) That statement in and of itself ought to give you a clue.

I'd say that the Muscle Car era began in 1961 with the introduction of the 409 in the Chevy Impala followed in 1962 by the 406 in the Ford Galaxy. Insurance rates, emission controls and gas prices killed the US muscle cars in 1972.

#Comment Re: made: 2009-06-03 18:23:26.619541+00 by: ebradway

Yep - I think the Corvette is only marketed to existing Corvette owners. A friend rented a 'vette last summer and was surprised that it got pretty good gas mileage as long as you weren't pushing it.

And that really says something that the Corvette beat out a Porsche 911 in autocross. I've always viewed the 911's strength being in nimbleness and the Vette's in raw acceleration.

#Comment Re: made: 2009-06-03 18:25:17.705653+00 by: jeff [edit history]

Indeed. I'd say the peak muscle car years may have been 1968-1970.

My stock (base) 1971 Dodge Charger w/318 made 230 SAE brake hp. I believe the 1972 model with the same engine netted 150 SAE brake hp. I think shortly after that horsepower measurements were made a little differently, but the net result of emission controls was that power was dramatically reduced across all displacements. Muscle cars were no longer muscular. They were essentially castrated.

And yes, the lack of marketing will kill many brands.

Eric--I shared your exact view of the Porsche 911 vs. Corvette comparison until that one day of autocrossing. It may have been a fluke (or the Corvette may have been heavily modified), but I was in the Porsche with my friend when he turned his fastest time of the day. That was back in 2001, and the autocross scene may be very different today. Maybe Dan can provide more of an update on that?

This may be a harbinger of things to come. Can you say Tesla?

#Comment Re: made: 2009-06-03 18:51:08.314223+00 by: Dan Lyke

Grins. Yeah, maybe you can excuse me as an outlier, but in general this thread has a set of relatively well-off white males who are all saying "Until someone outside of GM educated me on it, I had no idea that Corvettes were any good." There's some epic marketing failure there.

#Comment Re: made: 2009-06-03 20:29:27.231238+00 by: jeff [edit history]

"in general this thread has a set of relatively well-off white males..." Speak for yourself. (grins)

From the Wikipededia entry, "it proved to be a well rounded track vehicle as well, with the ability to do more than simply accelerate. Thanks in part to its upgraded suspension system, the Z06 is capable of holding its own against contemporary versions of the Dodge Viper and even the Porsche 911 Turbo around a road track."

I had read reports that the C5 was actually a very good vehicle from the automotive magazines of the day, but I still don't remember any GM marketing for the car. And I didn't know its predecessor (C4) was apparently this good on the racetrack:

"The C4's handling characteristics and cornering ability allowed it to dominate SCCA events and races during the 1980s and 1990s. It was undefeated in SCCA Showroom Stock competition from 1985 through 1987, despite Porsche's best efforts. Porsche reportedly even obtained a C4 Corvette for teardown and examination."

#Comment Re: made: 2009-06-04 00:03:51.631891+00 by: Larry Burton

Here's a quick Corvette trivia question: How many 1983 Corvette's were sold?

Here's another: How many 1983 Corvettes exist today?

#Comment Re: made: 2009-06-04 01:55:53.223193+00 by: Dan Lyke

I had to look it up, but the third part of that is: How many were made?

#Comment Re: made: 2009-06-04 03:06:32.871285+00 by: Dan Lyke [edit history]

Just looking around for some numbers on Eric's "nimble" impression, obviously there are tire differences and such, but the 2009 'Vette ZR1 pulls a lateral 1.06g, compared to just .96g for a 911 Turbo, which is down there with a Honda Civic (although surprisingly better than a Cooper S)..

And "...Speak for yourself..." says the guy who just bought a new CC. Giggle.

#Comment Re: made: 2009-06-04 03:25:53.840095+00 by: Dan Lyke

A '97 Corvette pulling lateral .93g, so they've been performing fairly well for at least a decade.

#Comment Re: made: 2009-06-04 10:14:50.645631+00 by: DaveP

I'd probably own a Corvette now if it even slightly better suited for tailgating (the Camaro worked pretty well until they discontinued it and made me cranky). But I'm pretty convinced I'm within spitting distance of a fully cliché mid-life crisis.

Then again, what I really want is a sports-car-dump-truck that gets 40 mpg at 180 mph.

#Comment Re: made: 2009-06-04 11:57:42.25955+00 by: jeff [edit history]

As for the 1983 Corvette? Is appears that model year was skipped and only 44 prototypes were made, due to production issues? It's also unclear to me how many were sold and how many still exist from those prototypes.

"And ...Speak for yourself... says the guy who just bought a new CC. Giggle."

I was able to get a base CC with a few extras thrown in for less than $26K. The MSRP for a base Corvette is $46K and the Z06 starts at $71K. The MSRP for a base Porsche Carrera is $76K and the Turbo lists at $130K. The Audi RS4 lists at $67K, so I imagine Phil bought a used Corvette?

"Relatively well-off," well, is just that. Relative. Very. Giggle (Grins)

#Comment Re: made: 2009-06-04 14:02:48.781394+00 by: Dan Lyke

Jeff, re the '83, none were sold, one still exists.

Dave, isn't the "Sports car dump truck" the El Camino that started this whole conversation? If GM could build one of those that got 40MPG...

#Comment Re: made: 2009-06-04 15:52:25.396462+00 by: Larry Burton

Chevy made their last "El Camino" in 2006. They called it an SSR

Chevy SSR Image

#Comment Re: made: 2009-06-04 16:09:31.046385+00 by: Dan Lyke

See, Dave, that with a modern diesel engine and you may not get 40MPG at 180MPH, but you'd probably get 40MPG highway and somewhere in the mid-hundred top speed.

#Comment Re: made: 2009-06-04 16:10:19.512622+00 by: jeff

Wow. Not the kind of vehicle that I'd own, but an interesting looking car nonetheless. I remember the early models.

I wonder if we can surmise that part of the problem with GM is the loss of manufacturing and blue collar jobs in this country, and the movement to a bi-model distribution of wealth? People who may have worked in factories at $20/hour are now working at Walmart for $8/hour, and simply can't afford the brand anymore? I wonder what we could uncover if we looked more closely at the real demographics driving new car sales, and brand loyalty.

#Comment Re: made: 2009-06-04 17:06:02.280641+00 by: Dan Lyke

Nick Scipio twitter on the new GM:

GM's PR campaign to convince people that they aren't a dying company in a dying industry? Full page ads. In newspapers. Savor the irony.

#Comment Re: made: 2009-06-05 09:35:19.049209+00 by: DaveP

I actually looked at the SSR. Shame I can't actually fit inside it without bonking my head on the ceiling.

Ditto the HHR (high roof? Hell, I can only see three car lengths in front of me due to the way the roof slopes down in front).

I've been trying to find a Chevy I could buy, and have a friend who runs (ran? I haven't talked to him for a while) dealership and who will cut me a deal on a new Chevy, but if I buy a new car this year, it'll probably be a VW GTI R32, provided they make one without a sunroof, because the sunroof takes away about 4 cm of headroom I need to fit into the car.

The problem with GM is that they're not making cars their core audience wants to buy, and they've pre- announced things like the Volt, and a hybrid SUV which grabbed my interest, but when I was interested, they weren't actually selling the things. Something's wrong when your most memorable marketing is for products you don't make.

#Comment Re: Bi-modality made: 2009-06-05 12:01:23.001017+00 by: jeff

A couple of links related to GM.

One is a "good feel" story, and the other is not.

#Comment Re: made: 2009-06-05 18:09:06.746975+00 by: Dan Lyke

Jeff, Philip Greenspun has a take on the support of the GM pensions, asking if an auto worker can retire before 50 and your average American taxpayer's going to be working through to 70 for Social Security, how's the pension bailout going to go over politically?

#Comment Re: made: 2009-06-05 20:15:05.114833+00 by: jeff

It's a point well taken, Dan.

But, as an extension of that, in our society of laws based on precedents, I suppose that all pensions are now at risk, and that ERISA laws will become meaningless? That's equally politically explosive in my view.

#Comment Re: made: 2009-06-06 06:16:30.561469+00 by: ebradway

That picture of the SSR reminds me of a song: "I love you/you love me/we a happy/family..." Sorry. It just does. It sure the heck doesn't provide an image of perfomance the way the early 80s El Camino SS did...

#Comment Re: made: 2009-06-06 11:23:51.60767+00 by: Larry Burton

Eric, I think the SSR and the HHR were GMs attempt at trying to grab a part of the retro styling market that Chrysler was able to grab with their PTCruiser.

#Comment Re: made: 2009-06-06 16:14:17.144742+00 by: TheSHAD0W

The smallest vehicle type I've found that suits me well is the minivan. Not super fuel-efficient, but better than a SUV; nice big windshield gives lots of visibility; seating and cargo space when you need it. And the '09 Toyota Sienna has a 275 horsepower engine that makes it accelerate more quickly than my '87 Trans Am did. (Can't corner as well, of course; it's a minivan!)